The Need for Congress to Pass the ABLE Act

by Vilissa K. Thompson, LMSW

The ABLE Act has the potential to improve the financial and employability statuses of people with disabilities in this country, if enacted.  The Achieve a Better Life Experience (ABLE) Act gained the attention of the disability community when it was first introduced into Congress on February 13, 2013.  The ABLE Act was not decided on last year due to the fact that the Congressional session ended before the bill could be considered; however, it has the support of over 400 co-sponsors in the House and Senate.  Having such a large amount of support gives many disability advocates, including yours truly, great hope that the Act will be considered and passed this year.

The purpose of the ABLE Act is to prevent disabled savers from losing their benefits by affording them the opportunity to open special tax advantaged saving accounts.  Under current policy, those who receive social security benefits such as Supplemental Security Income (SSI) and Medicaid cannot have saving assets of more than $2,000 in an account, and cannot earn income over $700 a month.  Those two financial restrictions unfairly places beneficiaries in the proverbial “a rock and a hard place.”  If beneficiaries have assets or income that exceed these financial thresholds, their benefits will be cut off.  If they decide not exceed these financial thresholds, then their employment and independence opportunities will be severely reduced.

I will give you a fictional example of the “rock and a hard place” choices people with disabilities like myself endure when it comes to wanting to be independent, but fear losing one’s benefits:

“Anita” was offered a part-time telecommuting position that would pay her the current minimum wage rate of $7.25 an hour.  Anita currently receives SSI and Medicaid benefits because she has a physical disability.  In order to keep her benefits, Anita could only work 24 hours a week, which would total $174 a week of earned income for her.  With this weekly schedule, Anita would earn $696 a month before taxes, which would put her under the $700 monthly financial threshold amount by $4.  

Anita would have to report her new income source to the Social Security Administration (SSA), which would take into consideration her total earnings, and not the amount Anita actually brings home after taxes.  The SSA has a special mathematical formula it utilizes to figure how much of Anita’s earned income should be counted against her benefits.  Anita’s monthly wage before taxes was $696; SSA would subtract 85 from this amount, and then divide that amount by 2 to figure how much her SSI benefits for that month should be reduced.  So, $696 – 85 would equal $611.  $611 divided by 2 would be $305.50.  Social Security would count $305.50 against Anita benefits, which would reduce her SSI benefits amount from $721 a month to $415.50 a month.  (The 2014 cost of living adjustment (COLA) for SSI beneficiaries is $721.)

This gross reduction of SSI does nothing to elevate Anita out of poverty.  Anita would have only $1,111.50 ($415.50 in reduced SSI, and the $696 (before taxes) she earned from working) to live off each month, which is not enough to cover the basic human needs of food, housing, and clothing.  This example is not hypothetical; it is fact.  This is the dreadful choice people with disabilities have to make:  do I work and put my benefits in jeopardy, or do I live off $721 a month that will keep me deep in poverty, and not allow me to be able to afford housing, transportation, entertainment, have an emergency fund, “nest egg” savings, and other “luxuries” that most take for granted?

This is why the passage of the ABLE Act is imperative – it would extinguish the current barrier of working and saving by ensuring that money saved through ABLE accounts would not be counted against the federal benefits an individual receives.  The ABLE Act would ease financial strains by allowing the tax-free saving accounts to cover qualified, essential expenses such as medical and dental care, community based supports, employment training, assistive technology, housing, education, and transportation.

The bill would assist in supplementing the benefits they already receive from private insurances, Medicaid, SSI, their employment, and other sources.  An ABLE account would provide people with disabilities the same types of flexible saving tools that other Americans have through college savings accounts, health savings accounts, and individual retirement accounts (IRAs).  Returning to our example, if the ABLE Act passed, Anita would be able to open an ABLE account where she could deposit her earned income and keep her SSI and Medicaid benefits intact.  This newfound freedom would allow people with disabilities to work without the fear of being penalized.

Like millions of Americans with disabilities, I am anxiously waiting for the passage of the ABLE Act.  From a personal standpoint, the ABLE Act would open a plethora of doors for me as an entrepreneur and a freelance writer.  Not having to worry about how much I earn or how much I have saved would be a joyous moment.  People with disabilities want the same things as everyone else – to work, have healthcare coverage, and be able to living independently and support themselves and those they love.  The ABLE Act would turn those hopes into reality.  Please urge your federal representatives to support and pass the ABLE Act this year because it is long overdue.

(Featured headlining image:  Courtesy of The Denver Channel.)