Last evening, the House approved legislation co-authored by Rep. Peter Welch that will allow persons with disabilities to open tax-free saving accounts to help pay for qualified expenses. Similar to college and health savings accounts, these new accounts can be used to cover basic needs like education, housing, transportation and health care. Opening such an account will not jeopardize an individual's eligibility for federal disability benefits.
H.R. 647, the ABLE Act (Achieving a Better Life Experience), passed on a vote of 404 to 17.
"This small change to the tax code will go a long way towards helping those with disabilities achieve financial independence," said Welch. "It's a practical solution that will give peace of mind to parents who worry about how they will pay for the significant expenses of caring for a disabled child. I'm proud to join my colleagues on both sides of the aisle to pass this common sense legislation that puts the tax code to work for disabled Americans."
"The ABLE Act is life-changing for Vermonters with developmental disabilities and their families, who will now have a simple way to save for transportation and housing costs without losing essentials like health coverage," said Karen Schwartz, Executive Director of the Vermont Developmental Disabilities Council. "These families and the loved ones they care for, can now work and save towards a brighter future."
Eligibility for federal programs, such as Medicaid and Supplemental Security Income, can be jeopardized when a person with disabilities has a job or has money gifted to them because their savings can easily exceed the asset limits for those programs. The ABLE Act allows for a tax-free savings account of up to $100,000 to be used for medical and dental care, education, community based supports, employment training, assistive technology, housing, and transportation, and would not be counted towards the asset limits for those programs.
Similar legislation (S.313) has been introduced in the Senate by Sen. Robert Casey (D-PA) and Sen. Richard Burr (R-NC), and is cosponsored by Senators Leahy and Sanders.