Discover how ABLE accounts can help families with special needs children save for the future without losing essential benefits.
As a financial advisors, we encounter families with special needs children who face unique financial challenges. One powerful tool that can help is an ABLE account. This article aims to educate you on what ABLE accounts are, why they are essential, how to determine eligibility, what expenses are allowed, how they work, and where to set one up.
Navigating the financial landscape can be daunting, especially when you’re trying to secure a stable future for a special needs child. It’s my hope that this guide will serve as a resource to help you make informed decisions and gain some peace of mind.
ABLE (Achieving a Better Life Experience) accounts are tax-advantaged savings accounts specifically designed for individuals with disabilities and their families. These accounts allow you to save money for disability-related expenses without affecting eligibility for federal benefits.
The concept of ABLE accounts was introduced under the Achieving a Better Life Experience Act of 2014. The legislation was inspired by the desire to provide financial security and independence to individuals with disabilities without jeopardizing their access to essential benefits.
Families with special needs children often incur significant costs related to medical care, education, and other essential services. Before ABLE accounts, saving money could jeopardize eligibility for crucial benefits like Medicaid and Supplemental Security Income (SSI). ABLE accounts provide a much-needed financial safety net, allowing families to save for future expenses without losing vital benefits.
Raising a child with special needs can be financially overwhelming. According to studies, families with special needs children can expect to spend significantly more on healthcare, therapies, educational support, and assistive technologies compared to families without special needs children. This financial burden often leaves families in a precarious position, balancing the need to save for the future with the risk of losing essential benefits.
ABLE accounts bridge the gap by allowing families to save and invest money specifically for disability-related expenses without affecting eligibility for means-tested benefits. This ensures that families can build a financial cushion for future needs while maintaining access to critical support services.
To be eligible for an ABLE account, the individual must meet the following criteria:
If you meet these criteria, you can open an ABLE account regardless of your current age. It’s important to note that the account beneficiary can be any age at the time of opening the account, as long as the onset of the disability occurred before age 26.
Funds in an ABLE account can be used for "Qualified Disability Expenses" (QDEs), which include but are not limited to:
Always consult with a financial advisor to ensure that your expenses qualify. Misuse of funds for non-qualified expenses could result in tax penalties and loss of benefits.
Most ABLE programs offer online portals where account holders can monitor contributions, withdrawals, and investment performance. Regularly reviewing account activity ensures that funds are being used appropriately and helps plan for future needs.
You can set up an ABLE account through state-sponsored programs. Each state has its own ABLE program, but you are not limited to your home state. Some popular options include:
As a financial advisor, I understand the complexities and emotional challenges families with special needs children face. ABLE accounts offer a valuable financial planning tool that can provide peace of mind and financial security. These accounts empower families to save for the future without compromising access to essential benefits, ensuring that special needs children have the support they need to thrive.
If you have any questions or need personalized advice, please don't hesitate to reach out. Navigating the financial landscape can be challenging, but you don’t have to do it alone. Together, we can create a financial plan that secures a brighter future for your loved one.
An ABLE (Achieving a Better Life Experience) account is a tax-advantaged savings account for people with disabilities and their families. The money grows tax-free, and withdrawals for qualified disability expenses come out tax-free. Best of all, it lets a family save without blowing up eligibility for means-tested benefits like SSI and Medicaid.
The person must have a qualifying disability that began before a certain age and meet the Social Security definition of disability. Here's an important update: as of 2026, that age-of-onset cutoff rose from 26 to before age 46 — which opens ABLE accounts to a lot more people, including many who developed a disability later in life. The beneficiary can be any age now, as long as the disability started before that threshold.
Contributions are capped at the annual federal gift tax exclusion — $19,000 in 2025, and it ticks up with inflation over time. Anyone can chip in: family, friends, or the beneficiary. People who are working and don't have a retirement plan through their job can often add even more under the ABLE to Work rules.
This is the whole point of ABLE accounts. The first $100,000 doesn't count against the SSI asset limit, and the balance generally doesn't affect Medicaid at all. Above $100,000, SSI can be paused, but Medicaid stays intact. So you can build a real cushion without losing the benefits that matter.
Qualified disability expenses, which is a broad list — education, housing, transportation, health and wellness, assistive technology, job training, legal fees, and basic living costs. The key word is qualified: spending on non-qualified items can trigger taxes and penalties, so it's worth keeping good records.
ABLE accounts are run through state programs, and you're not limited to your home state. Iowa has its own — IAble — and other popular options include Ohio's STABLE and Virginia's ABLEnow. When you compare programs, look at fees, investment choices, and whether your state offers a tax break for contributing. Any questions on that? Just give us a holler.