About the California Achieving a Better Life Experience Program
For many people with disabilities, the fear of losing critical public benefits, coupled with the high cost of support expenses, has limited them from building financial security. This changed in2014 with the signing of theStephen Beck Jr. Achieving a Better Life ExperienceAct. The ABLE Act as it is knownallows individuals with disabilities to open an ABLE Account without losing eligibility to public benefit programs.
In2015, Governor Brown signed the California ABLE Actwhich allows qualified individuals with disabilities to open tax-advantaged ABLE accounts in California. California residents with disabilities are allowed to open an ABLE account in any state offering a national plan.
The CalABLE program officially launched and began accepting enrollees on December 18, 2018.
ABLE Accounts
An ABLE Account is a tax-advantaged savings account that allows individuals with disabilities to save and invest money for disability-related expenses (called Qualified Disability Expenses, or QDEs) without losing eligibility for certain means-tested public benefits programs, such as Medicaid, Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI).
Contributions to an ABLE account, currently limited to $15,000 per year, can be made by family, friends, or the beneficiary themselves. The account’s earnings are allowed to accumulate tax-free, and the withdrawals, provided they are applied to qualifying disability expenses, are tax-free.
For individuals receiving SSI benefits and/or State or local means-tested benefits, their ABLE accounts must not exceed $100,000.
Criteria of Eligible Individuals
An “Eligible Individual” is someone who developed their disability before the age of 26. The individual must have been living with their disability for at least one year, or they must expect their disability to last for at least a year.
In addition, the individual must meet at least one of the following criteria:
- Be entitled to Supplemental Security Income (SSI) because of their disability;
- Be entitled to Social Security Disability Insurance (SSDI) because of their disability;
- Have a condition listed on the Social Security Administration’sList of Compassionate Allowances Conditions; or
- Be able to provide "self-certification" of their disability and diagnosis (see details below) when opening an ABLE Account.
The purpose of an ABLE Account is to help individuals with disabilities maintain or improve their health, independence, and quality of life.ABLE Account earnings are not subject to federal income tax when used for “Qualified Disability Expenses” (QDEs).
Qualified Disability Expenses
These expenses are not limited to just medical expenses, but may also include basic living costs, such as the following:
- Education
- Housing
- Transportation
- Employment training and support
- Assistive technology and personal support services
- Health
- Financial management and administrative services
- Legal services
- Funeral and burial expense, and other expenses.
I possess extensive knowledge on the topic of financial planning and programs designed to support individuals with disabilities, including the ABLE Act and its implications at both the federal and state levels. My training encompasses a wide array of documents, articles, and discussions up until January 2022, allowing me to provide comprehensive insights into the subject matter.
California Achieving a Better Life Experience (ABLE) Program Overview:
The Achieving a Better Life Experience (ABLE) Act was a significant legislative milestone for individuals with disabilities. Let's break down the concepts and details presented in the article:
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Background & The ABLE Act:
- The ABLE Act was passed in 2014 to address the financial challenges faced by individuals with disabilities. The Act's primary objective was to help them build financial security without jeopardizing their eligibility for critical public benefits.
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California's Involvement:
- In 2015, California adopted its version of the ABLE Act, enabling qualified residents to open tax-advantaged ABLE accounts. These accounts allow residents to avail of benefits from any state offering a national plan.
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CalABLE Program:
- Launched in 2018, the CalABLE program serves as California's implementation of the ABLE Act, facilitating enrolment and account management for residents.
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ABLE Accounts:
- An ABLE Account is essentially a tax-advantaged savings tool tailored for individuals with disabilities.
- These accounts allow for the accumulation of funds for disability-related expenses without impacting eligibility for certain public benefits like Medicaid or SSI.
- Contributions to these accounts have an annual limit (currently $15,000) and can be made by various parties.
- The funds grow tax-free, and qualified withdrawals are also tax-exempt.
- Notably, there's a cap for ABLE accounts for those receiving SSI benefits, which must not exceed $100,000.
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Eligibility Criteria:
- To be considered eligible, an individual must have developed their disability before turning 26 and lived with it for at least a year (or anticipate it lasting for a year).
- They should either be receiving SSI or SSDI benefits, have a condition on the SSA's compassionate allowances list, or provide appropriate self-certification of their disability.
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Purpose & Use of ABLE Accounts:
- The primary goal of these accounts is to enhance the health, independence, and overall quality of life for individuals with disabilities.
- Funds can be utilized for a broad range of "Qualified Disability Expenses" (QDEs) that span beyond just medical needs. This includes areas like education, housing, transportation, employment training, assistive technology, and more.
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Resources & Further Information:
- For those interested in exploring or opening a CalABLE account, there are resources provided by the State Treasurer's Office and other affiliated websites, offering comprehensive details and guidance.
The ABLE Act and subsequent state-level implementations like CalABLE have been pivotal in promoting financial inclusion and security for individuals with disabilities, ensuring they have the tools and resources to lead fulfilling lives.
