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Disability Insurance Observer: The ABLE Act

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I was thinking of covering the Senate Finance Committee hearing on S. 313, the Achieving a Better Life Experience (ABLE) Act bill, as news yesterday, when it hit me that it’s not easy to cover something like that as news.

Sen. Bob Casey Jr. trekked to the committee to explain that the bill, which has been kicking around Washington with a variety of bill numbers since 2006, would help people with disabilities, and their families, fund their care by setting up accounts similar to 529 plan accounts.

  • Families and individuals could put money in tax-free, and people with disabilities could take money out tax-free.
  • Account holders could use the money to supplement benefits from private insurance, Medicaid and other sources.
  • Medicaid would ignore the first $100,000 in account funds when performing eligibility calculations.
  • The qualified contribution limit could be no higher than the limit a state has set for its Section 529 college savings program.
  • Account holders could use the money to pay health insurance premiums, and health care and long-term care expenses.

S. 313 has bipartisan support and many cosponsors.

Of course, there are devils in details. The insurance community will want to make sure the term “premiums for health insurance” includes whatever other products they want it to include. Experts on malingering will want to figure out how to discourage malingerer use of the accounts, but, otherwise, in general, what’s not to like? Why should Congress need to spend eight years talking about this bill?

The United States has a big deficit and a complicated tax code. People have interesting proposals for replacing the current system with a flat tax, or a flatter tax; eliminating most “tax expenditures”; or getting rid of the income tax system altogether. But, as long as we have a wide variety for all sorts of able-bodied people, such as college students, it seems reasonable to give people with serious disabilities access to a similar system. If a family can set up a 529 account for a kid who has every possible advantage, from money to brains to brawn, why can’t it set up a 529 account for a sibling who has serious disabilities and may be setting out on a different kind of path through life?