Financial Freedom for People With Disabilities

The Stephen Beck Jr. Achieving a Better Life Experience Act (ABLE Act) allows people with qualifying disabilities to establish tax-free financial accounts. I’m going to answer the questions I had about ABLE accounts when I began researching them. When I discovered what I am going to share with you, I couldn’t wait to create my own ABLE account.

I will take the questions in the order I believe makes the most sense. If you have any comments about ABLE accounts, feel free to share.


How do ABLE accounts affect Social Security Supplemental Income (SSI)?

If I have an ABLE account, will I lose Medicaid?

Will an ABLE account impact SNAP benefits?

How are ABLE accounts funded?

How can funds withdrawn from an ABLE account be spent?
Are funds withdrawn from an ABLE account taxed?

How often can funds be withdrawn from an ABLE account?

Is there a limit on the amount of money that can be put in each ABLE account?

What happens if an ABLE account reaches its limit?

How does the value of an ABLE account increase?

How often can I change my investment strategy?

How is eligibility for an ABLE account determined?

Who can open an ABLE account?

What if the account beneficiary can’t make their own decisions?

Who offers ABLE plans?

What if my state doesn’t offer an ABLE plan?

What should I consider when comparing ABLE plans?

How can I learn more about ABLE accounts?

How do ABLE accounts affect Social Security Supplemental Income (SSI)?

The most important thing about ABLE accounts for recipients of SSI to know is that the amount contained in your ABLE account up to $100,000 is exempt from SSI’s $2,000 asset limit. This means that a person on SSI can actually save some money and use ABLE account funds to pay qualifying expenses without being too concerned about an asset limit.

If the beneficiary is getting SSI, they can’t have $100,000 in their ABLE account. If the value of an ABLE account reaches $100,000, the cash payments are stopped. As soon as the ABLE account is under $100,000, the beneficiary of the ABLE account can collect SSI payments without having to reapply for them.

If I have an ABLE account, will I lose Medicaid?

ABLE accounts (no matter how much they are worth) don’t impact Medicaid eligibility. Even if SSI cash payments are suspended because an ABLE account hit $100,000, health care covered by Medicaid won’t be lost.

Will an ABLE account impact SNAP benefits?

ABLE accounts are excluded from asset limits when someone applies for and/or gets SNAP benefits.

How are ABLE accounts funded?

Anyone can contribute to an ABLE account. Any money contributed to an ABLE account can’t be deducted from the contributor’s federal taxes. Some states do offer tax deductions for at least a portion of a contribution to an ABLE account.

How can funds withdrawn from ABLE accounts be spent?

Any funds withdrawn from an ABLE account must be spent on a qualified disability expense (QDE). Qualified disability expenses can be broken down into 12 broad categories.

  1. Education
  2. Housing
  3. Transportation
  4. Employment training and support
  5. Assistive technology and related services
  6. Health
  7. Prevention and wellness
  8. Financial management and administrative services
  9. Legal fees
  10. Expenses for ABLE account oversight and monitoring
  11. Funeral and burial
  12. Basic living expenses

Housing-related expenses that count as qualified disability expenses are broken down into nine broad categories.

  1. Mortgage payments (including insurance required by the mortgage holder)
  2. Property taxes
  3. Rent
  4. Heating fuel
  5. Gas
  6. Electricity
  7. Water
  8. Sewer
  9. Garbage removal

If a withdrawal from an ABLE account is used to pay rent, the money withdrawn from the ABLE account must be paid toward rent in the month it was withdrawn from the account.

Are funds withdrawn from an ABLE account taxed?

As long as money withdrawn from an ABLE account is spent on a qualified disability expense, the withdrawn money passes to the beneficiary of the ABLE account free of federal income tax. Funds withdrawn from an ABLE account may be subject to state income taxes. Obviously, that depends on your state.

How often can funds be withdrawn from an ABLE account?

The frequency with which funds can be withdrawn from an ABLE account and any fees associated with withdrawing money from an ABLE account depend on the ABLE plan you choose.

Is there a limit on the amount of money that can be put in each ABLE account?

The amount of money you can have in an ABLE account depends on the plan you choose. As of this writing, the amount you can have in an ABLE account mostly ranges from $200,000 to $500,000. Remember, if the beneficiary of the account is getting SSI, their cash payments are suspended once their ABLE account reaches $100,000 in value.

What happens if an ABLE account reaches its value limit?

When an Able account hits its limit, the account remains active. The amount in the account can continue growing; however, the account will no longer accept contributions.

How does the value of an ABLE account increase?

If you want to grow the value of an ABLE account beyond the amount of money contributed to it plus any interest, you can choose from a menu of investment options. Depending on your risk tolerance, you can invest in a portfolio that is largely stocks or mostly bonds. The higher the amount of stocks in your portfolio, the greater the risk. The higher the percentage of stocks in your portfolio, the greater the growth potential.

How often can I change my investment strategy?

You can change your investment strategy twice during each calendar year.

How is eligibility for an ABLE account determined?

Before explaining the eligibility process, I want to make one thing perfectly clear: you do not need to prove disability status before opening an ABLE account. During the account creation process, you will be asked to answer questions designed to demonstrate that the beneficiary of the account was disabled prior to their 26th birthday. You will not need to provide any documentation.

Eligibility to establish an ABLE account has two parts: the disability must have been present prior to the beneficiary’s 26th birthday; and the account beneficiary must have a qualifying disability.

The disability doesn’t have to be diagnosed before the account beneficiary’s 26th birthday. Nor does the account need to be opened before the beneficiary’s 26th birthday. As long as it can be proven that the beneficiary of the ABLE account was disabled before their 26th birthday, the age requirement is satisfied.

There are three ways to establish the existence of a qualifying disability: the beneficiary must be eligible for SSI based on blindness or disability; entitled to Social Security disability benefits, childhood disability benefits, or disabled widow/widower benefits; or if disability is certified in writing by a medical professional.

Who can open an ABLE account?

In addition to a qualifying person with a disability, a parent, legal guardian, or someone with a power of attorney for a person with a qualifying disability can open an ABLE account.

What if the beneficiary can’t make their own decisions?

When a person with a qualifying disability can’t make their own decisions, a parent, legal guardian, or someone with a power of attorney can have signature authority over the account.

Who offers ABLE plans?

Every state has been granted the authority to create an ABLE program. As of this writing, roughly 30 states offer ABLE programs.

What if my state doesn’t offer an ABLE plan?

Most of the states with ABLE programs allow people living in other states to open ABLE accounts. If your state doesn’t offer an ABLE program, you can find a plan that meets your needs and is offered by a state that doesn’t restrict membership to its citizens.

What should I consider when comparing ABLE plans?

The answer to this question depends on your personal circumstances. If the goal of the ABLE account is to save for something down the road, like buying a home, that is years away, you may want a plan that allows you to have more money in an ABLE account. If you are interested in using the ABLE account to grow your investment, you may want to consider the number and variety of investment options offered by the individual state plans.

How can I learn more about ABLE accounts?

The ABLE National Resource Center is the best place to learn more about ABLE accounts. On their website, you can: review the ABLE programs offered by the different states; compare up to three state programs simultaneously; access webinars about different aspects of the ABLE program; and more.

The Social Security Administration has an informative page dedicated to the ABLE program. One of the real benefits of the Social Security page is that it uses examples to help teach what is involved with ABLE accounts.

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