Before Congress recessed for the midterm elections, lawmakers announced plans to use the current lame-duck session to work on passing a bill called “The Achieving a Better Life Experience (ABLE) Act.” Supporters describe the bill as a way to eliminate “barriers to work and saving by preventing dollars saved through ABLE accounts from counting against an individual’s eligibility for any federal benefits program.” But what, exactly does that mean?

The ABLE Act (H.R. 647) would effectively eliminate the asset test for many families that receive means-tested welfare assistance. Consequently, it would expand the welfare state.

The purpose of asset tests is to ensure that individuals use their own resources before turning to taxpayers for support. The Congressional Budget Office estimates the bill will cost taxpayers $2.1 billion in just 10 years. Increased eligibility for means-tested welfare assistance accounts for more than half of that cost.

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.

The ABLE Act targets families with children who qualify for Supplemental Security Income (SSI). It would let them accrue up to $100,000 in savings or gifts, tax-free, while still receiving benefits. It would also eliminate all asset tests for Medicaid, food stamps (SNAP) and other means-tested benefits for disabled children once they become adults.

Credit Suisse’s Global Wealth report notes that Americans in the middle of the wealth distribution own assets worth $45,000. For individuals with more than twice the median wealth to retain eligibility for programs that are intended to relieve poverty seems excessive by comparison.

The core problem with the ABLE Act is that it would expand eligibility — and increases the incentives — for families to join a fast-growing and highly problematic cash welfare program: SSI. According to a 2011 Office of the Inspector General report, SSI payments totaling $1.4 billion were issued to 513,300 children who were ineligible.

For years, SSI payments have flowed to families who no longer qualify because the SSA has failed to conduct timely so-called “continuing disability reviews” (CDRs). More than one-third of childhood CDRs are overdue — some by more than 13 years!

Additionally, according to the Government Accountability Office’s Daniel Bertoni: “Accurately diagnosing some types of mental impairments is a complex and often subjective process for (the Social Security Administration), which can sometimes be vulnerable to fraud and abuse.” Around half of SSI child recipients are disabled because of “developmental disorders,” “childhood and adolescent disorders not elsewhere classified,” or “mood disorders.”

The SSI program provides a high level of benefits and is generally combined with aid from several other programs. The typical single unemployed mother with a child on SSI receives a means-tested welfare packet from various programs worth about $25,000 per year. If the mother works at a low-wage job, earning $10,000 per year, the combined value of welfare benefits and post-tax earnings can reach $43,000 per year.

Families with children on SSI are not subject to work requirements. And depending on the state of residency, these families can receive cash benefits that are twice as generous as those offered under the Temporary Assistance for Needy Families (TANF) program. The ABLE Act makes it easier to accrue cash from informal and unreported sources of income, facilitating SSI fraud by enabling welfare recipients to openly accumulate savings from hidden employment.

By restricting ABLE Act eligibility to children with clear clinical conditions like Down syndrome or blindness, and easing the asset test only when children become adults, Congress can mitigate some of the negative consequences of the bill.

 - Romina Boccia is the Grover M. Hermann Fellow in Federal Budgetary Affairs at The Heritage Foundation’s Roe Institute for Economic Policy Studies.

 - Robert Rector is Senior Research Fellow in Heritage’s Institute for Family, Community and Opportunity.