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Disability savings account bill makes its way through Congress

Disability savings account bill makes its way through Congress

| Jul 24, 2014 | Supplemental Security Income (SSI) |

No one gets rich from being on disability. In fact, even with the financial help provided by Social Security Disability Insurance and Supplemental Security Income, many beneficiaries still struggle to make ends meet.

Unfortunately, many individuals who receive SSI benefits are able to do at least some work but are often barred from pursuing part-time employment or accruing savings because of the strict income and asset limits of the program. Beneficiaries cannot have more than $2,000 in assets at any given time or they risk losing much-needed SSI benefits. Thankfully, this may soon be changing.

Congress is currently considering a bill known as the Achieving a Better Life Experience Act, or ABLE. The bill has actually been under consideration since about 2006, but it has only recently gained enough support to be considered passable.

The legislation would allow for the creation of savings accounts for those suffering from disabilities. The accounts could hold up to $100,000 before SSI or similar benefits would be at risk. Moreover, the accrued interest on the accounts would be tax-free. And no level of deposits would endanger a person’s Medicaid coverage.

Although the ABLE Act could potentially help anyone who receives disability benefits, it is easy to see how it could be especially useful to individuals who have lived with a disability their entire life. Many people with down syndrome, for instance, could probably live independently or with only a little assistance as they became adults.

But because SSI benefits are modest and recipients are not currently allowed to have more than $2,000 in assets, some have to continue living with their parents or other family members. They may also be unable to afford higher education and other important resources because their SSI benefits only cover basic necessities.

If all goes well, this bill could be on President Obama’s desk by the end of September. Hopefully, there will be no further delay in passing this important piece of legislation.

Source: Disability Scoop, “Congress Weighing Tax-Free Disability Savings Accounts,” Michelle Diament, July 24, 2014