Number: 113-19
Date: August 29, 2014

On July 31, 2014, the House Ways and Means Committee reported by voice vote, H.R. 647, the Achieving a Better Life Experience Act of 2013 (ABLE Act), to the full House.

The ABLE Act affects the Supplemental Security Income (SSI) program and other Federal means-tested programs.

Following are provisions of interest to Social Security:

• Would allow an individual to establish for the benefit of an eligible individual (as defined below) a tax-advantaged account (ABLE account), similar to a Section 529 qualified tuition program.  An ABLE account would be administered by the State in which the individual resides.  Contributions to such an account would not be deductible from the contributor’s income for Federal tax purposes.  Generally, an ABLE account must provide that it may not receive aggregate contributions during a taxable year in excess of the annual gift tax exemption (in 2014, $14,000).  Within certain limits, distributions for “qualifying disability expenses” from the account would not be subject to Federal taxes.  Eligible individuals would be limited to one ABLE account.

• For purposes of the ABLE Act, an eligible individual would be someone who is disabled according to the Social Security definition of disability by a condition or conditions that began before age 26.  If the person were not receiving Disability Insurance or SSI benefits, then he or she would qualify by filing with Treasury each year a self-certification that he or she meets this definition of disability, supported by a statement from his or her physician.  The bill provides that no inference may be drawn from an ABLE self-certification for purposes of establishing eligibility to Social Security benefits.

• States would set the maximum balance for ABLE accounts.  In any case, the first $100,000 in balance would not count toward SSI eligibility (as a resource).  Furthermore, if the balance exceeds $100,000 and the amount in excess causes an SSI beneficiary to exceed the SSI resource limit, then the beneficiary’s SSI benefits would be suspended without time limit, but not terminated.  Additionally, the beneficiary would retain eligibility for Medical Assistance while in suspense.

• Qualifying distributions from an ABLE account—with the exception of distributions for housing—would not affect SSI eligibility or payment amount.  Qualifying distributions are defined broadly and include such expenses as education, housing, transportation, employment support, assistive technology, and health and wellness expenses.  The Treasury would further define these expenses.  State ABLE account administrators would be required to send SSA electronic statements of relevant distributions on a monthly basis in a manner specified by the Commissioner.

• ABLE accounts would be transferable to another family member, if that person is also an eligible individual.  Additionally, upon the eligible individual’s death, the balance in his or her ABLE account would be used to repay the State for his or her Medical Assistance expenses. 

All provisions would be effective for the taxable year beginning after December 31, 2014. Treasury would be required to promulgate regulations and guidance implementing various provisions within six months of enactment.