The Denver Post

Savings accounts to be open to more people

- By Ann Carrns

Disabled Americans recently scored a victory when Congress approved an expansion of state- based accounts that let them work and save money without risking the loss of public benefits like Medicaid.

The change means an estimated 6 million more people, including about 1 million military veterans, will eventually qualify for the tax- favored accounts, advocates for disabled people say. The accounts, known as ABLE accounts, are named after the 2014 law that created them, the Achieving a Better Life Experience Act.

Forty- six states and Washington, D. C., offer ABLE accounts, which first became available in 2016 and are loosely modeled on 529 college savings accounts. But saving in ABLE accounts has been somewhat slow to catch on, partly because they have been limited to people who became disabled before the age of 26.

Now, the ABLE Age Adjustment Act, included in the omnibus spending bill passed in December, has raised the threshold for the onset of a qualifying disability to age 46.

That means people can be eligible if their disability occurred after their mid20s, in a car accident, say, or from a neurologic­al disease they developed, like multiple sclerosis.

It may also help people dealing with the lingering effects of COVID- 19, said Thomas Foley, executive director of the National Disability Institute.

The accounts let people with disabiliti­es save and invest for current expenses and future needs, including housing, education, transporta­tion and legal costs, without the funds disqualify­ing them from need- based federal help like Medicaid and Supplement­al Security Income.

In general, a disabled person can’t have more than $ 2,000 in savings or other assets to qualify for those programs. But money in an ABLE account doesn’t count toward that total.

“It’s a safe place to save money,” Foley said.

The age expansion was crucial for the ABLE program overall, supporters say. A 2019 report from the National Associatio­n of State Treasurers warned that participat­ion was too low to maintain affordable fees for ABLE accounts and sustain the programs over the long term. The associatio­n’s charitable arm, the NAST Foundation, has started several initiative­s to promote awareness of the accounts.

The new rule, however, won’t take effect until January 2026. That somewhat damps the news of expanded access, said Mary Morris, chief executive of Virginia52­9, the agency that oversees Virginia’s ABLENOW program. People may be disappoint­ed, she said, to learn about the accounts only to hear that they must wait several years to participat­e.

“It’s a bit of a letdown,” she said.

Still, millions of people might already be eligible and can be helped with expanded outreach, advocates say. Under current rules, an estimated 8 million people qualify for ABLE, but just a small fraction of them have accounts. ( About 14 million may qualify under the expansion.)

“We need to reach out to those who have been excluded,” said Stacy Garrity, state treasurer for Pennsylvan­ia and chair of the ABLE Savings Plans Network.

At the end of 2022, there were an estimated 134,000 ABLE accounts with more than $ 1.18 billion in assets, according to ISS Market Intelligen­ce, a financial research and analytics firm.

Anyone — family members, friends and even employers — can contribute to the accounts, up to a maximum for 2023 of $ 17,000. If a disabled person with an ABLE account works, that person can contribute extra from his or her own earnings, up to $ 13,590 in most states, for an annual total of $ 30,590.

There are caps on total balances. Generally, accounts can grow to $ 100,000 without affecting Supplement­al Security Income. But balances can be much higher without affecting eligibilit­y for other benefits, like Medicaid or federal housing assistance.

There is no federal tax deduction for contributi­ng to an ABLE account, but earnings and withdrawal­s for eligible expenses are tax- free. Some states might offer tax breaks for contributi­ons.

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