As clock ticks, Congress considers tax-free savings accounts for disabled people

Jawanda Mast (right), of Olathe, Kansas, talks with Community Outreach Coordinator, Cate Stark, at Congressman Kevin Yoder's office in Washington, D.C. Mast was lobbying lawmakers the day before in support of a bill that would create tax-free savings accounts for people with disabilities, Dec. 3, 2014. Her daughter, Rachel,15, has down syndrome.
Jawanda Mast (right), of Olathe, Kansas, talks with Community Outreach Coordinator, Cate Stark, at Congressman Kevin Yoder's office in Washington, D.C. Mast was lobbying lawmakers the day before in support of a bill that would create tax-free savings accounts for people with disabilities, Dec. 3, 2014. Her daughter, Rachel,15, has down syndrome. McClatchy

Jawanda Mast is a mom on a mission.

Every year, the 53-year-old Mast boards a plane from her home in Olathe, Kan., to Washington, determined to persuade Congress to create tax-free savings accounts for people with disabilities.

Her daughter Rachel, 15, was born with Down syndrome. For more than half her daughter’s life, Mast has made her annual pilgrimage to Capitol Hill only to return home disappointed.

Despite bipartisan support from 85 percent of Congress, the so-called Achieving a Better Life Experience Act, or ABLE, has stalled short of a vote in either chamber for eight years – until now.

The bill passed the House of Representatives on a 404-17 vote Wednesday as Mast looked on from the gallery. A Senate vote should follow soon. Still, Mast and other disability advocates worry the legislation could become another casualty of gridlock as lawmakers grapple with a long to-do list before Congress adjourns in mid-December.

“I’m nervous,” Mast said. “I continue to say, ‘I’ll believe it when I see it on the president’s desk.’”

As Mast knows from bitter experience, nothing comes easily on Capitol Hill these days, not even a bill co-sponsored by nearly 500 Republicans and Democrats in the House and the Senate.

Similar to 529 education savings plans, ABLE accounts would allow people with disabilities and their families to save up to $14,000 a year. The funds would be exempt from taxes and could only be used on behalf of the disabled person for qualified expenses such as housing, transportation, medical bills and post-secondary education. Perhaps most importantly, the money in an ABLE account wouldn’t count against the $2,000 asset limit required for an individual to qualify for federal benefits such as disability payments and Medicaid.

Supporters run the ideological gamut from conservative Minnesota Rep. Michele Bachmann to liberal Sen. Elizabeth Warren of Massachusetts. Even Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell – political arch-enemies who almost never agree on anything – signed on as co-sponsors of the bill in March.

Advocates say that the bill, if enacted, would be the most significant legislation for the disabled community since the Americans With Disabilities Act of 1990.

“What we’ve offered is essentially a private-sector solution to a public-sector problem,” said Sara Hart Weir, interim president of the National Down Syndrome Society, a nonprofit advocacy group that has championed the ABLE Act.

“People who have disabilities are penalized from saving or working because you can only have $2,000 in assets at any given time in order to remain on benefits,” Weir said. “The ABLE Act would enable people with disabilities and their families to put money aside for disability-related expenses, but also remain on benefits and work.”

Republican Kansas Sen. Jerry Moran’s interest in the bill dates back to March 2012, when Mast and her daughter visited him in his Washington office.

Rachel told Moran she wanted to save up for a pink house in New York City. The senator joked that a pink house was fine, but it needed to be a pink house in Kansas.

“It is that personal relationship that can capture someone’s attention and can put you to work on behalf of their cause,” Moran said.

Three months after meeting the Masts, Moran became a co-sponsor of the ABLE Act.

Over the next two years, as the bill languished in legislative limbo, Rachel’s pink house became a symbol of her dreamed-of independence, her mother said.

“It’s a silly thing, but it’s a true thing,” Mast said. “If she wants to live in a pink house, I want her to be able to live in a pink house. But we need to help her and offset some of those costs.”

Moran said he’s hopeful there will be a vote on the bill in the Senate before the lame-duck session of Congress ends next week.

“In many ways, it’s an indictment of Congress, how slowly things work here,” he said. “This is a piece of legislation that shouldn’t have any partisanship, that ought not to have any Republican or Democratic labels. . . . It makes no sense to me and it’s unexplainable why it’s taken so long.”

The ABLE Act does have detractors, however. An analysis by the conservative Heritage Foundation published earlier this month warned that its enactment would expand the welfare state.

The bill effectively eliminates all asset tests for families whose children receive disability payments through the federal Supplemental Security Income program, making it more attractive for families to get into that program and stay in it, said Robert Rector, a senior research fellow at the Heritage Foundation.

That’s because an individual’s eligibility to open an ABLE account would be contingent on meeting the SSI program’s disability standard – a standard Rector said is too broad.

“Only about 9 percent of these children have Down syndrome,” he said. “Most of them don’t have any direct physical disability at all. They have a mental problem or behavioral problem.”

The SSI benefits should be restricted to children with clear physical disabilities, Rector said.

“This bill essentially goes in the other direction,” he said. “The upfront cost is not great, but it sets a very bad precedent, and we have a $940 billion means-tested welfare system which grew by bad precedents.”

Weir, of the National Down Syndrome Society, said it would defeat the purpose if funds in ABLE accounts jeopardized the ability of disabled children and their families to qualify for federal benefits.

“This isn’t another government handout for people with disabilities,” she said. “We see this as a hand up.”

Moran and other Republican supporters of the ABLE Act seem unfazed by Heritage’s critique, or by the cost of the bill, which would increase budget deficits by $19.2 billion over the next 10 years, according the Congressional Budget Office.

That estimate is based on lost tax revenue and the expectation that more disabled children and their families would qualify for means-tested federal benefits if they’re not limited to $2,000 in assets.

Moran said other budget cuts in the House version of the ABLE Act will offset the cost.

“I would say it is a very appropriate conservative principle to encourage personal responsibility and take away the disincentive for people to not save for their future because their benefits might be reduced,” Moran said. “We want to encourage personal responsibility and encourage savings.”

Among the ways the House bill proposes to pay for the ABLE Act: banning Medicare coverage of vacuum erection systems – also known as penis pumps – for savings of $440 million; raising excise taxes on barge fuel by 9 cents per gallon, for $260 million in additional revenue; and authorizing an inflation adjustment for civil tax penalties, which would save $115 million.

Rep. Kevin Yoder, a Republican who represents Kansas’ 3rd Congressional District, called the ABLE Act a “deficit-neutral, commonsense bill.” He, too, is a co-sponsor and voted in favor of it on Wednesday.

“It does not put more burdens on bureaucratic programs,” Yoder said in a written statement. “Instead, it encourages families to save, invest, and become less reliant on support from the federal government.”

Yoder’s colleague Tim Huelskamp, a conservative congressman from western Kansas, was the only member of the state’s all-Republican congressional delegation who was not a co-sponsor of the ABLE Act. He voted against it Wednesday. His office declined to comment.

Mast said she wants Rachel to be independent when she grows up, but that most likely she will need some support. An ABLE account would be another tool to help her help herself, Mast said.

“Show my child some respect and allow her to be able to save and be a part of making her way,” Mast said. “That’s what we all want. That’s what I wanted when I was 15.”