Equity for the Disabled

Friday, June 13, 2008

PARENTS WHO want help saving for their children's college education enjoy generous tax breaks. Parents of disabled children, including children who have little or no hope of going to college, receive no such benefit to help defray the enormous extra costs their children may incur.

Several pieces of legislation have been introduced in Congress to create tax-free savings accounts for people with disabilities. In the Senate, one version is sponsored by Sen. Christopher J. Dodd (D-Conn.) and another by Sens. Robert P. Casey (D-Pa.) and Orrin G. Hatch (R-Utah). A version similar to the Casey-Hatch bill was introduced in the House last month by Rep. Ander Crenshaw (R-Fla.).

Although they differ in some details, these measures would allow parents, other family members or those with disabilities themselves to put money into special accounts; the savings would grow tax free and would not be taxed when withdrawn to pay for qualified expenses. Such accounts are a worthy idea that would address the current inequity in the tax code. As important, they would enable families of people with disabilities to provide a financial cushion without endangering recipients' eligibility for Medicaid and Supplemental Security Income benefits.

These accounts also pose complicated questions, especially about their interaction with benefits eligibility. Currently, those programs impose strict asset limits. The account proposals provide that money deposited in the accounts not count against eligibility. The trick is to permit parents to provide some extra help for children with disabilities without encouraging wealthy people who could easily pay for health care and other needs to sock away large sums in these accounts while moving family members onto government benefits. What limits should be put on the size of the accounts or on total contributions? Should eligible expenses include housing? Should money left over in an account after a person's death be given to the government to reimburse its expenditures? These are critical but resolvable details to be worked out as this worthy idea moves forward.

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