The Enhancing American Retirement Now (EARN) Act includes a troubling provision that has received very little media coverage. An ABLE account amendment would increase spending on means‐tested welfare programs by circumventing federal asset tests.

When the original ABLE Act emerged back in 2014, my then‐colleague at the Heritage Foundation, Robert Rector, and I wrote:

While the upfront cost of the ABLE Act is not enormous by Washington standards, the precedent of weakened asset limits in multiple welfare programs may well lead to huge costs in the future. Welfare spending did not balloon to nearly $1 trillion dollars annually overnight. It slowly grew via small, incremental expansions of benefits and eligibility like those contained in the ABLE Act.

And here we are, eight years later, and the ABLE Act may be undergoing a major expansion. Just like we predicted.

Many federal means‐tested programs (including Medicaid, the Supplemental Nutrition Assistance Program (SNAP), the Earned Income Tax Credit, the Supplemental Security Income (SSI) program, and Section 8 housing) have asset tests, limiting individuals with other financial resources from becoming eligible for benefits.

The purpose of asset tests is to ensure that individuals use their own resources before relying on taxpayers for support. This is only fair. Working‐class American families should not be subsidizing more affluent individuals who can afford to pay their own bills. In the case of the ABLE Act, a National Disability Institute report from 2015 predicted that “these account holders will most likely come from families earning over $90,000 per year.”

The original ABLE Act passed in 2014. It created tax‐preferred savings accounts for people with disabilities to save for a broad range of qualified expenses. More importantly, the law exempts ABLE account assets and distributions from being counted against federal means‐tested benefits, such as Supplemental Security Income (SSI) and Medicaid.

Individuals who wouldn’t normally qualify for these welfare benefits — because they have significant financial resources they could draw on to support themselves — are able to continue to receive welfare support for as long as those assets are held in a designated ABLE account.

ABLE accounts can be opened in 43 states and the District of Columbia, shielding up to $16,000 in annual contributions, made by anyone on behalf of the beneficiary, from asset tests. Working beneficiaries may contribute an additional amount up to the individual Federal Poverty Level.

There are no limits on how much someone can accumulate in an ABLE account. Once accounts exceed $100,000 in value, account holders would lose their SSI cash benefits. However, Medicaid beneficiaries can keep their benefits, regardless of how high their account balances grow.

Currently, only children and adults whose disability occurred before age 26 and who meet federal program disability standards are eligible to open an ABLE account. The amendment included in the Senate EARN Act would make ABLE accounts available to individuals who experienced their onset of disability before age 46. According to a news release by Senator Bob Casey (D‑PA) this change would expand ABLE account access for 6.2 million individuals.

This policy may incentivize more individuals on federal disability programs to work, with associated benefits to themselves and their communities. There’s also the risk that looser eligibility standards will motivate more individuals to apply for federal disability programs when they otherwise may have continued to work. The latter would drive up federal government spending on benefits.

To qualify, individuals must be entitled to federal disability benefits under the Supplemental Security Income program (a means‐tested welfare program that pays monthly benefits to people who are disabled, blind, or age 65 or older) or the Social Security Disability Insurance program (a program that provides monthly cash benefits to workers who meet the statutory definition of disability and have achieved insured status).

Both programs are poorly administered and subject to fraud and abuse. They have loose eligibility standards and inconsistent determination processes, which result in excess benefit payments. Unreliable disability determination processes make the ABLE Act expansion more troubling, because this asset test loophole will increase incentives for individuals to apply for federal disability programs.

Alternatively, individuals can also qualify by presenting a “disability certification” confirming documentation of a physician’s diagnosis that the individual meets the functional disability criteria in the ABLE Act.

The EARN Act, including the ABLE Age Adjustment Act amendment, is reportedly being considered for passage during a lame‐duck deal later this fall.

The Congressional Budget Office should first produce a score of the fiscal impact this massive expansion of ABLE accounts would have on the federal budget.

It would be further instructive for the Congressional Research Service to produce a report on current ABLE account usage, including the income level of participating families.

Working‐class taxpayers have a right to know who benefits from welfare programs that are intended for those who need them most.