Introduction
The landscape of financial planning for disabled Americans is set to undergo a transformative change. Beginning January 2026, individuals who became disabled by age 46 will have access to ABLE accounts. Traditionally limited to those who acquired disabilities before turning 26, this expansion is a significant step that acknowledges the diverse challenges faced by disabled individuals as they navigate life.
With this shift, an estimated six million more Americans, including approximately a million veterans, will gain access to these valuable resources. ABLE accounts are designed to allow individuals to save for current expenses and future needs without threatening their eligibility for important federal assistance programs such as Medicaid and Supplemental Security Income (SSI).
The Significance of ABLE Accounts
ABLE accounts, born from the Achieving a Better Life Experience Act of 2014, function in a way similar to 529 college savings accounts. Contributions to these accounts grow tax-free, and withdrawals for qualified disability-related expenses are also tax-free. However, it's crucial to understand their functionality in detail.
Changing the Age Limit: What It Means
Until now, ABLE accounts were accessible only to those with disabilities that occurred before turning 26. This limitation effectively boxed older adults, who suffered injuries from accidents, illnesses, or combat, into financial constraints that made it difficult to save. With the new rule, those now eligible will include individuals who became disabled later in life.
“This is a huge change for our community,” Mark Raymond Jr., national outreach coordinator at ABLE Today, emphasized. “We are finally beginning to address life events that occur beyond age 26.”
Understanding Benefits and Uses
The core advantage of ABLE accounts lies in their allowance for savings beyond the strict asset limits traditionally imposed on individuals receiving federal assistance. For many disabled individuals, having no more than $2,000 in assets for qualifying benefits has created a cycle of poverty that hampers financial freedom. ABLE accounts permit savings of up to $100,000 without jeopardizing eligibility for SSI and Medicaid.
Account Contributions and Structure
Who can contribute to an ABLE account? In addition to the account holder, friends, family members, and even employers can contribute to help support the disabled individual. The maximum annual contribution limit is set to increase to $20,000 in 2026, along with an additional $15,650 for working individuals who do not participate in a workplace retirement plan. This provision, known as ABLE-to-Work, significantly enhances the opportunities for account holders to accumulate savings over time.
Practical Applications of ABLE Accounts
The funds in an ABLE account can be used for a wide range of necessary expenses, including:
- Housing
- Health and medical care
- Transportation
- Education
- Legal fees
This flexibility is crucial for individuals who may face various challenges throughout their lives. However, it's also essential to approach these accounts with caution, understanding their benefits, implications, and potential downsides. In some states, assets left in an ABLE account at the owner's death may be subject to Medicaid payback rules, which warrant careful planning and advisement.
Financial Awareness and Future Planning
As we look toward the future, spreading awareness about these changes is pivotal. Many eligible individuals may still be unaware of the ins and outs of ABLE accounts. Financial planners and advocates in the community must engage in outreach to help bring this information to the forefront.
Steps individuals can take to prepare for opening these accounts include:
- Gathering necessary documentation and medical certifications.
- Reviewing ABLE accounts available in their states and understanding their respective terms and features.
- Considering long-term financial goals and needs, allowing for a more comprehensive approach to savings and investment.
Conclusion
The upcoming changes to ABLE accounts offer a beacon of hope for millions who may feel trapped in financial precarity due to their disabilities. While we've made significant strides, the road ahead will require concerted efforts to educate and empower individuals about their options. It is our duty to ensure that everyone knows how to take advantage of these monumental changes to improve their financial circumstances and secure a brighter future.
Source reference: https://www.nytimes.com/2025/12/05/your-money/able-disability-savings-accounts.html
