Living with a disability can be financially challenging, as households with a disabled adult require an average of 28% more income to maintain the same standard of living as those without. In response, many rely on government programs like Medicaid, Supplemental Nutrition Assistance Program, and Supplemental Security Income, which come with strict limits on liquid assets.
The Achieving a Better Life Experience (ABLE) Act, passed by Congress in 2014, provides an opportunity for those with disabilities to save money without jeopardizing their eligibility for government programs. ABLE accounts, similar to 529 college savings plans, offer tax advantages and allow disabled individuals to save for related expenses without impacting their public benefits.
Approximately 20 states and the District of Columbia offer an annual state tax deduction or credit for contributions to ABLE accounts. These accounts can be used to save for a wide range of disability-related expenses, such as education, housing, transportation, employment training, and assistive technology.
ABLE accounts are only available to individuals diagnosed with a disability or blindness before age However, recent changes through the ABLE Age Adjustment Act will raise the age of onset of disability from 26 to 46, starting on January 1, 2026. This change will make millions of additional Americans eligible for ABLE accounts.
Currently, 46 states and the District of Columbia have active ABLE programs, with each state running its program and setting its eligibility requirements. Many states allow out-of-state residents to sign up, so it is essential to check the options available in each state.
As of 2023, individuals can contribute up to $17,000 per year to their ABLE account, with employed disabled individuals allowed to contribute more under certain circumstances. Friends, family, and employers can also contribute additional funds as long as the total yearly contribution complies with established limits.
ABLE accounts offer a valuable alternative to special needs trusts, which are more flexible but may not provide as immediate access to funds. ABLE accounts can make a significant difference in the lives of disabled individuals, helping them become more financially independent and confident while ensuring they remain qualified for government programs like SSI and Medicaid.
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