S4498-119

What This Bill Does

The ABLE Tomorrow Act makes a broad set of changes intended to increase use of ABLE accounts by people with disabilities, especially people with low resources and people receiving Medicaid or Supplemental Security Income. It finds that people with disabilities face much higher poverty rates and that ABLE accounts let eligible people save for disability-related expenses without losing key benefits. The bill bars states from recovering correctly paid Medicaid assistance from a beneficiary's ABLE account after the beneficiary dies, regardless of whether the account is part of the estate. It creates an exception to ABLE contribution limits for one annual contribution from a third-party trust, life insurance proceeds, or a 529 qualified tuition program distribution that is not includible in gross income. It delays the suspension of benefits under the original ABLE Act until the first calendar month after a two-month period beginning with the date the individual receives notice from the Commissioner of Social Security.

The bill lets defined contribution retirement plans allow eligible ABLE employees to elect to have employer contributions sent to a qualified ABLE program instead of the plan. It treats those contributions as made by the designated beneficiary, lets employers contribute or match contributions to an employee's ABLE account, directs Treasury to amend tax regulations and employer publications, and requires model plan amendments. It also requires a long list of federal and state programs to provide ABLE account information and resources, including Social Security benefits, VA benefits and services, HUD disability housing and tenant assistance, AbilityOne nonprofit employment programs, Medicaid, CHIP, TANF, USDA and DOD nutrition assistance, vocational rehabilitation, Medicare disability benefits, Head Start, Early Head Start, IDEA special education, and early intervention services. Finally, it authorizes $50 million per year for fiscal years 2027 through 2031 for Treasury grants to states, tribal governments, and consortia to promote ABLE programs, encourage account opening, and collect data on accounts created through grant-funded activities.

Who Benefits and How

ABLE-eligible individuals benefit because the bill protects ABLE balances from state Medicaid estate recovery, allows certain large lump-sum transfers into ABLE accounts, gives working ABLE participants a way to redirect employer retirement contributions or matching contributions to ABLE accounts, and increases the number of benefit systems that must explain how to open and use ABLE accounts. People with disabilities who receive SSI, Social Security disability benefits, Medicaid, CHIP, TANF, nutrition assistance, VA benefits, HUD housing assistance, vocational rehabilitation, Medicare disability coverage, Head Start services, IDEA services, or AbilityOne nonprofit employment get more direct information about ABLE programs. Families of children with disabilities benefit from ABLE information through Head Start, Early Head Start, special education, and early intervention services. States, tribal governments, and their agencies benefit from new grant funding to run ABLE awareness campaigns. ABLE program administrators, the ABLE National Resource Center, the National Association of State Treasurers, and ABLE Today benefit from more outreach references and account uptake.

Who Bears the Burden and How

State Medicaid agencies bear a fiscal burden because they may no longer recover correctly paid Medicaid assistance from a beneficiary's ABLE account. The Commissioner of Social Security, the Secretary of Veterans Affairs, HUD, State Medicaid programs, CHIP programs, TANF agencies, USDA and DOD nutrition programs, State vocational rehabilitation units, Medicare disability benefit administrators, Head Start agencies, IDEA state education agencies, and qualified AbilityOne nonprofit agencies bear implementation burdens because they must provide ABLE information at enrollment, benefit receipt, redetermination, overpayment, or service entry points. Employers and retirement plan sponsors bear optional plan design and administration work if they choose to permit ABLE-directed employer contributions. Treasury bears administrative burdens to update tax regulations, employer publications, model amendments, grant applications, grant oversight, and data collection. Federal taxpayers bear the cost of the authorized $50 million per year grant program.

Key Provisions

• Prohibits state Medicaid adjustment or recovery from a designated beneficiary's ABLE account for correctly paid medical assistance.
• Expands ABLE contribution flexibility by exempting one annual third-party trust, life insurance, or qualified 529 distribution contribution from the normal contribution limit.
• Delays benefit suspension until after the Social Security Commissioner gives notice and a two-month period has run.
• Allows defined contribution plans to let eligible ABLE employees direct employer contributions to ABLE accounts, permits employer matching or direct ABLE contributions, and directs Treasury to issue regulations, publications, and model plan amendments.
• Requires Social Security, VA, HUD, Medicaid, CHIP, TANF, nutrition assistance, vocational rehabilitation, Medicare disability, Head Start, Early Head Start, IDEA, and AbilityOne-related programs to provide ABLE account information and resources to covered people with disabilities.
• Authorizes $50 million per year for fiscal years 2027 through 2031 for ABLE awareness grants to states, tribal governments, and consortia that promote ABLE programs and collect account-creation data.