How can an ABLE account help you?

If you’re a disabled adult, you may qualify to open something called an ABLE account. This is named for the Achieving a Better Life Experience Act of 2014. It’s a tax-advantaged investment account, managed by each state, that people with disabilities and their families can contribute to in order to help cover disability-related expenses.

The ABLE account has a number of advantages. The funds in the account aren’t included in any means testing for programs like Medicaid and Supplemental Security Income (SSI) that mandate that recipients not earn above a certain amount to qualify.

Contributions to ABLE accounts are tax-deductible, as individual retirement account (IRA) contributions are. However, the money earned on the account isn’t taxed as long the money withdrawn from the account is used only for “qualifying disability-related expenses.”

Anyone who’s disability was diagnosed before they were 26 is eligible to open an ABLE account, even if they aren’t getting SSI or Social Security Disability Insurance (SSDI). However, they must be certified by a doctor to have a disability that meets Social Security’s criteria for significant functional limitations.

These ABLE accounts allow individuals and their families to put money away to use for a multitude of expenses that can help someone with a disability have a better quality of life and more independence. “Qualified” expenses can include those related to:

• Housing
• Transportation
• Health care
• Education and employment training
• Personal support and other services

Even though money in an ABLE account can’t be used in a means test to determine Medicaid eligibility, if the beneficiary of the account is receiving Medicaid, that money is subject something called “Medicaid Payback” when they die. The government is allowed to recoup the total paid to the beneficiary in Medicaid during the period in which they had their account. That’s the only “payback” provision with these accounts.

As noted, you don’t need to be an SSDI recipient to qualify for an ABLE account. However, if you qualify for SSDI, this can provide valuable benefits that can help you and your family if you’re unable to work because of a disability. If you are having issues getting approved and you believe that you qualify, an experienced attorney may be able to help