The ABLE Age Adjustment Act has raised the age of onset of disability from 26 to 46, effective January 1, 2026. People who have become disabled later in life due to accidents or illness will now be eligible to establish a tax-advantaged ABLE account. It is projected that the rule change will enable 6 million more individuals, including one million veterans, to qualify for an ABLE account.
ABLE Account Basics
An ABLE account is a tax-advantaged savings account that permits a disabled individual to save and work and still maintain eligibility for government benefits such as Medicaid and SSI. Before the 2014 passage of the ABLE Act (Achieving A Better Life Experience), disabled individuals who had over $2,000 in assets would lose the vital federal benefits they depended on. This forced them to remain impoverished, refraining from working even if willing and able to do so. According to a 2020 report from the National Council on Disability, most working age adults with disabilities are eager to work if doing so would not result in loss of critical benefits. Other features of the ABLE account:
- The individual with special needs is the owner and beneficiary of the ABLE account, but anyone, such as family members, friends and organizations, may contribute to it.
- There is no tax on the growth of investments in the account. Funds withdrawn are not considered income so long as they are used for disability-qualified expenses that the government does not cover, such as training, transportation, medical expenses, assistive technology, etc.
- Money in the account is not considered a countable resource for most benefits; however, only up to $100,000 is permitted in order to maintain eligibility for Supplemental Security Income. Other federal benefits are not affected until the account is higher; the cap depends on the state.
- In Florida, there is no Medicaid recovery from ABLE accounts. When the beneficiary passes away, any funds left in the account go into the decedent’s estate.
- An eligible person 18 or over, or an authorized representative, may open the account. A minimum of $25 is required to establish an ABLE account.
Learn about Florida’s ABLE program (You can also open an account online at this site)
Information about ABLE programs in other states
Not A Substitute For Special Needs Trust
Despite the availability of ABLE accounts, parents who are planning for their special needs child should not consider an ABLE account as a substitute for a Special Needs Trust. Moreover, a disabled person may be the beneficiary of both a Special Needs Trust and an ABLE account. Each strategy offers different benefits:
- There is no limit on the amount of money that can be held in a Special Needs Trust. The amount that an ABLE account can hold has a cap, depending on the state.
- An ABLE account can be used for a wider range of disability-related expenses than a Special Needs Trust. Groceries are one example.
- Because the ABLE account holder is the disabled person, he/she manages his own funds and withdrawals, fostering greater independence. If this is not possible or desirable, a Special Needs Trust is managed by the trustee, not the beneficiary.
