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Congress Urged To Create Tax-Free Disability Savings Accounts

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Disability advocates are launching a major push to pressure Congress to pass legislation before year’s end that would offer a new way to save money without jeopardizing government benefits.

A broad coalition of three-dozen national organizations is backing the effort to support legislation known as the Achieving Better Life Experience Act, or ABLE Act. The bill would allow people with disabilities the ability to create special savings accounts where they could accrue as much as $100,000 without losing access to benefits like Social Security or Medicaid.

Advocates with the National Down Syndrome Society, Autism Speaks and The Arc are convening a press conference this Thursday on Capitol Hill to mark the one-year point since the bill was initially introduced and to revive their efforts to get the proposal enacted.

With 240 co-sponsors in the U.S. House of Representatives and 38 in the Senate, Sara Weir, vice president of advocacy at the National Down Syndrome Society, says momentum behind the bill is strong and advocates intend to capitalize on it. Weir’s group is targeting key members of Congress by flying in a group of 20 self-advocates and parents of those with disabilities from their districts across the country to lobby lawmakers in Washington this week.

“You’d be hard-pressed to find another piece of legislation that has as much bipartisan support as the ABLE Act,” Weir said, noting that backers of the bill span the ideological spectrum in Congress, including everyone from Rep. Barney Frank, D-Mass., to Rep. Ron Paul, R-Texas. “We definitely feel like we have the support to pass the legislation. Right now we’re just trying to figure out what the legislative vehicle is going to be.”

Under current law, people with disabilities often cannot have more than $2,000 to their name without forfeiting many government benefits. The ABLE Act would allow individuals to open up an account at any financial institution that would not be subject to the asset limits.

What’s more, the proposed ABLE accounts are modeled after the popular 529 college savings plans and interest earned on savings within the accounts would be tax-free.

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Comments (23 Responses)

  1. Patricia Sobczyk says:

    Why? I am disabled and I want to know why I should be allowed a tax free savings account up to $100 K.

  2. Sara's mom says:

    Patricia, like the 529 accounts that must be used for education expenses the ABLE account must be used to cover qualified expenses like medical, educational, equipment, etc. With the cuts looming for Medicaid, the ability to set aside money to cover critical expenses without losing coverage will only become more important. The $2,000 limit was set decades ago and has never been updated. Currently the only was to do this is to set up a Special Needs trust which costs a couple thousand dollars to establish.

  3. Alex's mom says:

    Patricia, it sounds similar to a special needs trust, without the need to go to a lawyer and pay for them to draft it. That would be wonderful for the many people who cannot afford a lawyer. Before you even ask, the money to fund the account could come from a parents life insurance, who couldn’t afford the attorney while they were alive. If you, as a disabled person, chose not to create the account, that is fine too.

  4. Stephen W. Dale says:

    This should be labeled a Medicaid Payback Account Act. I invite disabilityscoop to contact me and read some materials that have been around for some time about some serious problems with this legislation as written.

    I really hope that as advocates before you endorse this bill that you please learn more. Here is an article that I wrote about the ABLE Act for those willing to look beyond the rhetoric. The biggest problem with this legislation is the fact that there is no mention of the Medicaid Payback in any of the promotional materials including the release given to the disabilityscoop which published this announcement. Please download this link to a letter that explains the issue – and please consider asking NDSS to take up the offer to have a large number of disability rights attorneys that have offered assistance to fix this thing. They are promoting this as a savings plan and in fact upon actually understanding this legislation you will discover that it is not.

    BTW – it allows the Medicaid Payback Account to hold up to $400,000 – same as any other 529 plan. The $100,000 is just for SSI purposes – but for Medicaid the number is much higher.

  5. Dr Al Pfadt says:

    This would truly be a landmark piece of legislation.
    I will circulate copies of this post to as many colleagues as I can.
    What else can concerned citizens do?

  6. Erica says:

    This would allow me to save in order for me to make modifications to my home!

