With a little planning, you can save for your loved one’s future without putting their disability benefits at risk. It’s important to know that government programs like Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and Medicaid can include asset limits to qualify for benefits. Learn how an Achieving a Better Life Experience (ABLE) account can help you save for your loved one’s disability expenses without impacting their benefits.
What is an ABLE account?
An ABLE account is a tax-advantaged savings program that helps people with disabilities and their families save for disability expenses. Once an account is set up, anyone can make contributions, including friends, family, or the account beneficiary. If you use the money for qualified disability expenses, you won’t owe federal income tax on withdrawals, including any earnings.
How do ABLE accounts affect disability benefits?
Many people depend on government disability programs and benefits for income, health care, and food and housing assistance. It’s helpful to know:
- Medicaid benefits aren’t affected by money in ABLE accounts.
- SSI benefits aren’t affected if the balance in your ABLE account is below $100,000.
Who is eligible for an ABLE account?
Your loved one, the designated or account beneficiary, is eligible for an ABLE account if one of these apply:1
- They’re already receiving benefits under SSI or SSDI.
- They’re eligible for SSI based on disability or blindness that began before age 26.
- They’re entitled to disability insurance benefits (DIB), childhood disability benefits (CDB), or disabled widow’s or widower’s benefits (DWB) based on disability or blindness that began before age 26.
- They’re certified to have met the criteria for a disability before age 26.
What is the contribution limit for an ABLE account?
In 2023, the annual contribution limit is $17,000. This limit includes contributions from any source, including family, friends, or even a rollover from a 529 account.1
It’s also helpful to know, if the designated beneficiary is employed and has employment income, they can sometimes contribute more than the annual limit to their ABLE account. To learn more, check out Spotlight on Achieving a Better Life Experience (ABLE) accounts on ssa.gov.
What are some examples of qualified disability expenses?
These are expenses related to your loved one’s disability, to help maintain or improve their health, independence, or quality of life, which could include:
- Education
- Transportation
- Legal fees
- Housing
- Assisted technologies and services
- Health costs
See Achieving a Better Life Experience (ABLE) Accounts, for a more comprehensive list of qualified disability expenses. Also, it’s a good idea to keep detailed records of your withdrawals in case the IRS requests verification of how the money was used.