Saving for Natalie's Future: Why ABLE Matters
A guest blog by Sara Hart Weir, vice president for advocacy & affiliate relations with the National Down Syndrome Society. NDSS, Autism Speaks and 50 other national disabilities organizations have united in their support for the ABLE Act which has now attracted over 200 cosponsors in the House and a third of the Senate.
Each year, Steve and Catherine Beck put away money tax-free to save for their daughter Mariae’s college education, but the tax code restricts them from saving tax-free for their daughter Natalie, who happens to have Down syndrome. The National Down Syndrome Society (NDSS), along with 50 national organizations including Autism Speaks, the National Fragile X Foundation, The Arc, Special Olympics, and many others, think that's wrong and are supporting legislation to fix it – the Achieving a Better Life Experience (ABLE) Act (S. 1872/H.R. 3423).
Currently, families can save for their typical children's education through tax-advantaged 529 education savings accounts. Our ABLE Act would expand the use of 529 accounts to help cover disability-related expenses, enabling parents of children and adults with disabilities to save for their futures just like every other American.
Here’s how it works: the ABLE Act creates a new savings mechanism for people with disabilities under the current 529 savings plan. This account would allow individuals with disabilities and their families to save money to be used for education, medical and dental care, job training, housing, transportation and other expenses. Contributions to the account would grow tax-free and withdrawals for disability expenses would also be tax-free.
Our starting point is simple: Individuals with disabilities and their parents who care for them should have access to the same kinds of savings tools as the broader population.
The federal government encourages Americans to save for their retirements through 401(k) plans and for education through education savings accounts or 529 plans. These tax-deferred saving plans are now such a fundamental part of how families prepare for the future we barely think of them as public policy. But of course they are. The ABLE Act applies this successful model to ensure people with disabilities and their families save for costs they will likely encounter down the road.
In the past two decades, people with disabilities have made significant progress. The Americans with Disabilities Act (ADA), signed into law more than 20 years ago, opened new doors and solidified a change in attitude in this country. Barriers to employment have been knocked over. Buildings are more accessible. Equal opportunity in our schools is no longer a dream for children with disabilities.
However, adults with disabilities continue to confront significant economic challenges, facing unemployment and poverty rates far higher than the overall population. In 2010, the poverty rate for people with disabilities was more than double that of those with no disability and workers with a disability experienced an unemployment rate more than 5 percentage points higher than those without one.
Parents of children with disabilities also face significant financial challenges. The average cost of raising a child with a significant medical disability is more than $1 million over the course of the child’s lifetime.
The tax-free saving accounts authorized by the ABLE Act would help families plan for and meet future needs. Creating an ABLE account is as easy as opening an account at your local bank. Since the ABLE Act builds on the successful 529 college savings program, people already know about and use, it would be simple to get started. ABLE accounts could be managed online and anyone would be able to contribute.
The money saved in the ABLE account would supplement rather than replace benefits from core government programs, such as Medicaid. These additional funds would support individuals as they encounter a range of expenses related to their disability - expenses such as tutoring, home and vehicle modification, and job training.
Nearly one in five Americans has a disability. Many are children who have the potential for long, productive lives ahead of them. Under current law, people with disabilities cannot save more than $2,000 in assets without losing health care and other federal benefits. The ABLE Act would change that, ensuring that people with a disabilities and their parents would be able to save for their futures without jeopardizing the benefits they count on.
With a small change to the 529 savings program, we can make a big improvement in the lives of millions of Americans living with disabilities. The legislation has wide bipartisan, bicameral support in the US Congress, with 209 cosponsors in the House and 31 cosponsors in the Senate.
With the ABLE Act, the Becks, and millions of parents like them, will finally be able to save for the future of each of their children.