10 Things You Must Know about the ABLE Act

MAY. 27, 2015

By Michael Morris

The Achieving Better Life Experience Act, or ABLE Act, was signed into law by President Obama last December. ABLE amends the Internal Revenue Code, to allow eligible individuals with disabilities and their families to establish a tax-exempt savings account that allows disbursements of income tax-free funds for “qualified disability expenses,” including education, transportation, housing, obtaining and maintaining employment, personal support services, acquisition of assistive technology and health and wellness.

To benefit from this legislation, ABLE account programs must be established by each state. Most likely, these programs will be managed by state treasury offices who also currently manage 529 college savings programs.

Forty states have filed ABLE related legislation within their respective state legislatures, with just under 20 having already been passed. We are hopeful that many of the remaining bills will pass with bipartisan support and be signed into law within the next year, leading the way to the implementation of what is certain to be a valuable tool for individuals with disabilities and their families. 

For more information on the ABLE Act and ABLE accounts, please visit National Disability Institute’s website at www.realeconomicimpact.org.

To help explain the ABLE Act, I created a video about the 10 things you should know about ABLE accounts. Below is a condensed version of what I say in the video above:

1. What is an ABLE account?

ABLE Accounts are tax-exempt savings accounts for individuals with disabilities and their families. Income earned by and contributions made to the account are not taxed.

2. Why the need for ABLE accounts?

Many individuals with disabilities and their families depend on public benefits such as SSI, SNAP and Medicaid. To be eligible for public benefits, you must not have more than $2,000 in cash savings, retirement funds and other items of significant value.

Eligibility for public benefits also requires you remain below the federal poverty line. However, with ABLE accounts individuals and families will be allowed to establish savings accounts that will not affect their eligibility for public benefits.

3. Am I eligible for an ABLE account?

ABLE Act limits eligibility to individuals with significant disabilities (including mental health conditions) developed before turning 26 years of age. This means you don’t have to be under the age of 26 as long as you have documentation that proves onset of disabilities before age 26.

If you meet the age of onset criteria and are already receiving benefits under SSI and/or SSDI, you are automatically eligible. If you meet the age of onset requirement but don’t receive SSI and/or SSDI you are still eligible to open an ABLE account if you meet SSI criteria regarding significant functional limitations.

The regulations by the Treasury Department will explain further the standard of proof and required medical documentation.

4. 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, an amount which 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.

The total limit over time that can be made is dependent on individual states and their limit for education-related 529 savings accounts. Many states have set this limit at more than $300,000 per plan.

For individuals with disabilities, who also receive SSI and Medicaid, there are some further limitations. The first $100,000 in ABLE accounts will be exempted, from the SSI $2,000 individual resource limit. When an ABLE account exceeds $100,000 the beneficiary will be suspended from eligibility for SSI benefits and no longer receive that monthly income. However, the beneficiary will continue to be eligible for Medicaid.

5. 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 described in regulations by the Treasury Department.

6. Where do I go to open an ABLE account?

Each state is responsible for establishing and operating an ABLE program. If your state does not have its own program, it may contract with another state to still offer ABLE accounts to those eligible.

The Secretary of the Department of Treasury's regulations guide the states, 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.

7. Can I have more than one ABLE account?

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

8. Will states offer options to invest the savings contributed to an ABLE account?

Like state 529 college savings plans, states likely offer qualified individuals and families options to establish ABLE accounts with varied investment strategies.

Each individual and family will need to plan possible future needs and costs over time and measure their risk budget for future investment strategies, in order to grow their savings.

The ABLE Act Account limits contributors or designated beneficiaries to change the way their money is invested in the account up to a maximum of two times per year.

9. How many eligible individuals and families might benefit from establishing an ABLE account?

There are 5.8 million individuals with disabilities in the United States. About 10% of that 5.8 million meet the definition of significant disability required by legislation to be eligible to establish an ABLE account.

10. 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. The 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 individual circumstances. For many families, the ABLE account will be a significant and viable option in addition to, rather than instead of, a Trust program.

Michael Morris is the executive director of the National Disability Institute.


NOV, 15, 2017 09:44:21 PM
Des Astor
It appears that most of the folks posting misunderstand the purpose and qualification necessary for SSI. In order to qualify for SSI, the disabled individual has to prove marked impairment across a variety of domains. Just having a diagnosis does not matter at all. Although required as a first step, being bipolar, depressed, intellectually impaired and so on does not necessarily mean that one is disabled. There are a few exceptions, Down Syndrome for example will be close to an automatic allowance as it is fairly well demonstrated clinically that folks w/Down Syndrome are impaired and require assistance by others in order to not only function but to survive. However, Down Syndrome Mosaic is an exception as such individuals may be able to function quite well (even go to college) so that DS derivative will require the claimant to provide additional evidence to support the claim of total disability. What folks need to realize is that just because a lot of us pay into the SS fund, it does not entitle us for benefits just because we may feel overwhelmed by a particular job or even cannot do a particular job (as there may be other jobs out there that would fit our remaining qualifications and abilities). Obtaining SS requires a very high threshold of disability by definition as the law is written to support only the individuals that absolutely cannot maintain a full time job in a competitive job environment.
I wish all of you best of luck.

