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A Conversation About ABLE Accounts with Jody Ellis, Director, ABLE National Resource Center

April 17, 2024
Source: Administration for Community Living (ACL)

In April, [the Administration for Community Living (ACL)] observes National Financial Capability Month, which was created to raise awareness of the importance of financial literacy — and the need for financial education — for all Americans.

Understanding how to manage money is crucial to financial independence for everyone. For many people with disabilities, increased ability to manage personal finances also can increase their independence and help them to participate fully in their communities.

For example, everyone should have the knowledge and skills to save and invest money. They also need to understand how tax rules affect them.

Many people with disabilities have additional things they need to know about. For example, people who receive government-funded benefits, such as Social Security and Medicaid, need to understand how saving money can affect those benefits. People with disabilities also need to know about programs and options that can help them save money; in fact, they may be eligible for an ABLE account, which is a tax-advantaged savings plan for people with disabilities.

David Jones, director of the Office of Intellectual and Developmental Disabilities within ACL’s Administration on Disabilities, recently asked Jody Ellis, director of the ABLE National Resource Center, 10 questions about ABLE accounts.

As millions of people meet the April 15 federal tax deadline today, we’re sharing Jody’s answers to help people with disabilities and their families learn about this important savings option.

What is an ABLE account?

Jody: An ABLE account is a tax-free savings and investment account owned by a person with a disability. Eligible individuals can establish and contribute to an ABLE account, which does not adversely affect their eligibility for federally-funded, means-tested benefits like Medicaid. An ABLE account balance, up to $100,000, does not count as an asset for Supplemental Security Income (SSI). It may be used at any time to help cover the extra expenses related to living a life with a disability.

Who can open an ABLE account and who can contribute to it?

Jody: To be eligible for an account, a person must have a qualifying disability with the disability onset prior to age 26 (this age is increasing in 2026 — see below). Eligible individuals must meet the “severity of disability requirement” in one of two ways: (1) receiving SSI or Social Security Disability Insurance (SSDI); or (2) not receiving these benefits but possessing a disability certification signed by a licensed physician. As for contributions, the owner of the ABLE account can contribute, and contributions can come from friends and family, special needs or pooled trusts, or a 529 college savings account rollover.

How can the funds in an ABLE account be used?

Jody: ABLE funds may be used to pay for qualified disability expenses. These are expenses that enhance the health, independence, or quality of life for a person with a disability. They fall into broad categories such as education, housing, transportation, employment training and support, assistive technology, health, prevention and wellness, financial management and administrative services, legal fees, and other disability-related expenses that the ABLE account owner might have as a result of having a disability. For all expenses, it is important to save the receipts in your records as they may come in handy if the IRS or Social Security Administration ask questions.

What are the current contribution limits to an ABLE Account?

Jody: Currently, up to $18,000 may be directly deposited into an ABLE account each year. However, if the account holder is employed, they may be able to contribute more than $18,000. For example, an employed ABLE account holder who does not contribute to a retirement account can contribute an additional $14,580 from their earnings beyond the annual $18,000 limit. This amount is higher for residents of Alaska ($18,210) and Hawaii ($16,770).

What data can you share about the ABLE program?

Jody: As of 2024, 46 states and the District of Columbia offer ABLE accounts. At the end of December 2023, there were 162,969 active ABLE account holders with a combined asset total of more than $1.7 billion. The average balance for an ABLE account holder is $10,683. We have found that many people have used their ABLE savings to purchase an accessible home or vehicle.

How can people learn more about how ABLE is administered in their states? Could a person open an ABLE account from another state?

Jody: A good place to start is to find out what is offered within one’s state of residence to see if there are specific advantages for those who select their state’s ABLE plan. For example, some plans offer lower fees or a tax deduction — or they may have a favorable Medicaid payback policy for people who select their own state’s ABLE plan. There are many state plans that allow out-of-state residents to enroll. To access more information, you can visit the Choose the program that’s right for you page. You can also search state plans by using the state comparison tool.

How does saving in an ABLE account impact government benefits for people with disabilities?

Jody: ABLE savings will not affect Free Application for Federal Student Aid (FAFSA), Housing and Urban and Development (HUD) housing programs, Supplemental Nutrition Assistance Program (SNAP), or Medicaid, including Medicaid Waiver and Self-Direction Services. ABLE savings up to $100,000 do not affect eligibility for SSI. SSDI beneficiaries may save up to the ABLE plan limit based on state guidelines that currently range from $235,000 to $596,925. To learn more about ABLE and government benefits, we developed the Understanding ABLE and Public Benefits Decision guide.

Where can people learn more about how others are using ABLE accounts?

Jody: The ABLE National Resource Center (NRC) developed an initiative called the Ambassador Program that puts a spotlight on ABLE account owners and their family members to share their lived experiences about ABLE accounts with others. Currently, there are 29 ABLE ambassadors. These stories are shared on the ABLE NRC website on the Meet Our ABLE Ambassadors page.

What recent changes has Congress made that will impact ABLE in the future?

Jody: Congress recently passed the ABLE Age Adjustment Act (S. 331/H.R. 1219), which expands the eligibility requirements to open an ABLE account to include those with an onset of disability that began prior to turning age 46. This change will become effective in 2026. There are an estimated 8 million Americans eligible for ABLE accounts under the current eligibility requirements, which require onset of disability by age 26. With increased onset age, it is estimated that an additional six million people will be eligible, including 1.2 million more veterans. In total, we estimate 14 million people will be eligible for an ABLE account by January 1, 2026.

How can people learn more or continue to stay informed about ABLE?

Jody: You can get more informed about ABLE by navigating the ABLE NRC webpage. To get periodic updates, you can subscribe to receive our quarterly newsletter. In addition, ABLE-related questions may be submitted via email at info@ablenrc.org. We are also active on social media and you can follow us at @ablenrc on FacebookLinkedInYouTube, and Instagram to learn more about the positive impact an ABLE account can make in someone’s life.

News source: acl.gov/news-and-events/acl-blog/conversation-about-able-accounts-jody-ellis-director-able-national

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