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ABLE Act Gains Traction in the States

August 30, 2016

Legislation enabling disability savings accounts under the Achieving a Better Life Experience (ABLE) Act continues to gain ground in state legislatures. The ABLE Act, which was signed by President Obama last year, allows states to authorize special tax-advantaged accounts called ABLE accounts. These accounts enable people with disabilities to save money in special tax-advantaged accounts without their savings being counted in means-testing for means-dependent benefits such as Medicaid Home and CommunityBased Services and Supplemental Security Income (SSI). The accounts will help workers with disabilities save money to be used later for qualified disability expenses, which can include support to gain and keep employment, without losing services they also may need in order to be employed. In order for people with disabilities to set up ABLE accounts, the states in which they live must first pass legislation authorizing the accounts.

So far, 33 states have signed ABLE-related legislation into law. Notably, California bill AB 49, which will make ABLE accounts available to Californians with disabilities, was signed into law as of October 11, 2015. Pennsylvania Senate Bill 879, which would do the same in Pennsylvania, was approved by the Pennsylvania Senate and awaits approval by the House.

In addition, the Internal Revenue Service (IRS) has issued a Notice of Proposed Rulemaking (NPRM) regarding ABLE Act implementation. The Rulemaking would give clarity and guidance over how the ABLE Act is to be implemented in states. The NPRM includes a flexible definition of what constitutes a “qualified disability expense” and would allow the ABLE account holder to keep the same ABLE account even if he or she moves to another state.

For more information, read the article on the ABLE Act’s progress from National Disability Institute’s Washington Insider.