386 / What is the ABLE Act? Who is eligible for an ABLE account?

Under the previously existing rules, disabled individuals were often discouraged from accumulating assets to meet future expenses because, absent the use of certain trust vehicles, the individual would be disqualified from receiving Social Security and Medicaid benefits if accumulated assets were worth more than $2,000.

The ABLE Act modifies these rules to allow individuals to accumulate up to $100,000 in savings accounts called “ABLE accounts” without becoming disqualified from receiving Social Security benefits (above and beyond the traditional $2,000 resource limit, so that a total of $102,000 can be accumulated without risk of disqualification). Medicaid benefits will not be impacted regardless of how much the individual deposits into the ABLE account.²

In order to qualify as an ABLE account beneficiary, the individual must have been diagnosed with a disability that causes severe limitations before that individual reaches age 26. Beginning in 2026, this age will increase to age 46 under the SECURE Act 2.0. Individuals who are currently receiving Social Security disability benefits also qualify. Regardless, eligibility for Social Security benefits is not a requirement for establishing an ABLE account—a severe, diagnosed disability is sufficient.³

The ABLE account program is entitled to rely upon a certification of the beneficiary’s eligibility that is either signed by the beneficiary or the person establishing the ABLE account. That certification must state that the beneficiary (1) has a qualifying disability that results in marked and severe functional limitations (whether physical or mental) that can be expected to result in death or can be expected to last for a continuous period of at least 12 months or (2) is blind. The certification must also confirm that the disability or blindness occurred before the beneficiary turned 26 and that the beneficiary has (and will retain) a diagnosis that was signed by a physician.

See Q 388 for a discussion of changes to the contribution limits and rollover rules that impact ABLE accounts under the 2017 Tax Act.