In July, we wrote about a piece of legislation called the ABLE Act, is making its way through Congress. ABLE is an acronym that stands for “Achieving a Better Life Experience.”
Versions of this bill have been under consideration by Congress since 2006, but the legislation now seems poised for passage. Today, we’ll talk about the ABLE Act and what it could mean for individuals relying on Supplemental Security Income.
Unlike Social Security Disability Insurance, Supplemental Security Income is awarded based on financial need rather than on work history. While it is a crucial source of income for individuals who cannot work due to a disability, its strict income and asset limits make it very difficult for SSI recipients to pursue additional means of financial support.
If you want to know more about the income and asset limits with SSI, you can read this SSI information pamphlet put out by the Social Security Administration. In short, SSI recipients cannot have more than $2,000 in assets at any given time. Income limits vary depending on where you live, but they are also stringent.
Individuals living with a disability – especially a lifelong disability – often rely on SSI benefits. But because these payments are modest and income/asset limits are low, SSI recipients and their families may be prevented from saving additional money and assets for fears of losing benefits.
The ABLE Act would fix this. If passed, the bill would allow individuals to set up ABLE accounts at financial institutions and could deposit up to $14,000 per year. Social Security benefits would not be affected as long as the account contains less than $100,000 in savings. Like the 529 college savings account on which it was modeled, an ABLE account would earn tax-free interest.
This bill contains common-sense measures that would cost the government very little to implement and would provide incalculable benefits to individuals with disabilities and the families who help care for them. It is a shame that it has taken so long for this bill to advance in Congress. Hopefully, it will be passed and implemented as soon as possible.
Source: Disability Scoop, “Deal Reached On Tax-Free Disability Savings Accounts,” Michelle Diament, Sept. 19, 2014