As this issue went to press, a wave of coronavirus closings and dislocations began sweeping our state and the nation. This will have obvious impacts on Texas government and the state’s economy, but it’s too early to say definitively what the effects will be. The Comptroller’s office will be monitoring the situation closely.
Affordable independent living or saving for retirement are normal life goals that most of us take for granted. For Theodore Galanos, a Houston resident whose significant disabilities include blindness, wheelchair mobility and amputations of all his fingers, these once-challenging ambitions are now a little closer – with help from the Texas Achieving a Better Life Experience (Texas ABLE®) Program.
Texas ABLE celebrates two years of operation this May. The program allows eligible Texans with disabilities (like Galanos) and their families to save for disability-related expenses and plan for a brighter future.
“This (account) allows me to have a vested interest with meaning and purpose,” Galanos says.
Established by the Texas Legislature and administered by the Texas Prepaid Higher Education Tuition Board through the Texas Comptroller’s office, the Texas ABLE Program provides Texans with disabilities with the opportunity to save in a tax-advantaged investment account while preserving eligibility for certain means-tested state and federal programs.
Since inception, the program’s number of participants has grown 139 percent and the assets under management have grown 213 percent [Exhibit 1].
|Number of Participants||Assets Under Management|
Source: Texas Comptroller of Public Accounts
Linda Fernandez, director of the Educational Opportunities and Investments division with the Texas Comptroller’s office, provides support to the Texas Prepaid Higher Education Tuition Board that oversees the Texas ABLE Program and is optimistic about its future.
“ABLE accounts foster person-centered independence, helping to build self-reliance, creating opportunities to improve quality of life and allowing for employment,” she says. “Our office is proud to be a part of this important program that can positively impact so many lives.”
The Stephen Beck Achieving a Better Life Experience (ABLE) Act passed by Congress and signed by the president, authorized states to establish ABLE programs.
Before the ABLE Act passed, individuals with disabilities could not have more than $2,000 in resources without the risk of losing important benefits such as Supplemental Security Income (SSI) and Medicaid. Now, Texans with disabilities can save up to $100,000 without losing those state and federal means-tested benefits. Federal law limits annual contributions to $15,000 per year for individuals who are not employed or up to $27,490 in 2020 for certain employed individuals. If SSI eligibility is not a consideration, individuals can save a lifetime maximum of $500,000 in a Texas ABLE account.
“The Texas ABLE Program is truly a game changer for the way individuals with disabilities and their families can save,” says Fernandez. “It creates a new path for individuals with disabilities to save and to achieve a better life experience.”
“An acquaintance from Florida, who I had been tutoring, told me about this new way to save and invest without risking my Medicaid benefits,” says Galanos. “He knew I was in a nursing home and had limited financial resources. Texas launched its ABLE Program two weeks later (in May 2018), and I immediately opened an account.”
Since joining the program, Galanos says he’s much more at ease about finances.
Someday, “I can afford a decent meal away from the nursing home on occasion or go adaptive water skiing in the summer,” he says. “I can afford to be socially active again with organizations like the American Council of the Blind and iBUG Today.”
Galanos says he is now saving for an ADA-accessible apartment or house, as well as provider care services for his daily care needs. As an account holder, he can manage and designate how he wants his Texas ABLE account funds invested.
“A house or apartment is definitely something I hope to be able to afford someday. The larger expense, however, will be the daily living tasks I require 24 hours a day. Between the investment component (of Texas ABLE), a stock market that cooperates and maybe help from generous souls, I can make that a reality, leave the nursing home and return to the community.”
“The Texas Prepaid Higher Education Tuition Board has established multiple investment options for the program including three managed allocation options and an FDIC-insured bank savings account option. Individuals may select any one or a combination of the investment options, and any earnings on those investments are tax free if used for qualified disability expenses,” says Fernandez.
Through Texas ABLE’s special eGift tool, anyone — the individual with the disability, family, friends, even a special needs trust — can make direct contributions to the account. Accounts can be established by the beneficiary of the account or by someone with legal authority to act on their behalf [Exhibit 2].
Galanos says this is an added benefit of the program for him. “I enjoy having a financial instrument where family, friends and others can contribute to my well-being and quality of life,” he says.*
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Source: Texas Comptroller of Public Accounts
The Texas ABLE Program is only open to Texas residents who meet federal eligibility requirements: The onset of the disability occurred before the age of 26 and the individual also meets one of the following disability eligibility criteria: a) is entitled to Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) benefits, b) has a condition on the Social Security Administration’s list of Compassionate Allowances Conditions or c) has a physician’s diagnosis of a qualifying condition. For more information about the program, visit TexasABLE.org.
Other than FDIC insurance for the Bank Savings Account Option, accounts are not insured or guaranteed and could lose money (including the principal invested). Before investing in the program, investors should carefully consider the federal and state tax consequences, possible negative effects on eligibility for federal or state benefits, possible Medicaid recapture, investment objectives, risks, administrative fees, service and other charges and expenses associated with the program. The Program Disclosure Statement and Participation Agreement contains this and other information about the program and may be obtained by visiting www.TexasABLE.org or by calling 844-4TX-ABLE (844-489-2253). Investors should read the Program Disclosure Statement and Participation Agreement carefully before investing.
*This account owner’s experience with his Texas ABLE account may not be representative of other account owners.