Maryland's ABLE Program- A Step in the Right Direction

In House Bill 431, the word "ABLE" is the acronym for Achieving a Better Life Experience. I am the prime sponsor of HB 431, which establishes a program to encourage and assist individuals and families in saving private funds to support those with disabilities in maintaining health, independence and quality of life. In addition, the ABLE program is a way to provide secure funding for disability-related expenses to add to, but not take the place of, benefits provided through other public and/or private sources.

To carry out ABLE's goals, the legislation requires that the College Savings Plans of Maryland Board in consultation with the Maryland Department of Disabilities - MDOD - must establish, administer, manage and promote the ABLE program. The state's goal is to have the ABLE program up and running by October 1, 2017.

The College Savings Plans of Maryland Board currently operates two plans - the Maryland Prepaid College Trust and the Maryland College Investment Plan. These two plans allow parents and others to prepay a student's college tuition through savings plans. Currently, the two plans have assets of $5.2 billion across 188,900 accounts. The plans provide various tax benefits for those who save and invest. In any tax year, an individual is eligible for the subtraction modification for prepaid contributions, as well as for contributions to the investment plans. Generally, an account holder can subtract up to $2,500 per plan or beneficiary per year. Earnings on money invested in college savings plans are not subject to state or federal taxes as long as the funds are used for eligible college expenses.

The ABLE Program is bipartisan legislation that was enacted on the federal level in 2014. Eligibility for the federal program is limited to individuals with significant disabilities for whom the onset of the disability occurred prior to age 26. In 2015, the Maryland General Assembly established a Task Force on the Maryland ABLE Program, of which I was a member. House Bill 431 encompasses the recommendations of the Task Force.

By using data from the National Disability Institute, it is estimated that 42,550 Maryland individuals will be eligible for the ABLE program. The estimate assumes that 10% of the estimated 42,500 eligible Maryland residents will enroll in the ABLE Program by the end of 2018, and an additional 5% annually thereafter. According to the account growth assumption, approximately 8,500 ABLE accounts will be opened by the end of 2020 and take subtraction modifications in 2021.

Maryland's prepaid college plans have made it possible for thousands of students to attend four years of college and graduate without incurring massive debt. Adding the ABLE Program to these successful plans will make it possible for many disabled Marylanders to achieve a better life experience. And like the prepaid college plans, those who make contributions to the ABLE Program will be able to take advantage of a substantial tax break. Indeed, the ABLE Program is a win-win program and I am proud to be the sponsor of legislation to bring this program to Maryland.

It should also be noted that Governor Hogan is a strong supporter of ABLE, and has already budgeted money to start the program. Those funds are found in this year’s supplemental budget.