ABLE Savings Accounts for People with Special Needs

ABLE accounts allow people with disabilities to save money while on government disability benefits without risking the loss of those benefits. Read more about the advantages and limitations of ABLE accounts.

What Is an ABLE Savings Account?

In 2014, Congress signed the Achieving a Better Life Experience (ABLE) Act into law to make it easier for those with disabilities or special needs to save money. Importantly, much of the fund won't count against the disabled person's ability to qualify for Supplemental Security Income (SSI) or Medicaid. The money in an ABLE account also grows tax-free.

Disabled individuals or their families may establish a single ABLE savings account, and the individual, family, friends, or anyone else may contribute a total of $17,000 into the account each year—that's per account, not per donor. The disabled person can use the funds in the ABLE account to pay for "qualified disability expenses," such as education, food, housing, health care, and transportation.

In addition, some state ABLE programs allow disabled individuals who work to contribute an additional amount: up to the annual federal poverty guideline ($14,580 in 2023) or their annual salary before taxes, whichever is less.

Do You Qualify for an ABLE Savings Account?

ABLE accounts are only available to people who are blind or have a physical or mental impairment resulting in marked and severe functional limitations which can be expected to result in death or have lasted or are expected to last for at least 12 months. Moreover, the blindness or disability must have occurred before the person reached age 26. Disabled adults over age 26 may open ABLE Accounts provided they can prove they became disabled before they were 26.

Because people who became blind or disabled after age 26 are not eligible to open ABLE accounts, the great majority of the 61 million Americans who are blind or disabled are not eligible to open ABLE accounts. However, starting in January 2026, an individual who has a disabling condition that began before age 46 (rather than age 26) will be eligible, opening up ABLE Accounts to a greater number of people.

Anyone who started receiving disability benefits (SSI or SSDI) before age 26 is automatically eligible to open an ABLE account. Others can open an ABLE account by certifying, under penalty of perjury, that they meet the necessary requirements. This means they have a signed physician's diagnosis and will provide it to the program or the IRS upon request. However, eligible individuals with disabilities do not need to provide the written diagnosis when opening the ABLE account, and ABLE programs do not need to obtain or evaluate their medical records.

What Are the Pros and Cons of an ABLE Account?

The biggest advantages of an ABLE account are these:

• The money in an ABLE account won't disqualify a disabled person from receiving SSI and Medicaid benefits.
• Anyone can put money in the account, including the individual with the disability.
• Any income earned in the account will not be subject to income tax.
• An ABLE account is easy to set up on your own (unlike special needs trusts, discussed below).

ABLE accounts also come with some significant limitations, including the following:

• Each individual can have only one ABLE account.
• Contributions are capped annually. The limit for 2023 is $17,000. (This limit is equal to the annual personal gift tax exclusion, so it will rise periodically.) Also, to be clear, this is per account, not per donor. The owner of the account must keep track of all contributions to ensure that they do not exceed the $17,000 limit for the calendar year. Some states allow an additional amount to be added to the account for disabled individuals who are working, up to the annual federal poverty guideline ($14,580 in 2023) or their annual salary before taxes, whichever is less.
• The account has a maximum balance. For those who qualify for SSI, the balance of an ABLE account cannot exceed $100,000, or SSI benefits will be suspended. For those who do not qualify for SSI, the account can reach the limit allowed for 529 plans in that state—an amount that varies by state, but ranges from $235,000 to $555,000.
• Unused funds may go to reimburse Medicaid. In most states, if the account owner dies with funds in an ABLE account, those funds must be used (in this order): (1) to pay any outstanding qualified expense bills including funeral expenses, (2) to provide payback to Medicaid for Medicaid benefits received, and then (3) to be distributed to the account holder's legal beneficiaries. Some states, though, protect ABLE accounts from Medicaid recovery.

How to Establish an ABLE Savings Account

As with 529 college savings accounts, states run their own ABLE account programs. Each program has its own features. Money placed in an ABLE account is invested by the state. The account holders have only limited choices about how aggressively or conservatively the money should be invested.

You don't have to establish an ABLE account in the state in which you live. You can do so in any state with an ABLE account program that is open to out-of-state residents. (Most, but not all, state ABLE programs are open to nonresidents.) The ABLE National Resource Center has an online tool you can use to compare state ABLE programs.

Nolo also explores the features of several specific programs in a series on State ABLE Account Programs.

Special Needs Trust: Another Option for People With Disabilities

Special needs trusts are another useful option for people who receive disability benefits and want to protect and plan for their financial future. These trusts are designed to 1) provide for people with disabilities by giving them a source of funds that won't count against their eligibility for benefits and 2) name a trustee and a backup trustee to manage the trust for the benefit of the person with disabilities. These types of trusts are subject to strict federal rules, and you'll need a lawyer to set one up. Read more about Special Needs Trusts.