Getting to Know the ABLE Act

By Guest Blogger Chris Rodriguez, Senior Public Policy Advisor, National Disability Institute

For the first time in public policy, the ABLE Act recognizes the extra and significant costs of living with a disability and provides a savings tool to address them. The ABLE Act is formally known as the Stephen Beck Jr., Achieving a Better Life Experience Act. It was signed into law on December 19, 2014 after nearly a decade of national, state and local advocacy efforts.

The ABLE Act allows certain individuals with disabilities and their families to save funds in a tax-advantaged savings and investment account. Similar to a 529 College Savings account, anyone can contribute to an ABLE account belonging to a qualified individual with a disability, including friends, family and the individual him- or herself.

What You Need to Know

• What is an ABLE account?

  ABLE accounts are tax-advantaged investment accounts that help qualified individuals with disabilities and their families save for disability-related expenses. The funds in the account grow tax-free. The funds in the account, and distributions made for qualified disability-related expenses, are also not factored into determining eligibility for federally funded means-tested benefits, such as Supplemental Security Income (SSI) and Medicaid.

• Why is there a need for ABLE accounts?

  Millions of individuals with disabilities and their families depend on a wide variety of public benefits for income, healthcare, and food and housing assistance. To qualify for many of these benefits (SSI, SNAP, Medicaid), you must have limited financial resources. For example, you must report no more than $2,000 in cash savings, retirement funds and other items of significant value when you apply for benefits. ABLE accounts allow certain people with disabilities to save funds well over these limits without losing eligibility for benefits.  

• Who is eligible to open an ABLE account?

  The ABLE Act limits eligibility to people with significant disabilities who had the onset of their disability before they turned 26 years old. If you meet this age requirement and already receive SSI or SSDI benefits, you are automatically eligible for an ABLE account. If you are not an SSI or SSDI recipient but meet the age of disability onset requirement, you may still be eligible to open an ABLE account. To do so, you must meet Social Security’s definition and criteria for significant functional limitations and receive a letter of certification from a licensed physician.

• What can ABLE account funds be used for?

  ABLE account funds can be used to purchase “qualified disability-related expenses.” A "qualified disability expense" is any expense related to the designated beneficiary’s blindness or disability that helps them increase or maintain their health, independence and quality of life. These may include expenses related to education, housing, transportation, employment training and support, assistive technology, personal support services, healthcare expenses, financial management and administrative services, and other expenses.

• Do I have to wait for my state to establish a program before opening an ABLE account?

  No. Regardless of where you might live and whether your state has decided to establish an ABLE program, you are free to enroll in any state’s program, if the program accepts out-of-state residents.

For more in-depth information about the ABLE Act and ABLE programs, including which states offer enrollment, please visit the ABLE National Resource Center. Be sure to look for an upcoming WISE webinar on this topic.