What an ABLE account is and who can open one
An ABLE account is a tax-advantaged savings account created by federal law for people with disabilities. It lets you save money without losing Supplemental Security Income (SSI) or Medicaid coverage the way a regular savings account would. The account is named after the Achieving a Better Life Experience Act, passed in 2014.
You can open an ABLE account if you receive SSI or Social Security Disability Insurance (SSDI) for a disability that started before age 26, or if you have a disability diagnosis that meets Social Security's definition. You do not need to be receiving benefits right now — you only need to have been found disabled by Social Security before that age cutoff. Each person can have only one ABLE account.
ABLE accounts are offered through state programs. Each state runs its own, though the rules are federal. You choose which state's program to use — you do not have to use your home state's program, though most people do. The account works like a regular savings or checking account, but with special tax treatment and contribution limits.
Key Takeaways
- ABLE accounts let you save up to $18,000 per year (as of 2024) without losing SSI, as long as your total account balance stays under $100,000.
- Money in an ABLE account does not count as a resource for SSI purposes, so it will not reduce your monthly benefit payment.
- You can use an ABLE debit card to spend money directly from the account, and you can set up direct deposit from your employer or benefits.
- Once your account reaches $100,000, you lose SSI may be able to access but keep Medicaid coverage in most states.
- Each state runs its own ABLE program with different investment options and fees, so comparing programs before opening is worth your time.
How much you can save without losing SSI
The main advantage of an ABLE account is that money in it does not count against the SSI resource limit. SSI normally stops if you have more than $2,000 in countable resources (or $3,000 if you are married). An ABLE account is exempt from this rule, so you can save far more without losing your monthly payment.
You can contribute up to $18,000 per year to your ABLE account (the limit for 2024; it adjusts yearly for inflation). This is the same as the annual gift tax exclusion. Your employer can also contribute on your behalf, and family members can contribute, as long as the total does not exceed the yearly limit. Contributions come from after-tax money — you do not get a tax deduction for putting money in.
Once your account balance reaches $100,000, you lose SSI may be able to access. However, you keep Medicaid in most states, which is often the more valuable benefit. Some states have different rules, so check with your state's Medicaid program before your account gets close to that threshold. After you lose SSI, you can keep adding money to the account and using it without restriction.
What you can spend ABLE account money on
You can withdraw money from your ABLE account for any reason — there are no restrictions on what you spend it on. This is different from a Flexible Spending Account (FSA) or Health Savings Account (HSA), which limit what you can buy. You can use ABLE money for rent, food, transportation, medical care, education, employment support, or anything else.
Most ABLE accounts come with a debit card, so you can spend directly from the account at stores, online, or at ATMs. You can also set up direct deposit from your employer, your benefits, or other income sources. Some accounts let you write checks. The specific features depend on which state program you choose and which financial institution runs it.
If you withdraw money and your account balance drops below $100,000, you regain SSI may be able to access in the following month. This means you can manage your account balance to keep SSI if you need it. For example, if your account reaches $100,000, you could withdraw $5,000 to drop below the threshold and restore your monthly payment.
How ABLE accounts affect taxes and other benefits
Money you earn and put into an ABLE account is taxed as regular income — you pay income tax on it when you earn it. However, the money grows tax-free inside the account. Any interest, dividends, or investment gains do not trigger federal income tax as long as the money stays in the account. When you withdraw money, you do not pay tax on the withdrawal itself, only on the earnings if you withdraw them separately.
ABLE accounts do not affect SSDI (Social Security Disability Insurance). SSDI has no resource limit, so having an ABLE account makes no difference to your SSDI payment. The account only interacts with SSI, which has the $2,000 resource limit.
ABLE accounts also do not affect Medicaid in most states. Even after your account reaches $100,000 and you lose SSI, you usually keep Medicaid coverage. A few states have different rules, so contact your state Medicaid office to confirm. Veterans benefits, housing vouchers, and other means-tested programs may or may not count ABLE balances — check with each program separately.
Comparing state ABLE programs before you open
Each state's ABLE program is run by a different financial institution and offers different investment options and fee structures. Some states offer low-cost index funds; others offer actively managed portfolios. Some charge annual maintenance fees; others do not. Debit card fees, ATM access, and customer service quality also vary.
You can research programs on the ABLE National Resource Center website, which lists all state programs and their features side by side. You can also contact each state program directly to ask about fees, investment options, and account features. Since you can only have one ABLE account, choosing the right program matters.
You do not have to use your home state's program. If another state's program has lower fees or better investment options, you can open an account there instead. However, you cannot move money between ABLE accounts once opened — if you want to switch programs, you have to close the old account and open a new one, which can trigger tax consequences. Choose carefully the first time.
Opening an ABLE account and what you need
To open an ABLE account, you need proof that you have a disability that meets Social Security's definition and that started before age 26. If you receive SSI or SSDI, Social Security has already made this finding, and you can use your benefit letter as proof. If you do not receive benefits but have a disability diagnosis, you may need medical records or a letter from your doctor.
You will also need a Social Security number, a valid ID, and a way to fund the account (a bank account for direct deposit or a check). Most state programs let you open an account online. Some require you to mail in documents or visit a branch. The process usually takes a few days to a week.
Once your account is open, you can start contributing immediately. You can set up direct deposit from your employer or your benefits, or you can transfer money from another bank account. Keep records of your contributions and balance, especially as you approach the $100,000 threshold, so you know when you will lose SSI may be able to access.
What happens if your account balance grows too large
If your ABLE account reaches $100,000, you lose SSI may be able to access starting the following month. Your monthly SSI payment stops, but you keep your Medicaid coverage in most states. You can continue to use the money in your account without restriction.
If you want to restore SSI, you need to bring your account balance below $100,000. You can do this by withdrawing money, spending from the account, or letting time pass while you do not contribute. Once your balance drops below $100,000, you regain SSI may be able to access the following month. There is no penalty for crossing the threshold — it is a normal part of how the account works.
Some people intentionally let their account grow to $100,000 and then stop receiving SSI, because they have enough savings to live on and no longer need the monthly payment. Others manage their balance to stay just below $100,000 so they keep both the savings and the monthly benefit. Both strategies are legal and common.
Frequently Asked Questions
Can my family members contribute to my ABLE account?
Yes. Family members, friends, or anyone else can contribute to your ABLE account as long as the total contributions in a year do not exceed $18,000 (for 2024). Each person who contributes should keep records of how much they gave, in case Social Security asks. The contributions do not count as taxable gifts for the giver or the receiver.
What if I work and earn income — can I still use an ABLE account?
Yes. ABLE accounts work well for people who work. You can deposit your paychecks directly into the account, and the money grows tax-free. If you receive SSI, your work income will reduce your monthly benefit under the normal SSI work incentive rules, but the money you save in the ABLE account will not affect your benefit at all.
Can I use an ABLE account if I receive SSDI instead of SSI?
Yes. ABLE accounts are open to anyone with a disability that started before age 26, whether they receive SSI, SSDI, or no benefits at all. SSDI has no resource limit, so an ABLE account does not affect your SSDI payment. You can save as much as you want without losing benefits.
What happens to my ABLE account if I move to a different state?
Your ABLE account stays open and works the same way. You do not have to close it or move the money. However, you cannot transfer the account to your new state's program — you would have to close the old account and open a new one, which can create tax issues. Most people keep their original account even after moving.
Do I have to report my ABLE account to Social Security?
Yes. You should tell Social Security when you open an ABLE account so they know not to count it as a resource for SSI purposes. You do not have to file special paperwork, but mentioning it when you report your resources is a good idea. Keep records of your account statements in case Social Security asks for proof of the balance.