Lorie Konish | CNBC
Congress enacted legislation a decade ago to create accounts to help people with disabilities save money.
Yet only a fraction of the 8 million Americans who are eligible for the ABLE accounts — named for the Achieving a Better Life Experience Act — are using them, according to Sen. Bob Casey, D-Pa., who serves as the chairman of the Special Committee on Aging.
The senator on Thursday plans to introduce several new bills that would allow for eligible individuals to accumulate more money in ABLE accounts, while also raising awareness of them as an option to save for the disability community.
ABLE accounts let disabled individuals save money outside of asset limit requirements set by federal-assistance programs while also accessing certain tax advantages.
Funds in ABLE accounts must be used toward expenses to maintain or improve health, independence or quality of life for disabled or blind individuals. Investments in ABLE accounts grow tax deferred, while withdrawals are tax free, as long as they are used for qualified expenses.
An additional 6 million individuals may be eligible for ABLE accounts in 2026, when eligibility requirements for the accounts will broaden to a those who have disability before age 46. Current rules require accountholders have a disability before age 26.
To date, more than 171,000 people with disabilities have saved an average of over $11,000 each through ABLE accounts, according to Casey.
Casey is pushing for Congress to enact more reforms to make it easier to save in ABLE accounts.
“Over the last decade, the ABLE program has been a lifeline for thousands of people with disabilities across the nation,” Casey said in a statement. “However, we have a lot more work to do to ensure that every person who is eligible for an ABLE account can take advantage of the opportunity to save that the program affords them.”
Last year, Casey proposed a bill called the ABLE MATCH Act that would create a federal dollar-for-dollar match to help lower-income disabled individuals save money in those accounts.
“Disability is in everyone’s family, regardless of which side of the aisle you’re on,” said Thomas Foley, executive director of the National Disability Institute.
“We’re hopeful that Senator Casey and his colleagues on both sides of the aisle will recognize that this is just another step to help people with disabilities lead more independent and financially secure lives,” Foley said.
Here’s what the three new bills set to be introduced in Congress on Thursday would do.
Let employers contribute to ABLE accounts
While many employers offer 401(k) plan matches, people with disabilities may not be able to take advantage of the benefit perk without risking that money counting against their asset limits for federal benefits programs.
Casey is proposing a bill, the ABLE Employment Flexibility Act, to make it possible for employers to contribute to an employee’s ABLE account instead of 401(k) accounts.
That way, an employee could be eligible to receive matching contributions without jeopardizing federal benefits. The money could be used toward retirement.
“ABLE accounts are a great way to save for retirement for someone with a disability who qualifies,” Foley said.
Allow direct deposits into ABLE accounts
A second bill, the ABLE Direct Deposit Act, would make it so employers or government programs can make direct deposits to ABLE accounts.
“Including direct deposit for ABLE accounts would make it easier for anyone with a disability to participate” in these accounts, Foley said.
Help inform people about ABLE programs
Because many of the individuals who are eligible to open ABLE accounts have not done so, a third proposal, the ABLE Awareness Act, seeks to educate more people about the accounts.
The bill calls for requiring both federal and state agencies to inform eligible individuals about ABLE accounts when they enroll in certain benefits programs.
In addition, the bill also calls for the creation of a grant program to allow states or groups of states to apply for funds to advertise ABLE programs in the media and on billboards. The grant program would be funded at $50 million per year for four years.
“By drawing attention to ABLE and allowing employers to contribute to the ABLE accounts of employees with disabilities, the legislative package I introduced today will continue my work to remove the barriers that people with disabilities face when trying to save,” Casey said.
