Congress Expands Access to ABLE Accounts by Increasing Age Limit
In 2014 Congress passed the Achieving a Better Life Experience (ABLE) Act which allows states to create tax-advantaged savings programs for people with disabilities who became disabled before they reached the age of 26. The goal of ABLE accounts is to allow people with disabilities to maintain their benefits (such as Supplemental Security Income, Medicaid, or Supplemental Nutrition Assistance) while also being able to save for larger disability related expenses, like accessible housing, assistive technology, or transportation.
Anyone could contribute money to a person’s ABLE account, including the account owner, their family, and their friends as long as the total annual contribution does not exceed a certain limit, which is tied to the gift tax exemption. In 2023, the annual limit is $17,000. A person can have up to $100,000 in their ABLE account and any funds above $100,000 would be counted against the individual when considering eligibility for public benefits.
The reality of this meant that a 32 year old who was born with a disability and uses attendant services could maintain their eligibility for Medicaid while also saving for a larger disability related purchase, like a wheelchair accessible van. Another example would include a person who acquired their disability during an accident as a teenager could maintain their SSI while also using their ABLE account to save up for an accessible home. Across the U.S., there were approximately 134,000 ABLE accounts with more than $1.18 billion in assets in 2022.
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While ABLE accounts were helpful for people who had a disability before they turned 26, millions of disabled people were left without the option of opening an ABLE account simply because of the arbitrary age limit. However, Congress recently passed the ABLE Age Adjustment Act, which increased the age limit to 46. This means that a person who becomes disabled in a car accident in their 30s or a 42-year-old firefighter who gets injured in the line of duty can also enjoy the benefits of ABLE Accounts. This also can help people who are diagnosed with disabilities that present later in life, like multiple sclerosis.
Unfortunately, all of these hypothetical individuals will have to wait several more years until opening an ABLE account becomes a reality for them. That’s because the age limit increase that Congress passed in December 2022 will not take effect until 2026.
Despite the years-long waiting period, the Disability Community can still count this as a win. However, we still have work to do to ensure that all disabled people can benefit from ABLE Accounts because there are many people who have or will acquire their disabilities after the age of 46.