Tuesday, May 13, 2014

ABLE Act - Savings for People With Disabilities

The Achieving a Better Life Experience (ABLE) Act was introduced in Congress in February 2013 and it has recently been analyzed by the Congressional Budget Office (CBO), a nonpartisan federal agency that that provides budget and economic information to Congress. If and when it is finally passed, it can make a huge positive impact on the lives of people with disabilities.

ABLE Act – What it means
The ABLE Act would amend the IRS revenue code in such a way that would allow savings accounts to be set up for individuals with disabilities much like the college tuition accounts known as “529 accounts” that have been around since 1996. The money accrued in that account is not considered taxable income to the individual and their eligibility for SSI or Medicaid is not at risk, which are often times the only income and medical coverage people with disabilities have. 

A real life example:
Tony’s sister has a beautiful little girl who was born with cerebral palsy. Little Maggie is the light of her mother’s eye but she has a long road ahead of her. Tony sees how much it costs to get the equipment Maggie needs and deserves in order to be included in the rest of the family’s daily life. Maggie’s mom works very hard but can’t possibly cover all the expenses on her own.  Medicaid only covers the very basics and even those things are often a fight to get. Tony decides to help out by setting up an ABLE account for Maggie’s needs. He knows it won’t count as income to Maggie’s household so there’s no risk that the SSI and Medicaid Maggie and her family rely on will be affected. Family members & friends regularly deposit money in Maggie’s account for holidays & birthdays and Maggie’s mom is able to pay for the expenses that Medicaid doesn’t cover.

Key Characteristics

  • Anybody (including the individuals with disabilities themselves) can set up an ABLE account and multiple accounts in different states can be set up for one individual
  • Qualified expenses include education; housing; transportation; employment support; health, prevention, and wellness; miscellaneous expenses (such as financial management or legal fees); assistive technology and personal support services
  • Earning and distributions from the account would not count as taxable income to the owner
  • Contributions would be made using cash from the contributor’s after-tax income
  • Assets in these account would be disregarded when determining the individual’s eligibility for most federal means-tested benefits such as medical coverage
  • The first $100,000 would be disregarded when considering the eligibility for SSI

ABLE Act – Impact on SSI
In order to quality for SSI, an individual cannot have more than $2,000 in assets (for couples it’s $3,000). If their assets exceed this maximum amount, they must spend down the excess before they can qualify. Think about what this means! A person with disabilities cannot have a “rainy day” fund or a savings account for fun vacations like the rest of society. Doesn’t every financial expert say that we should have at least 6-8 months of expenses saved in case of an emergency? I guess people with disabilities don’t have emergencies like people without disabilities! Why would they need to have money saved up? The reality is, people with disabilities have higher medical expenses but are expected to live in poverty before they can qualify for government assistance which covers the very, very basics! And I hope that you, dear reader who doesn’t have a disability, will not become disabled due to an accident or illness because any money you’ve worked so hard to save up until then will have to be handed over until you have almost nothing left.

Another real life example:
Joe has always been a hard worker. He got his first job as a cashier at age 16 and was taught to save by his parents. By the time he turned 26, he managed to save over $15,000 in a savings account. For his 27th birthday he and his friends decided to go bungee jumping. That decision cost him his legs. After a freak accident, Joe became paralyzed from the waist down. He had to stop working because of his injuries and no longer had medical coverage. He applied for SSI and Medicaid but because he had so much money saved – money he was saving to buy himself a home – he didn’t qualify. Joe had to spend all that money he worked so hard for before he could find any assistance. A man who was independent and always worked for the things he wanted now had almost no money left and had to depend on the government for what little they could do for him.

Support is growing
Thankfully, the list of people and organizations that are behind the ABLE Act is steadily growing. The passage of this Act is crucial to people with disabilities and their loved ones.  

Congressman Crenshaw states it well: 
"No longer would individuals with disabilities have to stand aside and watch others use IRS-sanctioned tools to lay the groundwork for a brighter future. They would be able to as well, and that's an accomplishment we can all be proud of."

To see if your state’s Representatives and Senators support the ABLE Act you can check the following websites:

It’s time for the government and certain populations in our society to expect those with the least to give the most!

Equality for all, ALWAYS!

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