The ABLE Act: A Tax-free Benefit for People with MS That Could Be Better

Disability from multiple sclerosis develops, on average, within 10 years of diagnosis. Financial catastrophe was often the consequence, until Congress passed the Achieving a Better Life Experience Act (ABLE Act) — signed into law on Dec. 19, 2014, by President Obama.

This act allows you or anyone to put money into a special non-taxable account for you, up to $100,000, and you will still be eligible for Medicaid and SSI (Supplemental Security Income). The grand total allowed in ABLE accounts is $500,000, but anything over the $100,000 will affect SSI and Medicaid eligibility (as it should). Here is a link to the ABLE National Resource Center website for more information.

I first became aware of the ABLE Act legislation because Sara Wolff put it forward as a petition on Change.org. When I saw it, I was amazed and thrilled at the possibilities. Primarily, I longed to eliminate terror from my financial future. I signed the petition immediately.

Sara Wolff has Down’s syndrome. Like all of us who live with disabilities, a future life of penury loomed. There was no point to a disabled person saving for the future, because having any assets beyond $2,000 (variable based on state definitions of excluded assets) would be forfeit, that is, require a “spend down” to qualify for assistance.

The ABLE Act has changed that requirement, and made it possible to save money for future expenses, especially expenses that would require an extensive quantity of cash — for example, new car tires or new home appliances  — without losing eligibility for government assistance.

Here is the original language proposed:

Introduced in House (02/13/2013)
Achieving a Better Life Experience Act of 2013 or the ABLE Act of 2013 – Amends the Internal Revenue Code to establish tax-exempt ABLE accounts to assist an individual with a disability in building an account to pay for qualified disability expenses. Defines “qualified disability expenses” to include expenses for education, including higher education expenses, a primary residence, transportation, obtaining and maintaining employment, health and wellness, and other personal support expenses.

Treats a qualified ABLE program and an ABLE account in the same manner as a qualified tuition program for income tax purposes (i.e., allowing a tax exemption for such program and an exclusion from gross income of amounts attributable to a contributor to or a beneficiary of a program account). Defines “qualified ABLE program” as a program established and maintained by a state agency under which a person may make contributions to an ABLE account established to pay for qualified disability expenses.

Requires amounts in ABLE accounts to be disregarded in determining eligibility for Medicaid and other means-tested federal programs. Suspends the payment of supplemental security income benefits under title XVI (Supplemental Security Income) of the Social Security Act to an individual during any period in which such individual has excess resources attributable to an ABLE account.

AGE LIMIT FOR ELIGIBILITY
Unfortunately, Congress changed the original language and added restrictions. The age limitation for eligibility is the most egregious restriction. In order to qualify to create an ABLE account, disability “must have originated before age 26” and for MANY people with multiple sclerosis, this age limit is too young. Here is a link to the text of the amended bill.

Congress first began developing a bill to enable PARENTS to create special savings accounts for their children with disabilities, such as Sara Wolff’s Down’s syndrome. But there are far too many other ways to end up disabled, whether by accident or disease. Many people who eventually become too disabled to work do work for a time, even for decades, but they know disability awaits. The bill’s final language also contained some references to the need to be “severely” disabled. This qualification violates the intent of the bill, because people can be diagnosed with a disabling disease like MS but still be able to work, and they should be able to open an ABLE account.

People like Sara or me could not save any money for expenses AND have access to any means-tested social services. The ABLE Act changed that. We can now save money and still access social services as long as the disability originated before age 26. This restriction is so obviously age discrimination that I find it hard to believe that the legislators put that criterion in the final bill. This age requirement would mean that someone in a disabling car crash on their 26^th birthday would not be allowed to have an ABLE account. That is ridiculous.

For people with multiple sclerosis, “originated” does not really work to define our disability. Since there is a genetic component, we could claim our MS originated before age 26, but there are other factors as well. Similarly, it can take 10 years or more for an accurate diagnosis, so would “originated” mean at the onset of noticeable symptoms or the date of an official diagnosis? A diagnosis of a potentially severely disabling disease also does not make one “severely disabled” at onset.

