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Congress Eyeing Tax-Free Disability Savings Accounts

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With significant public backing and support in Congress, advocates say federal lawmakers are poised to consider a major change to the money-saving abilities of those with disabilities.

Just one hurdle remains before Congress is expected to take up the Achieving a Better Life Experience, or ABLE, Act.

The bill — which has lingered since at least 2009 — would establish special accounts to allow people with disabilities to save up to $100,000 without risking their eligibility for benefits like Social Security. What’s more, under the plan, individuals could retain Medicaid no matter how much is deposited.

But before Congress can move forward, lawmakers are waiting for the Congressional Budget Office to weigh in with an estimate of what the bill would cost the government if it’s implemented. Once that figure is released — which could happen any day now — Congress is expected to act swiftly with advocates hoping for a floor vote in early spring.

“The ABLE Act is a must-pass piece of legislation for this Congress,” said U.S. Rep. Cathy McMorris Rodgers, R-Wash., who is a member of the House leadership and a co-sponsor of the bill, in a statement to Disability Scoop.

Modeled after the popular 529 college savings plans, the ABLE Act would allow individuals with disabilities to open a special account at any financial institution to pay for education, health care, transportation, housing and other expenses. Interest earned on savings within the accounts would be tax-free.

The bill is backed by nearly every national disability advocacy group and has 63 co-sponsors in the U.S. Senate and 332 in the U.S. House of Representatives representing both political parties. An online petition favoring the act has generated more than 230,000 signatures.

“The fact that only six bills in all of Congress have this many co-sponsors is a sign of the overwhelming support for this effort to make a major difference in the lives of these families,” the measure’s chief sponsor, Sen. Bob Casey, D-Pa., said in December.

Advocates say it’s about more than just money for those with disabilities and their families. At present, individuals often cannot have more than $2,000 at any given time without forfeiting government benefits. As a result, many people with disabilities decline to seek out paid employment simply because they don’t want to risk losing access to Medicaid and other programs.

“It’s really about self-determination,” said Sara Weir, vice president of the National Down Syndrome Society.

If the ABLE Act passes, Weir said, “individuals can go out and get a job and pay for their own expenses and not be so dependent on the federal government for everything.”

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Comments (19 Responses)

  1. David Snow says:

    It will be interesting to see how the details are implemented at the State level/Medicaid. Should have been done long ago instead of the convoluted and risky Special Needs Trust setup.

  2. Jon K. Evans says:

    Here’s a news flash! I have been trying to get off of SSDI-as a result of my own endeavors-since I was diagnosed with Asperger’s in 2001! I favor this act. Even more importantly, I favor measures that would enable persons with disabilities not only to train in industries-BUT TO ESTABLISH INDUSTRIES OF THEIR OWN! That way, if Mainstream Industry wants nothing to do with a disabled person-fine! That person can go and establish his own industry and not be bothered with a mainstream that doesn’t want him/her!

  3. walter park says:

    Lifting the $2,000 cap on assests to allow some kind of employment is a great idea, and long overdue. But providing “savings accounts” for the most underemployed, poorly paid group of people in this wealthy country is cynical. An enhanced Earned Income Tax credit and a realistic living wage would help.

  4. Ann says:

    This article may be misleading to many. It is speaking specifically about Beneficiaries who receive SSI or Supplemental Security Income. People who receive SSI also receive Medicaid. SSI/Medicaid recipients have limits on assets and are not entitled to SSI and Medicaid any month that they have more that $2,000.00 in the bank on the first of the month.

    People who are Beneficiaries of SSDI have no asset restrictions unless they are also eligible for Medicaid becuase they are low income. This is all very complex, but please get the facts straight.

  5. Nora Terrell says:

    Hopefully this means people with disabilities can get an inheritance and not have to forfeit it to keep their benefits and access to medical care .
    They would be able to have it put into this type of saving account .
    Not sure about the working aspect since if you can work full time over a certain periods of time then under SSDI or SSI you are no longer disabled in their view since a person has gainful employment.
    But hopefully can encourage some part time so people can build an emergency fund or even raise some funds to aquire needed non covered medical equipment like a service dog or motorized wheelchairs / scooters not covered under medicare and medicaid. Not to mention maybe even save for some college or trade school training or a reliable modified vehicle for transportation. Without Medicaid it is impossible to keep employment or aquire an education or needed medical equipment if you cant keep the access to health care. Basically right now people are punished for saving to better their situation. Hope this passes.

