Today, U.S. Senator Charles E. Schumer announced his support for legislation that would create tax-advantaged savings accounts for family members of individuals with disabilities to help them better afford the cost of care. The Achieving a Better Life Experience Act (ABLE) would allow families to set up accounts, similar to 529 education savings accounts, to save money to cover education, medical care, support services, employment training, housing, and transportation services for individuals with disabilities. Families who are currently the recipient of supplemental security income benefits would be eligible to set up these accounts under the legislation that Schumer supports. On the press conference call with reporters, Schumer highlighted the cost of care related to autism -- a disability that is one of many covered by the legislation and one of the fastest growing children's disabilities in the country. A recent Centers for Disease Control study showed that 1 out of every 88 children in the United States will be diagnosed with autism. According to the State of New York, there were 6,752 children ages 3-21 who received special education services in 1999-2000 in New York and had autism. That number has risen dramatically. In 2008-2009, there were 19,132 children ages 3 to 21 who received special education services in New York and had autism.
"The number of our children getting diagnosed with autism is on the rise. Tens of thousands of Upstate New York families have a loved one with this disability, and this legislation would make life just a touch easier for them," said Schumer. "Health care and education can be extremely expensive for individuals with special needs, which is why we need to lower the cost of care wherever we can. Creating tax-advantaged savings accounts will help lower the financial burden over time, ensuring that families across Upstate New York can afford the care that their loved ones deserve. With the rise in the diagnosis of autism, passing this bipartisan legislation is more important than ever. I'm strongly urging my colleagues to get on board with this plan and pass this bill."
Under the ABLE Act originally introduced by Senator Bob Casey (PA), parents of children with a disability would be allowed to set up tax-advantaged savings accounts for their children in order to finance their long term care. Money could be saved to cover education, medical and dental care, community support services, employment training and support, moving and assistive technology, housing and transportation. Many individuals with disabilities and their families have assets that put them above the qualifying cap for Medicaid, but insufficient to cover the costly burden of care. As a result, they are effectively forced to sell assets in order to qualify for Medicaid, which pushes the family towards poverty while unnecessarily swelling Medicaid roles, putting strain on the program. The qualifying expenses appear below:
· Education -- tuition, books, supplies and other services from preschool through postsecondary education
· Transportation --includes mass transit; purchasing or modifying vehicles with special equipment; and moving expenses
· Housing -- purchasing a home, rent, mortgage payments, home improvements, repairs, taxes and utilities are all qualifying expenses
· Employment support -- expenses related to obtaining and maintaining employment, including job training, assistive technology and personal assistance supports
· Health and wellness -- qualifying costs include premiums for health insurance, mental health, medical, vision, respite care, nutritional support, adaptive equipment and a host of other services
· Assistive technology and personal care attendant support expenses
· Other approved expenses and miscellaneous expenses, including financial management and administrative services, legal fees and any other expenses approved by the Secretary of the Treasury
The Schumer-backed legislation would allow individuals with disabilities or their beneficiaries to create a savings account similar to the 529 College Savings Account to save for long term care. Eligibility would be extended to individuals who qualify for supplemental security income benefits through Social Security. Individuals who have a medically-determined physical or mental illness that severely limits their ability to function and will last for more than one year are also eligible for a tax-advantaged savings account. Anyone could contribute into an individual's account, and the principle would accrue tax-free throughout the lifetime of the individual who is disabled. Because investments grow tax-deferred, these plans reduce the overall tax burden for individuals with disabilities and their families, making care significantly more affordable.
For example, in a traditional savings account, the amount of interest income accrued annually on deposits is considered taxable income and taxed at the account holder's marginal tax rate. However, under this proposal, the investment grows and can be removed from the accounts completely tax-free. So, under the proposal, if a family deposits $10,000 per year in to an account, assuming an average interest earned of approximately 3%, they will amass about $13,300 in the account after 10 years. Approximately a quarter of that balance is attributable to earnings growth and would be taxable in a traditional savings account, but would not be taxed under the ABLE Act. Additionally, when a withdrawal is made to cover a qualifying expense, all distributions are excludable from the gross income of the beneficiary.
While the bill offers cost savings for a large number of individuals with disabilities, Schumer highlighted the expenses of caring for an individual with autism in his push for the ABLE Act. According to a 2006 Harvard study, it can cost about $3.2 million to care for an autistic person over the course of their lifetime, and Americans spend an estimated $35 billion each year caring for members of society with autism. Autism makes it difficult for individuals to communicate and interact with other members of society, which increases the need for special schooling, tutoring, and assistance when it comes to finding employment.
The ABLE Act that Schumer supports would make care more affordable for individuals with autism or other disabilities. Here is a breakdown of the eligible individuals in Upstate New York, the number of students in Upstate New York with autism in 2009, and the expected increase in individuals with autism who were born in 2010. The expected increase was calculated based on the autism in general birth rate of 1 in 88 cases according to a study conducted by the Centers for Disease Control, and the number of children who were born in 2010:
· In the Capital Region, there are 28,450 eligible individuals. In 2009 there were approximately 1,440 children in schools with autism, and an estimated 131 individuals born in 2010 will be diagnosed with autism in the coming years.
· In Central New York, there are 31,491 eligible individuals. In 2009 there were approximately 1,304 children in schools with autism, and an estimated 128 individuals born in 2010 will be diagnosed with autism in the coming years.
· In the Rochester-Finger Lakes Region, there are 33,993 eligible individuals. In 2009 there were approximately 1,262 children in schools with autism, and an estimated 146 individuals born in 2010 will be diagnosed with autism in the coming years.
· In the Southern Tier, there are 22,527 eligible individuals. In 2009 there were approximately 935 children in schools with autism, and an estimated 81 individuals born in 2010 will be diagnosed with autism in the coming years.
· In Western New York, there are 42,044 eligible individuals. In 2009 there were approximately 910 children in schools with autism, and an estimated 161individuals born in 2010 will be diagnosed with autism in the coming years.
· In the Hudson Valley, there are 43,358 eligible individuals. In 2009 there were approximately 2,770 children in schools with autism, and an estimated 303 individuals born in 2010 will be diagnosed with autism in the coming years.
· In the North Country, there are 16,630 eligible individuals. In 2009 there were approximately 557 children in schools with autism, and an estimated 66 individuals born in 2010 will be diagnosed with autism in the coming years.