Legislation in Congress seeks to allow the disabled and their families to create tax-exempt savings accounts for future care-related expenses.
Recently introduced legislation in Congress proposes to create tax-exempt savings accounts to care for people with disabilities, similar to Individual Retirement Accounts (IRAs) and 529 college savings plans. The ABLE—Achieving a Better Life Experience—Act would encourage individuals with autism and other disabilities—as well as their families—to save tax-free for disability-related expenses. The accounts would be exempt from federal taxation, provided certain rules are met. The legislation aims to supplement, rather than replace, benefits provided by other sources, including Medicaid and private insurance.
The ABLE Accounts Act of 2009, as it’s officially called, was introduced in the Senate in late February by Senators Robert Casey, a Democrat from Pennsylvania, Orrin Hatch, a Republican from Utah, and Christopher Dodd, a Democrat from Connecticut. Senators Richard Burr, a Republican from North Carolina, Edward Kennedy, a Democrat from Massachusetts, and Sam Brownback, a Republican from Kansas, are the bill’s original co-sponsors.
“Parents of children with disabilities face struggles on a daily basis that we can’t even begin to imagine,” said Senator Casey, in a recent conference call with advocates from the National Down Syndrome Society, the Center on Autism and Developmental Disabilities, and other advocates for people with disabilities. “This legislation will help make it easier for those families to save for their care and for their future. It will provide families with the financial piece of mind they need.”
Accounts would have a contribution limit of $500,000, but would grow tax free and would not have any effect on the disabled individual’s ability to collect from other means-tested federal programs, such as Medicaid, food stamps, and federal housing assistance.
Bob Wright, co-founder of Autism Speaks, said in a statement that the legislation would ease an “unreasonable financial burden for millions of families” and end what he termed “discrimination” against individuals with disabilities in the federal tax code. “If parents are entitled to save, tax-free, to send their child to Yale, they should be able to save in the same way to help every child meet his or her full potential,” he said in a statement.
Individuals with disabilities and their families have too few options to save for future financial security, Bradford C. Turner-Little, assistant vice president of government relations for Easter Seals, said in a statement. To access essential public services and support offerings, individuals currently must have “exceptionally low” incomes, he said. Saving for an individual’s family frequently means dealing with a complicated web of state rules that guide special needs trusts, he said. Most often, families cannot navigate the system without the assistance of an attorney, he added. The act “will enable individuals with disabilities to live a meaningful and productive life without having to impoverish themselves, as is currently the case, and will ultimately help individuals become less dependent on public benefits,” said Turner-Little.
Jeff Sell, vice president of advocacy and public policy for the Autism Society of America, said families of individuals affected by autism often are financially frustrated as they want nothing but the best for their children, but are often faced with astronomical expenses that come with providing appropriate services. “I want nothing more than to find a way to support and provide for my twin sons who have autism so that they may have the same opportunities to be happy and lead productive, independent lives just like their neuro-typical sisters,” Sell said in a statement.
The bill will have to pass both houses of Congress and be signed by the President to become law. But with a big national push on healthcare reform, it’s likely this bill will get plenty of lawmaker attention.
Marie Daghlian

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