Wisconsin should adopt ABLE account program for the disabled
This year, the Tommy G. Thompson Center on Public Leadership investigated how Wisconsin can help people with cognitive and physical disabilities increase their independence. One theme emerged: The state should allow people with disabilities to save money for their expenses without fear of losing existing benefits. Wisconsin should follow the lead of 43 other jurisdictions and implement an ABLE (Achieving a Better Life Experience) program.
ABLE accounts are tax-advantaged savings accounts that people can use to save for their (or their loved ones’) disability-related expenses. They are like Wisconsin’s
Edvest program for the college-bound. An individual who becomes blind or disabled before the age of 26 can open an ABLE account and save up to $15,000 each year — or whatever amount the federal gift tax exclusion is that year. Any money that they or their loved ones invest in an ABLE account can accumulate interest and dividends. A beneficiary can simply use a debit card or something similar attached to the account to spend the funds on approved items.
With a strongly bipartisan vote in 2014, Congress authorized states to establish ABLE account programs to “secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, Medicaid, SSI, the beneficiary’s employment and other sources.”
In the past five years, 42 states and the District of Columbia seized on the opportunity to establish ABLE programs, but Wisconsin was not among them. Under current law, Wisconsin residents may claim a subtraction from federal adjusted gross income for the amount deposited into their ABLE account held in another state.
Many Wisconsinites with disabilities do not have ABLE accounts, either because they do not know about them or because they are skeptical about opening accounts in other states.
Wisconsin should implement an ABLE account program. It would be a straightforward process since we could choose to adopt the basics of existing programs in other states. Many states, for example, have adopted Ohio’s program. Wisconsin could do something similar.
After all, ABLE accounts can help Wisconsinites with disabilities gain greater independence by rewarding them for work and by affording them greater financial autonomy. All of the panelists with disabilities at Thompson Center conferences (and the data as well) showed a preference for employment. But according to statistics released by the Institute on Disability, only 41.9% of Wisconsinites with disabilities had a job in 2019 compared with 45.7% in Iowa and 47.8% in Minnesota. Each of these figures is substantially lower than the 77.2% employment level for the general workingage population in the United States.
The reason for the low employment rate is simple. Historically, Americans with disabilities who worked risked losing public benefits such as Medicaid or
Supplemental Security Income if they accumulated money beyond benefit eligibility thresholds. The perverse incentive, then, was for them not to work.
ABLE accounts can help correct the situation by allowing eligible beneficiaries to accumulate money — that does not count against their federal benefits threshold — so long as they use it for disability expenses related to education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services.
ABLE accounts can also help grow the economy. When a person withdraws ABLE funds, the account holder can choose where to spend the funds in their community for the purpose of furthering independence and quality of life. The spending directly benefits local businesses and service providers. And the amount of funds is large. Today, ABLE programs manage more than $354.8 million in investments across the economy with an average balance of $6,265 per account, according to the National Association of State Treasurers. If Wisconsin created its own ABLE program, more Wisconsinites would participate and more of that money would be returned to Wisconsin’s economy.
To be sure, the state’s creation of ABLE accounts would not be free. The Wisconsin Department of Financial Institutions projects the cost of administering an ABLE program to be $400,000 annually. The Wisconsin Department of Revenue projects it “is likely to result in a minimal revenue reduction.” But the benefits would likely far outweigh the minimal costs.
If Wisconsin’s policymakers wish not to create an ABLE program, they should nevertheless improve awareness of our citizens’ ability to invest in other states’ ABLE accounts. In 2019, the treasurers association estimated that there were only 56,632 active ABLE accounts out of the 8 million Americans with disabilities who were eligible to have one. In other words, less than 1% of eligible Americans have enrolled since the ABLE began five years ago. We can do better.
This past month, on July 26, we commemorated the 30th Anniversary of President George H.W. Bush’s signing the Americans with Disabilities Act. Let’s honor that legacy by adopting an ABLE program in Wisconsin.
Ryan J. Owens is the George C. and Carmella P. Edwards professor of American politics at the University of Wisconsin-Madison and director of the Tommy G. Thompson Center on Public Leadership. Eric C. Tempelis is assistant director of the center.