Senate approves investment accounts for disabled children
Tax-free, federally recognized savings plans would help parents secure children’s future
STATE HOUSE – Legislation sponsored by Sen. Adam Satchell and approved by the Senate yesterday would allow the creation of tax-free investment accounts similar to 529 college savings plans to support services for disabled Rhode Islanders when they reach adulthood.
The legislation (2015-S 0465A) would establish federally recognized, tax-sheltered ABLE accounts for disabled Rhode Island children, into which their families and friends could deposit money that would be invested on the child’s behalf. When the child reaches adulthood, the funds from the account could be used for qualified expenses such as education, housing, transportation and services like employment programs, personal support services, health prevention and wellness, financial management and more. The program can be used for individuals with disabilities including physical, developmental, or otherwise.
The “ABLE” program, which stands for “Achieving a Better Life Experience,” is a federal tax designation that allows the funds to be invested free of income tax, and would also allow the account not to count as assets for determining income eligibility for state or local assistance programs, including Medicaid programs.
Senator Satchell said the legislation addresses both the needs that the disabled face when they are no longer in school and related programs, and the challenges they face paying for them when many assistance programs require that they have little to no assets.
“Many disabled people have lifelong needs and meeting those needs once they are no longer in high school can be a huge challenge for their families. Programs are often very expensive, and in many cases, the only way the person or the family can qualify for help with those costs is if they have very low assets, so saving for those costs currently doesn’t even make much sense,” said Senator Satchell (D-Dist. 9, West Warwick). “The ABLE program is a way families can safely and responsibly save for a better life for their child when he or she reaches adulthood, and can feel secure in knowing that their doing so isn’t going to disqualify their child for assistance in the future.”
Senator Satchell said he was interested in introducing the legislation because, as a teacher, he’d seen the challenges disabled students face when they leave school, and because he’s witnessed friends with disabled children struggle with the uncertainty of their children’s future.
He said the effort is one that hits home for many people, and noted the list of cosponsors transcends political parties. The legislation is cosponsored by Sen. Paul W. Fogarty (D-Dist. 23, Glocester, Burrillville, North Smithfield), Sen. Roger A. Picard (D-Dist. 20, Woonsocket, Cumberland), Sen. Edward J. O’Neill (I-Dist. 17, Lincoln, North Providence, North Smithfield) and Sen. Christopher Scott Ottiano (R-Dist. 11, Portsmouth, Bristol). The legislation (2015-H 5564) has also been introduced in the House by Rep. Robert A. Nardolillo III (R-Dist. 28, Coventry).
He credited State Treasurer Seth Magaziner and Secretary Elizabeth Roberts of the Executive Office of Health and Human Services for working closely on the legislation. The treasurer’s office will handle investing on behalf of the program, and the Executive Office of Health and Human Services will administer the program in Rhode Island. The Rhode Island Developmental Disabilities Council also contributed to crafting the legislation, he said.
For more information, contact:
Meredyth R. Whitty, Publicist
State House Room 20
Providence, RI 02903