Content provided by Mike Forker, CLS Chief Compliance Officer
There is a bill making its way through Congress that would allow states to create 529 savings plans for those with long-term disabilities. Similar to the 529 education savings plans, the Achieving a Better Life Experience (ABLE) Act would allow individuals to establish tax exempt savings accounts that could be used to pay for qualifying disability expenses, including expenses related to education, housing, and maintenance of health and wellness.
The ABLE Act would allow disabled individuals to be the beneficiary of a 529 account without affecting their eligibility for Medicaid and other means-tested federal aid programs. Social Security Insurance benefits would also be available if the account has a value of less than $100,000. In addition to being another source of benefits, an ABLE account would potentially alleviate some of the necessity for special needs trusts, which can be cumbersome to setup and maintain.
While the bill still needs to be passed by both branches of Congress, it has strong bipartisan support from both parties. If passed, the ABLE Act could be a powerful financial planning tool for those trying to support family members with disabilities.