ABLE Act: On December 19, 2024, we celebrate a significant milestone—the tenth anniversary of the Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act. The ABLE Act has transformed the lives of millions of people with disabilities by providing them with the opportunity to save and invest in a tax-advantaged way without losing essential public benefits like Supplemental Security Income (SSI) and Medicaid. This article delves into the history, impact, benefits, and future of ABLE accounts, highlighting their role in promoting financial independence and stability for individuals with disabilities.
Evolution and Impact of the ABLE Act
Background of the ABLE Act
ABLE Act: The ABLE Act was signed into law on December 19, 2014, with the primary goal of empowering individuals with disabilities to save for their future without compromising their access to essential government services. Historically, resource limits restricted individuals with disabilities from saving significant amounts for emergencies or personal needs, often resulting in the loss of crucial public benefits.
ABLE accounts offer a flexible approach to managing finances, allowing account holders to save for a variety of qualified disability expenses (QDEs). These expenses include education, housing, transportation, healthcare, and more, helping individuals maintain a good quality of life while still accessing vital benefits.
Growth of ABLE Accounts
Since the launch of the first ABLE program in 2016, significant progress has been made. As of 2024, over 187,000 people with disabilities have opened ABLE accounts, collectively saving over $2 billion in assets. The average amount saved in each account exceeds $11,600, reflecting the growing trust and utility of this program.
However, despite the success, only about 3% of eligible individuals have opened an ABLE account. One of the main barriers is a lack of awareness about the program’s existence. The ABLE Act continues to address this issue by expanding outreach and education efforts to ensure more people benefit from this opportunity.
Benefits of ABLE Accounts
Financial Independence
ABLE accounts allow individuals to maintain financial independence by reducing reliance on government services for day-to-day needs. With higher resource limits, SSI recipients can hold up to $100,000 without losing eligibility.
Tax Advantages
ABLE accounts provide tax-free investment growth and withdrawals, as long as the funds are used for qualified disability expenses. This ensures that individuals can use their savings effectively for their specific needs.
Flexibility in Use
Funds from ABLE accounts can be used for a wide range of expenses, providing flexibility to meet diverse personal requirements. Examples include medical expenses, housing, education, transportation, and even basic living expenses like food and utilities.
Expansion and Future Developments
ABLE Age Adjustment Act
On January 1, 2026, the ABLE Age Adjustment Act will expand eligibility to include individuals whose disabilities began before age 46. This change will allow approximately six million additional people to take advantage of ABLE accounts, broadening the scope of support available to individuals with disabilities.
Table: Key Statistics of ABLE Accounts in 2024
| Statistic | Value |
|---|---|
| Number of ABLE Accounts Opened | 187,000 |
| Total Savings in ABLE Accounts | $2 billion |
| Average Savings per Account | $11,600 |
| Percentage of Eligible Individuals with Accounts | 3% |
People First India
FAQs
1. Who can open an ABLE account?
ABLE accounts can be opened by individuals with a disability that began before the age of 26. Starting January 1, 2026, this age limit will be extended to 46.
2. What are qualified disability expenses (QDEs)?
Qualified disability expenses include education, healthcare, housing, transportation, and other essential living needs that support the person’s independence and well-being.
3. Are contributions to ABLE accounts taxable?
No, contributions to ABLE accounts are not taxed at the federal level if they are used for qualified disability expenses.