Washington, DC is polarized due to the divided government and amidst all of the political grandstanding is a measure that could make a positive impact on many families. Even though there is unlikely to be much legislating until after the November election, this piece of legislation has bi-partisan support and could make its way into the lame-duck session.
The reason this piece of legislation would be helpful is because of the large financial strains on many people who have families with disabled members and this is compounded over-time. The indirect costs can be un-sustainable, and this will allow for more cost-effective budgeting should it be executed as visualized.
Update on IMPENDING PASSAGE OF ABLE ACT
On September 19, Senate Finance Committee Chairman Ron Wyden (D-OR), Ranking Member Orrin Hatch (R-UT), Senator Bob Casey (D-PA), and Senator Richard Burr (R-NC) released a joint statement updating the public on the Achieving a Better Life Experience (S.313 and H.R.647) ABLE Act status.
They indicated that the Senate has generated momentum and positive progress on passage of the bill. The four Senators announced that as a result of bi-partisan collaboration, a policy agreement has been reached that will be the foundation for passing this legislation and obtaining Presidential signature in the lame duck Congressional session, which begins November 12, 2014.
Although no plan has been developed yet to pay for the $2.1 billion cost over 10 years, legislators are optimistic that agreement can be reached. The ABLE Act legislation, to allow people with disabilities to open tax-advantaged savings accounts, has been in development for eight years. This passage could provide some relief for the many families who struggle financially to save for and or finance the care for their loved ones.
BENEFIT One: TAX FREE ACCOUNTS TO SUPPORT DISABILITY RELATED EXPENSES
The ABLE Act would allow people with disabilities and their families to save money in new tax-free “ABLE” accounts for any of the following disability-related expenses:
• Education, from pre-K to college
• Housing, be it for rent or for purchase as long as it’s a primary residence
• Transportation, including moving expenses
• Employment support, like job training
• Health, including insurance premiums and assistive technology like wheelchairs
• Miscellaneous items like financial management and legal fees
The IRS would treat ABLE accounts like existing 529 college savings plans (also known as qualified tuition programs): after-tax contributions would not be tax deductible but earnings would accumulate tax free and qualified withdrawals would also be spared.
BENEFIT Two: GREATER FLEXIBILITY IN THE USE OF TAX-FREE FUNDS
The ABLE account offers greater flexibility in the use of its tax-free funds than any other savings account written into the tax code. ABLE accounts should be the rule, not the exception. Their flexibility and tax-exempt status could benefit everyone who is financially vulnerable. This winning combination would give all struggling families the freedom to use their savings for a broad array of asset-development purposes – for example, buying a home for more stability or leaving town for a better job opportunity.
BENEFIT Three: BUILDING FINANCIAL SECURITY WITHOUT LOSING PUBLIC BENEFITS
The ABLE account’s flexibility and tax-exempt status would be practically worthless to people with disabilities if the savings counted toward public benefit asset limits, which can restrict personal savings to as little as $1,000. The ABLE Act excludes the first $100,000 in an ABLE account from the asset limit for all federally-funded public benefit programs, including SSI, TANF, SNAP and LIHEAP. This provision will allow people with disabilities significant leeway to build their financial security without fear of losing vital public benefits.
BENEFIT Four: LESS GOVERNMENTAL DEPENDENCY
Minimizing the savings disincentives of asset limits helps reduce government dependency and should, again, be the rule, not the exception. There are several plans to help graduate individuals off of government programs and this is one that allows other private market forces to be involved. Chances are companies will be moving to capitalize on this new opportunity to deliver a more efficient process.
If you would like information on how to advocate for the provisions benefitting your organization as a support to the people you serve please contact us at firstname.lastname@example.org and make sure to check out your Member of Congress or Senator’s website to urge them to support this legislation in the “lame duck session.” Subscribe to the E.D. Bellis newsletter for up to the date information on the intellectual disabilities industry.