What is the ABLE Act?
Achieving a Better Life Experience (ABLE) Act went into effect on July 1, 2016. The ABLE Act authorizes the establishment of a special savings/investment account that has a tax-advantaged status. Florida's ABLE accounts are opened with and managed by: ABLE United.
Who Qualifies for a Florida ABLE Account?
Currently ABLE accounts may only be established by those who developed a qualified disability (one that would allow you to qualify for SSI/SSDI) prior to reaching 26 years old. So those who qualify (or wish to qualify) for SSI or Florida Medicaid, who developed a qualified disability when they were 25 years old or younger, should look into opening an ABLE account.
To clarify, you can be older than 25 and still open an ABLE account. As an example, someone who is 50 years old, but has been disabled since before turning 26, would be an eligible ABLE account candidate.
- this age restriction is increasing to 45 years old -or those who developed a qualifying disability before turning 46- as of January 1, 2026.
In addition, Florida ABLE accounts are available to those who are a resident of Florida, entitled to SSI or SSDI benefits, have a condition listed in the "List of Compassionate Allowances Conditions" per the Social Security Administration, or certify blindness, or certify that the individual has a medically determinable physical or mental impairment that results in severe functional limitation expected to result in death, has lasted, or is expected to last for at least 12 months.
Why open an ABLE Account?
Those who qualify can contribute up to $18,000 annually to the account (as of 2024, this amount is tied to the gift-tax exclusion amount). Up to $100,000 in an ABLE account is considered an exempt / non-countable resource for the purpose of determining Medicaid and Supplemental Security Income (SSI) eligibility (in fact more than $100,000 can be held in an ABLE account if only Medicaid is needed, but SSI is not). This is nice, since without it, assets cannot rise above $2,000 to qualify for SSI and Medicaid.
The ABLE Act actually amends section 529 of the IRS code. If that sounds familiar, it’s because the tax-qualified works similar to a 529 college savings account. For ABLE account purposes, this means that the money in the ABLE account will grow tax-free.
Florida ABLE accounts encourage individuals with a disability to save private funds to support their health, independence and quality of life. An ABLE account can be opened and contributed to by the disabled individual, their parents, guardian or agent authorized to act. The ABLE account funds can then be directly accessed by the disabled individual him or herself to use for certain qualified disability-related expenses such as:
- medical expenses,
- transportation,
- legal fees,
- schooling,
- housing expenses,
- purchasing disability therapies and assistive technologies/utilities,
- funeral/burial expenses,
- and more.
As you likely already know, those without ABLE accounts cannot directly touch more than $2,000 worth of assets. ABLE accounts essentially allow the disabled individual to have direct access and control over additional funds.
ABLE accounts are also free to enroll and have near zero maintenance fees.
ABLE United, currently offers four pre-designed portfolio options ranging from conservative (all savings/money market to more aggressive stocks and bond allocations). Some of the investment options come with small management fees.
Finally, ABLE United currently takes the position that funds remaining after the account holder has passed away are not subject to Florida Medicaid estate recovery.
When to use ABLE accounts alone
For large sums of money, it will often make sense to use an ABLE account in conjunction with a special needs trust. But sometimes, using an ABLE account alone will make more sense. Here are a few examples:
1. $500,000 net personal injury award. In this case, the special needs beneficiary might do the following:
- Spend $250,000 on a house, car, paying down debts, or buying anything else the Medicaid recipient needs or wants.
- Keep $20,000 in cash ($2,000 in personal account and the $18,000 allowed in the ABLE account each year), and
- Then remaining funds are placed in a structured settlement, with monthly payments of $1,500 ($18,000 divided by 12) for the second year moving forward.
2. Fundraisers (synagogue, church, gofundme, etc…) where a limited amount of money is being raised for a Medicaid or SSI recipient.
3. Family Members or friends who want to contribute to their disabled friend/family member to help cover housing expenses (e.g. condo, HOA, property taxes, electric).
- These 3rd party contributions would ordinarily be considered income if paid from family/friend directly to the disabled beneficiary or even directly to the 3rd party service provider (these are considered income that results in a reduction / potential elimination of SSI.
- But they are not counted as income if they go into an ABLE account and paid out from there.
What if I became disabled after turning 26 years old?
The ABLE Age Adjustment Act was signed into law by President Biden. This law provides that: Starting January 1, 2026, the age requirement for the onset of a disability will increase to 45 years old or younger (i.e. disability commenced before turning 46 years old).
For those who do not meet the ABLE account’s significant restrictions but who are otherwise looking to qualify for Medicaid, you still have other options. You will discuss special needs trusts, pooled special needs trusts, and other spend down Medicaid qualification strategies with an experienced Florida Medicaid planning or special needs trust attorney.
If you would like a consultation to discuss ABLE accounts or Florida Medicaid Planning, please call today.
