First ABLE Account Programs Open in Ohio and Tennessee
On June 1, 2016, the state of Ohio became the first state to launch a disability savings account program authorized by the federal Achieving a Better Life Experience Act (ABLE), which passed in December 2014. On June 13, 2016, the state of Tennessee launched ABLE TN and became the second state to launch a program. The ABLE Act allows states to sponsor tax-advantaged investment accounts that will give individuals with disabilities the opportunity to save and invest up to $14,000 per year in an ABLE account without losing eligibility for income-contingent federal benefits programs, such as Medicaid and Supplemental Security Income (SSI). Ohio’s accounts, known as STABLE accounts, and Tennessee’s ABLE TN accounts will enable people with disabilities across the United States to save money for qualified disability-related expenses. Anyone meeting the eligibility criteria is eligible for the ABLE account programs in these states, as there is no residency requirement. The ABLE Act limits eligibility to individuals with significant disabilities with an age of onset of disability before turning 26 years of age.
All earnings on savings in ABLE accounts are tax-deferred, which means that they are only taxed if and when the money is spent on something other than a “qualified disability expense.” Therefore, earnings are not taxed when they are used to pay for any “qualified disability expenses.” Qualified disability expenses can include housing and basic living expenses, transportation services, healthcare, wellness services, employment training, employment support services related to the person’s disability, and other employment-related expenses. People can save money in ABLE accounts while remaining eligible for Medicaid-funded health care and home and community-based services (HCBS) including employment supports. By saving money, workers with disabilities can also retain the housing and transportation stability they need in order to maintain jobs in their communities. It is anticipated that CMS will issue guidance on how the existence of state ABLE account programs impacts Medicaid beneficiaries.
Ohio Treasurer Josh Mendel announced the launch of the STABLE account program in a Cincinnati press conference. Ohio self-advocate Jenny Cunningham said at the launch: “Now I, and millions of persons with disabilities, can save for our future.” Tennessee State Treasurer David H. Lillard, Jr., at the launch of Tennessee’s program in Nashville, commended the General Assembly for passing the legislation and for protecting the lives of Tennessee citizens with disabilities. In total, 47 states have enacted ABLE-related legislation. Several other states are expected to launch their ABLE programs later in 2016 or 2017. It is anticipated that final Treasury regulations will be issued by the end of 2016. These final regulations, issued by Treasury and developed by the Internal Revenue Service (IRS), will serve as formal guidelines in which various state ABLE programs will implement, develop, and maintain their programs. Currently, the inaugural programs are operating under the proposed regulations that were published in June of 2015. While there may be some differences, we don’t anticipate there to be any significant changes not already addressed in recent notices published by Treasury and IRS.
For general information about the ABLE Act and ABLE accounts, please visit the ABLE National Resource Center. Learn more about Ohio’s STABLE account program and its eligibility requirements by visiting the Ohio Treasurer’s STABLE account website. For more information on Tennessee’s ABLE TN accounts, read the Tennessee Treasury Department press release or visit the ABLE TN website.