Dodd Introduces Disabilities Savings Act of 2008

On March 11, Senator Chris Dodd (D-CT), senior member of the Senate Committee on Health, Education, Labor and Pensions and Chairman of its Subcommittee on Children and Families, announced the introduction of the Disabilities Savings Act of 2008 at an event with Autism Speaks Co-Founders Bob and Suzanne Wright, Stuart Spielman, the father of a teenage son with Autism, Kathy Neas of Easter Seals, and families of children with autism and other disabilities.

The legislation is a significant move to help families for their children with lifelong disabilities. Senator Dodd notes that the legislation "provides families with an important tool to save the money they need for their unique needs and provide for their children long after they are gone.”

This legislation has a long way to go in a year filled with election politics, but this has a good chance of passage. What this does is removes the administration of support programs that help children with lifelong disabilities from the Social Security Administration. Currently such support is only available to families who can afford legal help to develop and administer what is called a Special Needs Trust. Moreover, Senator Dodd's DSA proposes to allow for job supports such as "employment training and support, transportation, and other related services". Such a move would make the use of the Social Security work incentives which are poorly administered by SSA less used. Access now is such a hassle that families don't use them when they are needed.

Below is a description of the program from Senator Dodd's office:

Disability Savings Act of 2008

Purpose:
To encourage individuals with disabilities and their families to save private funds for disability-related expenses to supplement, not supplant, benefits provided by other sources (including Medicaid and private insurance) so that people with disabilities can maintain health, independence, and quality of life.

Overview:

This legislation encourages individuals with disabilities and their families to save personal funds for their unique disability-related needs in Disability Savings Accounts (DSAs). The establishment of DSAs will promote the investment of private funds in the long-term well-being of individuals with disabilities through tax-advantaged savings tools, including a refundable tax credit for low-income savers, while protecting the beneficiary’s access to critical public supports.

Specifics:

DSAs will provide a tax-advantaged mechanism for individuals with disabilities to save money.

* Funds expended from the DSA for specific services such as education, medical services, employment training and support, transportation, and other related services will be tax-free.

* Interest on accounts with a balance of $250,000 or less is tax free.

* Low income earners will receive a refundable matching tax credit of up to $1000 for their contributions to the DSA.

* Funds from college savings plans and special needs trusts for the same beneficiary can be rolled into the DSA without penalty.

Beneficiaries of the account must be determined to be blind or disabled by the Social Security Administration or the Disability Determination Service of a state and be under the age of 65. The account can be held and managed by the beneficiary, their spouse or family member, or a legal guardian through a financial institution. The DSAs are designed to be easier to manage and set up than current savings mechanisms, which often require the expensive services of an attorney. Beneficiaries or their representative can expend funds directly from the account for services. Assets held in the fund will not be counted against eligibility for Medicaid and SSI or other federal support services.