The Account That Lets Your Disabled Child Save Without Losing Benefits
A few years ago, I was helping a small business owner in her early 50s figure out a financial plan for her teenage son, who has a developmental disability. She’d been paying him to help out around the shop—off the books—and putting that money into a savings account in her name. She knew he’d need help down the road and wanted to set something aside for him.
But she’d also heard the horror stories. If he ever needed SSI or Medicaid, having money in his name could disqualify him. So she kept it hidden. No paper trail. No growth. No structure.
She was doing the best she could with what she knew. The problem is, there was a better way—and nobody told her about it.
There’s an account called an ABLE account that would have let her pay her son legitimately, contribute those earnings to a protected account in his name, invest the money for growth, and build for his future—all without risking his eligibility for benefits. She could have been doing this the right way for years—and building real security instead of fear.
If you’re in a similar situation—or if you have a grandchild, niece, nephew, or anyone in your life with a disability—this is the tool most families don’t know exists.
An ABLE account is a tax-advantaged savings account specifically designed for people with disabilities. Think of it like a 529 college savings plan, but instead of education expenses, the money can be used for almost anything that improves the person’s quality of life—housing, transportation, healthcare, therapy, technology, job training, even basic living expenses like food and clothing.
Here’s what makes it different from a regular savings account: the first $100,000 in an ABLE account doesn’t count toward SSI’s $2,000 asset limit. That’s not a typo. SSI beneficiaries are normally disqualified if they have more than $2,000 in countable assets—a threshold that hasn’t changed since 1989. An ABLE account lets someone save 50 times that amount without losing their benefits.
And Medicaid? An ABLE account has no balance limit for Medicaid eligibility. You can have $200,000, $300,000, even more in the account, and it won’t affect Medicaid at all.
Big news if you were told you didn’t qualify before
Until very recently, ABLE accounts were only available to people whose disability began before age 26. That ruled out millions of Americans—including veterans injured in their 30s, people with later-onset conditions, and those who developed chronic illnesses or experienced accidents in adulthood.
As of January 1, 2026, that changed. The eligibility age expanded to include anyone whose disability began before age 46. Roughly 6 million more Americans are now eligible. If you looked into this before and were told no, it’s worth checking again.
To qualify, the person with the disability—the “beneficiary”—needs to meet one of two criteria. Either they’re already receiving SSI or SSDI, which automatically qualifies them. Or they can get a disability certification signed by a licensed physician stating they have a condition with “marked and severe functional limitations” that began before age 46. No income limits. No employment restrictions. The account is always opened in the name of the person with the disability.
And here’s the part that solves a lot of family headaches: anyone can contribute to an ABLE account. Parents, grandparents, aunts, uncles, family friends, even the beneficiary themselves. This is huge for estate planning. Instead of leaving money directly to a disabled family member—which could blow up their benefits—you can leave it to their ABLE account. Problem solved.
Let me show you how the math works in practice.
Remember that business owner with the teenage son? Say she starts paying him legitimately—$500 a month through her business, or $6,000 a year. She contributes that amount to his ABLE account each year. At 7% average growth over 10 years, from age 16 to 26, that account grows to roughly $83,000. Still under the $100,000 SSI threshold. He has a real financial foundation, built over a decade, without risking a dollar of his benefits.
Compare that to what she was actually doing—cash payments off the books, money sitting in her savings account earning nothing, no legal protection, and a ticking time bomb if he ever applies for government benefits and someone asks where the money came from.
Or take the grandparent who wants to help her 12-year-old grandson with autism. She’s got $15,000 she wants to leave him. If she puts it directly in her will, that inheritance could disqualify him from SSI and Medicaid the moment he receives it. But if she contributes to his ABLE account over three years—$5,000 per year—or simply names his ABLE account as the beneficiary in her estate documents, the money is protected. It grows tax-free. It’s available for his needs. And it doesn’t touch his benefits.
Contribution Limits
For 2026, the contribution limit is $20,000 per year from all sources combined. That means if grandma contributes $15,000 and mom contributes $5,000, they’ve hit the limit—no more contributions that calendar year. If the beneficiary works and doesn’t have an employer retirement plan, they can contribute an additional amount up to their earnings or $15,650 (whichever is less). So a working adult with a disability could potentially put away up to $35,650 in a single year.
The money grows tax-free. Withdrawals for qualified disability expenses are tax-free. Contributions aren’t deductible federally, but some states offer a state tax deduction if you contribute to their ABLE program—worth checking.
What counts as a qualified disability expense?
The definition is broad: housing, rent, utilities, transportation, car payments, rideshare costs, education, tutoring, therapy, medical expenses, assistive technology, employment support, legal fees, financial management, food, clothing—essentially anything that helps maintain or improve the person’s health, independence, or quality of life. The IRS interprets this generously. If the expense benefits the beneficiary, it probably qualifies.
