The Achieving a Better Life Experience (ABLE) Act allows people with disabilities who became disabled before they turned 26 to set aside up to $15,000 a year in tax-free savings accounts without affecting their eligibility for government benefits like Medicaid and Supplemental Security Income (SSI). This money can come from the individual with the disability or anyone else who may wish to give him money. Unlike direct gifts, transfers to ABLE accounts do not affect SSI or Medicaid benefits.
Modeled on 529 savings plans for higher education, these accounts can be used to pay for qualifying expenses of the account beneficiary, such as the costs of treating the disability or for education, housing and health care, among other things.
ABLE account programs continue to roll out on a state-by-state basis. Below is a list of state programs we know of so far, with links to each program’s website. Keep in mind that you may be able to set up an ABLE account even if your state does not yet have its own program; many state programs allow out-of-state beneficiaries to open accounts.
Although it may be easy to set up an ABLE account, there are many hidden pitfalls associated with spending the funds in the accounts, both for the beneficiary and for her family members. In addition, ABLE accounts cannot hold more than $100,000. Therefore, it is imperative that anyone thinking about establishing an ABLE account speak with her special needs planner first in order to make sure that all of the pieces of a special needs plan will properly align with the ABLE account.
For more on ABLE accounts, visit the ABLE National Resource Center as well as the following Special Needs Answers articles:
Click here for state listings on the Special Needs Planners website.