New plan helps disabled save without penalty

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New plan helps disabled save without penalty

7:34 p.m. PDT July 26, 2016

Individuals with disabilities and their families will no longer have to live in poverty or limit their savings to receive state and federal benefits.

The Oregon 529 Savings Board announced Monday that the Oregon ABLE Savings Plan will launch by the end of 2016.

“Many have needed this for a long time, but it wasn’t in place,” said David Bell, outreach director for Oregon ABLE Savings Plan. “This is an important tool of empowerment.”

For 10 years, disabled Americans have  been fighting for ABLE, the Achieving a Better Life Experience (ABLE) Act.

ABLE is a tax-advantage savings plan that will allow individuals with disabilities and their families to save for disability-related expenses without disqualifying them for state and federal benefits, like Medicaid and Supplemental Security Income (SSI).

Without ABLE, people living with disabilities and their families do not qualify for those benefits when their assets reach $2,000.

Bell said this pertains to all assets, not just cash. For instance, if someone had to purchase an electric wheelchair, they would have significantly less money to save for other necessities.

He said there are many expenses for someone living with disabilities that normal insurance doesn’t cover.

“The freedom to set financial goals and save your own money is so basic,” said Sen. Sara Gelser (D-Corvallis), a sponsor of the legislation that created ABLE, in a statement. “Unfortunately, for too long people with disabilities have been denied that basic opportunity.”

In December of 2014, President Barack Obama signed the ABLE Act into law, giving states the opportunity to create federal tax-advantaged accounts, which would allow people to save for disability-related expenses.

Eight months later, Governor Kate Brown signed Senate Bill 777 into law, directing the Oregon 529 Savings Board to establish an ABLE plan.

Since then, the network has been working closely with organizations throughout the state to make sure the plan would be uniquely tailored to the needs of people with disabilities.

The announcement to launch the program by the end of the year came after the board selected BNY Mellon as the program manager for the plan.

“Now that a program manager has been chosen, we can focus on working to solidify the plan’s details that will be key to financially empowering people with disabilities,” said Michael Parker, executive director of the Oregon 529 Savings Network.

Parker said the key takeaway he wants those using ABLE to understand is that their benefits will be protected.

“By using an ABLE plan, individuals who depend on these benefits will no longer be forced into poverty in order to continue qualifying for them,” he said

Parker and Bell said families often make sacrifices, like cutting down work hours or withholding money from one child’s account — in order to continue receiving needed coverage.

“This has been so long coming,” Parker said. “We want to make it as user friendly as possible and accessible to as many people as possible.”

Through ABLE, people can set aside money for long-term savings, through several investment options, or for spending, through a secured option. Any earnings in an ABLE account are tax-free if used for qualified expenses, like education, housing, assistive technology, personal support services and other disability-related expenses.

Individuals who have a significant disability diagnosed before the age of 26 are eligible for an account — a federal age limit Bell said was set to lower tax implications. Parker added that advocates will continue to lobby for a raised age limit — such as the age of 46 — to better incorporate veterans who may become disabled during active duty.

Eligibility is based off the Social Security Administration’s definition of disability, which includes people with Down syndrome, autism, cerebral palsy and other intellectual or developmental disabilities.

Additionally, Oregon residents are eligible for a state tax deduction — up to $4,620 for joint tax filers and $2,310 for single filers in 2016 — when contributing to ABLE plans with a beneficiary under the age of 21. Anyone can contribute to an account up to the annual gift tax exclusion of $14,000.

The maximum account balance for ABLE plans is $310,000. However once an account exceeds $100,000 it starts to count against the $2,000 asset limit for SSI.

“We don’t want a limit at all,” Bell said, in reference to the $14,000 limit specifically. “If a family feels they need to put in $50,000, we don’t want to stop them. But right now, this is a great piece of legislation.”

Though Oregon has created its own ABLE plan, many states are choosing not to at this time.

Parker said this may be due to a lack of resources, but since individuals are able to take part in ABLE programs outside their state of residence, it takes the pressure off all states to create a plan.

However, he said Oregon wanted to be a leader and set the bar in helping this community.

“I am really proud of Oregon,” Bell said.

He said he gives “lots of props” to Oregon for investing in the resources and supports these families need.

“We’ll take it, use it, and make it better along the way,” Bell said.

Contact Natalie Pate at npate@StatesmanJournal.com, 503-399-6745 or follow on Twitter @Nataliempate or http://www.Facebook.com/nataliepatejournalist

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