Investing in You: New low-cost savings fund for special-needs children

 

by Erin E. Arvedlund from Philly.com:
Middle-class parents of children with disabilities: There's a new low-cost, tax-advantaged way to save money on their behalf.
Low cost is the key idea here. ABLE accounts serve a purpose similar to the special-needs trusts often set up to help disabled or special-needs children without disqualifying them from government benefits.
ABLE accounts don't replace special-needs trusts. They are another option.
In December, President Obama signed the Achieving a Better Life Experience (ABLE) Act of 2014, which creates savings accounts for the disabled. Each state will set them up individually.
ABLE accounts will function much like 529 college-savings plans and even have a similar moniker, "529 A."

Accountants, trust attorneys, and industry experts say the new accounts will make it possible for disabled individuals to have assets without jeopardizing other kinds of financial assistance.
"If a disabled person earned more than $700 per month or had assets in excess of $2,000," says Kathryn Flynn of SavingforCollege.com, "they risked having to forfeit eligibility for government programs."
Until now, families got around the restrictions by spending thousands of dollars in legal fees to set up special-needs trusts, which remain popular.
The ABLE Act, Flynn says, has "created a way for families to adequately save for the future as a supplement to private insurance and public benefits."

ABLE Act 2014

by JD Supra Business Advisor from Thompson McMullan:
On December 19, 2014, the “Achieving a Better Life Experience Act of 2014” (ABLE ACT 2014) was enacted.  The purpose of the Act is to permit families to save private funds to help support some individuals with disabilities to maintain health, independence and quality of life.  To qualify for an ABLE account, an individual would have to have been determined disabled before their 26^th birthday.   ABLE accounts could be used to help pay for “qualified disability expenses”, such as medical care, dental care, education, job training, housing and transportation, without any impact on the disabled person’s eligibility for public benefits, such as SSI and Medicaid.  ABLE accounts will be designed to supplement, but not replace benefits provided through private insurance, Medicaid, SSI employment or other sources.

Starting in 2015, amounts in ABLE accounts will not be subject to the $2,000 maximum of assets that qualifying disabled people would otherwise be required to maintain to establish and remain eligible for SSI and Medicaid.  In addition, while ABLE accounts may not exceed $100,000 in value for SSI recipients, there is no similar cap for Medicaid recipients.

Support for ABLE Act Continues to Grow

from PennsNews.com:
WASHINGTON, D.C. – Today, support continued to grow for the Achieving a Better Life Experience Act (ABLE Act – S. 313/H.R. 647), introduced by U.S. Senators Bob Casey (D-PA) and Richard Burr (R-NC), bringing the total number of co-sponsors in the Senate to 60 members.  Introduced in the 113^th Congress in February, this bill would provide an improved quality of life for individuals with disabilities through tax-free savings accounts.

“This is a significant step forward for the ABLE Act and for the families of children with disabilities,” Senator Casey said. “Now that this bill has 60 cosponsors, I’m urging the Senate to take action on it in the new year. The fact that only 6 bills in all of Congress have this many cosponsors is a sign of the overwhelming support for this effort to make a major difference in the lives of these families.”

“The ABLE Act is a commonsense piece of legislation that allows families of disabled children to have the same access to tax preferred savings accounts as the parents of college-bound kids,” Senator Burr said.  “I am very excited that we now have 60 Senators on board and can hopefully expect swift movement on the Senate floor to send this bill to the President.”

The legislation would amend Section 529 of the Internal Revenue Service Code to 1986 to allow use of tax-free savings accounts for individuals with disabilities. The bill, first introduced in 2006, would ease financial strains faced by individuals with disabilities by making tax-free savings accounts available to cover qualified expenses such as education, housing, medical, and transportation. The bill would supplement, but not supplant, benefits provided through private insurance, the Medicaid program, the beneficiary’s employment, and other sources.