The Promise of ABLE

Vol. 42 No. 4


Senator Casey is Pennsylvania's senior senator. He works to create jobs, advocate for the education and well-being of children, and pursue a national security strategy that protects our interests.

A year into my second term as a senator, I met with the parents of two little twin girls with Down syndrome, Susan and Meredith. These parents told me about their girls and about their worries of what would happen to their children when they were gone. They worried because federal law prevented individuals with disabilities receiving federal support like Medicaid and supplemental security income from having more than $2,000 in assets. This cap all but guaranteed that Susan and Meredith, and all children with disabilities not born into wealth, were destined to live a life in poverty. 

I knew, just from watching those little girls run around my office and engage and talk to me, that if we gave these little girls’ parents the tools they needed to save for the future and the support they needed, those girls could do whatever they wanted. And that’s exactly what the Stephen Beck Jr. Achieving a Better Life Experience Act of 2014 (Public Law 113-295) (ABLE Act) does. 

Susan and Meredith weren’t born when we started this fight, but in 2014, they were around to celebrate the passage of the ABLE Act with my Republican and Democratic partners. The bill advances the simple promise of economic self-sufficiency by removing existing statutory barriers that locked many with disabilities into poverty. 

The income and asset limitations set out in federal statute prevented individuals with disabilities from having more than $2,000 in assets at any given time. These limitations also prevented most parents from being able to save for their children in any meaningful way. Absent savings, Americans with disabilities who outlive their parents are forced to rely on government assistance as family support disappears. The ABLE Act changes this, creating a protected tax-advantaged savings account for individuals with disabilities. The ABLE Act allows Americans with disabilities to save without losing eligibility for government programs. 

The disincentive to save prevented parents and those with disabilities from planning for future costs and stood in the way of a more productive life. Millions of Americans are currently living with disabilities; far too many endure financial uncertainty—the same kind of uncertainty millions of Americans face every day—such as rising housing, transportation, heating, and food costs, because of restrictions imposed by the government. 

Federal ABLE Act Provisions 

Prior to passage of ABLE, individuals receiving critical benefits, like Medicaid and supplemental security income, were barred from holding more than $2,000 in assets. For those with an onset of disability before the age of 26, the ABLE Act, through section 529A of the Internal Revenue Service Code (26 U.S. Code § 529A), creates tax-advantaged savings accounts for individuals with disabilities. Funds held within an ABLE account will not affect eligibility for supplemental security income (up to $100,000), Medicaid, and other public assistance. The total limitation on funds held in ABLE accounts is set by the states. Annual contributions are capped and cannot exceed the gift tax exemption—currently $14,000 a year. The bill aims to ease financial strains faced by individuals with disabilities by making tax-advantaged savings accounts available to cover qualified expenses such as utility bills, housing, and transportation. 

Simply put, the ABLE Act allows families that have a child with a disability to save for their long-term needs and care. The law will ease the type of financial stress many individuals with disabilities face by allowing savings beyond the $2,000 asset limitation. 

ABLE federal benefits allow:

  - Savings of up to $14,000 each year;
  - Tax-free growth of funds within the account;
  - Funds may be used to pay for a wide range of expenses;
   - Funds can be withdrawn income tax–free when used for qualified expenses.

Two years after the federal ABLE Act passed into law, 47 states and the District of Columbia have enacted legislation implementing ABLE at the state level—the remaining three are Idaho, Mississippi, and Wyoming. As of February 2017, 16 ABLE programs have launched around the country, with more to come.

The ABLE Act and States

With passage of implementing legislation at the state level comes new choices—choices about the maximum allowance of funds in an ABLE account, choices as to whether a state will provide a tax credit or deduction for contributions to ABLE accounts, choices as to whether a state will run its own program or enter into a consortium with other states, and the very important choices of what additional services and assistance will be provided to families and beneficiaries as these accounts are not only opened, but used. 

I am proud that my home state of Pennsylvania is a leading voice in the state implementation. I commend the Pennsylvania State Treasurer’s office and all our state treasurers for their continued commitment and support of ABLE. Getting a law passed is only a fraction of the work; the rest is making sure it is implemented properly and used appropriately. The U.S. Treasury, Social Security, Centers for Medicare and Medicaid Services, and our states are all doing their part to keep the promise of this bipartisan effort. Pennsylvania will join the list of states with active nationwide ABLE programs very shortly.

At the federal level, the coalition that made ABLE the law of the land continues to work toward improving the bill, including increasing the age limit for onset of disability from age 26 to age 46; allowing rollovers from a 529 college savings account to an ABLE account; and increasing the annual contribution limit to ABLE accounts as a way to help people with disabilities who work save more of their paycheck.

The fundamental promise of ABLE is peace of mind for families by way of savings for a disability. It is a simple objective, but one that requires constant vigilance. 

The ABLE Act would never have come to pass without the work of hundreds of thousands of disability advocates around our country working to steer Congress on course. It took eight years and more setbacks than can be counted. Those who fought alongside Senator Burr, Representative Crenshaw, Representative Sessions, Representative McMorris Rodgers, Representative (now Senator) Van Hollen, and me are the quiet heroes of this bipartisan law, bringing about what has been called “the broadest legislation to help [people with disabilities] in nearly a quarter-century.” If it can be done once, it can be done again, provided the people demand it, and their representatives listen.

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