Helping Fulfill the Promise of Able: Three Years Later

HELPING FULFILL THE PROMISE OF ABLE: THREE YEARS LATER

Updated Report on ABLE Implementation, December 2017

The Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act was signed into law on December 14, 2014. This transformative law amended the tax code to help qualified individuals with disabilities, and their families, save for disability-related expenses without jeopardizing their eligibility for means-tested federally-funded benefits such as Supplemental Security Income (SSI) and Medicaid.

Beginning in January 2015, states started passing their own ABLE bills, and 49 states plus the District of Columbia have now passed ABLE laws. January 2015 also marked the establishment of the ABLE National Resource Center (ANRC), a collaborative that brings together national disability-related organizations to share resources and expertise with two common goals: (1) to accelerate implementation of the ABLE Act at a federal and state level; and (2) to provide consistent, independent and reliable information about ABLE laws, policies and implementation.

In June 2016, the first state ABLE program was launched and ABLE accounts became available nationwide. As of December 2017, 30states have launched ABLE programs, most of which are accepting eligible individuals with disabilities regardless of their state of residence: Alabama, Alaska, Colorado, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont and Virginia.

Structure of ABLE Programs[1]

There are three different models forABLE program structure that have emerged so far: an alliance, independent plans and partner states. Under the Alliance model, there are various state sponsors who are using one or more common program managers and may offer multiple plans for different states. The National ABLE Alliance ( was established by Illinois and currently has 14 member-states. The Independent Plans contain a state sponsor, single program manager and one plan. Partner States contain a state sponsor, single program manager and multiple states.

Ohio
Partner States / Oregon
Partner States / Nebraska
Partner States / ABLE Alliance / Independent Plans
States / Ohio
Georgia
Kentucky
Missouri
South Carolina
Vermont / Oregon
Maryland / Nebraska
Alabama / Alaska
Colorado
District of Columbia
Illinois
Indiana
Iowa
Kansas
Minnesota
Montana
Nevada
North Carolina
Pennsylvania
Rhode Island / Florida
Louisiana
Massachusetts
Michigan
New York
Tennessee
Virginia
Total / 6 States / 2 States / 2 States / 13 States / 7 States
Expected Launches / New Hampshire / Washington / -- / Arizona
New Jersey / California
Texas

Table Provided by Andrea Feirstein, Managing Director, AKF Consulting

Program and Investment Managers[2]

While a stateagency must sponsor the ABLE plan, itmay contract with third-party program managers to administer the program and to provide the investment options available under the ABLE program. They may also contract with third-party investment managers to handle the investments, of which there are many options with varying degrees of risk.

There are currently six different program managers that provide program and administrative support to the state ABLE sponsors: (1) Ascensus, which serves the National ABLE Alliance states and New York; (2) Intuition, which serves the Ohio Partnership States and Florida; (3) First National Bank of Omaha, which serves the Nebraska Partnership States; (4) BNY Mellon, which serves the Oregon Partnership States; (5) Fidelity, which serves Massachusetts; and (6) PNC Bank, which serves Virginia.

There are five investment managers in the ABLE space so far: (1) Vanguard, which serves the National ABLE Alliance, the Nebraska Partnership States, the Ohio Partnership States, Florida, Louisiana, Michigan, New York, Oregon, Tennessee and Virginia; (2) BlackRock, which serves the National ABLE Alliance and Florida; (3) Schwab, which serves the National ABLE Alliance; (4) DFA, which serves Michigan, Oregon and Tennessee; and (5) Fidelity, which serves Massachusetts and Virginia.

ABLE Accounts: Number, Assets Under Management, Account Size[3]

As of the end of the thirdquarter in 2017, there were just over 13,000 ABLE accounts opened across all programs, with nearly $49 million in assets under management. The average ABLE account size was $3,679.

The chart below shows the industry growth since its launch in the 2nd quarter of 2016. ABLE assets are active and growing.

Historical ABLE Assets and Number of Accounts
AUM ($M) / Accounts / Average Account Size / Quarterly % Change AUM / Quarterly % Change Accounts
3Q 2017 / 48,520,170 / 13,190 / 3,679 / 36% / 30%
2Q 2017 / 35,580,625 / 10,114 / 3,518 / 44% / 44%
1Q 2017 / 24,652,538 / 7,019 / 3,512 / 77% / 73%
4Q 2016 / 13,910,026 / 4,064 / 3,423 / 237% / 110%
3Q 201 / 4,133,146 / 1,934 / 2,137 / 404% / 136%
2Q 2016 / 820,000 / 820 / 1,000 / N/A / N/A
Source: Strategic Insight
Note: Estimates were used for Nebraska Enable Savings Program and NY ABLE.

