ABLE Accounts Slow To Catch On
New data is prompting questions about the sustainability of a recently-established program that allows people with disabilities to save money without jeopardizing their government benefits.
Far fewer people have opened ABLE accounts than are needed to ensure the viability of the program, according to an analysis from the National Association of State Treasurers, a group representing state officials who run ABLE programs.
Created under a 2014 federal law, ABLE accounts enable people with disabilities to save up to $100,000 without risking eligibility for Social Security and other government benefits. Medicaid can be retained no matter how much money is in the accounts.
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As of the end of last year, less than 35,000 ABLE accounts were open nationwide. But, 450,000 ABLE accounts will need to be funded by June 2021 “for most programs to approach self-sustainability and continue to offer ABLE plans with low fees,” the state treasurers’ group said.
Based upon the current rate of growth, the program is “unlikely” to add enough new accounts to meet that goal without changes, according to the analysis.
“We are concerned, but not alarmed,” said Heather Sachs, policy director for the National Down Syndrome Congress and a co-chair of the financial security task force at the Consortium for Citizens with Disabilities. “I don’t believe that the ABLE program as a whole is in jeopardy, but there may be some state ABLE programs that have to increase their fees or fold.”
At present, 42 states and Washington, D.C. offer ABLE accounts, many of which are available to people with disabilities nationwide. Sachs said that some of the programs are doing quite well while others are less established.
The National Disability Institute estimates that 8 million people with disabilities across the country are eligible for ABLE accounts and Sachs indicated that the number of accounts is steadily increasing, but many potential account holders remain leery.
“People don’t know what ABLE is,” Sachs said. “There’s a lot of fear of the government and a lot of distrust of losing government benefits. What happens is one person has a bad experience at their local Social Security office and that fear spreads like wildfire.”
Some states are actively working to address concerns about ABLE accounts. At least nine states — Pennsylvania, Kansas, Illinois, Oregon, Maryland, California, West Virginia, Arkansas and Florida — have passed legislation eliminating the ability of their Medicaid programs to claim funds remaining in ABLE accounts of people with disabilities who have died.
In addition, the state treasurers’ group said that the Social Security Administration now has information about ABLE accounts appearing on monitors at its 1,800 local offices throughout the country. And, recent guidance from the U.S. Department of Housing and Urban Development about how funds in ABLE accounts affect access to housing assistance is helping to ease concerns, they said.
Disability advocates and the state treasurers’ group, however, say more changes are needed to increase the number of account holders. Chiefly, they want to see Congress increase the eligibility age limit.
Currently, individuals must have a disability that onset prior to age 26 in order to qualify for an ABLE account, but proposed legislation would increase that limit to age 46, creating 6.1 million more eligible account holders, according to lawmakers behind the bill.
Other changes that the National Association of State Treasurers is seeking include allowing more than one ABLE account to be open for a single beneficiary and permitting larger lump sum contributions in certain circumstances such as an insurance settlement or an inheritance.
Despite the findings from the National Association of State Treasurers’ analysis, the group sought to tamp down concerns.
“These numbers are not alarming,” said Illinois State Treasurer Michael Frerichs who chairs the National Association of State Treasurers’ ABLE Committee in a statement. “ABLE is a new program and many people with disabilities are new to the concept of saving and investing. We are seeing steady growth with ABLE programs and expect more states to join us to help give their community members with disabilities the ability to save.”