What is an ABLE account?

The ABLE (Achieving a Better Life Experience) Act will ease financial strains faced by individuals with disabilities by making tax-free savings accounts available to cover qualified expenses such as education, housing and transportation.  The ABLE Act will supplement, but not supplant, benefits provided through private insurances, the Medicaid program, the supplemental security income program, the beneficiary’s employment and other sources.

An ABLE account provides individuals with disabilities the same types of flexible savings tools that other Americans have through college savings accounts, health savings accounts and individual retirement accounts.  Legislation through this Act also contains Medicaid fraud protection against abuse and a Medicaid pay-back provision when the beneficiary passes away.  It will eliminate barriers to work and saving by preventing dollars saved through ABLE accounts from counting against an individuals eligibility for any federal benefits program.

Why the need for ABLE accounts?

Millions of individuals with disabilities and their families depend on a wide variety of public benefits for income, health care and food and housing assistance.  Eligibility for these benefits (SSI, SNAP, Medicaid) require meeting a means or resource test that limits eligibility to individuals to report more than $2,000 in cash savings, retirement funds and other items of significant value.  The remain eligible for these public benefits, an individual must remain poor.  For the first time in public policy, the ABLE Act recognizes the extra and significant costs of living with a disability.  These include costs, related to raising a child with significant disabilities or a working age adult with disabilities, for accessible housing and transportation, personal assistance services and health care not covered by insurance, Medicaid or Medicare.

Am I eligible for an ABLE account?

The ABLE Act limits eligibility to individuals with significant disabilities with an age of onset of disability before turning 26 years of age.  If you meet this criteria and are also receiving benefits already under SSI and/or SSDI, you are automatically eligible to establish an ABLE account.  If you are not a recipient of SSI and/or SSDI but still meet the age of onset disability requirement, you would still be eligible to open an ABLE account if you meet SSI criteria regarding significant functional limitations.  The regulations written by the Treasury Department will have to explain further the standard of proof and required medical documentation.  You need not be under the age of 26 to be eligible for an ABLE account.  You could be over the age of 26, but must have the documentation of disability tat indicates age of onset before the age of 26.

Are there limits to how much money can be put in an ABLE account?

The total annual contributions by all participating individuals, including family and friends, is $14,000.  The amount will be adjusted annually for inflation.  Under current tax law, $14,000 is the maximum amount that individuals can make as a gift to someone else and not pay taxes (gift tax exclusion).  The total limit over time that could be made to an ABLE account will be subject to the individual state and their limit for education-related 529 savings accounts.  Many states have set this limit at more than $300,000 per plan.  However, for individuals with disabilities who are recipients of SSI and Medicaid, the ABLE  Act sets some further limitations.  The first $100,000 in ABLE accounts would be exempted from the SSI $2,000 individual resource limit.  If and when an ABLE account exceeds $100,000, the beneficiary would be suspended from eligibility for SSI benefts and no longer receive that monthly income.  However, the beneficiary would continue to be eligible for Medicaid.  States would be able to recoup some expenses through Medicaid upon the death of the beneficiary.

Which expenses are allowed by ABLE accounts?

A “qualified disability expense” means any expense related to the designated beneficiary as a result of living a life with disabilities.  These 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 will be further described in regulations developed by the Treasury Department.

Where do I go to open an ABLE account?

Each state is responsible for establishing and operating an ABLE program.  If a stat should choose not to establish its own program, the state may choose to contract with another state to still to offer its eligible individuals with significant disabilities the opportunity to open an ABLE account .

The Secretary of the Department of the Treasury has begun to develop regulations that will guide the states in terms of a) the information required to be presented to open an ABLE account; b) the documentation need to meet the requirements of ABLE account eligibility for a person with a disability; and c) the definition details of “qualified disability expenses” and the documentation that will be needed for tax reporting.

No accounts can be established until the regulations are finalized following a public comment period on proposed rules for program implementation.  States will begin to accept applications to establish ABLE accounts before the end of 2015.

Can I have more than one ABLE account?

No.  The ABLE Act limits the opportunity to one ABLE account per eligible individual.

How is an ABLE account different than a special needs or pooled trust?

An ABLE account will provide more choice and control for the beneficiary and family.  Cost of establishing an account will be considerably less than either a Special Needs Trust (SNT) or Pooled Income Trust.  With an ABLE account, account owners will have the ability to control their funds and, if circumstances change, still have other options available to them.  Determining which option is the most appropriate will depend upon indvidual circumsttances.  For many families, the ABLE account will be a significant and viable option in addition to, rather than instead of, a Trust program.


The ABLE Act was introduced in the US Senate and US House of Representatives on February 13, 2013.  On December 3, 2014, the ABLE Act passed in the US House of Representatives (404-17).  Two weeks later , on December 16, the Senate voted to pass the ABLE Act as part of the Tax Extenders package.  On December 29, 2014, President Obama signed the Tax Extenders package, making the ABLE Act the law of the land.

For more information on the ABLE Act, please contact the attorneys at Martha C. Brown & Associates at (314) 962-0186.

Source:  National Down Syndrome Society – www.ndss.org; National Association of State Directors of Developmental Disbilities Services – www.nasddds.org