New Oklahoma STABLE accounts will make it easier for Oklahomans with disabilities to save for the future (Guest Post: Amy Smith)

Amy Smith, an OK Policy Summer Policy Institute alumna, is a graduate student in Disability Studies and an intern in the LEND (Leadership Education in Neurodevelopmental and Related Disabilities) program at the University of Oklahoma Health Sciences Center. She lives in Ada with her husband and the three of her four children who haven’t yet flown the coop.

Update (06/01/18): Oklahoma’s STABLE accounts are now available here! 

Most all of us understand the importance of saving money for the future, and that understanding leads many of us to take advantage of tax-free savings and retirement plans such as 401(k)s, Roth IRAs, and 529 college savings plans. But for the 4.5 million disabled adults relying on SSI (Supplemental Security Income) payments, saving money for the future has been discouraged until the recent passage of the Achieving a Better Life Experience (ABLE) Act.

That’s because SSI has an asset cap: if recipients have more than $2,000 in assets (including savings), they lose their benefits. This cap makes SSI different from traditional Social Security payments, which are reduced if income or savings exceed a certain amount. With traditional Social Security payments, you still get the benefit, but it’s smaller as your assets increase. But SSI benefits are not adjusted down; they are simply cancelled if you exceed the asset cap. 

Living under this asset cap made it impossible for SSI recipients to do something as simple as save up the money required to move into their own apartments, for example. $2,000 isn’t always enough to cover first and last month’s rent plus a security deposit for someone trying to move into their own apartment. It also doesn’t allow much for furniture, daily transportation, or out-of-pocket medical expenses. Saving for an emergency was out of the question. Staying under the $2,000 limit created a “spend-down” mentality where money had to be spent on something, anything, in order to keep receiving critical benefits.

Enter the ABLE Act

After years of lobbying by self-advocates and others, the Achieving a Better Life Experience (ABLE) Act was passed by the federal government in 2014. The ABLE Act allows states to create programs that let people who were disabled before the age of 26 and are eligible for SSI of SSDI to set up special savings accounts. Money deposited into these ABLE accounts do not count toward the $2,000 asset cap. Oklahoma adopted the ABLE Act in 2016 but did not put a savings plan into place right away. In the meantime, residents of Oklahoma were able to set up accounts in states that did have plans in place.

That’s about to change. Oklahoma State Treasurer Ken Miller has announced that this spring Oklahoma will roll out its own ABLE plan. Based on the Ohio STABLE plan (State Treasury ABLE), Oklahoma’s STABLE plan is similar in structure to our 529 college savings plan. Contributions to STABLE plan accounts are not tax-deductible, but any interest and/or investment earnings are tax-free when withdrawn. Account holders can deposit up to $15,000 per year into the account and can choose either an investment account or an interest-earning account. Money can be withdrawn and spent at any time and can be used only for a “qualified disability expense”.

What does the ABLE Act mean for Oklahomans with disabilities?

Let me tell you about my personal experience with an ABLE account. My son is 21 and has autism, intellectual disabilities, and a seizure disorder. He began receiving SSI payments when he turned 18, and I set up an ABLE account soon after Oklahoma adopted the ABLE Act. By coincidence, I went with the Ohio STABLE account. Because Oklahoma’s plan is based on Ohio’s, his plan will soon transfer directly from Ohio’s program to Oklahoma’s with no pause.

I’ve set up a standing order to transfer money every month from his bank account to the ABLE account. In the future if my son receives benefits from my or his father’s life insurance policies, or inherits money from his grandparents, that money will have a safe place to go that won’t interfere with his monthly benefits.

Without being able to put aside even the small amount I now transfer every month, it would be impossible for him to save for large purchases and stay under the $2,000 asset limit. We have used his ABLE account to save up for things like furniture for his room and uncovered medical expenses. And money he receives as birthday or Christmas gifts can go into his ABLE account too. I no longer have to track his bank balance to be sure money is spent before the balance reaches $2,000. We don’t have to have that “spend-down” mentality anymore.

The ABLE Act and the upcoming Oklahoma STABLE accounts will help Oklahomans with disabilities do something they’ve never been able to do before – save for their future. Individuals with disabilities are no longer prohibited from achieving financial security – they are free to save, and spend, in a way that makes sense.

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