For decades, people living with disabilities could not save more than $2,000 without running the risk of losing key benefits, including their Supplemental Security Income. But following Maryland’s adoption of a recent change in the federal tax code, it reported that about 1,000 disabled individuals put away nearly $4 million in a single year to help them pay for everything from special diets and hearing aids to rent, Uber fares and technology to support their independence.
Sama Bellomo of Baltimore’s Fells Point neighborhood said she has not been able to put much in her new Maryland ABLE savings account, but it is more than she has ever saved before. The 36-year-old woman has a severe genetic connective tissue disorder.
“It's enough for a modest car repair,” said Bellomo, who works in rehabilitation technology for the state Department of Education. “Better still, when I'm in the hospital, I don't have to worry about going home and not being able to pay the rent because I couldn't work.”
Modeled after the 2014 federal Achieving a Better Life Experience Act, the state created the ABLE program in 2016 to provide “more independence, greater financial security and a better quality of life” for people with significant disabilities.
The accounts can be opened with as little as a $25 deposit and can be used to pay for expenses associated with the person’s disability, including education, housing, personal support services and funeral costs. Savings are capped at $15,000 a year, although people who are working and do not contribute to a retirement plan can contribute up to $12,000 more, depending on their salary.
Interest earnings from the account and any money withdrawn are tax free when used for qualifying expenses. People who contribute to an ABLE account can subtract up to $2,500 per year from their Maryland taxable income.
The state expects the program could cost up to $2 million in revenue lost from income taxes.
Without the accounts, advocates say people with disabilities were forced to live in poverty — or forgo benefits. Before the federal law changed the tax code, people did not have as much incentive to save money, because of the risk they could lose the public assistance they depend on for food, shelter and clothing. Balances in an ABLE account can reach $100,000 before their federal Supplemental Security Income would be impacted.
Bette Ann Mobley, director of Maryland ABLE, said people have been “thrilled” to learn about the new savings accounts. But many are skeptical at first, given promises they’ve been made in the past and the complexities of various programs people with disabilities depend on.
“People say, ‘It sounds great. Can it really be so simple?’” Mobley said. “Building these relationships is a huge part of what we have to do.
“People have been forced to stay in that cycle of poverty, never being able to get ahead. This can serve as a very empowering program for people with disabilities.”
Between 31,500 and 53,600 Maryland residents are estimated to be eligible. To open an ABLE account, a person must have developed a significant disability before they turned 26. People with either physical or mental disabilities can qualify for an account.
When the state General Assembly created the program in 2016, lawmakers estimated that 4,255 people would open accounts in the first year, followed by about 2,000 each subsequent year. However, legislative reports said actual participation would be hard to forecast because of the difficulty of predicting the size of the pool of eligible people and how fast word about the accounts will spread.
To learn more about eligibility and to sign up for an account, visit marylandable.org.
Susan Plitt, individual funds custodian for the disability advocacy and service provider The Arc Baltimore, said many people are finding the ABLE accounts to be much more flexible than their old alternative: a complex special needs trust that was among the limited options available for people with disabilities and their loved ones to ensure their financial needs were met. And the new accounts allow them to save enough to pay for large expenses, such as assistive technology, and ultimately live more independently.
In the past, many were prevented from “saving for things that will improve their life, or that would be there for a rainy day as a safety net,” Plitt said.