  7. Holly Garner says:

    Stephen Dale, just read your article. So glad I did!! People need to be aware that the state will be able to take remaining funds in the ABLE account upon death of the person with disability as “payback” for medical serviced provided by the state. I also read the actual proposed legislation and it is quite clear. Thank you for trying to get the whole truth out there.

  8. Lorraine La Pointe says:

    Stephen W. Dale.Please post your citations/links again as they didn’t come through on your original post. I would like to see what leads you to believe this is a Medicaid payback acct.

  9. Marjorie Madfis says:

    Stephen Dale – please provide link to the article you mention thanks

  10. Michelle says:

    I certainly hope Congress passes something like this. But reading the article makes me realize how lucky Canadians are – the federal government passed legislation to create the Registered Disability Savings Plan in Dec. 2008. Not only does it allow for tax-free savings without effecting social assistance benefits, (contributaions are capped at $200,000) but the government throws a whole lot of money at these Plans in the form of Bonds and Grants.

    I think the original idea was similar to a RRSP, but for persons with disabilities – the initial plan was that you couldn’t withdraw any money until you were 60. Fortunately, that changed – thank goodness because for a lot of pple with disabilites, there income is not going to decrease once they turn 60, so what would be the point of that?

    The only “catches” are really in how much money you can take out at a time (it is strictly limited by a formula so that the older you get the more money you can take out) and that withdrawing money before you are 60 triggers a repayment of some of the government money contributed in the last 10 years (the interest earned is never affected) – but still … free money!

    I understand that Canada was the first country in the world to create something like this – funny, I am most definitely not bragging because usually it seems like we are way too far down the line in picking up (let alone coming up) with good ideas for persons with disabilies.

  11. Brenda Parris says:

    Could someone send me the links to Stephen Dale’s articles? I don’t see it on the post.
    Thanks,

  12. Stephen W. Dale says:

    I am guessing that the system doen not allow posting links.

    Try googling “Bridging the Great Divide: A Request to Revise the ABLE Act”

    Also – if the system allows – feel free to email me directly at steve@dalelawfirm.com and I will email you the other article directly.

    Steve Dale

  13. Therese says:

    We need this type of savings account – because we need to set things up before we die. It’s the same really as those tax-free savings plans for your kids to go to college.

    Here, in Staten Island, usually 6 parents get together when it’s time to open a group home for their adult child. The child is usually between 20-30 when the parents finally accept that its time. Each family comes about with about $25,000 and that $150,000 serves as a down payment to buy a house. Then the Non-Profit Agency we choose to work with applies to the OPWDD for the money to renovate it and get it funded as a home, etc. Our agency has to show 2 years worth of funds in their accounts that will be used to run the house.

    I could use an account like because the houses need alot of start up money. I don’t know how I’ll ever save for this life event.

  14. Goddessoflubbock says:

    The article is a bit misleading. People who collect social security have no asset limits, just earned income ones.

    People who collect SSI (Supplemental Security Income) are NOT receiving social security. It is a welfare program paid from the general fund. Same for Medicaid.

  15. Jack says:

    I believe that any modification to those laws (rule-making) that directly affects unfortunate Americans with Disabilities, especially those on the SSI Program (sick youth/young people & poor elderly) do need relief — particularly when it does NOT require any funding from the federal or state governments.

    The idea is when you are Disabled, limited lifestyle and groping for economic survival, such legislation like the SSI SAVERS ACT // HR 2103 should be passed immediately.

    Query – Just put yourself in the shoes/slippers of those ill folks that are relegated to SSI for NO reason of their own – only because they got seriously injured, sick or were even born with illness – MR/MS POLITICIAN, MR/MS LAWYER, MR/MS Average American – please try it and tell us what it’s all about … only then, from your limited/disabled perspective. Ah, what a relief, it’s only pretend for you, not for those brave and devoted Americans facing sickness and financial stagnation for a lifetime of being innocent.

    Let’s get real and HELP those SXZSICK / Poor American Disabled Citizens with a snoot amount of financial relief and meager economic independence.

