Are you or a loved one living with a special need? If so, you likely understand the significant amount of extra costs associated with managing these day-to-day needs. The National Disability Institute (NDI) reported on average adults with disabilities require 28% more financial resources compared to those without a disability. These individuals rely on public benefits for financial aid, health care, food and housing. Most needs-based programs restrict eligibility to people limited resources in their saving or checking account. So, a person with special needs is at risk of losing those needed public benefits if they inherit or obtain assets.
That is why the ABLE program was created. An ABLE account allows people with special needs to keep their public benefits and still receive an inheritance. Setting up an ABLE account for you or your child with special needs can be a great way to save for future expenses without affecting eligibility for government benefits.
Here are some key points to consider:
- Eligibility: Individuals must have a significant disability that began before the age of 26. This individual must also meet the required severity of disability. There are two ways in which this is determined: (1) by receiving Supplemental Security Income payments or Social Security Disability Insurance Benefits; or (2) their licensed physician signs a disability certificate including the diagnosis and stating they have “marked and severe” functional limitations which began before the age of 26. Either the individual with the disability can manage the account, or a family member or guardian, if authorized.
- Starting January 1, 2026, the age of ABLE eligibility will be expanded to include people with a disability beginning before the age of 46 (compared to 26 years of age).
- Timing: You can set up an ABLE account at any time, as long as the individual meets the eligibility criteria.
- Benefits: Funds in an ABLE account grow tax-free and can be used for a wide range of qualified disability expenses, including education, housing, and healthcare. ABLE funds are also exempt when calculating Social Security Income or Medicaid.
- Contribution Limits: The annual contribution limit is $18,000 (does not include additional ABLE Work contributions).
- Account Limits: The total balance in an ABLE account can grow up to $100,000 without affecting SSI benefits; however, Medicaid eligibility is not affected regardless of the balance.
- Rollovers: Funds from a 529 college savings plan can be rolled over into an ABLE account, subject to certain limits.
- Palmetto ABLE Savings Program is a program for South Carolina residents only and offers additional tax deductions or credits for contributions. See below for a link to their website and contact information.
- Investment Options: ABLE accounts typically offer a variety of investment options, allowing individuals to choose how their funds are invested. Please contact our team for more information.
It’s beneficial to set up the account as early as possible to maximize the savings and benefits over time. If you have any specific questions or need guidance, please reach out to our team.
This is not legal advice.