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ABLE Accounts

An ABLE account is a tax-advantaged savings account for individuals with disabilities. It helps save for disability-related expenses without affecting eligibility for certain benefits like SSI and Medicaid. Contributions are made after taxes, and earnings grow tax-free.


About ABLE Accounts 

ABLE Accounts were created as a result of the passage of the Stephen Beck Jr. Achieving a Better Life Experience Act of 2014, known as the ABLE Act. The law aims to ease financial limits of people with disabilities by making tax-free savings accounts available to cover qualified disability expenses.

The funds deposited into an ABLE account can be used to cover various disability-related expenses, such as education, housing, transportation, healthcare, assistive technology, and other qualified expenses. One significant advantage of ABLE accounts is that they do not affect eligibility for certain means-tested federal benefits, such as Supplemental Security Income (SSI) and Medicaid, as long as the account balance remains under a certain threshold.

Contributions to ABLE accounts are made on an after-tax basis, similar to a Roth IRA, and the earnings in the account grow tax-free. Additionally, some states offer state tax deductions or credits for contributions to ABLE accounts.

Transition tip

ABLE accounts can help you save for qualified disability expenses without impacting your Supplemental Security Income (SSI). Read here for more information.

How do ABLE Accounts work?

The beneficiary of the account (young adult or adult with the disability) is the account owner. ABLE accounts have yearly contribution limits and a maximum allowed in the account. Contributions to the account, which can be made by any person (the account beneficiary, family, friends Special Needs Trust or Pooled Trust), must be made using post-taxed dollars and will not be tax deductible for purposes of federal taxes; however, some states may allow for state income tax deductions for contributions made to an ABLE account. Income earned by the accounts will not be taxed.

Are ABLE accounts available in all states?

ABLE programs are established by individual states, and there are differences between ABLE accounts in different states (for example, in Massachusetts, accounts can only be acquired through the company, Fidelity). Some states don’t have ABLE accounts, and some only allow state residents to enroll. Other states allow anyone to hold an account, no matter where you live.

What happens when an ABLE account beneficiary dies?

It is helpful to know that when an ABLE account beneficiary dies, the state in which the beneficiary lived may file a claim to all or some of the funds in the account, equal to the amount in which the state spent on the beneficiary through their state Medicaid program. This is commonly known as the “Medicaid Payback” provision and the claim could recoup Medicaid-related expenses from the time the account was opened. If the beneficiary was not receiving Medicaid services during the period of time they have an ABLE account, they would not be subject to the payback rule.

Some Important Facts to Know About ABLE accounts

In-depth information on ABLE accounts:

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