There are many well-intentioned government programs that, due to certain provisions, are in some ways detrimental to those they are designed to help. This is how many Americans feel about Supplemental Security Income, which is similar to Social Security Disability Insurance. The major difference with SSI is that individuals need not have paid FICA taxes in order to be eligible.
A frequent complaint about SSI is that in order to keep receiving benefits, a person cannot have more than $2,000 in assets at any given time. This, critics say, provides a disincentive to working a job to help support oneself. It also makes it harder for SSI recipients to have enough money to live independently. Many SSI recipients (though not all) suffer from lifelong disabilities such as down syndrome and cerebral palsy.
Since 2006, advocates for reform have been lobbying for the passage of the Achieving a Better Life Experience Act. This year, the ABLE Act appears to be making significant headway in Congress.
The ABLE Act would let individuals with disabilities set up savings accounts at any financial institution in order to help pay for things like transportation, education and housing. The accrued interest would be tax-free, and individuals could save up to $100,000 without worrying about losing Social Security Administration benefits like SSI.
If the ABLE Act’s momentum continues, the final bill could be passed and sitting on President Obama’s desk by the end of September. This would be a major victory for the hundreds of thousands of disability advocates who have been working for years to pass the bill.
Source: Disability Scoop, “Congress Weighing Tax-Free Disability Savings Accounts,” Michelle Diament, July 24, 2014