APR, 09, 2017 12:10:33 AM
Gabrielle Crawford
I have two disabled children affected before they were 21. My youngest one lives in CA and my oldest one lives in NYC. Does the one living in CA qualify? He was born in NY. Can Pres.Trump change this law? Thank you.

MAR, 05, 2017 07:08:43 PM
dennis newman
It is sad that i learn about this now...my son is 28 and i new nothing and the expense has been enormous!!!!

FEB, 03, 2017 01:20:41 PM
I'm reading but would like clarification, what I read is should the person who the account is set up for passes away, any monies should then go to then go to reinbuse the the state or Feds. The monies that are placed in the Able Account most likely comes for family, so why would the government be untitled to receive it. If this is true there is no advantage at all to set up an account like this. I was very interested in this but now not so much.

JAN, 01, 2017 01:29:02 AM
I was disabled way before the age of 26 but "soldiered on" somehow before completely collapsing at age 28. Due to the good old SSA denial system, I couldn't get on SSI until I was 33. This cut off at the age of 26 is so typical of the screwy mentality of the SSA; "We'll give a little to some people, but everybody else can go die, actually, please go die in the street because there is no possible way of living on the piddly SSI we grudgingly give you." Ageism? The realization that SS is maybe not going to last very long? WHY 26? If you're on SSI, you can't get food stamps. I run out of food every month by the 15th. So, because I didn't get on SSI before I was 26, I don't get the same RIGHTS as other disabled people? That's disgraceful. I'm very happy for the 26 and under people, but this is, as usual, completely bizzare logic and unfair.

SEP, 19, 2016 09:50:59 AM
RW Riba
When will the ABLE Act become effective in New York State?

MAY, 30, 2016 02:27:11 PM
Debra S.Talley
Thank you for information never heard of this program.Lets post and re post.

MAR, 30, 2016 07:58:54 PM
I live in NJ, NOBODY seems to know anything about the able act! Supposedly it passed legislation but can't find any additional info!!! Please inform!

FEB, 11, 2016 10:42:44 PM
If the ABLE account doesn't exceed $100,000. Does that mean you can keep that much money in the account or does that mean when that much has been contributed you can no longer add to it even if some has been spent"

NOV, 25, 2015 06:14:23 PM
I think NAMI should have lobbied for the age limit to be revoked. As a child of a mentally ill parent, I would love to be able to give money to an ABLE account, however, records from any episodes occurring prior to my parent's 26th year may be difficult or even impossible to obtain since they are from the 1960's or 70's. Plus, misdiagnosis is still a significant problem in the mental health field, and the "onset" symptoms may have been misdiagnosed as something that would not be considered a disability qualifying for this. This act is severely limiting for those with mental illnesses and should be adjusted to meet their needs as well.

JUL, 06, 2015 11:30:32 AM
Joan Hogan
this Is great. !

JUN, 26, 2015 09:09:19 AM
*****ly Pam
This is lovely for people who have extra cash lying around that they can put in an ABLE account. However, many families who have a mentally ill relative do not have enough extra income to save. What does this act do for them? Or is this just for wealthy people?

JUN, 25, 2015 09:56:15 PM
Nick R
Randy, if you get suicidal call 911 or go to your nearest hospital emergency room and ask to be admitted. Tell them you are a "danger to yourself." States have laws about voluntary commitment to a hospital in a mental health crisis. My personal experience is that they will help you. Being in a hospital is not so bad as you might think. Mental health hospitals have social workers who can help get you Social Security benefits, also it looks good on the application to have at least one inpatient hospitalization, no matter what people tell you. At least google your state and local mental health crisis lines and give them a call so you know what to do in a crisis. Sometimes there are mobile teams who will come to see you in private. We all who suffer from depression have to have a crisis action plan. I will say a prayer for you. You are not alone. Hang in there, it will get better as you get stronger and wiser. leave another comment if you want to connect or want more info, Nick

JUN, 25, 2015 12:29:59 AM
Rizanito Holandez
I'm definitely interested. From what I understand reading above. A person needs to be diagnose disable before the age 26. Please fill me in.

JUN, 24, 2015 11:49:48 PM
I was all for this until I found out that any funds left in the ABLE account after the beneficiary dies passes on to the federal government. You have no other choice. If this information is not correct please inform me otherwise.

JUN, 21, 2015 02:51:57 PM
k berg
I find it strange the age limit for documented episodes is before age 26, as that is pretty close to the average where adult women with schizophrenia just start having their first episode, whereas men is 21-25.

JUN, 11, 2015 04:35:39 AM
Randy Soppeland
I may qualify for this in the future but now I am about to become homeless and don't know if I want to live that long! Pain anxiety depression,looking for help-can't find it!

MAY, 31, 2015 09:11:14 PM
My son is bipolar and his illness is now allowing him to finish his career. Please, send me all the information you have in order to help my son... thank you.

MAY, 31, 2015 08:27:58 AM
Looking forward to Able

MAY, 30, 2015 05:11:37 PM
Deb Mericle
The full blown effects didnt appear until i was 40 but because i was molested as a child and the dysfunctional family life i lived in it is thought that i have had at least bi polar and ptsd most of my live. Would i qualify?

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