A New Act Will Help Those Affected by Mental Illness Save Money

The Achieving a Better Life Experience, or ABLE Act, was signed by President Barack Obama on Dec. 19. This new law allows some families and individuals to establish tax-free savings accounts for the qualified expenses of people with blindness, physical or mental disabilities without the fear of losing government benefits.

Under the ABLE Act, people living with disabilities will be able to deposit up to $14,000 annually in a qualified savings account and save up to $100,000 without losing eligibility for Supplemental Security Income (SSI). Setting up an account will not affect eligibility for Medicaid. The law also allows the account to earn tax-free interest. Funds in ABLE accounts can be used to pay for health care, education, and other expenses, including housing.

However, in the final stages of the legislative process an important restriction was included on ABLE accounts: only people whose onset of disability occurred before age 26 will be eligible. This means that many adults living with serious mental illness will not be eligible for these accounts. It is important to note that the age of 26 is not related to the onset of illness, but rather the point at which the Social Security Administration (SSA) deemed an individual to be so disabled that they became eligible for benefits under SSI. For many adults with serious mental illness this is long after their initial diagnosis.

Why was this restriction put in the ABLE Act? The cost. Earlier versions of the ABLE Act did not include this restriction on eligibility. However, the Congressional Budget Office (CBO) projected that the cost would exceed more than $20 billion over the coming decade. With this age 26 eligibility requirement in place, the projected 10 year costs were lowered to $2 billion. This forced the bill’s sponsors to accept this restriction in order to pass the bill.

NAMI will continue to work with ABLE sponsors in 2015, including Senators Bob Casey (R-Pa.) and Richard Burr (R-N.C.) and Representative Ander Crenshaw (R-Fla.), to remove this restriction.