In December of 2014, Congress passed the Achieving a Better Life Experience Act, more commonly known as the "ABLE Act". On January 11, Governor Christie signed a law to implement the ABLE Act in New Jersey. It takes effect in October 2016.
The ABLE Act permits the establishment of special bank accounts for people who became disabled before turning 26 years old. Modeled after 529 college savings plans, the ABLE Act allows them and their families to open up ABLE accounts to save for housing, education, transportation, medical and other expenses. Contributions to these accounts can be made by anyone, including the individual, family members and friends. However, only one account may be opened per disabled individual.
The maximum annual contribution limit to an account is $14,000. If the person is getting Supplemental Security Income (SSI), the account can hold up to $100,000 without disqualifying the individual from SSI benefits. But eligibility for Medicaid will continue until the account exceeds New Jersey's maximum amount for a 529 account of $305,000.00. Also, these accounts are exempt from the $2,000 required cap for government support eligibility.
Finally, if there is any money remaining in the account at the time of the person's death, the State, unfortunately, recovers from the estate the total amount of Medicaid benefits paid to the disabled individual during his or her lifetime.
The enactment of the ABLE Act will give families with disabled members another tool to plan and provide for their loved ones. These accounts will help families save for their disabled children's futures, which will alleviate financial burdens and ultimately open up more opportunities for them to live a more independent life. Kieu-Nhi Le, Rutgers School of Law Newark candidate for a JD degree in May 2016. She is the Managing Business Editor of the Rutgers Computer and Technology Law Journal collaborated with me on this blog.