ABLE accounts can help employers with inclusion - Voya Financial
Elevating inclusion with employer-sponsored ABLE solutions
We’ve seen a shift towards a broader line of thinking when it comes to the role of the employer and the financial wellness of employees. The growth of employer student loan programs, emergency savings programs, health savings accounts (HSAs), 529s and other accounts that allow direct deposit – and in some cases employer match – can help employees achieve financial goals that are important to them. Unfortunately, many of these solutions, along with defined contribution plans, may unintentionally exclude an important and growing segment of the workforce: people with special needs, disabilities and caregivers.
To best attract the diverse talent offered by people with disabilities and caregivers, employers are trending toward more inclusive employment practices, such as offering accessible workplaces and employer-sponsored benefits.
Employer-sponsored benefits vs. government benefit eligibility
Employers now have the opportunity to reverse years of disadvantages faced by people with disabilities and special needs and caregivers in the workplace.
People with disabilities or special needs have been at a financial disadvantage for years, in part due to restrictions imposed by government benefits programs that are often critical to managing care needs. Many government benefits require qualifying individuals to limit their income and keep accumulated assets — including retirement accounts, HSAs, and 529 plans — below strict limits, or risk losing their eligibility.
As a result, employees with disabilities or special needs often opt out of valuable employer-sponsored benefits — including 401(k) and 403(b) plans — to maintain government benefit eligibility. Opting out of one’s employer-sponsored retirement plan may have serious ramifications for savings accumulation and tax benefits. In addition to giving up the ability to save an individual’s own money for retirement and other goals, those with disability or special needs situations may also be giving up the employer match, which is a significant benefit to those employees who participate.
Caregiver challenges in the workplace
As noted in Voya’s own research, financial challenges extend to caregivers in the workplace as well. Caregivers and loved ones who are employed face additional stress as they attempt to balance their financial goals with the needs of their loved ones.
Achieving a Better Life Experience (ABLE) accounts in the workplace
As employers recognize the needs of people with disabilities, special needs and caregivers in the workplace, a potential alternative to opting out of valuable employer benefits to maintain government benefit eligibility is emerging in the form of ABLE accounts. ABLE accounts are state-sponsored, tax-deferred accounts under the same tax code as 529 education plans. However instead of being strictly for higher education, they can be used for nearly anything related to quality of life for a person with a disability. Individuals with disabilities that began prior to age 26 may be eligible to contribute to an ABLE account. Caregivers, loved ones and even employers can also contribute to an ABLE account for an eligible individual.
Perhaps most importantly, assets accumulated in ABLE accounts are not counted toward government benefits resource tests. Account holders can accumulate up to $100,000 in an ABLE account without affecting their benefit payments from Supplemental Security Income (SSI). Depending on specific state limits, ABLE account holders can accumulate $300,000 or more without interrupting their medical coverage and other supports through Medicaid.
With plans available in every state, many with low-cost investments, low minimums and easy access that often includes debit cards, ABLE accounts are an easy, cost-effective way for families and individuals to save and invest for short-term needs and long term goals. Contributions are limited to $15,000 for 2019, but individuals who are employed and not participating in employer retirement plans can contribute an additional $12,140 for a total potential contribution of $27,140 for 2019. It’s easy to see how employees can really make progress towards their financial goals with ABLE accounts.
Employers can offer ABLE account contributions and support
ABLE accounts are a relatively new development but are gaining traction as an option for parents to save for their children with special needs or disabilities. But, in the workplace, ABLE can be a viable complement to an employer sponsored retirement plan for employers who want to be inclusive of people with disabilities and caregivers. Here are a few steps employers can take to offer ABLE account support to eligible employees:
- On the simplest level, employers can offer education about ABLE options and even help with access to a direct ABLE program.
- Employers can help employees with enrollment as well as allow for payroll deduction and direct deposit to facilitate saving.
- Employers that want to go a step further can even offer a matching contribution to ABLE accounts. This step can help bridge the gap between the benefits received by those who are participating in defined contribution retirement plans and those who might choose an ABLE account instead.
Communication, education and assistance are key to this process, as there’s a hurdle to overcome in the form of an understanding gap. Given the fact that ABLE accounts are relatively new and legislation has been evolving, there’s a need for quality educational content and guidance. Some individuals with disabilities are accustomed to strictly adhering to the asset limitation and are worried about saving even though the vehicle is designed for that purpose.
As use of ABLE accounts grows amongst the disabilities and special needs community, employers should consider how to incorporate ABLE into their benefits programs in order to help attract and retain quality employees. In doing so, they can make progress in financial inclusion and help all employees save for their own financial goals.
For more information on ABLE accounts, visit VoyaCares.com or ask your Voya relationship manager.