ABLE Savings Accounts for Individuals with Disabilities

Patterned after 529 college savings plans, ABLE savings accounts are tax-advantaged state savings plans for individuals with disabilities. They are being created as a result of the passage of the Stephen Beck Jr., Achieving a Better Life Experience Act of 2014.

ABLE accounts can be used for "qualified disability expenses" - any expense related to the designated beneficiary as a result of living a life with disabilities. These may include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses which help improve health, independence, and/or quality of life.

Limitations to ABLE accounts:

1. The disability must have occurred prior to age 26.

2. Only a parent, grandparent or guardian or a competent disabled person can establish one. (However, once the account is established, anyone can make a gift to it.)

3. There can only be one ABLE account per disabled person and it can be funded only up to the annual federal gift tax exclusion ($14K in 2017).

4.  All funds are not counted as a resource for Medicaid; but only the first $100K is not counted for SSI eligibility.  If the funds exceed $100K, then SSI benefits are “frozen” until the value of the account is below 100k.

5.  Once the ABLE account is established, when the disabled person dies, there is a Medicaid payback for the benefits provided for the disabled person.

6.  Finally, each state program has its own maximum funding limit.

Not all states are participating in ABLE programs, however, regardless of where you might live, you are free to enroll in any state’s program that accepts out-of-state residents.

More information, including a state-by-state comparison of programs, can be found on the ABLE National Resource Center website.

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