Effective January 1, 2022, the maximum annual contribution to an ABLE account is $16,000 (up from $15,000). Florida was among the first states in the nation to establish ABLE saving accounts. ABLE is the acronym for “Achieving A Better Life Experience.” This type of savings account permits an individual with a disability to have more than $2,000 in assets and still receive means-tested federal benefits such as Medicaid. Up to $100,000 in an ABLE account is considered a non- countable resource.
Friends and relatives may contribute to the account. The funds must be used for disability-qualified expenses, and withdrawals for such expenses are tax-free. Examples of eligible expenses include housing, education, job training, transportation, groceries, health care, assistive technology, etc.
To qualify for an ABLE account, the beneficiary must have developed the disabling condition before age 26. (Senate Bill 331, the ABLE Age Adjustment Act, would raise the age from 26 to 46; it is currently making its way through the legislature.)
You must be at least 18 years old to open an ABLE account. The beneficiary may open it or manage it, or a parent or other legally authorized representative may do so. An account may be opened with as little as $25.
What About Medicaid Recovery?
In 2019 Florida eliminated Medicaid recovery with respect to ABLE accounts. If the beneficiary passes away, funds in the account may be used for funeral expenses, and then the funds become part of the late beneficiary’s estate.
Is a Special Needs Trust Still Useful?
Having an ABLE account and a special needs trust are not mutually exclusive. There are differences between the two vehicles. For example, there is no limit on the dollar amount that can be held in a Special Needs Trust. Also, the beneficiary of a Special Needs Trust need not have developed the qualifying disability before age 26.
What Are Qualifying Disabilities?
The Internal Revenue Service recognizes the following as eligible disabilities:
- Developmental Disorders: Autistic Spectrum Disorder, Asperger’s Disorder, Developmental delays and learning disabilities
- Intellectual Disability: May be reported as mild, moderate, or severe intellectual disability
- Psychiatric Disorders: Schizophrenia, Major depressive disorder, Post-Traumatic Stress Disorder (PTSD), Anorexia Nervosa, Attention Deficit/Hyperactivity Disorder (AD/HD), Bipolar Disorder
- Nervous Disorders: Blindness, Deafness, Cerebral Palsy, Muscular Dystrophy, Spina Bifida, Juvenile-onset Huntington’s Disease, Multiple Sclerosis, Severe sensorineural hearing loss, Congenital cataracts
- Congenital Anomalies: Chromosomal abnormalities, including Down Syndrome; Osteogenesis Imperfecta, Xeroderma Pigmentosum, Spinal muscular atrophy, Fragile X Syndrome, Edwards Syndrome
- Respiratory Disorders: Cystic Fibrosis
- Other: Tetralogy of Fallot, Hypoplastic left heart syndrome, End-stage liver disease, Juvenile-onset rheumatoid arthritis, Sickle cell disease, Hemophilia, and any other disability not listed
More information on ABLE accounts
Able United (administrator for Florida’s ABLE program