The Ticket to Work program is just one example of a program that’s designed to benefit SSI and SSDI beneficiaries. There are other programs and laws that have been established to provide other assistance. In 2014, the Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act authorized states to establish tax-advantaged savings programs for individuals with disabilities. The ABLE Act is now considered to be one of the most significant pieces of federal legislation to address the needs of persons with disabilities since the Americans with Disabilities Act was initially passed more than 30 years ago.
In effect, the ABLE Act created Section 529A of the Internal Revenue Code. The Internal Revenue Code is the federal legal framework that establishes the specific rules and requirements that apply to an ABLE account. ABLE accounts are tax-advantaged savings accounts for eligible individuals with disabilities. It’s absolutely worth understanding more about how they work and how they may be able to benefit you.
The ABLE Act
With the ABLE Act, applicable individuals with disabilities and their families can save funds in a tax-advantaged savings and investment account. For reference, you can think of these accounts as being similar to a 529 college savings account. With an ABLE account, anyone may contribute. This includes friends and families or the individual holding the account.
It’s worth noting that there are some limitations to the ABLE Act. Eligibility is limited to people with significant disabilities who had the onset of their disability occur before they turned 26 years old. This means people who have experienced a disability later in life wouldn’t qualify. Additionally, anyone with a disability that isn’t deemed significant also wouldn’t qualify for an ABLE account. However, if you meet the age requirement and already receive SSI or SSDI benefits, you’re automatically deemed to be eligible for an ABLE account. If you aren’t already a beneficiary, you would need to meet Social Security’s definition of significant functional limitations and receive a letter of certification from a qualified physician.
As a tax-advantaged account, the funds in an ABLE account may grow tax-free. This means that the funds in the account and any distributions made for qualified disability-related expenses aren’t factored into determining eligibility for relevant benefits. This includes means-tested benefits such as SSI or Medicaid. Obviously, this is the primary advantage of having an ABLE account. There’s no need to worry about the account’s growth or related expenses when it comes to your eligibility for appropriate programs.
The funds in your ABLE account may be used for anything deemed a qualified disability-related expense. This means that the expenditures should be somehow related to your disability, such as helping you to maintain your health, independence, or quality of life. This is a fairly far-reaching definition, but it isn’t all-encompassing. However, it does cover many common expenses, such as housing, transportation, education, employment-related training, assistive technologies, personal support devices, health care expenses, aid with the management of finances or financial planning, appropriate administrative services, or other expenses that are determined to be applicable and qualifying. As you can see, this is a fairly extensive list, so many expenses do readily qualify.
A more in-depth analysis of the ABLE Act is available at the ABLE National Resource Center. Even if your state doesn’t currently have a program for ABLE accounts, you can still enroll through any state that has an ABLE program open to out-of-state residents.