  16. Kathryn A says:

    IT’S ABOUT TIME SOMEBODY DID SOMETHING LIK THIS!!! So many people w/ Disabilities are FORCED to live in TOTAL & COMPLETE POVERTY simply because w/o access to the medical benefits required to keep them ALIVE!! In my case, If I am EVER to be able to finish my college, I will HAVE TO SAVE UP for my tuition. With the current law, if I EVEN ATTEMPT to better myself via a college education, I will be FORCED TO GIVE UP the access to the care that allows me to have even a REMOTELY DECENT quality of life!!! My only other option is to WIN THE LOTTERY or marry someone with a net worth the size of DONALD TRUMP (which would obviously terminate my benefits… rightfully so) but aside from a windfall of that size, I am doomed to a life of poverty, just to keep the medical care that allows me to have ANY EVEN REMOTELY DECENT QUALITY OF LIFE!!!!

  17. John says:

    Please include People who are Blind and Legally Blind Too! They are, also, very limited in thier income too!

  18. Cherree Weeks says:

    What would happen for those of us who, at no fault of our own, became disabled but had been saving in a IRA. Would it get converted?

  19. Karen says:

    In response to Alex’s mom or anyone who is interested, if you want a special needs trust without the price of a lawyer try a special needs pooled trust that by law is operated and managed by a non-profit. We have legal attorney written trust documents AND unlike private special needs trust have very minimal to no entry investment requirements and very small set up fees. A pooled special needs trust provides a master trust that meets state and federal requirements as an umbrella over individual sub accounts. We also provide care management and financial oversight. In the case of The Special Needs Trust Network our financial advisors and money managers are private wealth managers used to managing million dollar trusts, but as all of our investments are pooled they manage ours as well. Where else can someone get the same financial advice that million dollar private trusts get for example on a $10,000 investment? NO WHERE and certainly not with an ABLE account.

    While these ABLE accounts seem “wonderful” no one is discussing who will oversee their proper use if the recipient is not fully able to manage their own money. A pooled special needs trust with care and financial managers and an objective board of directors act as an outside third party protector for their beneficiaries well being, investments and lifelong care. Will the ABLE account fight for SSDI benefits that may have been inappropriately stopped? Will an ALBLE account advocate for the named client? Non-profit special needs trusts are true advocates for their clients. The ABLE accounts leave wide open the possibility of financial exploitation of those needing the funds. The people and organizations pushing the ABLE act do not address this and do not act like they know there are already vehicles in place that can and do help save money for those with disabilities and protect both for eligibility for benefits and financial exploitation as well as provide any care management needed. Anyone thinking they should support ABLE should check out a special needs pooled trust first. We do well beyond the work that any ABLE account will ever do.

  20. Nancy Hall says:

    What about if you are using state IHSS??

  21. Bridgitte's Mom says:

    Stephen W. Dale — Thank you for posting the information about the ABLE accounts as “Medicaid Payback Accounts.” Your article “Bridging the Great Divide: A Request to Revise the ABLE Act” was an eye opener.

    Karen — Thank you for posting information about special needs pooled trusts. I had never heard of these but now I’ll be on the lookout for one in Ohio. I have been putting off setting up a trust for my daughter, but she’s 22 now and it’s high time that I get it done. I hope that the pooled trusts for special needs people is available in Ohio.

  22. kay says:

    I agree that the $2000 limit is too low, But $100,000? Anyone with $100,000 in the bank does not need government assistance. The government assistance should be based on actual need of the funds, not just due to a disability.
    I was laid off over a year ago but I could not get any help from the government. Why? Because I had plenty of money in the bank. The purpose of the government is to provide help for those who need it, not so an individual can keep their $100,000 in the bank and live off the government.

  23. Myrtha Mendez says:

    Any ideas as to when the ABLE Act will be presented to the House and Ways Committee? Has it been presented for vote in the House and Senate yet? Any updates on this matter would be greatly appreciated.
    Thank you,

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