Guidance on ABLE

ANRC is working with federal agencies and departments that provide federally-funded means-tested benefits to encourage them to publish guidance. In particular, we are still waiting for the U.S. Department of Education and the U.S.Department of Housing and Urban Development to issue guidance on ABLE, though we believe that the ABLE Act alone still allows for protection from disqualification from federally-funded means-tested benefits. Although the U.S. Department of Treasury has issued substantive interim guidance on ABLE, it remains to be seen if and when final guidance will be released.

In January 2017, the Food Nutrition Service (FNS), a federal agency under the U.S. Department of Agriculture (USDA), published a final rule regarding various aspects related to, among other things, eligibility for Supplemental Nutrition Assistance Program (SNAP) benefits. SNAP offers nutrition assistance to millions of eligible, low-income individuals and families (including those with disabilities). SNAP is a federally-funded means-tested benefit and, therefore, in accordance with the ABLE Act, should disregard funds in an ABLE account when determining eligibility for its benefits. The recently released SNAP rules confirm and re-iterate that ABLE funds will not compromise otherwise eligible individuals from accessing benefits under the SNAP program.

In September 2017, the Centers for Medicaid and Medicaid Services (CMS) released its own guidanceon Medicaid benefits and ABLE accounts. ANRC was pleased to see that the vast majority of the guidance acts to reinforce the language, spirit and congressional intent of the ABLE Act to ensure that ABLE accounts should “supplement, but not supplant” public benefits being provided to the ABLE account owner, including supports and services provided by the Medicaid program. For example, CMS directed Medicaid state agencies to disregard all funds in an ABLE account, including interest/earnings, in determining the resource eligibility of Medicaid recipients and beneficiaries who are subject to a resource test. The interest/earnings from the ABLE account will also be excluded from “countable income” under the Medicaid program, and the CMS guidance provided additional clarifications as well.

Annual Contributions Increased to $15,000

In October 2017, the Internal Revenue Service (IRS)announceda multitude of tax year 2018 annual inflation adjustments, including an increase to Section 2503, the federal gift tax exclusion. Section 529A(a)(2) of theABLE Act Stephen Beck Jr. Achieving a Better Life Experience (ABLE) Act(PL 113-225) specifically ties the annual contribution limit for ABLE accounts to section 2503(b) of the federal tax code, therefore any inflation adjustment to this section automatically adjusts the annual ABLE contribution limit. Beginning in 2018, each ABLE account will be able to accept up to $15,000 in aggregate annual contributions.

Federal Legislative Changes to ABLE

On April 5th, a bi-partisan group of Members of Congress, including Senators Richard Burr (R-NC), Bob Casey (D-PA), Jerry Moran (R-KA) and Chris Van Hollen (D-MD) and Representatives Pete Sessions (R-Texas), Cathy McMorris Rodgers (R-Wash.), Tony Cardenas (D–Calif.) and Mike Doyle (D-Pa.), introduced a package of bills(filed independently of each other)aimed at enhancing the benefits provided through theStephen Beck Jr., Achieving a Better Life Experience (ABLE) Act. This package of bills consists of the following three pieces of proposed legislation:

TheABLE Age Adjustment Act (S. 817/HR 1874)would raise the age of onset limit for ABLE accounts to age 46.

TheABLE Financial Planning Act(S. 816/HR 1897)would allow families to rollover savings in a 529 college savings plan into an ABLE account.It is important to note that the rollover from a 529 to a 529 ABLE account would still be subject to the annual contribution limit (currently $14,000).

TheABLE to Work Act (S. 818/HR 1896)would allow individuals and their families to save more money in an ABLE account if the beneficiary works and earns income. Specifically, in addition to the $14,000 annual contribution cap, an ABLE beneficiary who earns income from a job could contribute from his/her compensation up to the Federal Poverty Level, which is currently at $11,770 (potentially increasing allowable annual contributions to $25,770).It is important to note that beneficiaries would still be subject to the caps related to earned income and substantial gainful employment (SGA). This bill would not allow individuals with disabilities the ability to disregard earned income (even if it is contributed to their ABLE account) for purposes of eligibility for SSI and Medicaid.

At the time of this report, both the ABLE to Work Act and the ABLE Financial Planning Act were attached to the Senate version of the tax reform package, but their fate is still unknown.The ABLE Age Adjustment Act, which is viewed by the majority of the disability community and the ABLE administrators as the ABLE reform with the greatest potential to increase the number of ABLE accounts, has yet to be advanced in the legislative process.

