What is an ABLE Account?
The Achieving a Better Life Experience (ABLE) Act, signed into law in December 2014, was created to ease financial strains faced by individuals with disabilities by making tax-free savings accounts available to cover qualified disability expenses.
An ABLE Account is a tax-advantaged savings account designed to specifically for individuals with qualifying disabilities. Contributions to the account can be used to pay for a wide variety of qualified disability expenses, helping beneficiaries improve their health, independence, and quality of life.
One of the greatest advantages of an ABLE account is that, within certain limits, the funds are generally not counted as resources for means-tested federal benefit programs such as SSI and Medicaid.
Unlike a traditional savings account, an ABLE Account allows individuals to accumulate savings without immediately jeopardizing access to the public benefits they rely on.
Who is Eligible for an ABLE Account?
Effective January 1, 2026, the ABLE Age Adjustment Act amends Section 529A of the ABLE Act to expand the age of eligibility for individuals who have a disability before the age of 46, instead of 26, to be ABLE-eligible.
To qualify for an ABLE Account, an individual must have a disability that began before age 46 and meet one of the following criteria:
- Be classified as blind under the Social Security Act
- Receive Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) due to the disability
- Have a condition included on the Social Security Administration’s Compassionate Allowances Conditions
- Have a written diagnosis from a licensed physician documenting a qualifying physical or mental impairment expected to last at least one year or result in death
Eligible individuals may open their own ABLE Account. If they are unable to do so, an authorized individual—such as a legal guardian, parent, spouse, sibling, grandparent, or other eligible representative—may establish the account on their behalf.
What Can an ABLE Account Pay For?
Funds from an ABLE Account may be used to pay for qualified disability expenses, which are broadly defined as expenses that help maintain or improve the beneficiary’s health, independence, or quality of life.
Common qualified expenses include:
- Education
- Housing
- Transportation
- Employment training and support
- Assistive technology and related services
- Personal support services
- Healthcare and wellness
- Financial management and administrative services
- Legal fees
- Expenses for ABLE account oversight and monitoring
- Funeral and burial expenses
Because qualified expenses are interpreted broadly, Able Accounts provide significant flexibility in helping individuals meet both every day and long-term financial needs.
Contribution Limits and Account Balances
Beginning in 2026, individuals may contribute up to $20,000 annually to an ABLE Account. In addition, certain employed beneficiaries who do no participate in an employer-sponsored retirement plan may qualify to make additional contributions under the ABLE to Work Act, subject to federal eligibility requirements.
Each state’s ABLE program also establishes a maximum lifetime account balance. For example, the New York ABLE Program currently allows total account balances up to $520,000.
Families should also be aware that each individual may own only one ABLE Account.
How Do ABLE Accounts Affect SSI and Medicaid?
ABLE Accounts offer important protections for individuals receiving public benefits.
For SSI recipients, the first $100,000 held in an ABLE Account is generally excluded when determining SSI source eligibility. If the account balance exceeds $100,000 and the individual’s countable resources exceed SSI limits, SSI cash benefits may be suspended until resources return below the allowable threshold.
Importantly, Medicaid eligibility generally continues even if an ABLE Account exceeds $100,000, provided the individual remains otherwise eligible for Medicaid.
These protections make ABLE Accounts one of the most effective savings tools available for many individuals with disabilities.
What Happens When the Account Owner Passes Away?
Like many planning tools, ABLE Accounts have important estate planning considerations.
Upon the beneficiary’s death, remaining funds may be subject to a Medicaid payback claim. Before any repayment is made, outstanding qualified disability expenses, including funeral and burial costs, are generally paid from the account.
Any Medicaid recovery is generally limited to the amount of Medicaid benefits provided after the ABLE Account was established, subject to applicable federal and state laws. Because Medicaid recovery rules vary by state, beneficiaries and families should review the requirements of their state’s ABLE program.
Can NY ABLE Accept Direct Deposits from Life Insurance Companies?
Individuals receiving structured settlement payments or other periodic payments should be aware that most life companies will not issue future periodic payments to ABLE accounts directly.
This limitation can be particularly important when developing a long-term settlement plan.
Coordinating an ABLE Account with a Special Needs Trust
When annual structured settlement payments are intended to fund an ABLE Account for an individual receiving SSI, careful planning is essential to avoid unintended interruptions in public benefits.
In many cases, establishing a Special Needs Trust (SNT) or participating in a Pooled Trust may provide a more effective funding strategy. Rather than directing settlement payments to the ABLE Account, payments may first be made to the Special Needs Trust or Pooled Trust. The trustee can then make distributions to the ABLE Account within the applicable annual contribution limits.
This coordinated approach may help prevent temporary disruptions to SSI benefits during the month settlement payments are received while still allowing the beneficiary to enjoy the flexibility and advantages offered by an ABLE Account.
