The New York State legislature overwhelmingly approved a bill Thursday to allow citizens with disabilities to open tax-free bank accounts to pay for expenses ranging from education to housing and health care.
Known as the ABLE Act, the bill directly mirrors a bill that was passed by Congress in December. Modeled after college savings accounts, ABLE accounts will allow people with disabilities and their families to establish tax-free bank accounts for housing, education, transportation, medical and other expenses if related to their disability.
“The ABLE Act’s passage in New York represents a significant step toward enabling disabled individuals to get ahead in life,” said Senator Felder, one of the bill’s many co-sponsors. “It helps disabled individuals achieve a level of independence and a greater quality of life.”
Federal legislation left it up to states to design their own programs and legislate to exempt the accounts from state taxes. New York now joins 20 other states that have enacted similar laws since ABLE’s federal passage.
Both the State Senate and Assembly approved the legislation overwhelmingly and it is expected to be signed into law by Governor Cuomo in the coming days.
ABLE accounts can accrue up to $100,000 in savings without the person losing eligibility for government aid such as Social Security; currently, the asset limit is $2,000.
A major accomplishment of the bill is that Medicaid coverage will continue, no matter how much money is deposited into the account. This affords individuals with disabilities the possibility of substantially more independence, as they can work without fear of losing Medicaid benefits, typically needed to cover higher-than-average medical costs.
“For too long, individuals living with disabilities have faced a Catch-22: they must rely on government assistance to live, but if they get a job in order to become independent they face the risk of becoming ineligible for the very government assistance they need,” said Dr. Jeffrey Lichtman, International Director of Yachad, the Orthodox Union’s organization for people with disabilities. “Untold potential has been squandered because medical costs and other expenses have prevented those with disabilities from attending a university or pursuing their professional goals.”