On December 23, 2014, President Obama signed into law the Achieving a Better Life Experience (ABLE) Act which promises to help individuals with disabilities and their families save for disability-related expenses and proactively plan for their futures.  The ABLE Act allows a single tax-free savings account to be established for individuals who were disabled before the age of 26.  These individuals could save $14,000 per year to pay for future health-care costs, housing, lifelong education, transportation, and other necessary expenses.  Anyone will have the opportunity to contribute to these accounts as long as total contributions do not exceed $14,000 annually.  Additionally, individuals will not forfeit their eligibility for Medicaid, Social Security Income (SSI), or other governmental benefit programs.


  • Medicaid Payback
  • One account permitted
  • Annual deposits cannot exceed gift tax annual exclusion
  • Contributions may be made by any person
  • Contributions are not tax deductible
  • Income earned on account balances is not taxed, subject to exceptions
  • Withdrawals for qualified expenses are not taxable
  • Aggregate contributions subject to overall limit matching the State limit for Section 529 Accounts
  • Allowable Contributions
  • Qualifying ABLE Programs may only accept cash contributions or rollovers from one beneficiary to another family member beneficiary
  • Distributions for Qualified Disability Expenses are not taxable:

o   Education

o   Housing

o   Transportation

o   Employment Training and Support

o   Assistive Technology and Personal Support Services

o   Prevention and Wellness

o   Financial Management and Administrative Services

o   Legal Fees

o   Expenses for oversight and monitoring

o   Funeral and burial expenses

  • Qualified ABLE Program accounts must provide a separate accounting for each designated beneficiary
  • Designated beneficiaries are permitted to direct investment of account contributions only twice per year
  • ABLE Accounts must be opened in the State the beneficiary resides
  • States have the option to participate
  • Qualified ABLE Programs must be established and maintained by the State or an instrumentality of the State
  • Monthly electronic submission of distributions and account balances shall be made to the Social Security Administration

David S. Banas

Hickman & Lowder Co., L.P.A.