What Is an ABLE Account? A Guide for People with Disabilities

For years, people with disabilities faced an impossible choice: save money for the future or keep their essential benefits. ABLE accounts changed that. Now you can save without putting your SSI or Medicaid at risk.

In this article, we'll cover:

What an ABLE account is and how it works
Who qualifies for an ABLE account
How much you can save
What you can use ABLE funds for
How ABLE accounts affect SSI and Medicaid
How to open an ABLE account

1. What Is an ABLE Account?

ABLE stands for Achieving a Better Life Experience. Created by the ABLE Act of 2014, these accounts let people with disabilities save and invest money without losing means-tested benefits like SSI and Medicaid.

Think of an ABLE account like a 529 college savings plan, but for disability-related expenses. Your money grows tax-free as long as you use it for qualified expenses.

Key benefits include:

Tax-free growth on your savings
No impact on benefit eligibility (up to limits)
You control the account and spending decisions
Funds can be used for a wide range of expenses

2. Who Qualifies for an ABLE Account?

To open an ABLE account, you must meet these requirements:

Age of disability onset:

Your disability must have begun before age 26
Starting in 2026, this expands to before age 46

Disability status (one of the following):

You receive SSI or SSDI benefits, OR
You meet Social Security's disability criteria and have a signed certification from a licensed physician

Important: You don't need to be receiving benefits to qualify. If you meet the disability criteria and age requirement, you're eligible—even if you've never applied for SSI or SSDI.

3. How Much Can You Save in an ABLE Account?

ABLE accounts have two main limits to understand:

Annual contribution limit:

$18,000 per year (2024 limit, adjusts with inflation)
If you work, you may contribute an additional amount up to the federal poverty level

Total account balance:

For SSI purposes, balances up to $100,000 don't count as a resource
Balances above $100,000 may affect SSI (but not Medicaid)
The overall account limit varies by state (often $300,000+)

The $100,000 threshold is important for SSI recipients. If your ABLE account exceeds this amount, your SSI payments may be suspended until the balance drops back down. However, you won't lose Medicaid coverage.

4. What Can You Use ABLE Funds For?

ABLE accounts can be used for "qualified disability expenses" (QDEs). This includes a broad range of costs related to living with a disability:

Housing: Rent, mortgage, utilities, home modifications
Transportation: Car payments, repairs, public transit, rideshare
Education: Tuition, books, tutoring, school supplies
Healthcare: Insurance premiums, copays, therapy, medications
Employment: Job training, work-related expenses, assistive technology
Daily living: Groceries, clothing, personal care
Assistive technology: Wheelchairs, hearing aids, adaptive equipment
Financial management: Legal fees, financial planning services

Important: Keep records of your ABLE account spending. While the IRS doesn't require receipts with every withdrawal, you should be able to document that expenses were disability-related if asked.

5. How ABLE Accounts Affect SSI and Medicaid

One of the biggest advantages of ABLE accounts is how they interact with benefit programs:

SSI (Supplemental Security Income):

First $100,000 in your ABLE account doesn't count as a resource
Amounts above $100,000 may suspend (not terminate) SSI
Money you withdraw for housing expenses counts as income that month

Medicaid:

ABLE account balances don't affect Medicaid eligibility at any level
Even if your SSI is suspended due to ABLE savings, Medicaid continues

SNAP (food stamps):

ABLE accounts are excluded from SNAP resource calculations

This means you can save significant amounts without risking your healthcare coverage—a major change from the old $2,000 resource limit that trapped people in poverty.

6. How to Open an ABLE Account

Opening an ABLE account is straightforward:

Choose a state program. You can open an account in any state, not just your home state. Compare fees, investment options, and features.
Gather your information. You'll need your Social Security number, proof of disability (if not receiving SSI/SSDI), and basic personal information.
Complete the application. Most state programs offer online enrollment. The process typically takes 15-30 minutes.
Fund your account. Set up direct contributions, transfer money, or have family members contribute.
Choose investments. Most programs offer several investment options, from conservative savings to growth-oriented portfolios.

7. How Purple Helps You Manage Your Finances

With Purple, you can:

Track your spending to understand where your money goes
Receive benefits up to 2 days early with direct deposit
Monitor your account balance to stay within SSI resource limits
Keep your ABLE funds separate from daily banking
Avoid fees that eat into your limited income

Purple understands the unique financial challenges people with disabilities face. We built our tools to help you manage money confidently while protecting your benefits.