Achieving a Better Life Experience (ABLE) is federal legislation that was signed into law on 12/19/14. The law will permits persons with disabilities and their families to establish savings accounts that resemble 529 college savings plans (529 plans are tax-favored, education savings plans that help families set aside money for higher education). Persons and third parties may contribute a limited amount ($14,000 in 2016) annually to any one ABLE account. Distributions from the account must be used for qualified disability expenses such as education, housing, transportation, assistive technology, and personal support services.
There are pros and cons to ABLE accounts, and their utility will likely depend on a person’s unique circumstances. Though there are tax benefits and advantages in receiving and maintaining eligibility for some types of government benefits, an ABLE account may be subject to Medicaid payback upon the person’s death. This will depend on whether the person receives Medicaid benefits. Medicaid will also be paid back even if funds in the ABLE account were contributed by a third party. Currently these accounts are not available to the public, but are expected to be in the coming year once final regulations are established and implemented.
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