Social Security

An Achieving a Better Life Experience (ABLE) account is a tax-advantaged savings account to which contributions can be made to meet the qualified disability expenses of the owner, or designated beneficiary. ABLE accounts receive favorable treatment and are excluded from resources in whole or in part, for purposes of certain means-tested Federal programs.

The Stephen Beck, Jr., Achieving a Better Life Experience (ABLE) Act became law on December 19, 2014. The law aims to increase financial independence and improve quality of life while easing financial hardship faced by many individuals with disabilities and their families.

In order to be eligible to own an ABLE account, a person must:

• be eligible for Supplemental Security Income (SSI) based on disability or blindness that began before age 26;
• be entitled to Social Security Disability Insurance benefits (DIB), childhood disability benefits (CDB), or disabled widow’s or widower’s benefits (DWB) based on disability or blindness that began before age 26; or
• have certified, or have a parent or guardian that has certified, that he or she met the criteria for a disability certification before age 26.

Proof of disability is one of the criteria necessary to establish an ABLE account.  However, State ABLE programs determine what additional proof an individual must provide at account establishment and recertification.  In regard to proof of disability, the eligible person, or the eligible person’s authorized legal representative, certifies that the person:

• is eligible for Supplemental Security Income (SSI) based on disability or blindness that began before age 26,
• is entitled to Social Security Disability Insurance benefits (DIB), childhood disability benefits (CDB), or disabled widow’s or widower’s benefits (DWB) based on disability or blindness that began before age 26, or
• meets the criteria for a disability certification before age 26.

The person must make the proof available for the IRS or the ABLE program if requested to satisfy the disability certification requirement.  Account owners must recertify their eligibility annually.

The person with the disability is the owner and the beneficiary of the ABLE account. Therefore, you may see “owner” and “designated beneficiary” used interchangeably when you get information about ABLE accounts.

Up to and including $100,000 in the person’s ABLE account is excluded from being treated as a countable resource for SSI benefits calculations.

Up to and including $100,000 in an ABLE account is disregarded.  Only assets above $100,000 count as a resource for SSI purposes.  If the ABLE account balance exceeds $100,000 by an amount that causes the SSI recipient to exceed the $2,000 resource limit, either alone or with other resources, SSI benefits will be suspended without a time limit (assuming that the individual otherwise remains eligible for SSI).  SSI benefits are reinstated for all months in which the ABLE account balance no longer causes the individual to exceed the resource limit and the individual is otherwise eligible for SSI.

No. Medicaid eligibility continues even if the ABLE account exceeds $100,000 by an amount that causes the recipient to exceed the SSI resource limit, whether alone or with other resources, as long as the individual remains otherwise eligible for SSI.

Any person may contribute to, or deposit funds into, an ABLE account. (The Internal Revenue Code defines a person as including an individual, trust, estate, partnership, association, company, or corporation.)

Total contributions from all sources are limited to the annual gift tax exclusion.  In 2021, the limit is $15,000.

Yes.  ABLE account owners who are employed, and for whom certain other contributions have not been made for the taxable year, may contribute additional funds to the accounts beyond the annual gift tax exclusion limit ($15,000 in 2021).  The additional annual contribution may not exceed the federal poverty level for a one-person household for the calendar year preceding the calendar year in which the tax year begins (in your state of residence) or the designated beneficiary's gross wages for the taxable year, whichever is less.

A distribution is any payment from an ABLE account. Distributions (other than returns of contributions) may be made only to, or for the benefit of, the designated beneficiary.  Distributions for Qualified Disability Expenses are not counted as taxable income.

Qualified Disability Expenses (QDE) are expenses that relate to the disability or blindness of the designated beneficiary and that are for the benefit of the designated beneficiary in improving health, independence, or quality of life. Such expenses include, but are not limited to, expenses related to the designated beneficiary’s: education; housing; transportation; employment training and support; assistive technology; healthcare, prevention and wellness; financial management and administrative services; legal fees; account oversight and monitoring; funeral and burial expenses; and basic living expenses.

A distribution for a housing expense or for an expense that is not a QDE is counted as a resource, if the designated beneficiary retains the distribution into the month following the month of receipt. If the designated beneficiary spends the distribution within the month of receipt, there is no effect on SSI eligibility.

You can open your account for yourself if you are an eligible individual, at least 18 years of age and have the legal authority to open an account.  Sometimes, the eligible individual does not want to, or does not have the legal authority to act on his/her own behalf. In those cases, an authorized legal representative may open and manage the account on behalf of the account owner. Those who can serve as authorized legal representatives may vary by state.  Consult State plan disclosure documents for more information.

No.  Eligible persons or their authorized legal representatives may open an account in their own State’s plan or in a State plan that is available to out-of-State residents.  Some State plans are available only to residents of that State.  It is important to look at one’s home State plan first in case there are tax benefits for owning an ABLE account with that plan.

Only one ABLE account can be owned no matter what plan you enroll in.

ABLE accounts are transferrable to family members who are also qualified individuals.

Earnings on an ABLE account and distributions from the account for QDEs are not counted as taxable income.