State Legislative Changes to ABLE

State Medicaid agencies are authorized (but not required) to file a claim for reimbursement from assets remaining in the ABLE account under Section 102(f) of the federal ABLE Act when the beneficiary passes away. This is commonly known as the “Medicaid Payback” provision. Over the past year, California, Delaware and Oregon have joined Pennsylvania in eliminating this provision through state legislative action.Upon the death of the beneficiary,ABLE accounts openedin these state programs by state residentswill not be impacted by a reimbursement claim for Medicaidexpenses paidon behalf ofthe beneficiary.

ABLE National Resource Center Update

In August 2017, ANRC launched a nationwide ABLE awareness campaign named #ABLEtoSave. Each week focused on a different aspect of ABLE, with the aim to provide potential ABLE account owners, and their families, with comprehensive education and motivation to feel comfortable enrolling in an ABLE program of their choice.The first week gave a basic overview of ABLE, the second week addressed eligibility and the interplay with public benefits, and the third week delved into how the funds in the ABLE account could be used.Week 4 addressed how to manage an ABLE account by explaining investment choices and fees, while Week 5 discussed factors to consider when choosing an ABLE program and how to enroll and open an account.

While ANRC led the efforts and developed many of the campaign resources, the #ABLEtoSave campaign was a collaborative effort among many different stakeholders. The campaign was generously sponsored by Fidelity Investments, BNY Mellon and Fifth Third Bank. Nearly 30 state ABLE programs (all of those states that had launched programs as of August, as well as a handful of states who were still developing their programs) enthusiastically participated in the campaign, many of whom developed their own resources and held their own “mini-campaigns” simultaneously. Additionally, 25 of the country’s largest national disability-related organizations also participated.

The #ABLEtoSave campaign utilized a diverse set of tools in order to maximize reach and accessibility.These tools included social media, national webinars, informational videos, email blasts and utilization and redesign of the ANRC website.ANRC created an extensive network of webpages (The Road Map to Enrollment) to provide the information and resources for the campaign.ANRC also developed short informational videos on each weekly topic, as well as marketing videos featuring actual ABLE account holders. Weekly webinars featured national experts and were widely promoted and attended. All informational materials about the campaign were available free of charge to campaign participants through ANRC’s #ABLEtoSave Public Awareness Toolkit.

ANRC also assisted many of the states that had launched ABLE programs in working with their Governors to issue proclamations designating August 2017 as #ABLEtoSave Month.[4]

During the #ABLEtoSave Campaign, the ANRC’s Facebook page (@theABLENRC) posted 51 unique messages for a total reach of 120,406. The campaign kickoff post on July 31, 2017 generated 276 interactions (likes, shares) alone and reached 12,139 people. The total number of Facebook page “likes” grew by 265. Through the ANRC Twitter account (@theABLENRC), there were also 50 unique tweets that reached a total of 85,845 individuals.

Webinars

In 2017, the ANRC offered webinars on the following topics:

A Deeper Look at Four New ABLE Programs

Introduction to the National ABLE Alliance

The ABLE Act: A Tool for Financial Stability and Employment Outcomes

Understanding Saving and Investor Choices for ABLE Account Owners

Medicaid and ABLE: A Look at the Recently Released CMS Guidance

#ABLEtoSave Series: Debunking ABLE Myths (Sponsored by Fidelity Investments

#ABLEtoSave Series: ABLE Eligibility and Interplay with Public Benefits (Sponsored by Ascensus)

#ABLEtoSave Series: Choosing the Right ABLE Program for You (Sponsored by Fidelity Investments)

#ABLEtoSave Series: Understanding Qualified Disability Expenses (Sponsored by BNY Mellon)

#ABLEtoSave Series: Financial Literacy, Investments, and ABLE Accounts (Sponsored by Fifth Third Bank)

ABLE webinars from August-November 2017 saw an average registration rate of 767 individuals, with an average of 364 people attending each session.ANRC webinars are archived here:

As 2017 draws to a close, ANRC believes that the ABLE industry is well-organized and well-positioned to continue to grow the number of ABLE accounts and assets under management as the public becomes more familiar with ABLE accounts.These numbers have the potential to grow even more if the reach of ABLE accounts is expanded through legislative means.

We encourage everyone to join our mailing list and take advantage of the free resources offered through the ANRC website,

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[1]ANRC would like to thank Paul Curley, CFA, Director of College Savings Research at Strategic Insight, ( for compiling much of the data about ABLE accounts in this report. This data was presented at The ABLE Summit: State of the Industry Conference in October 2017 in Orlando, Florida.

[2] Source: Strategic Insight

[3] Source: Strategic Insight

[4]The following states issued proclamations declaring August 2017 as #ABLEtoSave month:Alabama, California, Louisiana, Massachusetts, Michigan, Nebraska, North Carolina and Vermont.