The law clearly intends to allow people with disabling diseases who are able to work to continue to do so AND to create an ABLE account. The relapsing-remitting nature of MS stymies easy categorization compared to a definitive quadriplegic or someone with cerebral palsy. Other diseases, like lupus or cancer, might not appear to originate before age 26 but could fundamentally exist genetically.

Disability is disability at any age, though I suspect that the legislators had some concerns about elderly people defined as disabled, and therefore able to stash money in an ABLE account for things like long-term care. The arbitrary age limit on ABLE accounts is definitely due to one factor: tax revenue. The logic was that if everyone who is actually disabled were to put $100,000 in an ABLE account, there would be a considerable loss of taxes. Note, this age limit does not reduce the NEED for ABLE accounts; it simply categorizes and classifies some disabilities as being more deserving of a decent life than others — not by reality, but by age. (Actually, properly taxing millionaires and billionaires and corporations would easily and quickly make up any lost revenue from income taxes on the backs of those least able to afford them: the disabled.)

ACTION NEEDED! CONTACT YOUR LEGISLATORS!
Fortunately, some members of Congress realized that the age limit of 26 was too young, and proposed an amendment to raise the age cap to prior to age 46. This improvement still could shut out people with multiple sclerosis, so is not really quite good enough.

I have spent some time on the phone with various legislators for an update on the status of the age amendment, and two other related modifications in committee. My recommendation is that the age be increased further, or better yet, eliminated. Or, at the very least, it allow “listed conditions” for Social Security Disability to automatically qualify people with diseases like multiple sclerosis to be eligible for ABLE accounts, regardless of age or severity of disability at any given moment.

Here is a link to the Senate ABLE Age adjustment amendment.

Here is a link to the House ABLE Age amendment.

Here is a link to respective websites with contact information for your SENATORS and REPRESENTATIVES.

ANNUAL CAP ON CONTRIBUTIONS TO ABLE ACCOUNTS
One other thing that needs to be changed in the existing law is the maximum annual contribution to an ABLE account. The federal gift tax allows anyone to give someone about $14,000 a year. Any amount over $14,000 results in a tax on the giver. [IRS taxes you when you earn money and even when you give it away!] This limitation also applies to the money you can contribute to your ABLE account in a year. Whether you or someone else puts money in an ABLE account, the maximum per year allowed is $14,000.

This limit is grossly unfair because for older disabled adults; we have less time to be able to build up an ABLE account. When you call your representatives, be sure to request at least a one-time bulk contribution so that we can build the total toward $100,000 as soon as possible, especially for people still able to work.

TO BE CONTINUED. . .
The simplicity of an IRS exclusion for disabled people that allows us to save money for the future is a GREAT IDEA! And the fact that it was passed at all deserves high praise all around. The complications and unforeseen implications of changes like the age limit, the option of crossing state lines, and other factors have made the ABLE Act more complicated and so requires more discussion of the issues.

Future columns will continue exploring the status of the pending amendments and plans that are available now. The important thing for you to know now is that ABLE accounts are coming online; four state plans are active now (Nebraska, Ohio, Tennessee, and Florida) and several accept accounts nationwide (only Florida’s, to date, is restricted to state residents). Minnesota, where I live, should be online soon.

I will cover additional issues about ABLE accounts, such as the burdensome fees many plans require. Not that there is any choice at present, but if enough people question their validity, then maybe a simpler and less burdensome management system could be implemented.

Call your representatives at the Federal and State Levels. If the Congress fails to act on the Age Adjustment amendment or the other two in committee, then perhaps states could modify their state-level plans to raise the age, the maximum annual amount allowed per person’s account, and other issues still outstanding in implementation.

Here are the links, again, to contact your members of Congress to advocate for alternative age limits or eligibility criteria that would allow people with MS to be able to start an ABLE account with a large lump-sum deposit:

 SENATE and HOUSE

Note: Multiple Sclerosis News Today is strictly a news and information website about the disease. It does not provide medical advice, diagnosis, or treatment. This content is not intended to be a substitute for professional medical advice, diagnosis, or treatment. Always seek the advice of your physician or other qualified health provider with any questions you may have regarding a medical condition. Never disregard professional medical advice or delay in seeking it because of something you have read on this website. The opinions expressed in this column are not those of Multiple Sclerosis News Today, or its parent company, Bionews Services, and are intended to spark discussion about issues pertaining to multiple sclerosis.