New tax-free accounts allow Mississippians with disabilities to save without the risk of losing benefits

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On July 1, Mississippi began rolling out Mississippi ABLE, a program that allows Mississippians with disabilities to save without risking the loss of government benefits.

For the first time, Mississippians with disabilities will now be able to work and save money without losing their benefits under the state’s Achieving a Better Life Experience Act, which establishes the use of savings programs for qualifying individuals.

“A person like my daughter with a disability can only have $4,000 to keep the Medicaid assistance that she has,” disability rights and elder law attorney Richard Courtney said.

Courtney explains that people receiving Supplemental Security Income, Social Security Disability Income and/or participating in programs like Medicaid or Medicare have limits placed on their assets; if they pass the limits, their benefits are suspended. Those limits in many cases can be as low as $2,000.

“A child with a disability’s grandparent will pass away and they’ll leave them some money in their will, not a large amount of money – $5,000, $10,000 – and that disqualifies,” disability rights lawyer Paul Rogers said. “They have to either not be honest with Medicaid or Social Security or they have to conceal it somehow or they lose their benefits until that money is spent.”

This means that people who want to support family members with disabilities are oftentimes limited to things like buying groceries, until now.

On July 1, the state began rolling out a program that allows Mississippians with disabilities to set aside money without risking the loss of government benefits. Income earned from the accounts is tax free “if spent on qualified disability-related expenses,” according to Mississippi Department of Rehabilitation Services. The program was established under the federal Achieving a Better Life Experience (ABLE) Act signed by then-President Barack Obama in 2014 and the Mississippi ABLE Act signed by Gov. Phil Bryant in 2017.

For Courtney’s daughter, that means she can save up to $15,000 a year to pay for medical procedures, monthly expenses, or anything else that would qualify under the law. “The benefit is that she gets to be more independent with her financial matters, not relying on other people to have to pay for things for her …,” Courtney said.

And for Courtney, that means he can worry a little less about his daughter’s future.

“At some point her mother and I won’t be around, and it may be that she is saving some toward being able to care for herself with those kinds of funds and still keep Medicaid benefits or SSI if she was on that,” Courtney said.

Beyond the financial benefits, the mental health of participants and their families might improve as a result of the ABLE program as well, said Emily Lund of the National Research and Training Center on Blindness and Low Vision and assistant clinical professor at Mississippi State University.

“In general, we know that financial independence is very helpful psychologically and on the flip side of that, not having financial independence can be detrimental psychologically,” Lund said. She added that the ability for parents to save for their disabled children might relieve stress as well.

Eligibility is limited to individuals who were disabled before age 26.

“There was originally not an age limit in the legislation but whenever they ran it through the budget office and they scored the cost in the legislation it was going to be … like $20 billion or something that it was going to cost the federal government if there wasn’t an age limit in there, which was going to kill the bill,” Mississippi Department of Rehabilitation Services chief of staff Billy Taylor told Mississippi Today. “So (age limit) was put in there… to drive the cost of the program down.”

Mississippi is a member of the National ABLE Alliance, which is a partnership of several states which utilize the same program. The program allows out of state residents to create ABLE accounts, allows contributors to ABLE accounts to deduct contributions from their taxable income, allows account holders to use debit cards and to choose from seven different investment options.

“We know that surveys tell us that people with disabilities more often live in poverty than people without disabilities, that their families typically have fewer assets because of therapies and medical treatments,” said Laura Trujillo, senior public relations manager of Fifth Third Bank, which handles the ABLE Alliance savings accounts. “We want to help lift them out of poverty. ABLE accounts will help these families save and not jeopardize their government benefits.”

Investment options for ABLE participants in Mississippi include a normal checking account and six different combinations of stock, bond and cash investment plans.  Accounts require an initial deposit of $50 but do not have minimums. The accounts charge $3.75 each month for account maintenance, which is about $45 annually. Mississippian with disabilities can enroll online or via mail.

More information on Mississippi ABLE can be found here.