ABLE Accounts Should Be for All Disabled People
At the end of 2014, the U.S. government passed the Tax Extenders package which made the ABLE Act law. The ABLE Act stands for Achieving a Better Life Experience.
ABLE accounts are set up for persons with disabilities to be able to save money without having those funds count towards the $2,000 asset limit for those receiving SSI and/or Medicaid. The $2,000 limit was set by the government in 1984 and has not been adjusted for inflation. ABLE accounts are tax-free savings accounts to save money for disability-related expenses such as education, housing, and transportation. Each year, up to $15,000 may be put in an ABLE account with a maximum amount of funds in the account of $100,000. Both the disabled person on the account as well as third parties are able to put money in an ABLE account to benefit the disabled person.
In addition, funds from an ABLE account do not count as “in-kind” donations that could be used to offset housing and utility costs among others.
The ABLE accounts have a few caveats compared to traditional savings accounts. One main difference is that when the disabled person passes away, the government will take funds from the ABLE account to offset whatever Medicaid expenses the government paid while the disabled person was alive. For example, if I had $100,000 in my ABLE account and Medicaid had covered $60,000 of expenses, the government would take that $60,000 and leave only $40,000 to my heirs. While some may find that to be government overreach, I think it is a clever way to keep the Medicaid program funded longer.
The other caveat is currently a person must be deemed disabled before age 26 in order to qualify for an ABLE account. Currently, legislation is making its way through Congress to change that age to 46. While that’s an improvement if passed, it means that if someone is deemed disabled after age 46, they would be ineligible to an ABLE account and be strictly limited to the $2,000 asset limit, thus making it impossible to save for an emergency or other expenses.
I argue that anyone deemed disabled and receiving benefits, regardless of the age they become disabled, deserves the ability to save for their future. What harm is there in allowing all disabled people to save for their future?
Right now, I feel incredibly lucky that I got SSI at the age of 24, and am able to have an ABLE account. While I’m allowed to save for my future, it is difficult due to my income being limited to my SSI benefit and having traditional expenses such as rent, utilities, food, and other personal care items. With that said, I have only been able to save a few hundred dollars in the few years I’ve had the account. Fortunately, the account will follow me as long as I need it.
The U.S. Constitution promises the unalienable rights of life, liberty, and the pursuit of happiness. I find these rights are compromised when disabled people are limited to $2,000 in assets and are unable to invest in an ABLE account.
ABLE accounts are integral for the future of persons with disabilities and all disabled persons deserve to save for their future. More or less being forced to live in poverty due to the low incomes of those on SSI to maintain their benefits such as medical care is already tough enough.
Getty image by Nadia Bormotova.