Several States Join Forces for ABLE Accounts

Several states say they will work together in effort to offer new accounts that will allow people with disabilities to save money without risking their government benefits. Nine states have joined forces as they work to make ABLE accounts available to the public.

ABLE accounts were authorized with the federal passage of the Achieving a Better Life Act in 2014, but each state has to approve their own legislation and create regulations before offering them. To date, 40 states and Washington, D.C. have approved legislation to create ABLE accounts, but no state has made the program available as of yet.

State officials say they will be able to attract better quality investment products at a lower cost by uniting in a consortium. The states plan to work together to offer investment options, but each will operate its own ABLE program.

The states committed to participating in the consortium include Alaska, Illinois, Kansas, Minnesota, Missouri, Nevada, Pennsylvania, and Rhode Island. It is thought that are states are considering joining. Together, the states say they will leverage the potential of over 47 million residents.

Without such a consortium, it is thought that there would be too few people eligible in each individual state for ABLE accounts to attract the best offerings.


New Website Launching to Help Families Navigate ABLE Account Offerings

ableactlogoStates have begun preparing to offer ABLE accounts. As this process has begun, a new website is launching to help families navigate the offerings.

The site from the ABLE National Resource Center is designed as a one-stop shop for families as well as financial professionals and program administrators. It has information about laws, regulations and product offerings in each state.

To date, 35 states and the District of Columbia have passed legislation regarding ABLE accounts, but each are in varying degrees of implementation. The first offering is expected to be available as soon as March.

A change to federal tax law late last year allows people with disabilities to take advantage of accounts offered by any state, no matter where they live.  Each state program is thought to be unique which means that one program or another could be advantageous to different individuals depending on their circumstances.

This is where the resource center could really come in handy for families.  The site will be able to compare one program to another by using a list of 15 to 20 variables that beneficiaries and families would want to take into consideration when choosing a program.

So far, the resource center website includes information about the law, ABLE accounts, who qualifies and particulars of each state’s legislation. More information will be added as states begin rolling out their offerings.

Advocates say they expect Ohio, Nebraska, Virginia, Florida and Tennessee to be among the first states to make ABLE accounts available.

Tax Credit Proposed for Caregivers of People with Disabilities

tex-credit-1A bill introduced in the beginning of March in the House of Representatives would allow family members who care for people with disabilities or aging family members receive up to $3,000.00 in tax savings annually. The bill is known as the Credit for Care Act.

The tax credit offsets expenses for things like home modifications, groceries, transportation and hired help to care for individuals with long-term needs who need assistance performing at least two activities of daily living such as eating, walking, dressing or grooming.

Family members could qualify for providing care to a spouse, parent, grandparent, sibling, child, niece, nephew, brother-in-law, sister-in-law, father-in-law or mother-in-law. To be eligible, caregivers have to be working and earning at least $7,500.00 per year.

“This is more than just another tax credit,” said U.S. Rep. Linda Sanchez, D-Calif., who introduced the legislation along with U.S. Rep. Tom Reed, R-N.Y. “This is about how we can help older adults and people with disabilities live independently in their own homes and communities.”

People with Disabilities Allowed to Pick ABLE Programs from Any State

hand20dropping20money20into20a20piggy20bankThanks to a tax law passed last month, consumers eligible to open an ABLE account will be free to select a plan sponsored by any state, rather than being restricted to their home state’s plan. The change will make it possible for people across the country to start an ABLE account as soon as the first state program begins. Experts expect there to be competition among states to attract out-of-state residents to their ABLE programs, which could result in lower fees and better investment options for consumers.

About 35 states have passed legislation to sponsor ABLE programs and it is thought that many programs will begin later this year. Officials in Nebraska, Virginia, and Florida say they plan to make ABLE accounts available in 2016.

Now that these programs can attract contributions from other states’ residents, experts say it is unclear whether all states that passed legislation will set up their own plans. Some may put their programs on hold and reassess once the initial ABLE plans are operating to see whether the market is big enough for additional players. Other states may opt to subcontract with another state or join a multi-state consortium to achieve economies of scale to reduce investment costs and account fees.

Some experts say families who want to maximize their contributions to these accounts should set one up in 2016, even if there are relatively few plans to choose from. This is because annual contributions are limited to $14,000 a year per beneficiary.

Families may want to wait until the end of 2016 to open an account so they have more options to choose from. They should keep an eye on the offerings from other states that enter the market. If they find a plan with lower fees or better investment options, they can initiate a tax-free rollover of their assets from one state plan to another.

