Two more states are rolling out programs this week designed to help families and individuals living with disabilities and special needs save money for basic living expenses, as well as health costs and employment training.
Following similar programs launched earlier this month in Ohio and Tennessee, Nebraska opened enrollment for its Enable Savings Program on Thursday and Florida residents will be able to access the ABLE United Program starting Friday.
Structured like 529 plans, the savings vehicles allow people with disabilities to save as much as $100,000 tax-free and still qualify for benefits like Medicaid, the Supplemental Nutrition Assistance Program (SNAP) and the federal program for those with disabilities, the Supplemental Security Income (SSI).
The programs are based on guidelines outlined in the Federal Achieving a Better Life Experience (ABLE) Act, which was signed into law in 2014. The accounts allow families and those with disabilities to save up to $14,000 per year in a 529A account without incurring federal taxes. Parents who have opened 529 college savings account have the ability to roll the funds into a 529A account if their child is later diagnosed with a condition such as autism. In the past, accumulating as little as $2,000 meant losing your eligibility for these programs.
The program differs slightly from a regular 529 college savings account. You have to open a 529A account with your own state’s plan. Also, parents’ contributions to a 529A plan are irreversible, unlike college savings plans—which usually allow parents to pay a 10% penalty fee and then use the money.
“We are proud to be one of the first states in the nation to offer these tax-advantaged savings accounts to enable children and adults with qualifying disabilities in Nebraska and across the United States to save and invest their money without jeopardizing benefits they may receive through public programs like SSI and Medicaid,” Nebraska State Treasurer Don Stenberg said in a statement.
Nebraska’s program—which is managed by First National Bank of Omaha—is open to children and adults with intellectual, developmental and physical disabilities. Like a 529 college savings plan, the savings generated can be used toward qualified expenses, including basic living expenses such as school, housing and transportation, as well as more assistive technology, personal support services and expenses related to oversight and monitoring.
The Enable program offers moderate and conservative allocation investment options, as well as an FDIC-insured bank savings account. The Treasurer’s office noted that a checking account with debit card capability coming is expected to roll out in the fall.
Florida’s program is open to residents who suffer from a qualifying disability that was diagnosed before the person turned 26. The disabilities covered include conditions such as legal blindness, as well as physical or mental impairments that result in long-term and severe functional limitations. The ABLE United Program provides seven investment options offered through partners Vanguard, Blackrock and Florida PRIME.
While there are only four states that offer the ABLE plans, several more states, including Illinois and Virginia, have created web pages ahead of setting up their own programs.