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New state program lets disabled people save more
Richmond Times-Dispatch - 3/20/2017
Matthew Shapiro's monthly ritual used to involve making sure his bank account didn't exceed $2,000.
If it did, the 26-year-old Glen Allen resident risked losing his disability and health care benefits from the federal government.
"Two thousand dollars isn't really a whole lot of anything, so people with disabilities were always sort of darned if you do, darned if you don't," said Shapiro, who was diagnosed with cerebral palsy as an infant.
"Quite honestly, that's why people with disabilities struggled."
But Virginia has created a program that now allows people with disabilities to save up to $14,000 a year in accounts managed by the same agency that oversees Virginia529, the college savings account program.
The new program, called ABLEnow, significantly increases the amount of money people receiving certain federal and state benefits may save without jeopardizing those benefits, said Mary Morris, CEO of ABLEnow and Virginia529.
Account holders can save up to $100,000 before losing any of their Social Security housing benefits and up to $500,000 total.
"I think it's going to be a real game-changer, but I think it's going to take awhile (to grow the accounts), because to a large extent, we're dealing with a population of people who have been forced to impoverish themselves in order to keep the federal benefits that they need to have to have any kind of quality of life," Morris said.
Virginia is among 18 states that have taken advantage of federal legislation passed in 2014 - the Achieving a Better Life Experience (ABLE) Act - that allows them to start savings account programs for people with disabilities, Morris said.
Members of the General Assembly paved the way with legislation authorizing Virginia529 to create the program in 2015, Morris said. In 2016, the assembly added a state income tax deduction for contributions to ABLEnow accounts.
Virginia's ABLEnow program started in December. Anyone with disabilities across the country can sign up for one of Virginia's accounts, Morris said.
So far, about 1,200 accounts have been created totaling $1.5 million in assets. About 35 percent of those accounts are held by Virginia residents, Morris said. By comparison, Virginia529 manages $60 billion in assets for 2.4 million account holders, she said.
Morris expects growing the program to take a long time in part because people with disabilities often are extremely careful not to do anything that would risk losing their benefits.
She expects it will be a challenge to earn their trust.
"Individuals with disabilities and their families often have spent considerable time and effort to establish access to important benefits and are fearful of losing them," she said.
"... Awareness of the existence and benefits of ABLE disability savings accounts is still low, so the Virginia team is working to build awareness and overcome hesitancy that perhaps this benefit is 'too good to be true.'"
To qualify for an account, the onset of a disability has to have occurred before age 26.
Anyone who qualifies for Supplemental Security Income or Social Security disability insurance automatically is eligible for an ABLEnow account, Morris said. People with a qualifying physician's diagnosis also are eligible.
The money grows tax-free, just like in a 529 college savings plan, Morris said. The first $2,000 goes into a checking account, which can be spent on qualified expenses that maintain a person's health, independence or quality of life.
Anything saved beyond $2,000 can go into one of four investment accounts that earn interest and are based on how much risk the account holder is willing to take, Morris said.
Having a disability can cost a lot of money, from therapies and transportation to specialized equipment at work or at home, Shapiro said. His wheelchair alone was $32,000.
Shapiro, who graduated from Virginia Commonwealth University in 2013 with a double major in interdisciplinary studies and sociology and a minor in psychology, said his new account has allowed him to expand his disability consulting business, 6 Wheels Consulting LLC.
"It's a start and something that I think will help people a lot," Shapiro said of the ABLEnow accounts.
"I don't know why it took so long. It's great to have a system in place to sort of help protect the disability population."