ABLE accounts are designed to encourage private savings to support individuals with disabilities and to allow those private savings to be available to supplement other benefits an individual with disabilities might be receiving.
A qualified ABLE account is one created for an eligible individual to pay for qualified disability benefits for the beneficiary. To be eligible, an individual must be:
(i) blind or disabled as determined by the Social Security Administration; or
(ii) file a disability certification with the Secretary of Health and Human Services that satisfies the Secretary that the individual has a medical impairment resulting in marked and severe functional limitations that will either result in death or will last for a continuous period of at least 12 months.
The disability must be determined to have begun before the beneficiary reaches age 26.
The beneficiary must meet the definition of disability at the time the account is established and when contributions and distributions are made.
Qualified expenses include education, housing, transportation, employment training, assistive technology and personal support service that are related to the beneficiary’s disability or blindness.
Only $100,000 is excluded from countability for Supplemental Security Income (“SSI”) purposes.
Individuals with disabilities as defined by the Social Security Administration that began prior to age 26 are eligible to deposit up to $16,000 per year. Other family members can also contribute to an ABLE account, but the total contribution in any calendar year cannot exceed $16,000. in 2021. The tax-free accounts will not be considered as an asset or income in determining an individual’s eligibility for means-tested government benefits such as SSI and Medicaid. Individuals with disabilities can have only one ABLE account. Upon the death of the account holder, Medicaid is entitled to reimbursement for all benefits paid after the account was opened.
The earnings are federally tax-free if used for qualified disability expenses.
Individuals can set up their accounts online here.
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