By David M. Goldfarb, Esq.
The ABLE Age Adjustment Act would raise the aging of onset of a disability to 46.
Four years ago, Congress passed the Achieving a Better Life Experience (ABLE) Act of 2014, creating tax-favored accounts for persons with disabilities to save and pay for disability-related expenses. Since its passage, 41 states and the District of Columbia have created programs.
Yet despite more than 25,000 ABLE accounts opened, the National Association of State Treasurers (NAST) warned that the current program’s trajectory is not sustainable. To achieve sustainability, 390,000 ABLE accounts would need to be opened by 2021.
NAELA’s history with the legislation is complicated. While we supported the concept, the initial draft, which had no limits to funding an account, included a Medicaid payback provision. That put previously protected third-party money at risk if placed in an ABLE account instead of a third-party special needs trust.
But the final version proved to be a great benefit. That is for those who could qualify. Vastly scaled back from the initial draft, it capped yearly contributions to the gift tax exclusion amount ($15,000 in 2019). While the Medicaid payback remained, the money at risk was now vastly lower. Unfortunately, the scaled back benefit only applied to those who developed a disability before the age of 26.
The final bill’s age limitations upset many in the disability community who had lobbied hard for the ABLE Act for years only to see many individuals unable to qualify.
Given this, disability advocates have since focused on expanding the age limit needed to qualify.
That led to the introduction of the ABLE Age Adjustment Act last Congress. The legislation would raise the aging of onset of a disability to 46. Many have asked why 46? The answer is that it’s halfway to 65 from 26, the original cut-off age.
In March of this year, Sens. Bob Casey (D-PA), Jerry Moran (R-KS), Chris VanHollen (D-MD), and Pat Roberts (R-KS) along with Reps. Tony Cardenas (D-CA), Cathy McMorris Rodgers (R-WA), Steve Cohen (D-TN), Brian Fitzpatrick (R-PA), Michael Turner (R-OH), Max Rose (D-NY), and Debbie Wasserman Schultz (D-FL) reintroduced the legislation.
The timeline and likelihood for passage remain unclear. However, both Republicans and Democrats would like to address a few issues with the big tax reform bill passed in 2017. In addition, a number of tax provisions expire, requiring an extension. That could give rise to an opportunity later in the year for a legislative vehicle to include the ABLE Age Adjustment Act.
The good news from an advocacy perspective is that raising the age solves the main issue for NAST: increasing the number of accounts. According to the National Disability Institute (NDI), about 6 million individuals could qualify under current law. By raising the age to 46, an additional 8 million could qualify.
Earlier this year, as NAELA’s Sr. Public Policy Manager, I was selected to become a co-chair of the Consortium for Citizens with Disabilities Financial Security Task Force, which in part coordinates strategy and outreach for passing the ABLE Age Adjustment Act. By providing the expertise of NAELA members to Congress and the disability community at large, hopefully we’ll be able to make a difference in your clients’ lives by expanding access to these accounts.
About the Author
David M. Goldfarb, Esq., is NAELA’s Senior Public Policy Manager.