A bill filed this week would allow for people with disabilities and their families to save without the fear of losing their other benefits.
By Rose Hoban
If you’re a person with a disability receiving government benefits such as Medicaid or Social Security, buying a new refrigerator can be a real challenge. Or a new hot water heater. Or even new clothes.
That’s because in order to retain government benefits, people with disabilities are limited in the amount of money they can save for basic necessities before they lose their benefits.
“The cap is $2,000.… That’s nothing,” said Jennifer Mahan, director of advocacy and public policy for the Autism Society of North Carolina. “Folks with disabilities are really limited in how they can plan for their futures.”
But a bill introduced this week at the General Assembly would make it a little easier for people with disabilities to save some money or for their families to squirrel some away to help with their long-term needs.
The Achieving a Better Life Experience,or ABLE, Act would allow for families of people with disabilities to save up to $100,000 in a 529 account for disability-related expenses, similar to the tax-deferred accounts used by families to save for their children’s college educations.
The money would be used to defray expenses such as extra medical costs not covered by Medicaid, things like transportation costs, housing costs, educational needs and technologies that can assist people with disabilities.
The cost of an iPad
“I worked with a parent whose child used a communication device, and Medicaid only purchased specific communication devices,” said Julia Adams, the lobbyist for The Arc of North Carolina, which provides services and support for people with developmental and intellectual disabilities. “They looked like ancient cell phones; they were big and clunky.”
Adams said the mother realized it would be cheaper, and more convenient, to go to the Apple store, buy an iPad and download the appropriate software to help her daughter communicate.
“It cost less than what Medicaid would have paid,” Adams said. “An ABLE account would be able to cover that.”
The North Carolina legislation piggybacks on federal legislation by the same name that passed last year after an eight-year effort by national advocates.
“Here in North Carolina, we’re lucky that Sen. Richard Burr was one of the first people to cosign and lead the effort for the federal ABLE Act,” said Kathryn Lariviere, head of the Down Syndrome Association of Greater Charlotte.
But it can take up to several years for the Department of Treasury and the Internal Revenue Service to write the rules and regulations around ABLE accounts. In the meantime, federal officials encouraged states to create their own ABLE Acts to fill in for now and to address state tax regulations.
Adams explained though that because of North Carolina’s tax reform bill, which passed in 2013, 529 accounts lost their tax-exempt status. So for North Carolina families, accounts will only receive the tax exemption from federal taxes.
The law stipulates that a person must be diagnosed with their disability before the age of 26 and the expenses paid out of the accounts must be disability-related costs.
“Immediately after Congress passed this and the president signed it, I had families calling me up and asking how can I sign up for one of these,” Mahan said.
“Let’s jump to when my son’s an adult. If he goes out to get a job, he’ll be able to save,” said Lariviere, who has a 10-year-old son with Down syndrome.
“I don’t know if he’ll have a driver’s license He might need transportation to go to work. Maybe he’ll be able to live independently but might need someone to come in once a week and help make out a grocery list or make sure he’s eating properly.”
Larievere said the bill would end up encouraging people with disabilities to look for work.
Mahan said the current $2,000 cap is a real disincentive for people with disabilities to go out and get a job.
“What happens when you start earning money, what do you do?” she said. “You can’t teach financial responsibility. It’s very difficult when the government is essentially saying, ‘You can’t save.’”
According to the U.S. Department of Labor, workforce participation for people with disabilities is only 19.8 percent, compared to a 68.2 percent participation rate for people who do not have disabilities. And the unemployment rate for people with disabilities who want to work is more than twice that of people who do not have a disability.
The ABLE Act could increase that workforce participation, say advocates.
“This bill helps people with intellectual disabilities become productive members of society,” Lariviere said.
She also said the bill provides her and her husband with peace of mind.
“The average life expectancy of someone with Down syndrome is now 60 years old. That’s only going to keep going as medical science finds more ways to keep everyone healthy,” Lariviere said. “Fifty years ago, people didn’t worry about kids with Down syndrome outliving them, but that’s changed.”
She said she and her husband have set up a trust for Cameron, but that it’s difficult to withdraw money from a trust for regular expenses, such as housing.
“Some day, we’ll be gone,” she said. “We want Cameron to be as independent as he can be, and this ABLE account will help him do that.”