ABLE Accounts

I didn't make this up.

Photo by Alexander Grey on Unsplash

Disclaimer

I am not a lawyer.

I am not a financial advisor.

Consult an expert before proceeding.

This information only applies in the United States (although there may be analogous accounts in other countries.) The details can also vary from state to state.

This is from the IRS (Internal Revenue Service):

An ABLE account. The Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE) was enacted to help people with disabilities or who are blind save money in a tax-favored ABLE account to maintain health, independence, and quality of life. Compare ABLE programs on the websites of state governments to see which program is best suited for you.

This is from the California State Website (CalAble):

For many people with disabilities, the fear of losing critical public benefits, coupled with the high cost of support expenses, has limited them from building financial security.

Until recently, individuals receiving federal benefits have been restricted in the amount of money they can save, essentially keeping them in poverty and preventing them from saving or planning for the future. When the Stephen Beck Jr. Achieving a Better Life Experience (ABLE) Act was signed into federal law by President Obama in 2014, these obstacles were removed as the law provides that eligible individuals with disabilities could now save above the $2,000 resource limit without impacting their eligibility for means-tested public benefits, such as such as Supplemental Security Income (SSI) and Medicaid/Medi-Cal. The ABLE Act has been heralded as one of the most important pieces of disability legislation since the Americans with Disabilities Act.

The CalABLE Savings Plan opened to the public on December 18, 2018. The program enables Californians and out-of-state residents the ability to save for disability-related expenses by putting money in tax-advantaged investments, while protecting their eligibility for means-tested public benefits programs. After-tax contributions allow earnings to grow tax-deferred, and withdrawals, when used for a broad range of Qualified Disability Expenses, are federal and state tax-free.

Thanks for your concern, governmental fucks!

I love that the legislation that created these accounts is called the Achieving a Better Life Experience (ABLE) Act!

Photo by engin akyurt on Unsplash

Ultimately, what the ABLE Act does is make it easier for people with disabilities and their families and friends to save money in a particular account for the disabled person’s disability-related expenses. That means the government has a “moral out” about not paying for some of those things, right? Whatever.

Like most regulations that touch on taxes savings and public benefits, the details are complicated, and if you want to do anything remotely complicated, you need an expert to guide you through it.

Basic Highlights

I researched this for about eight hours in preparation for writing this piece, and I am only going to give you a few basics that I feel sure of.

Eligibility

To be eligible for an ABLE account, you or the beneficiary must:

• Be blind or have a medically determinable physical or mental impairment that results in marked and severe functional limitations, and such condition developed before the age of 26 and will last, or has lasted at least a year;

• Be a U.S. citizen; and

Confirm one of the following:

• Are eligible for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) because of a disability;

• Experience blindness as determined by the Social Security Act; or

• Can provide a signed diagnosis from a licensed physician if requested.

In 2022, the U.S. Congress passed the ABLE Age Adjustment Act. This legislation increases the eligibility age of beneficiaries of ABLE accounts from the onset of disability before age 26 to age 46 — beginning January 1, 2026. Until then, only individuals who have a qualifying disability beginning before age 26 are eligible to open a CalABLE account. (CalAble website)

Qualified Eligible Expenses

Some examples of expenses eligible for payment from a CalABLE account include:

Education

• Tuition for preschool through post-secondary education

• Books

• Supplies and educational materials

• Computers or other assistive technology

Housing*

• Rent

• Purchase of primary home

• Expenses of primary home

• Mortgage payments

• Mortgage insurance, if required by the lender

• Property taxes

• Utility charges

• Home improvement, changes, maintenance, and repairs

• Home modifications

*Money you withdraw for housing expenses may affect your SSI benefits if you do not spend it within the same month. To avoid any impact to your SSI benefits, be sure to spend housing money within the same calendar month that you make the withdrawal. 

Transportation

• Use of mass transit

• Purchase of vehicle

• Alteration of the vehicle to accommodate a disability

• Moving expenses

• Taxis or ride-sharing service

Employment Support

• Cost related to gaining and maintaining employment

• Job-related training

• Job coach

• Employment training

• Benefits planning

Health, Prevention, and Wellness

• Premiums for health insurance

• Mental health, medical, vision, and dental expenses

• Habilitation and rehabilitation services

• Durable medical equipment

• Therapy

• Respite care

• Long-term services and support

• Nutritional management

• Personal assistance

Assistive Technology and Personal Support

• Cost of assistive technology and personal support

• Communication services and devices

• Adaptive equipment

Miscellaneous Expenses

• Financial management and administrative services

• Legal fees

• Oversight and monitoring

• Funeral and burial expenses

People Who Should Be Interested in This

• Anyone (like me) who became permanently disabled before age 26 OR who has a child in this circumstance.

• In 2026, the age ceiling is going up to 46, so if you become disabled or become disabled before then, you will be able to open an account starting then.

• There are separate rules for people on different types of Social Security, particularly SSI. But the main thing is, you can have money in one of these accounts that is over the typical $2,000 limit even if you are on SSI, as long as you are careful about your record keeping.

If you are not worried about becoming disqualified for one type of benefit or another, you can have considerably more money in the account; each state has determined its own limit.

Also, people who are eligible based on when they became disabled but “don’t like to think of myself as disabled” need to get over it. This culture is so ableist that WE MUST use every tool we can for any tiny advantage we can get. This legislation would have helped me so much more thirty years ago, but I have been told it’s not all about me.

Other people can contribute to the account up to the total annual limit. To be clear, the contributions are not tax-deductible, but the earnings on the savings are tax-sheltered.

My Experience

So far, I have saved in an ABLE account but haven’t made any withdrawals for expenditures. I am saving toward a new power wheelchair if my insurance won’t pay for an adequate chair. I will also be using it for some wheelchair van-related expenses.

Resources

California's ABLE Account Website

IRS link that lists publications for people with disabilities.