The ABLE Act: Savings Accounts for the Disabled - Cona Elder Law

The ABLE Act: Savings Accounts for the Disabled


​The ABLE Act (Achieving a Better Life Experience Act) is a new federal law designed to give individuals with disabilities access to savings accounts without disrupting their eligibility for government benefits, such as Medicaid and SSI.  These special savings accounts are modeled after the 529 college savings plans.  Anyone can contribute to an ABLE Act account, including parents and family members as well as the disabled individual him/herself. New York State has proposed legislation to enact the ABLE Act in New York.

ABLE accounts have very different rules from Special Needs Trusts and are arguably not a substitute.  There are special rules and limitations to keep in mind when determining if an ABLE account is appropriate:

♦ An ABLE account is an exempt resource for purposes of Medicaid eligibility.

♦ Up to $100,000 in an ABLE account is exempt for SSI purposes.

♦ A disabled individual is limited to having only one ABLE account.

♦ Total annual contributions from all sources combined are limited to the gift tax exclusion amount (currently $14,000/year).

♦ An ABLE account can be funded up to a maximum of $375,000 (New York State's limit for 529 accounts).

♦ ABLE accounts are pay-back accounts: Money remaining in the ABLE account upon the beneficiary's   death must be paid back to the State up to the amount expended in Medicaid benefits on the beneficiary's behalf.

♦ ABLE account balances grow tax free. 

♦ Withdrawals from an ABLE account for qualified expenses are not taxable.

♦ Qualified Disability Expenses include:

  • Education
  • Housing *
  • Transportation
  • Employment training
  • Assistive technology
  • Personal support services
  • Financial management and administrative services

*Caution: Payment from an ABLE account for housing expenses will reduce the beneficiary's SSI benefits.

An ABLE account should be considered along with and compared to a Special Needs Trust as the rules are different.  For example, a Special Needs Trust funded by the disabled beneficiary's parents is NOT a pay-back trust and money remaining in the account can pass to other beneficiaries.

As always, our attorneys are available to answer your questions and review your circumstances so that you can make informed decisions that are best for you and your family.

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Cona Elder Law is recognized as a leading elder law and estate planning firm on Long Island.  The firm provides creative advocacy and cutting edge planning strategies and has been featured in many publications including: The New York Times, The Wall Street Journal, Newsday, L.I. Business News, Kiplinger's, Reader's Digest and many others. Cona Elder Law attorneys are frequent contributors to Newsday's Act II "Ask the Expert" column and have appeared as guests on WNBC-TV, CNN-fn, News 12, News 55, Channel 21 "Act II With Newsday" and many radio stations including WOR, WCBS AM and WFAN.

About the Author Cona Elder Law

Cona Elder Law is a full service law firm based in Melville, LI. Our firm concentrates in the areas of elder law, estate planning, estate administration and litigation, special needs planning and health care facility representation. We are proud to have been recognized for our innovative strategies, creative techniques and unparalleled negotiating skills unendingly driven toward our paramount objective - satisfying the needs of our clients.

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