A new tax-free investment program to assist people with disabilities without jeopardizing their federal Social Security benefits recently opened in North Carolina and 12 other states – a product of bipartisan law championed by U.S. Sen. Richard Burr, R-N.C.
North Carolina’s newly elected state treasurer, Dale Folwell, met with Burr and other state treasurers and advocates in Washington on Monday to tout the new coalition of states administering tax-advantaged savings accounts for people with qualifying disabilities. Burr said he and U.S. Sen. Bob Casey, D-Pa., were working on two pieces of legislation that would expand the program. The other states involved are Alaska, Arizona, Illinois, Iowa, Kansas, Missouri, Minnesota, Montana, Nevada, New Jersey, Pennsylvania and Rhode Island.
The consortium of 13 states under the ABLE Alliance – which shares its name with the underlying law called the ABLE Act – has allowed North Carolina and other participating states to offer a low-fee structure for the investment accounts, Folwell said. Ascensus, a national investment and savings account firm, is under a five-year contract to administer the program for participating states.
Enrollment began Jan. 26 in North Carolina. Folwell estimates that at least tens of thousands of North Carolinians are eligible to sign up.
ABLE stands for “Achieving a Better Life Experience.” Burr and Casey’s original ABLE Act was signed into law by then-President Barack Obama in 2014. North Carolina’s state ABLE law was signed in 2015 by then-Gov. Pat McCrory.
The accounts work similarly to 529 college savings accounts. ABLE accounts allow people with disabilities and their families to save money long-term, for costs like medical expenses, legal fees, housing, transportation needs and job training.
“An important part of today is for these folks to know they’re not invisible and they’re not penalized for trying to do better in their life,” Folwell said following Monday’s news conference in the U.S. Capitol. Folwell was referring to the federal cap on how much a person with a disability can have in assets and still be eligible for Social Security and other benefits. ABLE accounts essentially raise that cap from the current $2,000.
Proposed ABLE Act expansions include a bill from Burr and Casey to allow for investment of earned income by a person with a disability who is working, without lowering other limits of tax-advantage savings in the account. Another bill would increase the age of eligibility for ABLE accounts to age 46. Current law provides for eligibility if a person developed a disability or blindness before age 26.
Folwell credited Burr for working on the issue at the federal level for nearly 10 years and his predecessor in office, former N.C. Treasurer Janet Cowell.
Burr said he’d like to see every state join the ABLE Alliance to offer individual 529-A savings accounts. In the meantime, the federal law allows for qualified individuals to enroll even if their states haven’t joined. He noted that the program also enables grandparents and other family members and friends with financial means to contribute to an account for a person with a disability.
Under current law, the annual contribution limit to an ABLE account is $14,000. The investment will not affect federal disability benefits or other means-tested benefit programs for the first $100,000. ABLE accounts do not affect Medicaid eligibility.