There is one catch you need to understand
When the beneficiary dies, if there’s money left in the ABLE account, Medicaid can file a claim to recover what it paid for the beneficiary’s care after the account was opened. This is called “Medicaid payback.” It’s different from a third-party special needs trust, which typically has no Medicaid payback.
This isn’t a dealbreaker—it just means you should know about it. If the beneficiary didn’t receive Medicaid while the account was open, there’s no payback. Some states have opted not to pursue Medicaid recovery from ABLE accounts at all. And after Medicaid is repaid (if anything is owed), remaining funds go to the beneficiary’s designated heirs. But it’s worth understanding that ABLE accounts don’t provide the same protection from Medicaid claims that a properly structured third-party special needs trust does.
Opening an account is simpler than you’d think
You don’t need an attorney. Most state ABLE programs have online enrollment that takes 15-30 minutes. You’ll need the beneficiary’s Social Security number, date of birth, disability documentation, and a bank account for contributions. Typical fees are $0-50 to open, plus small annual maintenance fees.
You don’t have to use your own state’s program—most states allow out-of-state residents to open accounts. It’s worth comparing a few options, since investment menus, fees, and features vary. Virginia’s ABLEnow program and Ohio’s STABLE account are popular choices that accept residents from any state. Your home state might offer a tax deduction for contributions to its own program, so check that first.
Because these rules are complex and vary by situation, this section is about understanding how the system works—not replacing professional advice when larger sums or estate planning decisions are involved.
How does this compare to a special needs trust?
Think of ABLE accounts as the starter tool and special needs trusts as the heavy-duty solution.
An ABLE account costs nothing to set up, doesn’t require an attorney, and lets the beneficiary (or their representative) control the money directly. But it has a $20,000 annual contribution limit, and Medicaid can make a claim against it after death.
A special needs trust costs $3,000 or more to establish, requires an attorney, and puts a trustee in control of the funds—not the beneficiary. But it has no annual contribution limit, can hold much larger amounts, and a third-party special needs trust has no Medicaid payback provision.
Many families end up with both. The ABLE account handles day-to-day needs and smaller amounts. The special needs trust holds larger sums—inheritances, life insurance payouts, lawsuit settlements. They work together.
If this might fit your situation, here’s how to run the play
First, verify eligibility. The beneficiary’s disability must have begun before age 46. If they’re receiving SSI or SSDI, they automatically qualify. If not, they’ll need a disability certification from a licensed physician.
Second, research state programs. Start with your home state to see if there’s a tax deduction for contributions. Then compare fees and investment options across a few programs. The ABLE National Resource Center (ablenrc.org) has comparison tools.
Third, gather your documents. You’ll need the beneficiary’s Social Security number, date of birth, address, and disability documentation. If someone other than the beneficiary will manage the account, you’ll designate an authorized representative.
Fourth, open the account online. The process takes 15-30 minutes on most state program websites.
Fifth, set up contributions. You can make one-time deposits, set up recurring transfers, or arrange direct deposit from employment income or Social Security benefits. Anyone can contribute—just stay under the $20,000 annual limit from all sources combined.
Sixth, invest the money. Like a 529 plan, most ABLE programs offer several investment options. If you’re not sure, a target-date fund or balanced fund is a reasonable default. Don’t leave it sitting in cash.
A few mistakes to avoid along the way
Don’t assume you don’t qualify. The age limit just expanded from 26 to 46. Many people who were told no before now qualify.
Don’t exceed the annual contribution limit. It’s $20,000 total from all sources. If multiple family members are contributing, coordinate so you don’t go over.
Don’t forget the $100,000 SSI threshold. The account can hold more than $100,000, but SSI benefits suspend once you cross that line. Medicaid isn’t affected, but SSI is.
Don’t forget to designate an authorized representative if the beneficiary can’t manage the account themselves. This lets a trusted person handle contributions and withdrawals.
Don’t think ABLE replaces a special needs trust. They serve different purposes. For large sums or complex situations, you may need both.
And don’t keep this to yourself. Tell the grandparents. Tell the aunts and uncles. Anyone who might leave money to a disabled family member needs to know this account exists. It’s the difference between a gift that helps and a gift that destroys their benefits.
If this feels overwhelming, that’s normal. This system was not designed to be intuitive—it was layered over decades in response to gaps that families kept falling into.
Where does this leave you?
If you’ve been avoiding financial planning for a disabled family member because you didn’t know where to start, this is your on-ramp. An ABLE account is something you can set up yourself, this week, without an attorney.
If you’ve already got an ABLE account, make sure it’s invested—not sitting in cash. And make sure the people in your life who might want to contribute know it exists.
If you’re dealing with larger sums—an inheritance, a life insurance payout, more than $100,000—an ABLE account might not be enough on its own. That’s when a special needs trust becomes worth the investment in an attorney. I’ll walk through when and why in the next post.