ABLE Accounts: A Powerful Financial Tool
For many individuals with disabilities and their families, saving money can feel risky. Traditional savings accounts may threaten eligibility for critical benefits like Supplemental Security Income (SSI) and Medicaid. For years, this reality left people with disabilities with limited options to build financial security in their own name.
ABLE accounts changed that.
ABLE accounts are a powerful financial planning tool that allow eligible individuals with disabilities to save, invest, and spend money without automatically jeopardizing essential public benefits. When used thoughtfully, ABLE accounts can support independence, dignity, and long-term stability — all while preserving access to vital supports.
What Is an ABLE Account?
An ABLE account is a tax-advantaged savings account designed specifically for individuals with disabilities. Created under the Achieving a Better Life Experience (ABLE) Act, these accounts allow people with qualifying disabilities to save money without violating SSI and Medicaid asset limits, within certain thresholds.
To be eligible, an individual must have a disability that began before age 46.
ABLE accounts are owned by the individual with a disability, although a parent, guardian, or authorized representative may help manage the account.
Why ABLE Accounts Matter
For the first time, individuals with disabilities can save money in their own name while maintaining benefits eligibility. This represents an important shift toward financial autonomy and self-determination.
ABLE accounts help:
Encourage personal savings
Support financial independence
Reduce reliance on others for day-to-day expenses
Provide flexibility for a wide range of disability-related costs
Rather than replacing public benefits, ABLE accounts are designed to complement them.
What Can ABLE Account Funds Be Used For?
ABLE account funds may be used for qualified disability expenses, which are broadly defined and intended to support health, independence, and quality of life.
Common qualified expenses include:
Housing and utilities
Education and training
Transportation
Healthcare and therapies
Assistive technology
Employment supports
Personal support services
Financial management and legal fees
The flexibility of allowable expenses makes ABLE accounts particularly useful for everyday living.
Contribution Limits and Key Rules
While ABLE accounts offer significant advantages, they also have specific rules that must be followed carefully.
Annual Contribution Limits
Annual contributions are capped at a federal limit, though some individuals who work may be able to contribute additional amounts under certain conditions.
Account Balance and SSI
ABLE account balances up to a certain threshold are excluded from SSI resource limits. Balances above that threshold may affect SSI cash benefits, though Medicaid eligibility is generally preserved.
Investment Options
ABLE accounts offer limited investment choices, typically through pre-selected portfolios. While simpler than traditional brokerage accounts, investment decisions still matter.
Understanding these rules is essential to using an ABLE account effectively.
Tax Advantages of ABLE Accounts
ABLE accounts offer several tax benefits:
Contributions are made with after-tax dollars
Earnings grow tax-free
Withdrawals for qualified disability expenses are tax-free
Some states may also offer state tax deductions or credits for contributions. These tax advantages make ABLE accounts a valuable long-term savings tool when used appropriately.
ABLE Accounts vs. Special Needs Trusts
ABLE accounts and special needs trusts are often discussed together, but they serve different purposes.
ABLE Accounts
Owned by the individual
Emphasize independence and control
Best for smaller balances and daily expenses
Easier to manage and access
Special Needs Trusts
Managed by a trustee
Designed for larger sums or inheritances
Provide long-term asset protection
Often central to estate and legacy planning
Many families use both tools together, leveraging the strengths of each.
Supporting Independence and Self-Determination
One of the most powerful aspects of ABLE accounts is the role they play in promoting autonomy. When individuals with disabilities manage their own savings and spending, they gain confidence and agency.
Financial planning that includes ABLE accounts can:
Support supported decision-making models
Encourage financial education
Respect personal choice and preferences
Reinforce dignity and inclusion
ABLE accounts are not just financial tools — they are empowerment tools.
Common Mistakes to Avoid
To protect benefits and maximize value, it’s important to avoid common pitfalls, including:
Exceeding contribution or balance limits
Using funds for non-qualified expenses
Failing to coordinate ABLE accounts with other planning tools
Not reviewing the account as circumstances change
Regular review and coordination with broader financial planning helps prevent issues.
Integrating ABLE Accounts into a Comprehensive Plan
ABLE accounts work best when they are part of a holistic special needs financial plan. This includes:
Coordinating with SSI and Medicaid rules
Aligning with employment income
Integrating with trusts and estate plans
Supporting short- and long-term goals
Financial planning ensures that ABLE accounts enhance — rather than complicate — long-term security.
A Tool for Today and the Future
ABLE accounts represent progress in disability financial planning. They acknowledge that individuals with disabilities deserve the same opportunities to save, plan, and participate financially as anyone else — with safeguards that recognize the realities of public benefits.
This communication contains general information that is not suitable for everyone and was prepared for informational purposes only. Nothing contained herein should not be construed as a solicitation to buy or sell any security or as an offer to provide investment advice. Hestia Wealth & Wellness, LLC is a registered investment adviser. For additional information about Hestia Wealth & Wellness, LLC, including its services and fees, send for the firm’s disclosure brochure using the contact information contained herein or visit advisorinfo.sec.gov.