About This Legislation:

The ABLE Act would give individuals with disabilities and/or their families access to savings accounts that would allow individual choice and control while protecting eligibility for Medicaid, SSI and other important federal benefits for people with disabilities. They could create a disability savings account that would accrue interest tax-free. Withdrawals would not be taxed as long as they are used to pay for qualified expenses. The account could fund a variety of essential expenses for the person with a disability, including educational expenses; medical and dental care; health, prevention and wellness expenditures; employment training and support; assistive technology; personal support services; transportation; housing; and other expenses for life necessities.

Savings accounts opened under the ABLE Act would differ from other savings instruments with tax advantages because they provide substantial flexibility:
 

• The individual with disabilities could hold/control the account, or parents/guardian could hold it in trust.
• The allowed expenses are designed to be broad enough to accommodate the individual needs of account holders.
• Most of the allowed expenditures are not limited to adulthood or retirement age, so they can be used whenever they are needed.
• The flexibility in expenses also allows families to save with confidence even though they cannot always predict how independent their child will become.
• A family that has saved money in a traditional account for a child who becomes disabled later in life can roll over the funds into a disability savings account without penalty.
• The account should be easy and inexpensive to open, like a simple savings account.
• Unlike some savings instruments, such as "529" college accounts, the ABLE Act accounts would be created and regulated on the federal level. They would operate under the same rules in every state, ensuring they are portable for individuals and families who move across state lines.
• Individuals and families who find that the current individual or pooled trusts available under the Medicaid program will better address their needs may roll over the account into the trusts.
• The ABLE accounts can be managed by pooled trusts, if the individual or family so chooses.

In a manner similar to the treatment of Medicaid trusts, funds remaining in the accounts at the individual's death would be used to pay back the state Medicaid program up to the value of services provided to the individual during life.

The ABLE Act would give individuals with disabilities and their families an option for saving for their future financial needs in a way that supports their unique situation and makes it more feasible to live full, productive lives in their communities.

Legislative support:

The ABLE Act was introduced in the House (H.R. 1205) by Reps. Ander Crenshaw, R-Fla.; Kendrick Meek, D-Fla.; Patrick Kennedy, D-R.I.; and McMorris Rodgers, R-Wash. It was introduced in the Senate (S. 493) by Sens. Robert Casey, D-Pa.; Orrin Hatch, R-Utah; Christopher Dodd, D-Conn.; Sam Brownback, R-Kan.; Richard Burr, R-N.C.; and Edward Kennedy, D-Mass. Both bills have a growing list of bipartisan co-sponsors. No hearings have been held.