After years of lobbying from disability advocacy groups, Congress passed the ABLE Act (Achieving a Better Life Experience Act) in late 2014. This creates a tax-advantaged account for individuals who are living with disabilities. The funds that are in an ABLE account mature and can be spent tax-free on qualified expenses.
What is an ABLE Account?
These are tax-advantaged savings accounts for people who have disabilities and their families. The account owner is the beneficiary of the account and the income that is derived by the account will not be subject to tax. There are certain states that may permit state income tax deductions for contributions to an ABLE account.
Why You should have an ABLE Account
There are many individuals with disabilities along with their families who are dependent on government benefits for health care, food, and housing. To be eligible for these government benefits, you will need to meet certain standards. To stay eligible for these benefits, you must remain on a low-income status. The ABLE Act understands the substantial costs associated with living with a disability. Costs such as personal assistance services, transportation, and accessible housing are not covered by Medicare, Medicaid, or insurance.
Expenses Allowed by ABLE Accounts
An allowable expense is known as a qualified disability expense which is classified as any expense associated with the beneficiary as a result of living with disabilities. These expenses may include housing, education, personal support, or transportation. Other expenses include health care expenses, financial management, and employment training.
Who Is Eligible for an ABLE Account?
Eligibility is limited to those who have significant disabilities who had the onset of the disability before the age of 26. If you have met the age requirements and are currently receiving benefits, then you are automatically eligible to create an ABLE account. If you meet the age requirement, but you are not a recipient of SSDI or SSI, then you may still be eligible to create an ABLE account if you meet the Social Security requirements in regard to significant functional restrictions and obtain a letter of certification from a physician.
ABLE Account vs. Ticket to Work
An ABLE account and Ticket to Work are both beneficial to people with disabilities, however, there are some differences. The Ticket to Work program is an ideal fit for beneficiaries who want to have meaningful employment. The Ticket to Work program and work incentives allow you to retain your benefits while you seek after employment opportunities. In contrast, an ABLE account is a program tax-advantaged savings account that allows certain expenses tax-free.
If you would like to learn more about how you can benefit from an ABLE account or the Ticket to Work program, give the experienced team at DisABLEd Workers a call at 877-291-9806.