  6. Gael McCarthy says:

    I wonder, will this include those of us who are retired and have savings in special accounts that tax funds withdrawn prior to specified withdrawal periods? I’ve always had to put money aside to pay for treatments, surgeries, and high priced medications warranted by my disabilities resulting from surviving Polio at a young age. It would help if I didn’t have to pay taxes on funds I need to withdraw for personal purposes. Who and how is it determined that an individual applying for “Disability Accounts” meets specified requirements?

  7. Peggy Hakanson says:

    This would have been helpful to my children many years sooner. Because they have had to live with chronic, debilitating conditions, they have not been in a position to seek employment. If they were to get sick and miss work, then they would have to go back to SSI and Medi-Cal. Both make it virtually impossible to get back on the roles once you get off. The monthly costs of meds alone runs into the thousands. I’m still wondering if this will also help find jobs for those whose medical care is so involved that it would cost employers a pretty penny to employ them.

  8. Jack Lancellotta says:

    Young People & Poor Elderly who are geuninely DISABLED, have an enormous task of taking for granted most of do – participating in a full LIFE!

    The ability to experience some economic freedom by our Disabled Citizens is a natural aspect of providing a baseline of benefits to those that are most vulnerable.

    Legislation as the A.B.L.E. Act (Achieving a Better Life Experience) and SSI SAVERS ACT, are so necessary to allow our fellow Disabled Americans a little bit of piece of mind in having more than a mere token of assets, to experience a portion of ‘savings’ for their present and uncertain future and to fundamentally participate in the stream of our economy without heartbreak, reasonable and excessive worry and the sense of being accepted.

    Thank You – God Bless America

    Jack Lancellotta, Ex. Director
    JCS Education & Library Foundation

  9. Patricia Polizzi says:

    What a welcome surprise! I didn’t know that Congress had it in them to actually use evidence and initiate a public policy that makes sense. I did a research paper on the ADA Title III last fall. Here is a part of the economic analysis that demonstrates the impact that allowing a disability savings account could have.- “…an increase in the number of PWDs employed, could significantly and substantially add savings to our national economy. According to economist, Douglas Kruse, “if only one million more people with disabilities worked, there would be as much as a $21.2 billion annual increase in earned income, a $1.2 billion annual decrease in means-tested cash income payments, and a $286 million decrease in the use of food stamps (Kruze & Schur, 2001).
    It can be difficult to fully employ people with disabilities who get Supplemental Security Income and other government benefits, because these programs limit the number of hours they can work. If they surpass this limit, they may lose some of their benefits (MANILA, 2006). Many who are placed on Social Security Disability Income (SSDI) or Supplemental Security Income (SSI) face strong disincentives for returning to work and stay dependent on government assistance. Social Security rules trap people into living at poverty levels in order to retain essential medical supports and services. Personally I think it should be much more than $100,000. Disability related expenses over a life time are astronomical..

  10. Cheri Fistel says:

    Not to be a naysayer but, The Citizens with Disabilities Act provided one-sided protection and promotion, that is, for people with disabilities. That put undue stress and danger upon co-workers. As someone who was attacked by someone at the office, off “meds”, and who was having a bad day, I ask,”Where is the other peoples’ protection? Also, regarding the protection of the disabled person, how much of his or her privacy will be violated. Right now, if needed there is Social Security Disability or there is SSI, Are there limits on what someone can have in the bank when that person is on either?

  11. gregsdad says:

    what happens when the person dies? does it go to the family who were in a supportive ($$) role? or does it go to the STATE ? does anybody know ? thanks..

  12. Marian J. Miller says:

    This has been long in coming. It is about time that people with disabilities be treated like anyone else, who wants to open up a savings account for the unexpected and “extras” that come up. Having a son with Down Syndrome, I am very aware of the stipulations that are placed on their money and hoe it is used during the course of a year. A Savings Account could affored them the comfort of knowing that they have it and can use it for those special occasions that they want to purchase something out of every day necessities. They need to be treated like everyone else. Thank you for this major change, hopefully that will take place, after all these years of struggling. An Advocate Mom

