Congress OKs ABLE Act to give disabled greater financial independence

Families of disabled children could create tax-free savings accounts of up to $100,000 if President Barack Obama signs bipartisan legislation headed to his desk.

Known as the Achieving a Better Life Experience, or ABLE, Act, the law would revise the tax code to create a savings plan for disabled people similar to those that exist for college tuition.

 “It’s a complete game changer,” said Josh Kershenbaum, an attorney for special needs children in Bryn Mawr.

Under the current system, he said, there are disincentives for families to save. Not only are there no tax-free options for investment, but as little as $2,000 in assets can render disabled adults ineligible for vital governmental services such as Medicaid.

“That effectively means that parents — and people with disabilities themselves — can’t save money or work,” said Kershenbaum. “It traps people in a perpetual cycle of dependence.”

The new accounts would be available only to those diagnosed with a disability by the age of 26. Unlike funds in traditional 529 plans, which must be spent on education, the money could be used on a broad range of disability-related needs, including housing, health care, and transportation.

Michael Dinda, whose son John has severe autism, hasn’t been able to save for him they way he has for his two other children. At 20, John is less than a year away from reaching the legal age of adulthood for those with disabilities, and Dinda would have liked to use the past two decades to invest in his son’s future and help build him a group home.

“If you were able to put $100,000 away, and use those dollars to partner with another family or other families, you would be in a position to build a home in the community to serve the needs of three to four children,” he said.

Medicaid would still provide the much-needed supervision and programming in the group home, but the infrastructure would be privately sourced.

Celia Feinstein, the co-executive director of the Institute on Disabilities at Temple University, said the law would do little for those with few resources. But middle-class families would be better able to fill in where the government falls short. For example, Medicaid’s low reimbursement rates for dental care means many people with Down syndrome or autism have difficulty finding a dentist to take them on.

“People with disabilities can’t use public resources to purchase an iPad,” she added. “Yet, for many people, it’s the best piece of assistive technology for them.”

The ABLE Act passed the House Dec. 3 and the Senate on Tuesday. Sen. Bob Casey, D-Pa., was a lead sponsor of the bill the president is expected to sign into law.