There are many different support options that a lot of people do not realize exist! A little known support option is the Achieving a Better Life Experience (ABLE) Act. This act was established in 2014 to help out American citizens that have disabilities. This can offer people a chance to save thousands of dollars per year in a tax-deferred savings account. It allows up to $16,000 in yearly contributions, so that can really financially support people with disability costs.

What You Should Know About ABLE Accounts

Most people also know the ABLE account as a 529 A account. These types of accounts offer individuals with disabilities and their households the chance to save money. The money that they save can go to eligible disability costs of the account’s specified beneficiary. By 2022, the maximum limit for ABLE accounts reaches up to $16,000 per year. On the other hand, limits for contributions can differ, depending on the state you live in. Any individual can contribute to post-tax payments to this account, either the account beneficiary, their household, or their loved ones. The contributed payments are usually not tax deductible. On the other hand, there are some states that might accept state income tax deductions. An ABLE account is regulated because of the Municipal Securities Rulemaking Board (MSRB). 

How Do ABLE Accounts Operate by State?

States have the right to set their own regulations for ABLE accounts. You have the chance to open an ABLE account in any state. In the past, there was a regulation that said people can only open an ABLE account in the state they live in. Luckily, the limitation was removed in 2015.

You can use a free online tool to navigate between different states. The ABLE National Resource Center created a map that details ABLE programs for each state. While you are comparing states, you can tell that there are some states with tax benefits and fees that other states might not have. This means that the best thing you can do is compare between states to find out which is the right state for you.

Account Fees: Are There Any?

States might decide to charge fees for ABLE accounts. Generally, states charge a maintenance fee per month. On the other hand, they might also offer discounts or fee waivers for citizens that fall within a specific account balance.

Who Qualifies for An ABLE Account?

There are some eligibility criteria for an ABLE account since it is meant to help only people with disabilities. To qualify, the ABLE account beneficiary needs to meet at least one of the following requirements: 

• Have a qualifying status for Supplemental Security Income (SSI) because of a disability or blindness that began before they reached the age of 26
• Be allowed to get childhood disability benefits (CDB), disabled widow’s/widower’s benefits (DWB), disability insurance benefits (DIB), or  because of a disability or blindness that began before they reached the age of 26 
• Be a person that has proof that they met the requirements for disability certification before they reached the age of 26

No matter how you are eligible, you will be required to offer evidence that you qualify. The state that you decide for your ABLE account is responsible for deciding what documents you will need to present. On the other hand, providing evidence of your disability will be required, regardless of the state you decide. Additionally, you should remember that you might be required to offer more than just evidence of disability.

Can You Be Eligible If You Are Over The Age of 26?

The simple answer is yes. If you meet all of the other eligibility criteria, then your age will not influence your chances of getting an ABLE account. In the case that you are either older or younger than the age of 26, you could still be eligible.

Qualifying Disabilities

If your disability leads to strict restrictions, then you will probably qualify for an ABLE account. The medical condition can be either mental, physical, developmental, or so on. You can look through the qualifying disabilities in the Social Security Administration’s Blue Book (Parts A and B) and SSA’s List of Compassionate Allowances Conditions. 

What is Considered Eligible Disability Costs?

ABLE accounts can only be used for qualifying disability expenses (QDE). QDE are costs that are meant to financially support the account’s beneficiary. Some of these costs can consist of:

• Assistive technology and other similar services
• Basic living costs
• Education expenses and job training
• Financial management and administrative services
• Funeral and burial costs
• Health and housing costs
• Legal charges
• Prevention and wellness expenses
• Costs of transportation

Benefits From an ABLE Account

One of the things that you should keep in mind about an ABLE account is that the first $100,000 that deposits into this account are not labeled as a personal asset. Personal assets are considered important because they influence eligibility conditions for other assistance programs such as the SSI Program, Medicaid, and housing support programs. These programs have restrictions that do not allow recipients to have higher amounts than $2,000 in financial assets. An ABLE account offers people with a disability to have amounts higher than that $2,000 restriction in this savings account.

Commonly Asked Questions

ABLE accounts could be a little confusing, which might result in asking a lot of questions. That is perfectly normal. You might find it overwhelming to learn about ABLE accounts, but it does not need to be. All you need is a little time and research, and then you will know everything you need to know about ABLE accounts.

Who is Considered The Account Beneficiary?

Most people might not know what the term beneficiary means. The beneficiary means the account owner who has a disability. You might find that “designated beneficiary” and “owner” are used interchangeably. When you have more information about the ABLE account when looking through different states, it is important to remember this!

Can You Open Several ABLE Accounts?

No matter what state you choose to open your ABLE account, you will not be able to open more than one account. You can only open one ABLE account, no matter what plan you decide on.

Is It Possible To Transfer Your Account?

Yes, you can transfer your ABLE account! Your ABLE account can only be transferred to a qualifying person.

How Many Different Types of ABLE Accounts are There?

For 2022, there are currently 49 ABLE accounts across the United States that can support eligible people. 

Bottom Line

An ABLE account is a tax-advantaged savings account that can financially support qualifying account owners. You might be able to qualify if you are able to meet at least one of the following requirements:

• Be eligible for Supplemental Security Income (SSI) because of  a disability or blindness that began before they reached the age of 26
• Be allowed to get childhood disability benefits (CDB), disability insurance benefits (DIB), or disabled widow’s/widower’s benefits (DWB) because of a disability or blindness that began before they reached the age of 26 
• Be a person that has proof that they met the requirements for disability certification before they reached the age of 26

Since each state has its own version of ABLE accounts, you should compare between states. You never know what you might find and how it can help you out!