What is an ABLE Account?

In late 2014, Congress passed the Achieving a Better Life Experience (ABLE) Act, which authorized states to create tax-free savings accounts that could be used to pay for disability-related expenses without affecting an individual’s eligibility for means-tested government programs. Only individuals whose disability occurred prior to their turning 26 can hold ABLE accounts. Most ABLE programs allow eligible individuals to participate regardless of their state of residence.

Only one ABLE Act account can be established per individual but there is no limitation on the number of individuals who can contribute to that one account. Total contributions for the benefit of a given ABLE Act beneficiary cannot exceed $15,000 in a single year, the maximum federal gift tax exclusion ($15,000 in 20197).

If the ABLE Act account exceeds $100,000, the participant’s eligibility for Supplemental Security Income (SSI) will be suspended until the ABLE account is less than $100,000. Medicaid eligibility continues until the account exceeds the limit for the College Savings 529 Plan in the state sponsoring the ABLE program ($250,000 to $450,000 in 2019).

Upon the death of an ABLE accounts holder, states may require reimbursement from remaining funds for Medicaid services provided to the individual after the establishment of the account. Check to see whether or not your state chooses to do so.

Why the need for ABLE accounts?

For individuals with disabilities, saving money can often be a challenge. Prior to the creation of ABLE accounts, saving could put someone at risk of losing important benefits. ABLE accounts were created to help solve this issue. ABLE accounts allow eligible individuals to save money without having it count against their eligibility for certain federal benefits. Individuals can save up to $15,000 per year without putting these benefits at risk. Additionally, ABLE accounts offer investment options and tax-free growth, making it a financially secure way to save for future expenses related to living with a disability. ABLE accounts empower individuals with disabilities to take control of their financial future.

Am I eligible for an ABLE account?

If you are a person with disabilities who developed the condition before the age of 26, you may be eligible for an ABLE account. ABLE accounts, which stands for Achieving a Better Life Experience, were created to provide individuals with disabilities a tax-advantaged way to save for qualified disability expenses. These expenses can include education, housing, transportation, healthcare, and other specified costs that improve an individual’s quality of life. ABLE accounts allow individuals to save for these expenses without jeopardizing their eligibility for other government benefits. It is important to understand the eligibility requirements and limitations of ABLE accounts before opening one. If you meet the eligibility requirements, an ABLE account could be a valuable tool for managing your finances and improving your overall quality of life.

Which expenses are allowed by ABLE accounts?

ABLE accounts are designed to provide individuals with disabilities a tax-advantaged way to save money for qualifying expenses related to their disability. But you may be wondering what expenses are actually allowed to be paid for by your ABLE account. The good news is that there is a wide range of expenses that qualify, including housing, transportation, education, assistive technology, personal support services, and even basic living expenses like groceries and utility bills. However, it’s important to understand that there are some limits and regulations in place, such as annual contribution limits and restrictions on using the funds for non-qualified expenses. Overall, ABLE accounts can be an invaluable tool for individuals with disabilities and their families to achieve greater financial independence and security.

Can I have more than one ABLE account?

If you are thinking about opening an ABLE account, you might be wondering whether you can have more than one. The good news is that, in most cases, you can! ABLE accounts are designed to help individuals with disabilities save for their futures, and there are few restrictions on how many accounts they can have. However, there are some nuances to keep in mind. Each state that offers ABLE accounts has its own rules regarding how many accounts a person can have, so it’s important to do some research before opening multiple accounts. Additionally, there are contribution limits to consider, so keep that in mind when deciding whether to have more than one ABLE account. Overall, having multiple ABLE accounts can be a great way to maximize your savings potential and ensure that you have the resources you need to achieve your financial goals.

How ABLE Accounts Work?

ABLE accounts, also known as Achieving a Better Life Experience accounts, are an essential resource for individuals with disabilities and their families. These accounts provide a way for individuals with disabilities to save and invest money without affecting their eligibility for government benefits such as Medicaid and Supplemental Security Income (SSI). ABLE accounts work by allowing individuals to contribute after-tax dollars into an account that can then be used to pay for qualified disability expenses such as healthcare, education, housing, and transportation. With these accounts, individuals with disabilities can have the peace of mind knowing that they have a savings safety net and can plan for a brighter financial future.

For a comparison of ABLE accounts with special needs trusts, click here.

If you’d like to speak with an attorney who has specialized knowledge of these issues, please use our directory to find SNA members in your state.