Caregivers know more than most that living with a disability means extra expenses for housing improvements, assistive devices, and specialized healthcare. The Achieving a Better Life Experience (ABLE) Act of 2014 introduced an innovative savings tool: ABLE accounts.
These tax-advantaged savings empower eligible individuals with disabilities and bring relief to family caregivers, allowing them to save and invest for qualified expenses without jeopardizing SSI or Medicaid benefits. In this article, discover if you or your loved one is eligible.
The Achieving a Better Life Experience (ABLE) Act of 2014 created a new savings tool for people with qualifying disabilities: the ABLE account. Worried about losing your SSI or Medicaid? An ABLE account won't affect either. As long as the balance stays under $100,000, your benefits are fully protected.
An ABLE account is a tax-advantaged savings account that lets people with qualifying disabilities save money without losing SSI or Medicaid benefits.
An ABLE account is sometimes called an ABLE savings account. However, it works differently from a standard savings or checking account. It’s a tax-advantaged account specifically for disability-related expenses.
Each state runs its own ABLE program. You don't have to use your own state's program. Most states allow out-of-state residents to enroll.
Medicaid waiver enrollment doesn’t automatically qualify someone for an ABLE account. Many people who have a Medicaid waiver also have an SSI or SSDI certification that does qualify them. This is different from a Medicaid spend-down. Holding ABLE accounts does not trigger asset spend-down rules or affect Supplemental Security Income benefits (SSI) if the ABLE account has less than $100,000.
Medicaid waiver programs are the main way for family caregivers to get paid for caring for a loved one. We’ll cover that below.
The standard annual limit as of 2026 is $20,000. The annual contribution limit may change year to year.
The ABLE to Work Act lets employed beneficiaries who are not participating in an employer sponsored retirement program contribute an extra amount equal to their earnings or $15,650, whichever is less. That means your employed loved one can contribute up to $35,650 to their ABLE account each year.
These additional contribution limits are higher for employed residents in Alaska and Hawaii at $19,550 and $17,990 respectively.
If your loved one’s ABLE account goes above $100,000, SSI benefits might be stopped until the amount goes back under $100,000. Medicaid eligibility isn’t affected.
Money in ABLE accounts is used for qualified disability expenses (QDE). What qualifies? Here are some examples:
Account holders are responsible for keeping detailed records. Record expenses to make sure they meet qualified disability expense (QDE) guidelines. ABLE program administrators usually don't ask for regular expense reports. Still, keep receipts, invoices, and any other relevant documents in case the IRS audits your family member.
Using ABLE funds for non-qualified expenses could lead to tax penalties. Your loved one could lose benefits like Medicaid in an audit. To avoid this, ABLE account holders should carefully track spending. Only use funds for qualified disability expenses.
What is the difference between ABLE accounts vs. special needs trusts? This is the most common question family caregivers ask as they plan for their disabled loved one’s financial future. We list the main differences below.
Many families use an ABLE account for day-to-day disability expenses. Caregivers usually use a special needs trust for longer-term financial planning.
Family caregivers may get paid through Medicaid to care for a loved one who qualifies for an ABLE account. Givers can help make that happen. Many who qualify for ABLE accounts also qualify for Medicaid programs that pay family caregivers. Givers helps families enroll with no upfront costs.
Self-directed Medicaid programs let your loved one choose their own caregiver, including family. That means family caregivers may be paid through Medicaid. Your loved one decides the caregiver pay rate. These Medicaid programs are available in all states. Each state has different rules. For example, some states exclude spouses and legally responsible family members.
Givers helps families through self-directed Medicaid program enrollment with no upfront cost. Does your loved one qualify for Medicaid? Have they had a qualifying disability before age 46? Then you may be able to get paid for the care you're already providing.
No. Four states don’t have ABLE account programs: North Dakota, South Dakota, Wisconsin, and Idaho. However, you can still apply to an ABLE account in another state. Many states accept out-of-state residents. Some don’t like Florida, Georgia, Oklahoma, and Maine. The federal eligibility rules are the same no matter which state you choose.
No. Each state runs its own program. They have their own fees, investment choices, and program name. For example, the NY ABLE Savings Program doesn’t include a state income tax deduction and offers a Sallie Mae High Yield Savings Account. The Ohio STABLE Account allows up to $4,000 in state income tax deductions. Federal laws apply to all accounts. States also may offer a state income tax deduction on contributions if you use the home state plan.
The annual contribution cap and $100,000 SSI threshold may not work for all families. Money can only be used for qualified disability expenses. Only people whose disability began before age 46 can apply. However, for many families, the ABLE account is the only tool that protects savings without affecting Medicaid eligibility.
The account owner can take out money for qualified disability expenses like housing, groceries or car expenses. The funds don’t have a tax penalty if used for QDE. However, if you use the funds for other expenses, you will face federal and state income taxes and a 10% federal penalty tax. Record all QDE expenses in case of a rare audit.
Yes. Transportation is a qualified disability expense. Your loved one can use funds for car payments, registration, titles, repairs, and other car-related costs. They can also use the funds to buy a car, bus tickets, or rides. Keep all receipts for any IRS audit.
Yes, if the disability began before age 46. In fact, autism advocates like Autism Speaks helped push the ABLE Act in 2014 for people with autism. Most people with autism qualify since the disability usually begins in childhood. They need to show that their diagnosis severely impacts daily activities. Family caregivers can set up a tax-exempt savings account to pay for housing, groceries, and other qualified disability expenses.
Open an ABLE account through a state ABLE program. Deposit the minimum balance to open an account and contribute up to $20,000 a year. Use funds to pay for QDE without tax penalties. Money grows tax-free. Also, look at Medicaid programs that pay family caregivers. Most people who qualify for ABLE accounts also qualify for Medicaid.
