It’s taken eight years, but on Tuesday Congress passed, by a large bipartisan margin, the ABLE Act, which will allow people with disabilities and their families to create tax-exempt savings accounts to pay for expenses associated with disability.
This means that for the first time a disabled person will not have to be virtually impoverished to receive Social Security, Medicaid and other public funds. Up until now, individuals were disqualified from these programs if they had more than $2,000 in savings, retirement funds or other items of value, or if they earned more than $680 a month. A true disincentive to work or to save.
ABLE stands for Achieving a Better Life Experience, and this version of the act was introduced into Congress in 2013. A similar bill was first introduced into Congress in 2006.
The ABLE Act allows people with disabilities and their families to set aside $14,000 a year for expenses related to living with a disability. This includes unreimbursed medical and dental care, education, community support, employment training, assistive technology, housing and transportation.
The savings accounts are similar to those for college savings, health-care savings, dependent-care savings and IRA’s. The accounts can be cumulative. College savings accounts in most states have a top limit of $300,000. With ABLE Accounts the first $100,000 will be exempt from the SSI prohibition. If savings exceed $100,000 the beneficiary would no longer be eligible for SSI but would continue to eligible for Medicaid.
To qualify, the disability has to have been diagnosed before the person reached the age of 26. For parents of children with disabilities this act helps alleviate some of the anxiety about expense that comes with raising a disabled child. You do not have to be under the age of 26 to open an account, known as , but your disability has to have been diagnosed by that age.
The Christian Science Monitor’s DC Decoder noted that the passage of this act might point to bipartisan support for “one of Congress’s most intractable issues”: entitlement reform. “The aim of the ABLE Act is to remove bureaucratic obstacles to help Americans save their own money to help pay for long-term care. To some activists, that could provide a template for reforming Medical Care and Social Security in the next Congress.”
Let’s hope that’s not just wishful thinking.
To find out more about the ABLE Act, about eligibility and how it works, go to NDSS – the National Down Syndrome Society – which has a very informative article on the act.