What Is an ABLE Account? An Introduction

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ABLE Accounts and the ABLE Act

Since the passage of the Achieving a Better Life Experience (ABLE) Act in 2014, tens of thousands of people with disabilities have opened up new, special tax-free savings accounts to save for disability-related expenses.

These accounts, popularly known as ABLE accounts, allow many people with disabilities or their families to save while the account owner remains on government assistance. The accounts can be used in creative ways, either alone or in conjunction with other planning tools, to make a big difference to families with special needs children.

ABLE Account Contributions

ABLE accounts are modeled on popular 529 college savings plans, and are state-based, just like the college plans. 

Upon opening an ABLE account, people with disabilities and their families can set aside up to $17,000 annually to spend on a wide range of “qualifying disability expenses.” As long as the total in the ABLE account falls below $100,000, the account’s funds are shielded from the income and resource limits for Supplemental Security Income (SSI), Medicaid, and other government benefits, thus allowing the account owner to maintain eligibility.

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 attesting that they otherwise meet the Social Security Administration’s definition of “disabled.”

Also, people are only eligible if they became disabled prior to age 26. This has effectively excluded millions of peole whose disabilities developed via chronic conditions, workplace injuries, or catastrophic events after turning 26. Note, however, that this rule is due to change in 2026, when age 46 will become the new age of eligibility.

ABLE Account Qualified Expenses

What may the money in an ABLE account be spent on? These accounts may be used to pay for qualifying disability expenses of the account beneficiary, such as:

• 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 are not limited to an ABLE program in your state. Most state ABLE programs allow out-of-state residents to open up accounts in their states, subject to certain rules.

While ABLE accounts are often opened by the beneficiaries’ family, adult beneficiaries can open accounts in their own name, providing a level of financial independence otherwise unavailable when utilizing trusts and more complex savings tools.

Helpful Resources on ABLE Accounts

Because ABLE accounts come with many rules and possible pitfalls, consult with a qualified special needs planner 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. Or, view an infographic featuring the basics on ABLE accounts.

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 eligibilty for government benefits, such as SSI or Medicaid; Find an ABLE Account program in your state: specialneedsanswers.com/able-accounts.