What is the ABLE Act and How Can it Help Your Family?

The Federal ABLE Act was signed into law in December 2014 and the Texas ABLE Program was signed into law the following June. Once enrollment opens, people with disabilities who qualify will be able to open special savings accounts (called ABLE accounts) for disability-related expenses without impacting their SSI or SSDI benefits.

Families will hear more and more about the ABLE program as the program rolls out. It’s important to understand the purpose of ABLE accounts and how to use them. If you can an accountant, they can help you decide if this is a good program for you or your loved one.

An individual is eligible if they:

• Became disabled before the age of 26 and
• Are entitled to Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI), or receive a disability certification under the rules of the U.S. Treasury.

Here are the details:                      

• Parents, legal guardians, or a power of attorney may open an account for a child. 
• There can be only one account per child or adult with disabilities.
• The beneficiary is the person with the disability. The account is in their name.
• A child does not have control of the money in the account until they turn 18. As an adult, they can control their funds. There are exceptions if they have a guardian making decisions for them. (Talk to a legal adviser about guardianship and alternatives.)
• Anyone can contribute to the ABLE account. Yearly contributions cannot exceed an allotted amount per year as decided by the state. The maximum amount the account can ever have is also alloted.
• If a person receives SSI, they can have an allotted amount as designated by the state in their account and still receive SSI benefits. If there is more than this amount in their account, their monthly SSI benefits will be suspended. They will still be eligible for Medicaid as long as the funding does not exceed the allotted amount in their ABLE account in order to qualify for benefits.
• Money in the account must be used for specific expenses that relate to the person’s disability and are for the benefit of that person to improve their health, independence, or quality of life.
• Money in the account is tax-free as long as it is used for qualified disability expenses. A partial list of qualified expenses can be found at www.texasable.org.

Some states will allow you to open an ABLE account even if you don’t live there. Check with your accountant or financial adviser regarding this possibility.

For more information and to receive updates as to when ABLE accounts will be available in Texas, go to their website www.texasable.org.  H.R. 647, ABLE Act of 2014, and the IRS guidance for the Treasury rules here.

You can find more information on financial help on this website.