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The ABLE Act: New Law Helps Federally Disabled Save For the Future

By Lynda Spence, Family & Consumer Sciences Extension Agent at UF/IFAS Extension-Marion County
Reviewed by Martie Gillen, PhD, Department of Family, Youth, and Community Sciences, University of Florida

Living with a disability, such as major impairment of vision or mobility or a long-term serious illness, can be very difficult. While many people with disabilities are able to work, some find that this is not possible. The government does provide limited cash benefits to those who are ruled permanently disabled by a court, but many restrictions come along with these benefits.

In the past, if you received federal disability benefits, you had to keep your assets limited to less than $2,000, or risk the loss of these benefits. As if a disability weren’t penalty enough, this “old way” further penalized individuals who needed to establish an emergency fund and build savings.

The ABLE Act Brings Changes

Now, there’s a new law that changes these rules– good news for those receiving these benefits. Congress has just passed the Achieving a Better Life Experience (ABLE) Act, and after the President signs it, it will become law. Regulations still will have to be written and individual states still need to set up their respective programs, but after seven-plus years in the making, this change is about to become a reality.

In the foreseeable future, gone will be the day when the struggles of living with a disability are compounded by the fact that a person can’t even put aside rainy day funds. Instead, people receiving disability benefits will be able to save funds in a special account called an ABLE (Achieve a Better Life Experience) account.

What Does This New Law Really Mean? 

Simply stated, disabled individuals and families will be free to save private funds to maintain their health, independence, and quality of life. Can you handle more good news? ABLE accounts will have no impact on Medicaid eligibility.

As with most legislation, though, there are a few conditions to be aware of. For instance, the law stipulates that a person must be diagnosed by the time he or she is twenty-six.

Accounts Can Be Used in Many Ways

Under the new law, ABLE Accounts are fairly flexible. They can be used for a number of purposes, as long as the money goes to the benefit of a person with a disability and is related to the disability. Some things ABLE accounts can be used for include education, housing, transportation, employment support, assistive technology, personal support services and health and wellness costs. Because we know health-related expenses can choke budgets all the way from private households up to the federal budget, this is extremely significant.

Disabled individuals will now also be able to save for emergencies and future medical expenses and for long-term investments in education, homeownership, and other asset-building activities—a big change from how things were in the past.

Guidance is Available   

Is saving new to you or someone you know because it was prohibitive in the past? Visit America Saves to learn how to take their savings pledge, set a goal, and make a plan. UF/IFAS Extension is another resource to explore. Take advantage of the services they provide.  No time to attend a program? Listed below are helpful publications to read at your own convenience:

Building a Spending Plan series 

Individual Retirement Accounts  

Money and Marriage: Saving for Future Use 

Read more about the ABLE Act here:

Congress Passes the ABLE Act: Savings Accounts for People with Disabilities

(Photo credit: Piggy bank by Sergei Galyonkin. CC BY 2.0. Cropped.)

References:

H.R. 647: ABLE Act of 2014. Retrieved December 19, 2014 from: https://www.govtrack.us/congress/bills/113/hr647

H.R.647 – ABLE Act of 2014113th Congress (2013-2014). Retrieved December 19, 2014 from: https://www.congress.gov/bill/113th-congress/house-bill/647

Levin, E. (2014). Congress Passes the ABLE Act: Savings Accounts for People with Disabilities. Retrieved from: http://cfed.org/blog/inclusiveeconomy/congress_passes_the_able_act_savings_accounts_for_people_with_disabilities/

O’Neill, Barbara, and Jane White. 2013. Financial Fitness for the Best Rest of Your Life: What Older Adults Need to Know about Money. New Jersey Coalition for Financial Education, Rutgers University. Retrieved from http://njaes.rutgers.edu/money/pdfs/older-adults-money-advice.pdf