2026 ABLE Account Updates
Many individuals with disabilities have heard of ABLE accounts, but few know the answers to all the “w” questions: Who can open an ABLE account; What is an ABLE account; Where can you open an ABLE account; and Why would you open an ABLE account?
For those who have long been searching, here are the answers, including all of the 2026 updates!
WHO can open an ABLE account?
As of 2026, an ABLE account can be opened by an individual with a disability that began before the age of 46. The individual’s disability must meet Social Security criteria, meaning it must impact his/her ability to be gainfully employed for a time period of 12 months or more. This requirement is satisfied by all individuals who began receiving Supplemental Security Income (SSI) before the age of 46. If an individual’s disability began before 46 but he/she did not begin receiving SSI before then, the individual’s physician can complete a particular form documenting that the disability criteria is satisfied.
WHAT is an ABLE account?
An ABLE account is a tax-advantaged bank account for individuals with disabilities. Any money contributed to this account grows income-tax free. The individual with a disability and other individuals can contribute money to the account. However, the total contributions cannot be higher than $20,000 each year (except, individuals who are working can contribute additional funds). Note that contributions to a Connecticut ABLE account may be eligible for a state income tax deduction of up to $5,000 for single filers, and $10,000 if married filing jointly.
The money in the account must be used for “qualified disability expenses.” According to the Social Security Administration, qualified disability expenses are any expenses related to an individual’s disability, and include (but are not limited to):
· Education
· Housing
· Transportation
· Employment training and support
· Assistive technology and related services
· Personal supports
· Health needs
· Prevention and wellness
· Financial management and administrative services
· Legal fees
· Expenses for ABLE account oversight and monitoring
· Funeral and burial expenses, and
· Basic living expenses.
Dependent on the state, monies remaining in an ABLE account may be subjected to a “payback,” at time of death. In states with a payback provision for their ABLE accounts, if there is any money remaining in the ABLE account upon the death of the account holder, the state which provided Medicaid assistance to the individual is paid back before the funds are distributed to the named beneficiaries.
Under 2024 legislation, Connecticut waived the payback for any money remaining in a Connecticut ABLE account.
WHAT can be deposited into an ABLE account?
An ABLE account may be funded with an individual’s income and assets, or the income and assets of individuals other than the account owner. Assets include items such as settlement amounts and inheritance from third parties. Income includes recurring monthly payments, such as social security benefits or wages. Importantly, while the assets in an ABLE account are “invisible” for purposes of meeting low asset limits for government benefits, the ABLE account does not make income invisible. For example, if an individual receives $2,000 of Social Security Disability Insurance each month, and is seeking to qualify for a program with an income limit of $1,500, the ABLE account will not help to reduce the individual’s countable income (BUT a first party special needs trust or pooled trust likely would help to meet the lower income limit).
If an individual is enrollled in Supplemental Security Income (SSI), then the ABLE account maximum (to keep this benefit in place) is $100,000. If the individual is not enrolled in SSI, then the ABLE account can hold up to maximum amount allowed under the state’s ABLE plan. In Connecticut, the maximum account value is $300,000.
WHAT can an ABLE account pay for?
Funds in an ABLE account must be used for the benefit of the account owner (the individual with the disability). These expenses include but are not limited to: basic living expenses such as rent and food, assistive technologies, medical expenses such as insurance and preventative care, and even travel.
WHERE can you open an ABLE account?
Currently, every state, except Wisconsin, North Dakota, and South Dakota, offers an ABLE account. However, not every state allows out-of-state account holders (a Connecticut resident is unable to open an Oklahoma ABLE account).
WHY would you open an ABLE account?
The most significant “w” question is the why? Not all individuals with disabilities need or would benefit from an ABLE account.
The key question is this: Is the individual receiving supports from the state or federal government that have low financial limits (like SSI or Medicaid)?
If the answer to this question is yes, then the individual would most likely benefit from an ABLE account. An ABLE account helps individuals to stay within the low financial limits of public benefit programs, even though their money exceeds these limits.
For example, SSI has a resource limit of $2,000. If an individual has $5,000 in an ABLE account, he/she will still qualify for SSI because the money in the ABLE account is treated as if it is invisible.
In addition, individuals enrolled in SSI face many restrictions regarding their ability to manage and control cash money. For example, if a recipient on SSI receives cash in any amount, then this will reduce his/her monthly benefit by one-third. ABLE accounts enable SSI recipients to manage and control cash funds without this reduction in SSI.
Lastly, many SSI beneficiaries receive a reduced SSI benefit because they are living rent-free. By using an ABLE account in conjunction with a bona fide rental agreement, this reduction can be avoided.
To learn more about ABLE accounts, and to uncover ABLE planning strategies tailored to your circumstances, please do not hesitate to contact us. We are always here to help.