Senators Bob Casey (D-PA) and Eric Schmitt (R-MO) have introduced the Ensuring Nationwide Access to a Better Life Experience (ENABLE) Act. The bipartisan bill seeks to extend three expiring provisions of the Achieving a Better Life Experience (ABLE)program, which allows disabled individuals to invest in tax-advantaged accounts while protecting their eligibility for federal aid programs.
The ENABLE Act would permanently protect ABLE account provisions, set to expire in 2025, that make the program accessible to more people with disabilities and make it easier for them to save.
Background on ABLE Programs
Signed into law in 2014, the ABLE Act, also sponsored by Casey, allows states to establish ABLE accounts.
When Congress passed the ABLE Act, it was hailed as a game-changer for families with special needs.
Generally, an adult with disabilities who has more than $2,000 in countable assets is ineligible for public assistance programs such as Medicaid and Supplemental Security Income (SSI). But the ABLE Act allows disabled individuals and their families to save money in tax-free accounts without losing access to federally funded, means-tested benefits.
- Up to $100,000 in ABLE account savings will not disqualify an eligible individual from SSI.
- Any amount of ABLE savings up to the plan limit does not affect eligibility for other federal benefits, including the Supplemental Nutrition and Assistance Program (SNAP) and Medicaid. In some states, ABLE program account owners can save nearly $600,000 without jeopardizing their access to these programs.
While ABLE account contributions are not tax-deductible, their earnings accumulate tax-free. Expenditures for qualifying disability expenses such as housing, transportation, assistive technology, health care, and employment support are also tax-free. All but four states (Idaho, North Dakota, South Dakota, and Wisconsin) have ABLE programs.
Access a directory of ABLE account programs by state.
Currently, someone must have acquired their disability before age 26 to be eligible for an ABLE account. Thanks to the passage of the ABLE Age Adjustment Act, people who acquired a disability prior to age 46 will become eligible for an ABLE account starting in 2026. This will likely extend ABLE account access to around 6 million more Americans, including over a million veterans.
According to a press release from Casey, he created the original ABLE program to address the intersection of disability and poverty.
Individuals with disabilities are more than twice as likely to live in poverty (25.9 percent) compared with people without disabilities (11.5 percent). However, households with a person whose disability limits their ability to work require 28 percent more income on average to obtain the same living standard as the nondisabled. And disabled people have half the rate of workforce participation as those without disabilities.
Since the creation of the ABLE program, more than 162,000 account holders have saved more than $1.74 billion.
In 2024, an annual combined total of $18,000 can be contributed to an ABLE account by the person who has a disability or by their friends and family, a special needs trust, a pooled trust, or a 529 College Savings Account rollover. This annual contribution limit is pegged to the annual gift tax exclusion.
TCJA Enhancements to ABLE Accounts
The Tax Cuts and Jobs Act (TCJA) of 2017 made significant changes to the U.S. tax code. Many of its provisions are set to expire, or “sunset,” at the end of 2025.
TCJA increased the ABLE account contribution limit for tax years 2018 – 2025 (on par with increases in the annual gift tax exclusion amount). It also made three key changes to ABLE accounts that are scheduled to expire in 2025:
- ABLE to Work: An employed person with a disability can make additional contributions to their ABLE account that exceed the gift tax exclusion amount up to the lessor of either the prior year’s federal one-person poverty limit ($15,060 in 2024) or their annual compensation.
- ABLE Saver’s Credit: ABLE account beneficiaries can take a retirement savings contributions credit of up to $1,000 for qualifying ABLE account contributions.
- 529 to ABLE rollover: Families can roll over funds from a 529 education savings account to another family member’s ABLE account. The ABLE account must have the same beneficiary as the 529 account or be for a member of the same family as the 529 account holder.
Learn more about the pros and cons of ABLE accounts and practical ways to use an ABLE account for special needs planning.
Proposed Legislation
The bill Casey and Schmitt unveiled in June 2024 would permanently enshrine TCJA changes in the ABLE program.
In addition to Casey and Schmitt, the ENABLE Act has the support of at least 10 senators from across the aisle and the country, including John Boozman (R-AR), Markwayne Mullin (R-OK), Amy Klobuchar (D-MN), Ron Wyden (R-OR), and Tim Kaine (D-VA).
The National Association of State Treasurers and disability advocacy groups like Autism Speaks also endorse the bill. Co-sponsor Schmitt, whose son has autism and epilepsy, launched the ABLE Program in Missouri as the State Treasurer, with his son opening the first account.
“The ENABLE Act is a fantastic bipartisan opportunity to protect access to federal programs for those with disabilities while safeguarding their ability to invest and save,” said Schmitt in a press release.
“I’m grateful to have worked with Senator Schmitt on this new bipartisan bill, which will prevent some key ABLE provisions from expiring and ensure that as many people with disabilities as possible across the country can continue to benefit from opening ABLE accounts,” said Casey.
The ENABLE Act would amend the Internal Revenue Code by removing the sunset provision. As bills go, it is a succinct piece of legislation, running to just over 200 words.
Although still in the initial stage of the legislative process, the bill has been referred to the Committee on Finance Action, where it could benefit from having the support of Finance Committee Chair Ron Wyden.
Track the progress of the ENABLE ACT online.
To learn how an ABLE account could benefit your special needs child, connect with a local special needs planning attorney.