Recent law changes allow disability recipients to start saving money without losing their benefits. Recipients with savings of more than $2,000 lose their benefits. A lack of savings vehicles forced recipients to spend their money and not save for their future.
ABLE accounts offer a new form of savings vehicle that allows people with disabilities to save up to $14,000 per year without their benefits being taken away.
Christopher Rodriguez, an advisor at the National Disability Institute, states, “It kind of shackles you to a life of poverty.” Advocates fought for years to change the savings limits for disabled people.
Sixteen states allow ABLE accounts under law, with an additional 10 states planning to introduce ABLE accounts.
Restrictions on ABLE accounts require money placed in the accounts to be utilized for the betterment of the recipient. Recipients can spend the money on rent, groceries, tuition and other items.
Restrictions on account owners require the disabled person to be disabled prior to their 26th birthday. Friends and family members can place money into an account. Savings limits are $100,000 before disability benefits are affected.
Minnesota officials signed into law ABLE accounts on January 31, 2017 that are expected to lift many disabled persons out of poverty. The state has 600,000 people that receive disability benefits.
Disability recipients often clip coupons, trying to stretch their money as far as possible. 7Coupons, and similar sites, are go-to places for recipients that try to spend every last dime of their benefits to remain under the savings threshold.
A lack of savings keeps recipients in a state of poverty. The Social Security Administration’s 2005 study indicates that 41.9% of recipients are in poverty. The inability to save causes 48.2% of couples receiving benefits to remain in poverty.
North Carolina’s Treasurer Dale Folwell last week introduced two new pieces of legislation to further promote tax-advantaged accounts for disability assistance. Enrollment for ABLE in the state started on January 26, with estimates of tens of thousands expected to sign up for an account.
The proposed legislation from U.S. Senator Richard Burr (NC) and Bob Casey (PA) aim to raise the age limit from 26 to 46 to allow for older people receiving disability benefits the opportunity to open an ABLE account.
Burr, a long time advocate of ABLE, hopes to see all states join the ABLE Alliance. Burr has worked on the federal level for almost 10 years to promote the ABLE Act.
Friends and family members can place money into a person’s ABLE account.