Lavielle Fights for Bill Allowing Tax-Free Savings Accounts for Persons with Disabilities

State Representative Gail Lavielle (R-143), testified last week in support of HB 7038, a bill that would allow persons with disabilities and their families to save money tax-free to pay for disability-related expenses. The bill is designed to implement in Connecticut the 2014 federal legislation known as the Achieving a Better Life Experience (ABLE) Act. Earlier this session, Rep. Lavielle had introduced the same concept in HB 5447, and the concept has since been adopted and raised by the Finance, Revenue, and Bonding Committee in HB 7038.

HB 7038 would allow persons with disabilities to create tax-free “ABLE” savings accounts to pay for disability-related expenses like education, health care, transportation, housing, employment training and support, and personal support services. Interest earned in the accounts would accumulate tax-free, and the funds held in the accounts would not be considered assets when determining a beneficiary’s eligibility for Medicaid, Supplemental Security Income, and other need-based services.

“This bill extends a lifeline to people with disabilities and their families,” said Rep. Lavielle. “Facing the lifelong obligations of providing constant care for a loved one can be not only emotionally but also financially overwhelming. The ability to save tax-free for these ongoing expenses and future needs can help to provide a measure of reassurance for responsible people in the face of these daunting concerns.”

ABLE accounts have a structure and regulatory framework similar to those of 529 college savings plans. An individual with a disability that meets certain federal certification requirements and has occurred before the age of 26 may hold one ABLE account. Anyone including that individual may contribute to the account, as long as aggregate contributions do not exceed specified annual state and federal limits. While contributions must be made in cash from contributors’ after-tax income, earnings on the funds deposited and distributions for qualified disability-related expenses do not count as taxable income for either the contributor or the beneficiary.

HB 7038 now awaits consideration by the General Assembly’s Finance, Revenue, and Bonding Committee. No date has yet been set for a committee vote. Rep. Lavielle suggests that anyone who wishes to submit testimony in favor of the bill send an email as quickly as conveniently possible to fintestimony@cga.ct.gov. Emails should include the writer’s name and town, and the bill number, “H.B. 7038” should appear in the subject line.

The 2015 legislative session will conclude on June 3.

Rep. Lavielle’s testimony on HB 7038 before the Finance, Revenue, and Bonding Committee is available here.