Casey, Hatch, Dodd, Burr, Kennedy, Brownback Introduce Bill to Create Special Savings Accounts for Individuals with Disabilities

Press Release

Senators Bob Casey (D-PA), Orrin Hatch (R-UT), Chris Dodd (D-CT), Richard Burr (R-NC), Edward Kennedy (D-MA) and Sam Brownback (R-KS) today introduced bipartisan legislation to allow individuals with disabilities and their families to create tax-exempt savings accounts similar to Individual Retirement Accounts (IRA) and 529 College Savings accounts to save for the added expenses they will experience over their lifetimes.

"Parents of children with disabilities face struggles on a daily basis that we can't even begin to imagine," said Senator Casey. "This legislation will help make it easier for those families to save for their care and for their future. It will provide families with the financial piece of mind they need."

"ABLE Accounts will assist people with disabilities in their effort to save money for their care and thereby provide a more independent life. Many Americans are faced with physical or mental challenges and this legislation will provide a wonderful benefit to these people and their families by allowing them to put money aside to finance the specialized care they require," said Senator Hatch.

"ABLE accounts are designed to help individuals with disabilities live full and productive lives from childhood into adulthood," said Dodd. "It provides families of disabled children with an important financial tool to save the money they need to provide for their children and their unique needs long after they are gone."

"Parents know all too well the enormous financial burden that comes with caring for a child with special needs," said Senator Richard Burr. "We can help alleviate this burden by allowing families to save using tax-favored accounts similar to college savings accounts. As these accounts grow, they will help parents to meet their child's needs. It is my hope that this legislation will improve the quality of life for families across North Carolina."

"This legislation supports the efforts of parents who responsibly plan for the long-term needs of their significantly disabled child. With this bill, children with special needs will have the resources available to help them stay independent during their adult years," said Senator Kennedy

Brownback said, "It is important to ensure that individuals with disabilities and their families are able to save money and have financial security; ABLE accounts will make it easier for individuals with disabilities to be financial secure. Families who are struggling to make ends meet and save money in difficult circumstances will hopefully be helped by the legislation introduced today."

The Achieving a Better Life Experience Act of 2009 (ABLE Act) will allow individuals with disabilities and their families to save money and cover expenses such as education, medical and dental care, community support services, employment training and support, moving and assistive technology, housing and transportation.

Under current law, saving for the additional expenses incurred over their lifetime, many individuals with disabilities are forced to divest of all of their assets in order to qualify for health care under Medicaid. This requirement effectively impoverishes these individuals and prevents them and their families from building and using savings to meet expenses.

Like IRAs and 529 College Savings Accounts, the ABLE Accounts would provide a tax incentive for family members to contribute to the savings accounts. ABLE Accounts would be available to individuals eligible to receive supplemental security income benefits under Title XVI of the Social Security Act.

Anyone may contribute to an ABLE Account and rollovers from other accounts would be allowed without penalty; however, contributions to these accounts are capped at $500,000. Under the proposal, the principle in the account would accrue interest tax-free during the life of the beneficiary. When distributions are made to the beneficiary for qualified expenses, the distributions are excludable from the gross income of the beneficiary. In the event an individual becomes disabled later in life, funds from certain existing qualified accounts, such as 529s, can be transferred to an ABLE Account.

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