The ABLE act- Achieving a Better Life Experience Act- passed Congress this December and was signed into law.
Louisiana had previously passed a similar bill which was to become effective when the federal government approved its version. The Act, passed with bi-partisan support, allows people with disabilities to set up savings accounts with no tax on the earnings, similar to 529 college savings accounts. This bill allows disabled persons to build up savings without losing their Medicaid or Social Security Benefits.
Because current law prevents those with more than $2,000.00 in assets or earnings more than $680.00 per month (these amounts may vary depending on the situation) from receiving Medicaid or Supplemental Security Income there has been no avenue for disabled persons or those who care for them to save for education, housing, employment support, health, transportation, or other life necessities. If the disabled person is not able to make decisions with regard to the account, a custodian of the account can make those decisions. The ABLE account can also be a trust account with a trustee to make decisions regarding the assets. Assets in such accounts are not counted in determining eligibility for Medicaid or Supplemental Security Income. Income grows tax- free like a 529 plan.
Beneficiaries must have been diagnosed with a disability by age 26 and can only have one account. Individuals with a disability, their families, their employers, and any other persons can contribute to an ABLE account for the disabled individual. However, only $14,000.00 per year total can be contributed and the maximum contribution is $100,000.00. Plan amounts in excess of $100,000.00 result in a loss of SSI benefits but not Medicaid. Also any amounts left in the account at the time the disabled person dies is subject to estate recovery and would have to be paid back to Medicaid.