There is a valuable new tool for settlement recipients with severe disabilities: an ABLE account. With the passage of the “Achieving a Better Life Experience Act of 2014” or the ABLE Act on December 3, 2014, individuals with special needs or disabilities can now own tax-free savings accounts with up to $100,000 in funds without losing needs-based government benefits, such as Medicaid and Supplemental Security Income, or SSI.
The Act’s stated purpose is “to encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence and quality of life.”
The ABLE Act amends Section 529 of the Internal Revenue Code, which formerly only made college savings plans tax exempt. ABLE accounts are intended to provide for disability-related expenses for the individual such as education, housing and transportation so that people with severe disabilities can live and work independently. ABLE accounts are strictly for people with severe doctor-certified disabilities incurred prior to age 26 who qualify for needs-based benefits. Individuals over age 26 are eligible as long as there is documentation proving they’ve had the disability since before their 26th birthday. [Read more…]