Understanding the ABLE Act

The Cottage Foundation is dedicated to sharing information that encourages independence or provides new avenues for the disability community. We’re exploring below the Able Act and what it can mean for you and your family.

What is the Able Act?

On Dec. 21, 2014 congress passed the “Achieving a Better Life Experience” Act that enables individuals with disabilities and families of those with disabilities to finance their needs through tax-free savings accounts. According to The New York Times, “advocates say it is taking time to complete the details of the accounts…[and that the] timing of the accounts’ availability will probably vary.” Each state must pass its own legislation on the law which is why the full implementation of the act has been delayed. Most states hope to be opening ABLE accounts by 2016, so without further ado, here’s the “need-to-know” on tax-free savings accounts provided by the ABLE Act.


Why does it matter?

The ABLE Act allows people with disabilities to obtain a special savings account for disability-related expenses. Earnings on these accounts will not be taxed and the act does not impede other financial assistance such as Medicaid, Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP) or other resources.


How is this different?

Current law makes it nearly impossible to save for disability-related expenses. To remain eligible for federal benefits such as the ones listed above, families and individuals must have less than $2,000 in savings. In short, recipients must be poor to receive aid. Federal benefits will only be suspended if savings in an ABLE account exceed $100,000, but they will not be terminated.


Are you eligible for an ABLE account?

You are eligible if you became disabled before the age of 26 AND

1) receive Social Security Disability Insurance (SSDI) or SSI OR

2) file disability certification under rules that the IRS will write


What expenses does ABLE cover?

To list a few: education, housing, transportation, employment training, personal support services, health and wellness, financial management, legal fees, oversight and monitoring fees, funeral expenses and any other expenses that each state’s legislation sees fit.


*Regulations may vary from state to state. Federal law implies that each state should act uniformly, but each state is able to regulate ABLE accounts differently. The states will determine how ABLE Accounts can be opened.


See how your state is ranking in passing the ABLE Act and learn more here. 

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