ABLE Tomorrow Act
- Sponsor
- Sen. Moran, Jerry [R-KS]
- Committees
- Finance Committee (primary)
- Last action
- May 12, 2026
Bottom line
This bill significantly enhances the financial security and savings opportunities for individuals with disabilities by making ABLE accounts more flexible, protected, and widely known.
What it actually does
The ABLE Tomorrow Act expands the utility and accessibility of ABLE (Achieving a Better Life Experience) accounts for individuals with disabilities. It prohibits states from recovering Medicaid costs from ABLE accounts upon a beneficiary's death, relaxes contribution limits for certain lump sums and 529 rollovers, and delays benefit suspension for exceeding ABLE limits. Crucially, it allows employer contributions to ABLE accounts in lieu of retirement plan contributions and mandates numerous federal and state agencies to inform eligible individuals about ABLE programs. The bill also authorizes $50 million annually for five years for ABLE awareness grants.
Proponents argue
Proponents argue that the bill is a vital step towards financial independence and security for people with disabilities, addressing existing barriers that discourage saving. They contend that protecting ABLE accounts from Medicaid clawbacks, increasing contribution flexibility, and ensuring broad awareness will empower more individuals to save for disability-related expenses without jeopardizing essential benefits. The bill's bipartisan sponsorship highlights its broad appeal in supporting a vulnerable population.
Opponents contend
Potential opponents might raise concerns about the fiscal implications of preventing Medicaid recovery, arguing it could strain state budgets that rely on such mechanisms to recoup healthcare costs. Some might also question the administrative burden placed on numerous federal and state agencies to implement new information dissemination requirements, or the effectiveness and oversight of the proposed ABLE awareness grants.
The bill is relatively concise, making it accessible for an informed reader to understand its core provisions and implications within a reasonable timeframe.
Section 4, page 3
Prohibition on State Medicaid Recovery from ABLE Accounts
This provision amends the Internal Revenue Code to explicitly prohibit states from seeking to recover medical assistance (Medicaid) costs from a designated beneficiary's ABLE account after their death. Currently, states can recover these costs, which can deplete the account and discourage families from saving. This change ensures that funds remaining in an ABLE account can be passed on to heirs or used for other purposes without state claims.
Supporters argue
Supporters argue this change removes a significant disincentive for families to utilize ABLE accounts, ensuring that savings intended for the individual's well-being are not seized by the state upon their death. This promotes long-term financial planning and dignity for individuals with disabilities.
Critics contend
Some state fiscal authorities might express concern that this provision eliminates a mechanism for states to recoup a portion of Medicaid costs, potentially increasing the burden on state budgets, although the actual amounts recovered from ABLE accounts are typically small.
Tradeoffs
The provision balances the goal of protecting the financial assets of individuals with disabilities and their families against the states' interest in recovering Medicaid expenditures.
Section 5(a), page 3
Removal of Annual Limit on 529-to-ABLE Rollovers
This provision amends the Internal Revenue Code to remove the annual contribution limit for rollovers from a 529 qualified tuition program to an ABLE account. Previously, such rollovers were capped at the annual ABLE contribution limit (currently $18,000 for 2024). By striking the limiting language, this allows for larger, potentially one-time, transfers of funds from 529 accounts to ABLE accounts.
Section 5(b), page 3
One-Time Exception for Lump Sum ABLE Contributions
This provision creates a one-time exception to the annual ABLE account contribution limit for specific types of lump sum payments. These include contributions from third-party trusts, proceeds from life insurance contracts, or amounts distributed from 529 qualified tuition programs. This exception can only be used once per qualified beneficiary in their lifetime, allowing a larger initial or significant contribution without exceeding the typical annual cap.
Section 6, page 4
Two-Month Grace Period for SSI Benefit Suspension
This provision amends the Stephen Beck, Jr., ABLE Act of 2014 to introduce a delay in the suspension of Supplemental Security Income (SSI) benefits. If an individual's ABLE account balance exceeds the SSI resource limit, their benefits will now be suspended starting with the first calendar month that begins after a two-month period following notification from the Commissioner of Social Security. This provides a grace period for beneficiaries to adjust their finances or address the excess funds.
Section 7, pages 4-6
Employer Contributions to ABLE Accounts via Retirement Plans
This section allows employers to contribute to an eligible employee's ABLE account instead of their defined contribution retirement plan, if the employee elects to do so. These employer contributions are treated as if made to the retirement plan for certain nondiscrimination rules, but are not tax-deductible for the employee as retirement contributions. The Treasury Secretary is directed to issue guidance confirming the deductibility of these employer contributions for the employer and to encourage employers to inform employees about ABLE contribution options.
Section 8, pages 6-10
Mandated ABLE Account Awareness Across Federal and State Programs
This comprehensive section mandates various federal and state agencies to inform eligible individuals about the existence of qualified ABLE programs and related resources (like the ABLE National Resource Center). Agencies include the Social Security Administration, Department of Veterans Affairs, Department of Housing and Urban Development, State Medicaid and CHIP agencies, State TANF agencies, agencies administering nutrition assistance programs, State vocational rehabilitation agencies, Medicare, Head Start programs, and programs under the Individuals with Disabilities Education Act (IDEA). Information must be provided at key interaction points, such as enrollment or benefit redetermination.
Section 9, pages 10-11
Authorization of ABLE Awareness Grants
This section authorizes the Secretary of the Treasury to award grants to states, Indian tribal governments, or consortia thereof, for the purpose of promoting ABLE programs and encouraging the establishment of ABLE accounts. The grants can be used for activities such as media campaigns, conferences, canvassing, and recruitment. The bill authorizes an appropriation of $50,000,000 for each of fiscal years 2027 through 2031 to carry out this section.
The exception allowing certain lump sum payments (from trusts, life insurance, or 529 rollovers) to exceed the annual ABLE contribution limit can only be utilized once for a qualified beneficiary across all taxable years.
Section 5(b)(1)(B), page 4
Why it matters:This is standard legislative practice for defining the scope of an exception, ensuring it's not overused. It's not necessarily evasive but requires careful reading.
Case for: Proponents would argue this limitation prevents potential abuse of the ABLE account's tax-advantaged status while still providing critical flexibility for significant, infrequent financial events.
Case against: Critics might argue that a one-time limitation is too restrictive, especially for individuals who might receive multiple significant lump sums over their lifetime, potentially forcing them to choose which payment to apply the exception to.
Estimated impact: Limits the financial flexibility for a subset of ABLE beneficiaries who might receive multiple large, qualifying lump sums.
Clarifies that employer contributions to ABLE accounts, whether elected by the employee or made directly by the employer (including matching contributions), are treated as contributions made by the designated beneficiary for the purposes of ABLE account rules.
Section 7(b) and 7(c), page 5
Why it matters:This is standard legislative drafting to ensure consistency and avoid unintended consequences when introducing new contribution mechanisms. It's not evasive.
Case for: Proponents would argue these clarifications are essential for the smooth operation and legal certainty of employer-sponsored ABLE contributions, ensuring they align with the beneficiary-centric nature of ABLE accounts.
Case against: No specific opposition is typically raised against these technical clarifications, as they support the intent of the broader provision.
Estimated impact: Ensures the proper legal and tax treatment of employer contributions to ABLE accounts, facilitating their adoption.