Disabled Oregonians Earn Right to Save as State Moves to Approve Able Act

The bill expanding the state’s 529 savings accounts to people with disabilities is about to clear the Legislature, providing a way for families as well as individuals with intellectual or developmental disabilities to save for their basic needs without running afoul of federal restrictions on assets when they receive state services.

When Sen. Sara Gelser, D-Corvallis, was 9 years old, she wanted a cat. But her parents didn’t just give her the feline.

They taught her a lesson in work and savings: she washed the car and did a long list of household chores, all the while saving up cash for the animal and its needs: a kitty litter box and kitty food.

But as the mother of a son who has intellectual disabilities, she was told the system discouraged her from putting anything away on his behalf: “Whatever you do, don’t save a penny for him because he won’t be eligible for any services,” Gelser told her colleagues Tuesday.

People with disabilities have had to live by the same asset limitations for support programs such as food stamps: don’t go over $2,000.

The federal policy has helped assure that public resources go to those who are most in need, but that policy has also artificially impoverished people with disabilities, who might be able to get some of their needs met from family or their own income, but still would benefit moreso from government services.

Enter Senate Bill 777, which expands the popular 529 savings program used for college savings and offers such accounts to people with disabilities, as a tax-deductible means to save money for basic living expenses.

Account holders can place up to $14,000 a year in these accounts, for a total of $100,000 without losing disability payments. Even if they exceed the cap, they will not lose their Medicaid benefits.

In addition to money they might receive from family support, the accounts can help people with a disability who are working to keep their earned income without losing their benefits.

Gelser, the chair of the Senate Human Services Committee, shepherded Senate Bill 777 through the budget process, worked with the state treasurer’s office and on Tuesday, it passed the Senate with unanimous approval. It now heads to the House.

“I look forward to people finally being able to save their own money,” said Gelser, noting a constituent would use the money to save up for a rental deposit so they could move into safer housing, something federal restrictions on assets have currently prevented.

Her adult son also might be able to establish an account for himself, although he does have access to a trust to help with medical expenses. Gelser explained to The Lund Report that the 529 accounts allow people much more flexibility, which can be done without the help of an attorney, opening a savings option to many more people.

SB 777 did come with a caveat from Sen. Brian Boquist, R-McMinnville, who worried the state may not be trusted handling people’s savings and that the Legislature should keep a close eye on the program.

“We want all the money saved in this program to go where it’s intended,” Boquist said. “We want to be sure that the treasurer won’t gobble up the money.”

Treasurer Ted Wheeler’s office said this jab at the 529 savings program was without merit -- It’s a trust fund completely segregated from the state general fund or any other funds. All contributions are sent directly to the private plan administrator.

“It’s an innovative, creative approach, but by the same token, it’s using a framework that we are thoroughly familiar with,” Wheeler told The Lund Report.

Wheeler said his support for developing new ways to give a leg up to people with disabilities started with his days as a Multnomah County Commissioner, but he credited Gelser with the swift passage of SB 777 -- which will make Oregonians eligible for the program in its very first year, after Congress passed a law allowing states to expand their 529 savings accounts to people with disabilities.

The program is intended to be self-sustaining, but the bill does include $665,000 in general fund money to help get the program running.

Wheeler spokesman Michael Cox said that money will be used to fill two new positions. “We will look to hire someone with ties to persons with disabilities in Oregon so we can engage in much more direct outreach and education about the program,” Cox said.

One key but obvious difference between the college savings accounts is that fund holders will be able to draw down money over their lifetimes as opposed to just the few years when attending a university.

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