While out of state plans may offer some benefits, it is thought that many states may offer a state tax break for using a home-state plan. States that currently offer one include Oregon, Iowa, Missouri, Montana, Nebraska, New York, and Wisconsin.

If maintaining SSI benefits, which are suspended once a person’s assets reach $100,000, isn’t a concern, a family may want to shop for a state plan that allows them to set aside the most money possible. On average, ABLE programs cap the balance at $300,000 per person, but some states are planning to cap the balance as high as $480,000.

IRS Eases Rules for New ABLE Accounts

irsbuilding1In October, the IRS had requested feedback on their proposed rules for the Achieving a Better Life Experience Act (ABLE Act). After a lot of pushback from disability advocates and state officials, the IRS will be easing up on the rules for these new accounts.

The IRS said they plan to issue final regulations with less stringent reporting requirements. Specifically, individuals opening ABLE accounts will not need to submit medical documentation, but will have to certify under penalty of perjury that they have a qualifying diagnosis.

The IRS also indicated that ABLE programs will not be required to request taxpayer identification numbers from contributors to ABLE accounts except in limited circumstances and program administrators will not have to categorize what money in the accounts is for.

Despite federal passage of the ABLE Act last year, each state must establish regulations of their own in order to made the accounts available. So far, 34 states have approved legislation, including North Dakota.

These states are still working out the details and need to know the IRS rules before moving forward. ABLE accounts are expected to start becoming available next year, but the timetable for each state will vary.

With these new accounts, people with disabilities will be able to accrue up to $100,000 without losing access to Social Security and other government benefits. Medicaid coverage will remain intact no matter how much money is in the individual’s ABLE account.

These accounts were modeled after the 529 college savings plans and funds in the account can be used to pay for education, health care, transportation, housing, and other expenses. Interest that is earned on these accounts will be tax-free. Individuals with disabilities acquired before the age of 26 will be eligible for the new accounts.

Help Stop the Helping Families in Mental Crisis Act

The Helping Families in Mental Health Crisis Act of 2015 (also known as the Murphy Bill or H.R. 2646) passed through the House Energy and Commerce Health Subcommittee. This bill could be dangerous and has been gaining public support.

Provisions in this bill strip away many of the civil and human rights of people with psychiatric disabilities under the guise of violence prevention. This bill is based on incorrect assumptions about people labeled with psychiatric disabilities, and it perpetuates stereotypes and misinformation.

Here are a few ways the bill would be harmful to people with disabilities:

  • Change the Substance Abuse and Mental Health Services Administration which could threaten effective programs such as peer support.
  • Promote involuntary treatment (called “Assisted Outpatient Treatment”), limited federal aid for community mental health services to states that fail to have laws conforming to new standards.
  • Increase institutionalization by modifying the Institutions for Mental Diseases exclusion, which would allow Medicaid payment for nursing homes and hospitals.
  • Limit the work in which Protection and Advocacy for Individuals with Mental Illness is permitted to engage.
  • Create lower standards of privacy for people with psychiatric diagnoses due to changes in HIPAA regulations.

This discriminatory bill can be stopped. It is currently in the House Energy and Commerce Committee. North Dakota is represented on this committee by Representative Kevin Cramer. Send him a letter and tell him not support the Mental Health Crisis Act of 2015 (also known as the Murphy Bill or H.R. 2646).

Bill to Increase Access to Special Needs Trusts

Last week, the U.S. Senate approved legislation that may soon make it easier for people with disabilities to save money. The Special Needs Trust Fairness Act would allow individuals with disabilities to establish a special needs trust for themselves. Current law states that such trusts can only be created by a parent, grandparent, legal guardian, or a court.

Senator Chuck Grassley, R-Iowa, stated, “Those who want and need a trust to help pay for their care shouldn’t have to jump through hoops to do it.” He went on to say that this bill allows individuals to act in their own interests with their own assets without having to rely on a family member or the courts.

For people with disabilities who rely on government benefits like Medicaid and Supplemental Security Income, a special needs trust can be vital. To qualify for Medicaid or Supplemental Security Income, individuals cannot have more than $2,000 in assets at any given time. However, money saved within a special needs trust does not count against the asset limit.

Separately, states are working to implement the Achieving a Better Life Experience Act, also known as the ABLE Act, which offers people with disabilities another way to save money. Under that law, individuals with disabilities will be able to establish ABLE accounts where they can accrue up to $100,000 without compromising their government benefits. However, it is thought that because of the deposit limits, many people will continue to rely on special needs trusts as well.