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Several States Poised To Offer Savings Accounts For Disabled Americans

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Several States Poised To Offer Savings Accounts For Disabled Americans

Law

Several States Poised To Offer Savings Accounts For Disabled Americans

Several States Poised To Offer Savings Accounts For Disabled Americans

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New laws in 35 states will allow more than 5 million Americans with disabilities to begin setting aside money for disability-related expenses without being penalized. Right now, many lose health and other public benefits if they save too much money, which is one of the main reasons for the high poverty rate among those with disabilities.

KELLY MCEVERS, HOST:

This year, for the first time, millions of Americans with disabilities will be able to put money into savings accounts without fear of losing their government benefit. Advocates say this will transform the way many people with disabilities live. NPR's Pam Fessler reports.

PAM FESSLER, BYLINE: Here's an example of how ludicrous things have been until now for disabled individuals who've tried to save. When Emeka Nnaka's friends raised $20,000 to help him buy a wheelchair-accessible van a year ago, he stored some of the cash in his closet in Tulsa, Okla. Nnaka, a paraplegic, needed the van to finish college and get work, but he worried if he opened a bank account, he'd lose his Social Security and Medicaid.

EMEKA NNAKA: The system is set up to keep people under, and we've got to find a better way to make it work.

FESSLER: And it seems like that's about to happen. Several states are poised this year to begin offering what are called ABLE accounts. These will allow people with disabilities to save up to $14,000 a year, tax-free, to pay for disability related expenses, such as education, transportation and housing. More importantly, the money will not count against a $2000 asset limit for those receiving disability and other federal benefits.

AMANDA THOMPSON: That is going to have a huge impact on my life.

FESSLER: Twenty-four-year-old Amanda Thompson says she'll open an ABLE account as soon as she can. She's trying to complete a master's degree Fort Hays State University in Kansas, a challenge after she suffered a traumatic brain injury in a car accident five years ago. Thompson says Social Security benefits are helping her through school now, but the system limits her ability to plan ahead.

THOMPSON: I don't know. It's just really frustrating because it's, like, I want to build for my future, and who knows where the economy's going or the world or anything? And it's kind of terrifying to not have anything saved or put aside in case of an emergency.

FESSLER: And Congress, in a rare show of bipartisanship, has agreed. In 2014, it overwhelmingly approved legislation allowing ABLE accounts. Although, it required states to pass their own laws setting them up. Thirty-five states have done so with about five to 10 states expected to have accounts up and running this year. Sara Hart Weir is president of the National Down Syndrome Society.

SARA HART WEIR: It doesn't solve all of our problems, but it's probably the biggest leap we've taken in 25 years.

FESSLER: When the landmark Americans With Disabilities Act was passed, Weir says that ABLE accounts will allow young disabled individuals to save for college and older ones to work and live on their own. It's expected to cost about $2 billion in lost tax revenue over 10 years, but one of her key selling points to Congress was that ABLE accounts will save money in the long run.

WEIR: To the extent we get more individuals with disabilities independent, you know, out in the workforce, less dependent on the federal government - and the 18-year-old or the 20-year-old that goes and gets a job 20 years from now doesn't necessarily need to be on Medicaid.

FESSLER: Under the law, anyone can contribute to an individual's ABLE account, but only those who become disabled before age 26 are eligible to have one - a concession to concerns about cost. Still, some 5 to 8 billion people are expected to qualify, and Michael Morris of the National Disability Institute thinks that's a good start.

MICHAEL MORRIS: People with disabilities in this country are twice as likely to be living at or below the poverty level. That's at a rate close to 30 percent.

FESSLER: He hopes the new accounts will help reduce those numbers. Both Amanda Thompson and Emeka Nnaka hope he's right. Pam Fessler, NPR News, Washington.

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