As reported by INARF early last week, the Achieving a Better Life Experience (ABLE) Act was signed into law by President Obama, creating opportunities for individuals with disabilities to open tax-exempt accounts similar to 529 College Savings Plans. The Act was well received by consumers and providers alike, prompting many questions about the establishment and maintenance of these accounts. To better prepare INARF members to answer questions posed by consumers and families, Doug Long, with long-time INARF General Counsel and Associate Member Hall, Render, Killian, Heath, and Lyman, researched the act and has provided the following summary, outlining its key provisions: Douglas P. Long of Hall, Render, Killian, Heath & Lyman, P.C. “The Achieving a Better Life Experience Act of 2014 ("ABLE") became law on December 19, 2014 and added a new Section 529A to the Internal Revenue Code to permit individuals to establish ABLE accounts for disabled beneficiaries. The purpose of the new law is to assist persons and families in saving funds to support individuals with disabilities generally without supplanting amounts payable for the individual's benefit under the Supplemental Security Income ("SSI") and Medicaid programs. Assets in an ABLE account and distributions from the account for qualified disability expenses are disregarded when determining the qualified beneficiary's eligibility for most federal means-tested benefits. Key characteristics of the new ABLE accounts are as follows: 1. These accounts are available and recognized once the particular state adopts a qualified ABLE program or contracts with another state that has such a program. 2. Any contributor, such as a family member or the disabled person, can establish an ABLE account for an eligible beneficiary. An eligible beneficiary can have only one ABLE account. 3. Contributions to an ABLE account must be made in cash from the contributor's after-tax income. 4. The maximum amount which an ABLE account can receive each year is an amount equal to the annual federal gift tax annual exclusion amount under Internal Revenue Code Section 2503(b) which is currently $14,000. 5. An eligible beneficiary must be: a) a child who meets the SSI program's blindness or disability standard; or b) an adult who meets the SSI program's blindness or disability standard, provided that the adult's disability occurred before he or she reached age 26. Alternatively, an individual can qualify as an eligible beneficiary if a proper disability certification is made which includes the individual's impairment diagnosis signed by a physician. 6. Qualified disability expenses include any expenses for the benefit of the eligible beneficiary related to education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and any other expense approved by the Secretary of the Treasury under future regulations. 7. Earnings on an ABLE account and distributions from an account for qualified disability expenses do not count as taxable income of the eligible beneficiary. 8. Depending upon the circumstances, any assets remaining in an ABLE account upon the death of the beneficiary may be required to be paid to a pertinent State Medicaid agency to reimburse the agency for payments it made on behalf of the beneficiary. As noted, assets in an ABLE account (including earnings thereon) and any distributions for qualified disability expenses are disregarded when determining a qualified beneficiary's eligibility for most federal means-tested benefits. However, in the case of the SSI program, a distribution for housing expenses would not be disregarded nor would amounts in an ABLE account in excess of $100,000. The assets in an ABLE account do not count against Medicaid eligibility.” Click here for a copy of the ABLE Act Statute Click here for a copy of a report to the Ways and Means Committee. If you have questions about the new law and these new accounts, please contact Christiaan Campbell.