In a significant development for individuals with disabilities, new regulations regarding ABLE (Achieving a Better Life Experience) accounts are set to expand eligibility and facilitate savings for millions. Paul Safarik, a 32-year-old from Lincoln, Nebraska, exemplifies the benefits of these accounts, having recently used his savings to buy a treadmill and cover dental expenses without jeopardizing valuable government assistance. Starting in 2026, ABLE accounts will be available to those identified with disabilities before the age of 46, potentially affecting an additional 6 million people, including many veterans, while enhancing financial literacy and awareness around these crucial resources.
| Article Subheadings |
|---|
| 1) Understanding ABLE Accounts and Their Impact |
| 2) Contribution Rules and Tax Benefits Unveiled |
| 3) Rise of Awareness as a Challenge |
| 4) Eligibility Requirements for ABLE Accounts |
| 5) Preparing for Changes in 2026 |
Understanding ABLE Accounts and Their Impact
ABLE accounts were established under the Achieving a Better Life Experience (ABLE) Act of 2014 and have been operational since 2016. They allow individuals diagnosed with disabilities prior to age 26 to save money without affecting their eligibility for government benefits such as Supplemental Security Income (SSI) and Medicaid. These accounts enable individuals to bypass the restrictive $2,000 asset limit typically associated with disability benefits, thus promoting financial independence and a better quality of life. Currently, around 8 million individuals nationwide qualify for an ABLE account, yet only 186,641 accounts were opened by the end of 2024, highlighting a significant gap in awareness and utilization.
The upcoming changes in 2026, which will allow individuals diagnosed with disabilities before the age of 46 to open ABLE accounts, are expected to further increase participation in these programs. State treasurers are responsible for administering the accounts, which can be established online, allowing individuals to manage their savings conveniently. The following account features make ABLE accounts especially appealing: savings can accumulate without jeopardizing government assistance, and funds can be withdrawn tax-free when allocated for qualified disability-related expenses, including education and medical costs.
Contribution Rules and Tax Benefits Unveiled
One of the notable features of ABLE accounts is the contributions permitted from family, friends, or even organizations. For 2025, account holders can receive contributions of up to $19,000 per year. If an account holder is employed and not contributing to a workplace retirement plan, they can add an additional amount equal to their gross income, subject to limits that range from about $15,560 to $18,810 depending on the state. This flexibility allows account holders to maximize their savings while adhering to the rules set forth by the ABLE program.
Tax benefits accompany these contributions, as earnings on investments within ABLE accounts are untaxed when used for qualified disability expenses. Such expenses cover a wide array of necessary expenditures, including medical treatment, educational resources, and job training. This financial setup empowers individuals with disabilities to enhance their savings while being proactive about their future.
Rise of Awareness as a Challenge
Despite the clear advantages of ABLE accounts, one of the most pressing challenges remains raising awareness about their existence and benefits. Daniel Elliott, the Indiana State Treasurer, notes that many families still hold misconceptions about saving that stem from prior asset limits associated with disability benefits. The National Association of State Treasurers (NAST), of which Elliott is Secretary Treasurer, is actively working to improve outreach efforts to ensure that families are informed about how they can save money without jeopardizing essential government assistance.
National statistics reveal that fewer than 1% of eligible individuals possess ABLE accounts. This disconnect highlights an urgent need for increased education and outreach programs targeting both affected individuals and the service providers who work with them. As awareness grows, it’s imperative for families and caregivers to understand that financial independence is achievable, thereby breaking the cycle of dependence that often exacerbates vulnerabilities.
Eligibility Requirements for ABLE Accounts
To qualify for an ABLE account, the individual must have a disability that onset before age 26. Furthermore, their disability must either be terminal or long-term, impacting their ability to carry out daily functional tasks. This can include a diagnosis of physical or mental disabilities that are recognized under Social Security criteria.
A crucial determinant of eligibility includes documentation from a qualified healthcare provider affirming the individual’s disability. The upcoming changes in 2026, which expand eligibility to include those diagnosed prior to age 46, promise to bring relief to many individuals whose disabilities developed later in life, such as due to accidents or diseases. This shift marks a meaningful expansion in accessibility and support for a broader range of individuals seeking financial independence.
Preparing for Changes in 2026
As 2026 approaches, prospective account holders and their families can take proactive steps to prepare for the new opportunities presented by ABLE accounts. Familiarizing themselves with the process of opening an ABLE account will help streamline contributions and allow for savings to start as soon as the eligibility expands. Friends, relatives, and community organizations can begin setting aside funds to contribute to these accounts as soon as they become available. This proactive approach can offer financial security for individuals with disabilities, enhancing their opportunities for growth and stability.
| No. | Key Points |
|---|---|
| 1 | ABLE accounts allow individuals with disabilities to save beyond the $2,000 asset limit without losing government benefits. |
| 2 | The eligibility for ABLE accounts will expand in 2026 to include individuals diagnosed before age 46. |
| 3 | Contributions to ABLE accounts can be made by various parties, creating opportunities for collective saving over $19,000 annually. |
| 4 | Tax benefits exist for earnings used for qualified disability expenses, making it more feasible for individuals to independently manage their finances. |
| 5 | Raising awareness about ABLE accounts remains a significant challenge as many eligible individuals remain uninformed. |
Summary
The expansion of ABLE accounts represents a transformative step for individuals with disabilities, enhancing their ability to save and invest in their future. With the upcoming changes set for 2026, millions more will gain access to these invaluable financial tools. Addressing the critical need for awareness and education can foster a supportive environment, promoting financial literacy among individuals with disabilities and their families. As awareness grows, so too does the opportunity for this demographic to achieve financial independence, improving their overall circumstances and enhancing their quality of life.
Frequently Asked Questions
Question: What are ABLE accounts?
ABLE accounts are tax-advantaged savings accounts designed for individuals with disabilities to save money without losing government benefits.
Question: Who can contribute to an ABLE account?
Anyone can contribute to an ABLE account, including the account holder, family members, friends, organizations, and employers.
Question: What expenses can be covered using funds from ABLE accounts?
Funds from ABLE accounts can be used for qualified disability expenses, including medical care, education, housing, and transportation.
