On December 16th the Congress passed the Achieving a Better Life Experience (ABLE) Act that aims to lessen the financial burden faced by individuals with disabilities and their caregivers. The ABLE Act permits creation of tax-free savings accounts similar to the Section 529 college savings plans. This piece of legislation allows individual states to establish accounts as soon as 2015. If the disability occurred prior to the age of 26, you could be eligible to participate in The ABLE Act.
Funds in ABLE accounts will not be counted in determining eligibility for public benefit programs like Medicaid and SSI (only the first $100,000 is exempt for SSI). ABLE funds can be used for healthcare, education, housing, personal support and other care needs. The annual account contribution cannot exceed the federal gift tax exclusion (currently $14,000). The maximum amount in an account will be same as for the other 529 plans. Contributions are not tax-deductible, but income grows tax-free. There is a Medicaid payback for any funds remaining after the beneficiary dies.
The President is expected to sign the bill, which passed with broad bipartisan support. No word yet as to whether or not Maryland will establish ABLE accounts, but I hope that Governor-elect Larry Hogan will act on this in 2015.