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The Achieving a Better Life Experience (ABLE) Act
The Achieving a Better Life Experience (ABLE) Act became law in 2014. Since then, tens of thousands of people with disabilities have established these tax-advantaged savings accounts to save for disability-related expenses.
These accounts, popularly known as ABLE accounts, allow many people with disabilities to save while the account owner remains on government assistance. An eligible individual can use the accounts in creative ways, either alone or in conjunction with other planning tools. This can make a significant difference to families with special needs children.
Account Contributions
The popular 529 college savings plans serve as the model for ABLE accounts, which are also state-based, just like the college plans.
With this type of account, a person with a disability and their family can set aside funds to spend on a wide range of “qualifying disability expenses.” The annual contribution limit to the account, as of 2024, is $18,000.
The total amount of the account has to fall below $100,000. This allows the account owner to remain eligible for public benefits like Supplemental Security Income (SSI) and Medicaid. They do not have to worry about the income and resource limits.
Who Is Eligible for an ABLE Savings Account?
However, not everyone can open an ABLE account. SSI and Social Security Disability Insurance (SSDI) recipients are automatically eligible.
Others may only open an account if they obtain a certification from a licensed physician. The physician must attest that the individual otherwise meets the strict criteria the Social Security Administration uses to define the term “disabled.”
Also, people are only eligible if they became disabled prior to age 26. This has effectively excluded millions of people whose disabilities developed via chronic conditions, workplace injuries, or catastrophic events after turning 26. Note, however, that this rule will change in 2026, when age 46 will become the age when people can qualify.
ABLE Account Qualified Expenses
As mentioned above, the money in an ABLE account may pay for qualifying disability expenses of the account beneficiary. These include the following:
- the costs of treating the disability
- education
- housing
- health care
- legal fees
- and more
The Internal Revenue Service (IRS) has urged states to interpret “qualifying disability expenses” broadly. The ABLE Act itself defines the term as follows:
“Education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses, which are approved by the Secretary under regulations and consistent with the purposes of this section.”
ABLE Accounts by State
Most states have ABLE programs up and running, each with its own separate rules for opening accounts. However, you do not necessarily need to limit yourself to opening an ABLE program in your state. Most state ABLE programs allow out-of-state residents, subject to certain rules.
The family of an individual with a disability can open an ABLE account for their loved one. Adult beneficiaries also can open accounts in their own name. These types of accounts can provide a level of financial independence otherwise not available when utilizing trusts and other, more complex savings tools.
Helpful Resources on ABLE Accounts
ABLE accounts come with many rules and possible pitfalls. Consult with a qualified special needs planning attorney near you before setting one up.
Learn more about some of the practical uses for an ABLE account, as well as the pros and cons of establishing one.
Access a directory of ABLE account programs by state.
For more on ABLE accounts, including fact sheets, articles and short webinars, visit the ABLE National Resource Center.
Full description of infographic:
Title reads "Why Consider an ABLE Account?" and features 11 blocks of content that read as follows:
Congress passed the Achieving a Better Life Experience (ABLE) Act in 2014;
For families who have dependents with disabilities: The ABLE Act provides a way to set aside savings money, tax-free, for their loved one; ABLE Accounts can hold up to $100,000;
ABLE Accounts are for people with disabilities who were diagnosed with a disability before age 26;
Individuals with disabilities can manage their own ABLE accounts, giving them a measure of financial independence; Up to $17,000 per year can be contributed to an ABLE Account;
Nearly 120,000 have ABLE accounts nationwide;
ABLE Accounts can help pay for disability treatment, assistive technology, education and training, housing, living expenses, health care, legal fees, and transportation;
As of 2022, 46 states as well as the District of Columbia have active ABLE account programs in place;
Did You Know? ABLE account owners are not at risk of losing their access to government benefits, such as SSI or Medicaid; Find an ABLE Account program in your state: specialneedsanswers.com/able-accounts.