Like a lot of expectant dads, Chris Hendricks thinks a lot about finances. But unlike most of them, he used to worry about saving too much money.
Hendricks, 32, receives federal disability benefits because he has cerebral palsy. Social Security has strict rules on how much people with disabilities can save.
A few months ago, Hendricks opened an account, called ABLE, that allows him to save more money than federal rules typically allow.
“The primary function of the ABLE account is to allow savings and funding to go in there without affecting the benefits,” said Hendricks, who is a musician and a motivational speaker, and works on an indie comics website.
“I feel like this has given me a new sense of safety in my life overall,” said Hendricks, who lives in Chapel Hill. “Certainly, I would not be able to put myself in a position to be a dad without the ABLE account.”
ABLE, which stands for Achieving a Better Life Experience, allows people with disabilities to save up to $100,000 in an account without having to worry about losing Supplemental Security Income. They can save up to $450,000 in the accounts without losing Medicaid benefits.
People who receive Supplemental Security Income are usually limited to $2,000 in savings.
The tax-free investments – similar to a 529 account that parents use to save for college – allow people with disabilities and their families to save money for future housing, transportation, medical, and other expenses. People can also use the accounts to pay for eligible ongoing expenses, withdrawing money as they would from a checking account.
Hendricks said he uses the money to help pay for repairs on his vehicle.
ABLE accounts are open to people with intellectual or physical disabilities that occurred before age 26. They can open their own accounts, or parents and guardians can open accounts on their behalf, where they can save up to $15,000 a year. Friends and family can contribute. Account earnings aren’t taxed. People who receive Supplemental Security Income or Social Security Disability Insurance benefits are automatically eligible.
“NC ABLE accounts can make a profound and lasting impact on citizens with disabilities for generations to come,” North Carolina State Treasurer Dale Folwell said in a statement last month on the first anniversary of ABLE accounts’ introduction in the state.
Folwell’s office administers the program in the state, and he is chairman of the board of trustees.
U.S. Sen. Richard Burr of North Carolina was one of the main sponsors of the federal legislation to allow the accounts that then-President Barack Obama signed into law in 2014. The state’s law was signed in 2015 by then-Gov. Pat McCrory.
Changes to the program included in the federal tax bill signed last year allow money from 529 college savings accounts to be rolled over into ABLE accounts without penalty, and allow people with jobs to put in more than $15,000 a year.
The accounts improve financial stability and “potentially build a bridge to less future dependence,” said Chris Egan, executive director of the NC Council on Developmental Disabilities.
According to the treasurer’s office, 293 accounts, with a total balance of about $1.1 million, have been funded. The average balance was about $4,300, or about twice as much as people receiving federal benefits would usually be allowed to save. Additionally, participants had withdrawn about $152,000 from their accounts as of the end of last year.
Melinda Plue and her husband are guardians for her brother-in-law, Jake, who is 36. Plue and her husband have helped Jake Plue find jobs, get mental health services, and build a support network, she said in an email.
“The one thing we haven’t been able to do for Jake is SAVE money for him, because any assets people like Jake have can mean cutting off Medicaid,” she wrote.
Plue set up an ABLE account for her brother-in-law, who has an intellectual disability as well as mental health issues, when the option first became available last year. She is a member of the state ABLE program board of trustees and works as director of advocacy and chapter development at The Arc of North Carolina, an advocacy group.
Jake Plue puts one-third of the money he makes working 10 to 12 hours a week at a Monroe restaurant into the account, Melinda Plue wrote. She and her husband also add money.
“We have not drawn any funds out of the account at this time, and are trying our best to grow the money before he really needs to use it,” she wrote. “He tells me he’s saving for hearing aids (something Medicaid doesn’t pay for when you are his age) and a scooter to get around town, but we will see!”