Because of income and resource eligibility requirements for some public programs, individuals with disabilities and their loved ones are often faced with the hard choice of maintaining their eligibility for continued benefits, or working to achieve a better life either through employment or family support. In order to alleviate this burden and provide individuals with disabilities more opportunity, the federal Achieving a Better Life Experience (ABLE) Act was passed in December of 2014. The legislation allows families and individuals with disabilities the opportunity to contribute to tax-advantaged accounts that can be used to help maintain health, independence, and quality of life, without losing eligibility for certain public benefits programs, like Medicaid or Supplemental Security Income (SSI).
On March 5, 2018, Arizona launched its ABLE program, AZ ABLE, in partnership with the Ohio STABLE Account program. By partnering with Ohio, Arizona did not have to develop and deploy a plan and system, but instead decided to utilize the efficiency of an existing and well-respected national plan to offer Arizona residents lower costs and fees. AZ ABLE accounts can be used as a savings account or an investment account. Account holders can choose from four Vanguard mutual funds that range from aggressive to conservative or one principal-protected FDIC-insured option. While participants can still withdraw and spend their money whenever they need it, an AZ ABLE account also allows them to grow their money and save long-term for disability expenses.
Earnings in an AZ ABLE Account are not subject to federal income tax, as long as the monies are spent on “Qualified Disability Expenses,” and assets in the account do not affect eligibility for federal and state means-tested benefits programs. For example, if you have $5,000 in your account, that $5,000 does not count as an asset when determining your eligibility for SSI or Medicaid. While ABLE accounts do have a $100,000 resource limit for those receiving SSI, this is much higher than the historically low $2,000.
On June 30, 2021, Governor Doug Ducey signed into law SB 1844, which expanded the benefits of the AZ ABLE program by establishing tax deductions. Annual contributions made to the program up to and including two thousand dollars ($2,000) per participating taxpayer, and up to four thousand dollars ($4,000) for married individuals filing a joint tax return, shall be subtracted in determining Arizona adjusted gross income. Contributions can be deducted per beneficiary (i.e. account holder). As of June 30, 2021, AZ ABLE had approximately $9.4 million assets under management and 1,130 active accounts, with an average balance of $9,000.
August is #ABLEtoSave Month, an opportunity to highlight the impact of ABLE accounts and expand the participation of individuals with disabilities. If you qualify for an AZ ABLE account and don’t already have one, now is the perfect time to sign up!
Establishing an account online is free and easy. An initial contribution of at least $25 is required to open your account. If you are not employed, contributions of up to $15,000 per year from all sources can be contributed; if you are employed, you can contribute wages up to an additional $12,760, bringing your yearly contribution limit amount to $27,760 per year. Once your account is established, you will be provided a Visa debit card so you can easily access funds in your account. If you’re ready to get started, or if you’d like to learn more about AZ ABLE, please visit https://az-able.com/.
Through AZ ABLE, we are better equipped to help individuals with disabilities bridge the gap, without losing the vital resources available to them. Individuals should not have to risk their financial security to achieve a better life.