“Just because a man lacks the use of his eyes doesn’t mean he lacks vision.” —Stevie Wonder
If you or a loved one lives with a disability, you already know the costs aren’t just medical.
Specialized equipment, home modifications, transportation, personal support services, ongoing therapies… they all add up (often far exceeding what a “normal” household budget can handle).
That’s why Congress passed the Achieving a Better Life Experience (ABLE) Act.
An ABLE account is actually one of the most valuable financial planning tools for people with disabilities, for a few reasons.
First, money in the account grows tax-free. And when you spend it on qualified disability expenses (which I’ll define in a moment), both principal and earnings remain tax-free as long as the total contributions from all sources don’t exceed the federal gift tax exclusion of 19K for 2025.
And if the beneficiary works and doesn’t participate in an employer-sponsored retirement plan, they can add even more from their own earnings — up to the federal poverty level.
Normally, having more than 2K in assets can jeopardize your SSI eligibility. But with an ABLE account, the first 100K is ignored for SSI resource purposes.
And Medicaid continues no matter how large the account grows (up to your state’s limit). But when the beneficiary dies, the state may take any remaining ABLE funds to recover the cost of Medicaid services they received after the account was opened (AKA, the Medicaid payback provision).
The IRS defines qualified disability expenses as those related to the beneficiary’s disability that help maintain or improve health, independence, or quality of life, like:
- Housing and utilities: like rent, mortgage payments, property taxes, electricity, gas, water, sewer, and garbage.
- Assistive technology and personal support: think wheelchairs, hearing aids, home automation systems, vehicle modifications, communication devices, etc. This category also includes personal attendants, home health aides, and job coaches.
- Health and wellness: Beyond doctor visits, this includes everything from insurance premiums and co-pays to physical therapy, mental health counseling, respite care, and specialized diets.
- Education and employment: Tuition, books, tutoring, vocational training, job placement support, business start-up costs, even service animal care.
- Financial and legal needs: Tax prep or financial advisor fees, legal costs for establishing an ABLE account or a Special Needs Trust, funeral and burial expenses, even groceries and daily living costs may qualify if they benefit the disabled individual.
Just make sure tokeep records, because the IRS can ask for them. Keep invoices, bank statements, and receipts. If you can’t prove it was a qualified disability expense, earnings may become taxable (and hit with a 20 percent penalty).
Is an ABLE account right for you?
If you’re considering an ABLE account, it’s not something to navigate without guidance. Because these accounts sit right at the intersection of tax law and means-tested benefits, even a small mistake can trigger tax penalties or suspend SSI or Medicaid.
Our role is to help you structure your account correctly, ensuring that: housing withdrawals follow strict timing rules, every qualified disability expense is properly documented, and your ABLE plan fits into your larger tax strategy.
So, let’s have a conversation about whether an ABLE account is the right move for you and your family:
