ABLE Accounts: A Way to Save for Disabled People

Families face a dilemma when providing for someone with a disability: how to offer meaningful support without jeopardizing essential means-tested government benefits, such as Medicaid and Supplemental Security Income (SSI).

One option is an ABLE (Achieving a Better Life Experience) account, which offers potential tax-free growth on contributions (up to annual limits), tax-free withdrawals for qualified disability expenses, and generally does not affect eligibility for federal assistance.

"It's a huge benefit to have a pool of money for daily living expenses that doesn't need to be spent down to stay under the government's 'countable resource' limit," says Austin Jarvis, director of estate, trust, and high-net-worth tax planning research at the Schwab Center for Financial Research. (The countable resource limit for SSI is $2,000 for an individual and $3,000 for a married couple; if the assets used to calculate financial eligibility exceed this limit on the first day of the month, you're ineligible for SSI that month.)

Here's what else you need to know.

To qualify for an account, the beneficiary's disability must have started before age 46. They must also meet severity requirements, either by qualifying for federal disability benefits or by receiving a physician's attestation that their disability meets the functional-limitations standard in the ABLE statute or the Social Security Administration's "List of Compassionate Allowances Conditions."

Accounts are administered by individual states, which determine not only investment options but also account maximums, which range from $235,000 (Mississippi) to $675,000 (Virginia).¹ Medicaid and other benefits typically are unaffected so long as the ABLE account balance remains below the state's cap; if the account balance exceeds $100,000, SSI benefits may be suspended temporarily until the balance falls below that threshold. Most states' programs are available to nonresidents, though the account holder's home state may offer special tax benefits. (You can compare plans at the ABLE National Resource Center.)

In 2026, the annual contribution limit from all sources is $20,000. Disabled workers can contribute an additional amount—the lesser of $15,960 or their entire compensation for the current calendar year—as long as they aren't enrolled in an employer-sponsored retirement plan. (For Alaska and Hawaii residents, the maximum additional contributions are $19,950 and $18,360, respectively.)

Funds can be withdrawn tax-free to pay for qualified disability expenses, including food, housing, medical costs, transportation, and even job training, employment coaching, and other types of education. (Money withdrawn for housing expenses must be spent within the same month.)

"Families who want to set aside excess funds will often use an ABLE account in tandem with a third-party special needs trust, which allows the beneficiary to retain access to means-tested government benefits because the trust—not its beneficiary—owns the financial assets," Austin says.