WI23-10: Improving Financial Security for People with Disabilities: The Promise of ABLE Accounts

Abstract

A burgeoning literature documents ways that programmatic barriers hinder efforts by individuals to obtain needed public benefits, and otherwise harm recipients of public aid. The $2,000 resource limit on countable financial assets for individual Supplemental Security Income (SSI) recipients is one such barrier. Last raised in 1989, that stringent resource limit sharply constrains recipients’ ability to finance uncovered medical expenses, make essential home or auto repairs, and pursue educational and other opportunities crucial for personal development, independence, and well-being.

The Stephen Beck Jr. Achieving a Better Life Experience Act of 2014 allowed the creation of ABLE accounts, tax-advantaged savings vehicles that allow persons with disabilities to accumulate significant financial assets without endangering their SSI or Medicaid benefits. Despite the potential advantages of ABLE accounts, only about 1 percent of eligible SSI recipients possess such accounts.

Our mixed-methods study uses administrative and survey data from the State of Illinois to explore barriers to take-up of ABLE accounts. We find sharp income gradients in ABLE account take-up. We document an array of barriers, including financial constraints as well as diverse administrative burdens and misperceptions, that deter eligible persons from opening ABLE accounts. We provide a set of recommendations for scalable solutions to improve program participation, especially among under-represented communities.