As we celebrate Hanukkah by increasing the number of candles we light on each of the eight nights, bringing a warm glow to the longest, darkest days of the year, the disability community has been given a wonderful gift—a new federal program in 2015 called the ABLE Act, modeled on 529 college savings and investment programs which would allow people with disabilities the chance to finally save up money and still retain vital government benefits.
Once enacted by states, up to $100,000 could be accrued without risking eligibility for Social Security and other government programs. Funds could be used to pay for education, health care, transportation, housing and other expenses. According to the Jewish Federations of North America, “these funds would supplement, but not supplant, the benefits received from sources such as private insurance, Medicaid and the Supplemental Security Income program, providing new and valuable lines of support to people with disabilities and their families.” Individuals could deposit up to $14,000 annually under current gift-tax limitations. Under current law, the maximum people who receive SSI or SSDI can save is $2,000 if they want to keep getting government benefits.
Originally known as the Achieving a Better Life Experience, or ABLE, Act, the legislation that has been under consideration since 2006 was recently renamed the Stephen Beck, Jr. Achieving a Better Life Experience Act of 2014. A longtime proponent of the bill, Beck died unexpectedly earlier this month. Over 70 nonprofits and healthcare organizations have supported the ABLE Act, including many Jewish advocacy groups. This legislation has passed both the House and Senate and President Obama is expected to sign it into law soon.
Other key details of the ABLE Act according to Bay Area attorney and trust expert Stephen W. Dale:
o Contributions into an ABLE Act can be made by any person such as parents, grandparents, and the person with a disability
o Deposits and income earned would not be taxed, same with account withdrawals
o Individuals will be limited to one ABLE account and total annual contributions by all individuals to any one account could be made up to the current gift tax limit, which is $14,000 in 2014
o Total contributions to an ABLE account would be subject to an overall limit matching a state's limit for all Section 529 accounts (in CA, that limit is $371,000)
o Individuals with ABLE accounts can keep their eligibility for means-tested benefits such as SSI and Medicaid (Medi-Cal in California)
o In the event the qualified beneficiary dies with remaining money in an ABLE Account, the state Medicaid plan that provided medical assistance to the beneficiary after the creation of the ABLE plan must be paid back first. After that payback, funds could be roll-overed to heirs.
o People who qualify for an ABLE account must be diagnosed with a disability before age 26 and either currently receive SSI/SSDI or be certified as meeting conditions similar to those required by SSI or SSDI.
I‘ve spent the last 12 months as a consultant to Bet Tzedek, coordinating a Community Needs Assessment (paid for by the Los Angeles Jewish Federation) on whether creating a Pooled Special Needs Trust for the LA Jewish Community would be helpful (the answer was YES!), and have heard from many parents and adult siblings of loved ones with serious disabilities. Across the board, family members have expressed their frustration with the current $2,000 asset ceiling, and the ABLE goes a long way in changing that. Light one more candle and Happy Hanukkah!
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