03 Jun ABLE Accounts Make DebutJune 3, 2016
By: Michelle Diament
For the first time, people with disabilities can open special accounts where they can save money without jeopardizing their government benefits.
This week, Ohio became the first state to offer accounts made possible through the Achieving a Better Life Experience, or ABLE, Act with the launch of its program. ABLE accounts are available to individuals with disabilities nationwide through the state’s offering known as STABLE.
With ABLE accounts, people with disabilities can save up to $100,000 without risking eligibility for Social Security and other government benefits. Medicaid can be retained no matter how much is in the accounts.
The accounts are nearly a decade in the making, becoming possible thanks to federal passage of the ABLE Act in 2014. However, states had to pass their own legislation and implement regulations before the offering could become available to consumers.
“The ABLE Act was an idea that started around a kitchen table in Northern Virginia by five dedicated parents from the Down syndrome community. Today is a historical achievement as now ABLE accounts are a reality for all individuals with disabilities in America thanks to the hard work of so many dedicated advocates from across the U.S.,” said Sara Hart Weir, president of the National Down Syndrome Society.
While Ohio is first to unveil its ABLE program, the state is not expected to be the lone player for long. Nebraska and Tennessee are set to launch their offerings this month, which will both be available to individuals nationwide.
Meanwhile, Florida is planning to open its program by July 1, though that offering will be limited to residents.
Each state program is expected to be somewhat unique and fees are likely to vary.
Ohio’s STABLE accounts can be established through a dedicatedwebsite with an initial contribution of at least $50. State residents will pay a $2.50 per month fee for the accounts while residents of other states will pay $5 per month. Additional fees apply depending on the investment options chosen and amounts vary depending on whether the account holder lives in Ohio.
Up to $14,000 per year can be deposited in an individual’s ABLE account. Funds can be used to pay for education, health care, transportation, housing and other expenses. Interest earned on savings in the accounts is tax-free.
ABLE accounts are currently limited to individuals with disabilities that originated before the age of 26, though federal lawmakers have proposed legislation to raise that threshold.
One caveat to the accounts is that states can recoup money remaining after an account holder dies to pay for Medicaid benefits disbursed to them.
Advocates recommend speaking with a financial advisor before deciding how to take advantage of an ABLE account.