Posted Dec. 16, 2014 | Congress gave final approval to the most sweeping legislation in support of Americans with disabilities in a quarter century, allowing these individuals and their families to open tax-free bank accounts to pay for long-term needs, such as education, housing, transportation and health care. The move paves the way for creation of the accounts beginning next year for as many as 54 million Americans. The Democratic-led Senate passed the measure on a 76-16 vote after it was attached to a bill extending dozens of tax breaks for individuals and businesses until the end of the year. Earlier this month, the Republican-controlled House overwhelmingly approved the measure (by a vote of 404-17), which had garnered 85 percent of Congress as co-sponsors. The Achieving a Better Life Experience (ABLE) Act now goes to President Obama for his signature.
Modeled after tax-free college savings accounts, the ABLE Act would amend the federal tax code to allow states to establish the program. To qualify, a person would have to be diagnosed by age 26 with a disability; in addition, those who already are receiving Social Security disability benefits would qualify. Families would be able to set up tax-free accounts at financial institutions, depositing up to $14,000 annually. The contributions would be in after-tax dollars but earnings would grow tax-free. The ABLE accounts would be able to accrue up to $100,000 in savings without the person losing eligibility for government programs, such as Social Security; currently, the asset limit is $2,000. Medicaid coverage would continue no matter how much money is deposited in the accounts.
Courtesy of The Boston Herald