ABLE Accounts Are a Financial Blessing for People With Disabilities

ABLE accounts let you save for disability-related expenses without affecting your eligibility for public benefits.

Did you know that in the U.S., people with disabilities can save money for disability-related expenses while still receiving benefits like Social Security Disability Income, Supplemental Security Income, and Medicaid?

The Achieving a Better Life Experience (ABLE) Act allows people with disabilities to create savings and investment accounts – and the money they save in those accounts doesn’t affect their eligibility for public benefits. Interest on those savings isn’t taxed, either.

Before the ABLE Act was passed, people with disabilities had a hard time saving money for medical and related expenses without exceeding resource limits imposed by public assistance programs they relied on. Thanks to the ABLE Act, that’s no longer a problem.

“ABLE accounts can provide funding for qualified disability expenses that supplement, but don’t replace, benefits otherwise available through private sources, employment, public programs, or other sources,” the Social Security Administration (SSA) says. “The Internal Revenue Service does not restrict the usage of the ABLE funds, leaving it open to items or services that relate to the unique needs of each individual.”

According to the SSA, since the first ABLE program opened in 2016, ABLE account holders have saved more than $550 million, with more than $100 million spent on disability-related expenses. More than 75,000 people with disabilities have opened an ABLE account with an average balance of $6,000. 

There are 46 ABLE plans available with savings/investment limits ranging from $235,000 to $529,000. Still, less than 1% of ABLE-eligible individuals have opened an account.

Who May Open an ABLE account?

The ABLE National Resource Center (ABLE NRC), which is managed by the National Disability Institute, explains that to open an ABLE account of which you’re the beneficiary, you must have had an age of onset of disability before your 26th birthday (although you can be older than 26).

If you meet this age requirement and are also receiving SSI and/or SSDI benefits, you’re automatically eligible to open an ABLE account. If you aren’t receiving SSI and/or SSDI but still meet the age of onset of disability requirement, you could still be eligible to open an ABLE account if you meet the SSA’s definition of disabled and receive a letter of disability certification from a qualified medical provider (not a psychologist, clinical therapist, or certified vocational rehabilitation counselor). 

How much can I put in an ABLE account?

ABLE accounts have contribution limits. An annual total of $17,000 can be contributed to an ABLE account by:

  • Friends and Family
  • Special Needs / Pooled Trust
  • 529 College Savings Account rollover

You can have up to $100,000 in savings in an ABLE account without affecting your eligibility for SSI. Even better, any amount of ABLE savings up to the plan’s limit won’t affect your eligibility for:

  • SSDI
  • Housing Assistance via Housing and Urban Development programs (HUD),
  • Supplemental Nutrition and Assistance Program (SNAP)
  • Free Application for Federal Student Aid (FAFSA),
  • Medicare Parts A, B, C, or D, Medicare Savings Programs, and Extra Help
  • Any type of Medicaid benefit, including Medicaid waiver services.

What expenses are allowed by ABLE accounts?

ABLE accounts allow “qualified disability expenses,” i.e. any expenses you have as the account beneficiary that are related to your disability. “Related” is interpreted broadly. Examples include: 

  • Education
  • Food
  • Housing
  • Transportation
  • Employment training and support
  • Assistive technology
  • Personal support services
  • Health care expenses
  • Financial management
  • Administrative services
  • Other expenses which help improve your health, independence, and/or quality of life.

You can even withdraw money from an ABLE account for a down payment on a home. “The purchase of a home, payments for rent, and other housing-related expenses, those are all qualified disability expenses,” ABLE NRC Director Miranda Kennedy tells Business Insider.

Do I have to enroll in my state’s ABLE program?

No. If you don’t like your state’s program or live in Idaho, North Dakota, South Dakota, or Wisconsin (which don’t have their own programs), you can enroll in another state’s program that accepts out-of-state residents. To choose a program, the ABLE NRC suggests asking the following questions:

Opening an Account

  • What documentation will an ABLE program require from you to open an account? 
  • Is there a minimum contribution to open an ABLE account? 
  • Is there a fee to open an account and, if so, how much is that fee?

Maintaining the Account and Fees

  • Is there a required minimum contribution to your account? If so, what is it? 
  • Are the fees front-end loaded or are they reduced if you leave your funds invested for several years? 
  • Are there restrictions on how often you can withdraw funds from your account?

Investment Opportunities

  • What are the investment options the state ABLE program offers? 
  • Are the options likely to meet your needs for limiting risk with the growth of your contributed dollars to the ABLE account? 
  • Does the program offer any unique or value-added program elements to help you save, contribute to your account, grow the account and manage your invested dollars? 
  • Does the state program offer any unique or value-added program elements (such as a match or rewards program, financial literacy info or program for beneficiaries) to help you save, contribute to your account, grow the account and manage your invested dollars? If so, what is it?

Uniqueness

  • Does your state have a program?
  • If so, do they offer a state income tax for contributions to their account? 
  • Is there a “debit card/purchasing card” available with the program? Are there added costs to this?

So don’t let the fact that you’re receiving SSDI or some other form of public assistance keep you from saving for your disability-related expenses. Open an ABLE account; your future self will thank you.

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