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Lampitt, Greenwald, Vainieri Huttle, Benson & Mazzeo Bill to Create Tax-Free Savings Accounts for Individuals with Disabilities Heads to Gov’s Desk

(TRENTON) – Legislation sponsored by Assembly Democrats Pamela Lampitt, Majority Leader Louis Greenwald, Valerie Vainieri Huttle, Daniel Benson and Vince Mazzeo to create tax-free savings accounts for individuals with developmental disabilities has received final legislative approval and now heads to the governor’s desk.

The bill (A-3956) would require the Department of Human Services and the Department of the Treasury to establish the “New Jersey Achieving a Better Life Experience” (ABLE) program in accordance with the federal “Achieving a Better Life Experience Act of 2014,” which President Obama signed into law in December 2014. Under the program, individuals with certain disabilities would be permitted to establish ABLE accounts that may be used to pay certain disability-related expenses. ABLE accounts would be exempt from state income taxation and would not be included as an asset or income when determining the individual’s eligibility for state assistance programs.

“The goal of this law is to ease the financial strains faced by individuals with disabilities by making tax-free savings accounts available to cover many day-to-day expenses,” said Lampitt (D-Camden/Burlington). “This is an important tool to help provide financial security throughout their lives.”

“This new law will allow people with disabilities to open specialized accounts where they can save up to $100,000 without risking eligibility for Social Security and other government programs,” said Greenwald (D-Camden/Burlington). “Even more importantly, individuals can keep their Medicaid coverage no matter how much money they accrue in an ABLE account.”

“An ABLE account can go a long way in helping individuals fund a variety of essential expenses, such as medical and dental care, education, employment training, assistive technology, housing, and transportation,” said Vainieri Huttle (D-Bergen). “For those who may not be able to work full-time or at all, this savings tool is crucial to improving their quality of life.”

“The ABLE Act provides individuals with disabilities the same types of flexible savings tools that many people have through college savings accounts, health savings accounts and individual retirement accounts,” said Benson (D-Mercer/Middlesex). “This was a laudable move on the part of the federal government and one New Jersey is proud to join.”

“Individuals with disabilities often face barriers to financial independence and collectively have a poverty rate double that of the national average,” said Mazzeo (D-Atlantic). “Federal law has established an avenue to removing those barriers, and with this legislation, New Jersey will give more of its residents the opportunity to gain a sense of financial stability.”

Under the bill, the Departments of Human Services and Treasury would be permitted to contract with a third party provider to administer and operate the program, including providing program services such as promoting the program to communities likely to benefit from access to ABLE accounts, processing applications for ABLE accounts, and processing claims from ABLE account holders to institutions assigned to administer their ABLE accounts.

The Department of the Treasury would be required to ensure that participants can readily deposit and withdraw funds from ABLE accounts. The Departments of Human Services and Treasury would also be required to take all actions as may be necessary to ensure the program meets the requirements under federal law to be treated as a qualified state ABLE Program.

The bill was approved 66-0 by the Assembly, and 40-0 by the Senate on Dec. 17.