The Fine Print on ABLE Accounts

Who Can Have One

An ABLE account is a special kind of savings account. Money in it does not count against SSI or Medicaid, the way regular savings would. You can have the account and keep your benefits. The federal rule sets an age limit, and it is 46, not 26 like some old articles say.

The law says: “the individual is entitled to benefits based on blindness or disability under title II or XVI of the Social Security Act, and such blindness or disability occurred before the date on which the individual attained age 46” (26 U.S.C. 529A)

You do not actually have to be on SSI or Social Security disability to open one. There is another door.

The law says: “a disability certification with respect to such individual is filed with the Secretary for such taxable year” (26 U.S.C. 529A)

A parent or guardian can sign the paperwork, so you can open an account for your child while they are young. A lot of families do exactly that. The Protecting Benefits page explains why this matters.

Anyone Can Put Money In

The grandparent who wants to help can. So can your neighbor. The law says anyone can contribute to the account, not just the parents.

The law says: “under which a person may make contributions for a taxable year, for the benefit of an individual who is an eligible individual for such taxable year” (26 U.S.C. 529A)

But there is a yearly limit on how much everyone together can put in. The limit is tied to the gift tax rule, so it changes every year.

The law says: “if such contribution to an ABLE account would result in aggregate contributions from all contributors to the ABLE account for the taxable year exceeding the sum of” (26 U.S.C. 529A)

There is also an extra allowance if the person with the disability earns their own money and puts it in.

The law says: “in the case of any contribution by a designated beneficiary described in paragraph (7), the lesser of” (26 U.S.C. 529A)

The extra amount is the smaller of what they earned or the federal poverty line for a single person. That is a technical rule, so call the ABLE program you pick and ask whether it applies to your child and what the dollar amount is for this year.

Say: “What is the contribution limit this year, and how can family members send money without it landing in my child's checking account?”

It Is Set Aside, With Two Catches

Congress wrote the law so that money in an ABLE account does not count when SSI or Medicaid decide whether your child qualifies.

The law says: “any amount (including earnings thereon) in the ABLE account” (ABLE Act, Pub. L. 113-295, sec. 103)

The account and the money in it and the spending from it are all ignored. But there are two catches for SSI. First, housing expenses have their own rules.

The law says: “a distribution for housing expenses (within the meaning of such subsection) shall not be so disregarded” (ABLE Act, Pub. L. 113-295, sec. 103)

Second, there is a ceiling. Once the account has more than $100,000, SSI starts looking at it.

The law says: “any amount (including such earnings) in such ABLE account shall be considered a resource of the designated beneficiary to the extent that such amount exceeds $100,000” (ABLE Act, Pub. L. 113-295, sec. 103)

But if it does go over $100,000, SSI pauses, not ends. Medicaid keeps paying.

The law says: “shall not be terminated, but shall be suspended, by reason of excess resources of the individual attributable to an amount in the ABLE account” (ABLE Act, Pub. L. 113-295, sec. 103)

Before you use the account for rent or housing, call your ABLE program and ask how housing spending gets reported to SSI. That one rule can matter a lot.

What You Can Spend It On

The list is long and it surprises people. It is not just doctors and medicine.

The law says: “education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses” (26 U.S.C. 529A)

The rule is simple: the expense has to be related to the disability and help the person. Keep receipts.

Two Limits to Know Before You Open One

First: a person gets one account. Not one per custodian. One.

The law says: “which limits a designated beneficiary to 1 ABLE account for purposes of this section” (26 U.S.C. 529A)

Second: there is a repayment rule that shocks most families. When the person dies, the state can claim money left in the account to repay what Medicaid spent.

The law says: “upon the death of the designated beneficiary, all amounts remaining in the qualified ABLE account not in excess of the amount equal to the total medical assistance paid for the designated beneficiary after the establishment of the account” (26 U.S.C. 529A)

The state can only claim what Medicaid paid after the account opened, and what it claims is reduced by Medicaid Buy-In premiums (which lower the claim).

The law says: “net of any premiums paid from the account or paid by or on behalf of the beneficiary to a Medicaid Buy-In program” (26 U.S.C. 529A)

Funeral and burial expenses are on the spending list, so you can plan for that and protect some money. A special needs trust works differently. The right choice depends on your situation, so talk to a benefits counselor or an attorney who knows special needs planning. Your state's parent center usually has free resources or referrals.

A Way to Ask That Works

Start with your state's ABLE program. Ask in writing about fees, this year's contribution limit, how housing is handled for SSI, and whether a parent can open the account for a minor. Keep every statement. The pages on SSI rules and turning 18 and 26 cover the nearby dates and deadlines.