ABLE accounts are open to people with disabilities. The onset of the individual’s disability must have occurred prior to his/her 26th birthday. Parents can NOW open NC ABLE accounts for for their adult children. Senate Bill 582.
What is the NC ABLE Program?
- The NC Achieving a Better Life Experience (ABLE) Act allows people with disabilities to save and invest money in without jeopardizing Medicaid and other programs and supports.
- Up to $15,000 can be saved per year without endangering benefits from federal and state means-tested programs. Friends, family members and others may contribute to an individual’s NC ABLE account using the Ugift feature. More information about how to do so can be found at NC.SaveWithABLE.com.
- On December 19, 2014, the ABLE Act was signed into federal law by President Barack Obama, creating a new Section of the IRS tax code and enabling individuals who qualify to open ABLE accounts. NC passed the North Carolina ABLE Act in August 2015.
How does it help people?
- This new type of savings and investment account allows people with disabilities to save (and their family members, friends and others to contribute) money in a 529A account for qualified disability expenses, similar to the tax-deferred accounts used by families to save for their children’s college educations.
- Up to $100,000 saved to this account is not counted toward a disabled person’s eligibility for SSI or other federal means tested programs – a major change in federal and state policy.
- Any funds placed into this account, and earnings thereon, can be used to defray disability-related expenses, such as additional medical costs not covered by Medicaid. Money spend on qualified disability expenses (QDEs) is not considered “income” for the purposes of mean-tested programs.
Who is eligible?
- ABLE accounts are open to people with disabilities. The onset of the individual’s disability must have occurred prior to his/her 26th birthday.
- No special medical forms are required. Individuals can self-certify that they qualify to open an ABLE account.
- Individuals who receive Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) benefits under Title II of the Social Security Act are eligible to open an ABLE Account.
- And, individuals with disabilities who are not otherwise eligible for federal benefits but who meet criteria similar to those required by federal programs like SSI or Medicaid may open an ABLE account.
- A qualified person can open an ABLE account – or a parent or guardian can open an ABLE account on his/her behalf.
What are the details of this 529 Account?
- Similar rules that govern 529 college savings accounts will govern ABLE accounts, including rules for tax treatment of annual contributions, earnings, withdrawals, reporting requirements, and contribution limits. The Internal Revenue Service (IRS) provided “Guidelines Under Section 529A: Qualified ABLE Programs” in June 2015 to offer guidance to state programs, beneficiaries and other interest parties. Until the final regulations are issued, taxpayers and qualified ABLE Programs may rely on these regulations.
Qualified Disability Expenses (this list is not exhaustive- ABLE is NOT just for educational expenses)
- Education – Tuition for special education services, including tutors and educational materials.
- Housing – Expenses for a primary residence, home improvements and modifications.
- Transportation – Expenses for transportation, including the use of mass transit, the purchase or modification of vehicles.
- Employment Support – Expenses related to obtaining and maintaining employment, including job-related training, assistive technology, and personal assistance supports.
- Health and Wellness – Expenses for health and wellness, including mental health, medical, vision, and dental expenses, habilitation and rehabilitation services, durable medical equipment, therapy, respite care, long term services and supports, nutritional management, communication services and devices, adaptive equipment, assistive technology, and personal assistance.