  13. Whitney says:

    Cheri, to answer the question the limit is $2000 dollars in total assets. Whether it a bank account or investments. Most people on disabilities barely afford costs of living such as meds. The problem with SSI or SSDI the rent, clothing, and food should be divided in to thirds. If you needs to take any form of meds either you have to sacrifice food or clothing. Most likely the expense of clothing will go to rent so meds will take from the food allotment. So to buy food they skip dosages of meds to further the food budget. It happens to elderly comes down to choice of eating or having meds. If meds are not needed for life saving measures the more likely they skip it or lower dosage. Because meds can cost the whole paycheck or good portion. It is scenario where how much can you afford to work? Or how much can get on a welfare state. Most people with disabilities are punished for being productive by not getting meds they need to be covered. It is simple of russian roulette if something going happen. You need to pay to have place to live and eat with medicine or prescription they get second consideration. It comes down taking medicine or starving.

    Income for SSI is about $800
    Couples is $1078
    You can have $2000 in assets.

    In my area most places are costing rent 800 dollars plus.
    Food stamps being cut
    Meds are last expense because if you have medicaid your lucky to afford them.

    Many states cost of living exceeds the basic needs of people so SSI and SSDI have not kept up with medium income levels. Not knowing having a roof over you ahead nor where next meal is going be creates stress for all workers not just disabled. Plus mental conditions such a bi-polar or schizophernia are not always consider to be disabled even PTSD are not considered that soldiers suffer from.
    As it happens for the article I think this neutral option it will help the elderly but does nothing for people with Disabilities who can work. Nor raises the quality of life.

  14. Denise says:

    Instead of ABLE, search out a Pooled Asset Special Needs Trust. There are many across the country, with no minimum deposits and people running them who are knowledgeable about benefits both state and federal. The Pooled Trusts are not considered assets so you do not lose benefits and you can deposit your funds from working. With ABLE, you may be limited as to where (what bank) you can place your funds. Most Pooled Trusts also have “third party” options where families can place funds for the individual with disabilities. The ABLE Act has a payback to the state requirement.

  15. Whitney says:

    Special Needs Trust Fund is dependent on the state ability invest and trust between family members. It is not an option for everyone. Not all families have the best interest of person with disabilities at heart. It is a system that allows for abuse. In Texas we are limited already to that same condition of the Able act and have no say in the Special Needs Trust. It may be many states but the service is not equal in all states. You are still trusting outsiders to make financial decisions of those with disabilities that are able to make decisions. I am more in favor of having both special needs trust fund and the Able act

  16. jamie says:

    able act is nice thinking but these government controlled accounts is a bad idea — face it those 529 plans is managed so badly the government needs to keep hands off my savings accounts

    i live on disability and do want to save but the government way of making savings plans put you in so many low interest type accounts

    let me just use a normal broker account and put my money where actually get dividends from stocks and not a thing of either just a low paying bank savings account or like the 401k rules is a series of badly managed mutual funds

    government screws up savings plans with extreme bad financial planning so let us have the assets just keep hands off how we save

  17. Ron says:

    These laws have not been even minimally increased/changed/modified since 1989 .. some as far back as 1972!!!!!!

    It’s about time some form of SSI SAVERS ACT, ACHIEVING A BETTER LIFE EXPERIENCE (A.B.L.E.) ACT or SUPPLEMENTAL SECURITY INCOME RESTORATION ACT is passed … encouraged by the President and enacted into law by BOTH chambers of CONGRESS!!

  18. Amy Wiley says:

    I am a young adult who is disabled and live with my parents because I cannot afford to live on my own and pay for food and rent, much less the extra care I need (which my parents have to provide most of). I want to save up to pay for furniture and move-in fees, and maybe even own a tiny house someday–all things that will help me be more independent and a more productive member of society. But right now I can’t save over $2,000 without losing half my health care, my home help, and my medication coverage. I’m very excited about the possibility of this bill passing and allowing me to actually make wise decisions about my money instead of having to choose between medications that keep me alive right now, and my future.

    But one change to the bill I would encourage–change the dollar amount we’re allowed to save to a percentage of the costs of living average. This way, the bill will never have to be updated, and in 50 years we won’t be back in the same boat of the amount being much too tiny to pay for anything.

    Amy
    Amy

  19. Carolyn Hurst says:

    This would be wonderful, I used all of my savings to live on while
    waiting to be approved for ssdi. I would feel better knowing that I
    had money that I could turn to in case of emergency

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