A Long Time Coming: The ABLE Act Provides a Savings Opportunity for Individuals with Disabilities

For a long time, individuals with disabilities and their families worried how they would save for their future without losing access to necessary government benefits and services. Most individuals with disabilities depend on a variety of public benefits for income, healthcare, food and housing due to the extra, and often significant, cost of living with a disability. Individuals with disabilities risked losing these benefits if they saved for their future as they could be deemed ineligible if they held more than $2,000 in cash savings or funds.

Disability rights advocates fought hard, and in 2014, the Stephen Beck Jr. Achieving a Better Life Experience (ABLE) Act was passed into law. Many consider the ABLE Act the most significant federal legislation to address the needs of a person with a disability since the Americans with Disabilities Act.

The ABLE Act acknowledges the extra costs of living with a disability. It authorized states to set up tax-advantaged investment accounts that help qualified individuals with disabilities and their families save for disability-related expenses. Funds held in an ABLE account cannot be taken into consideration when determining eligibility for federally funded programs such as SSI and Medicaid.

Contributions to an ABLE account are not tax deductible, but all investment earnings remain untaxed if the money taken from the account is used for “qualified disability expenses.” Qualified disability expenses can include anything that assists the individual with increasing or maintaining their health, independence or quality of life. Expenses related to education, housing, transportation, employment training, assistive technology, personal support services, healthcare and financial management are all considered qualified disability expenses. 

To be eligible for an ABLE account, you must have a significant disability with an age of onset before 26 years of age. This does not mean that you must be under 26 years of age to open an ABLE account, but that your disability must have been present before turning 26 years of age. Once an individual has enrolled in an ABLE account, anyone can contribute to that account. Friends, family and co-workers can make contributions to an individual’s ABLE account, but all contributions combined cannot exceed $15,000 per tax year.

In addition to the $15,000 in contributions per tax year, ABLE account owners who work (but who do not participate in their employer’s retirement plan) may also contribute more, up to $12,490 of their gross income to their ABLE account. ABLE accounts that have more than $100,000 in funds or exceed the $15,000 per tax-year contribution limit can affect SSI eligibility, so it is important to keep an accurate record of your account balance and annual contributions.

There are now ABLE accounts available in all 50 states, but regardless of where you live, you can open an ABLE account in any state that accepts outside residents into their program. ABLE accounts can vary from state to state regarding minimum contribution amounts, service fees, debit card options, etc. You can compare up to three state programs at a time by visiting The ABLE National Resource Center. It may be a good idea to consult with a financial counselor if you have questions prior to opening an ABLE account or if you have any questions regarding contributions or eligible expenses after your account has been established. Additional information on ABLE accounts can be found by visiting:

• The ABLE National Resource Center
• The National Down Syndrome Society
• NJ ABLE
• PA ABLE