For people with disabilities, saving money has long carried a cruel penalty: accumulate more than $2,000 and the assets can disrupt Supplemental Security Income and the Medicaid coverage that often comes with it. ABLE accounts were created to break that trap. They let an eligible person set aside tens of thousands of dollars in a tax-advantaged account that is largely ignored by the programs that once punished any savings at all. A rule change that took effect in 2026 widens the door further, making millions more people eligible to open one.
Saving above the $2,000 asset limit
The reason a modest cushion has been so hard for disabled savers to build is the SSI resource limit, which cuts off benefits once countable assets top $2,000 for an individual. That figure has not moved in decades, so a person who saved for an emergency or a wheelchair-accessible vehicle risked losing the monthly SSI payment and, in many states, the Medicaid tied to it. The ABLE account exists to carve out an exception to that limit.
Money held in an ABLE account is disregarded up to generous thresholds. The Social Security Administration excludes up to $100,000 in an ABLE account from the SSI resource test, and even if a balance climbs past that line, SSI is only suspended rather than terminated, resuming once the account drops back under the threshold. Medicaid treatment is more generous still: eligibility generally continues regardless of the ABLE balance, so a beneficiary can save well beyond $100,000 without losing health coverage. Funds also grow tax-free and come out tax-free when spent on qualified disability expenses.
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What the money can pay for
The tax break comes with a definition of what counts as a qualified expense, and it is deliberately broad. The IRS describes ABLE funds as available for costs that help maintain or improve the health, independence, or quality of life of the account owner. That reaches far beyond medical bills to include housing, transportation, education, assistive technology, personal support services, and basic living expenses connected to the disability.
Contributions can come from the beneficiary, family, or friends, and the annual total is capped — set at $20,000 for 2026. A beneficiary who works and does not participate in an employer retirement plan can add still more under a provision known as ABLE to Work, tied to earnings. Only one ABLE account is allowed per eligible person, and while states run their own programs, a resident of one state can generally enroll in another state’s plan if it offers better features or lower fees, so it is worth comparing options rather than defaulting to the local program.
One caveat matters for planning: money left in an ABLE account at the beneficiary’s death can, in some circumstances, be subject to a Medicaid claim for benefits the state paid, depending on the program and state rules. That does not undo the account’s value during life, but it is a reason families sometimes coordinate an ABLE account with a special-needs trust, which is treated differently, when the goal is to preserve assets across generations.
Who now qualifies after the 2026 expansion
Eligibility has always turned on the age when the disability began, not the person’s current age, and that onset test just loosened significantly. For years, an ABLE account was open only to someone whose qualifying disability began before age 26. Beginning January 1, 2026, that age-of-onset limit rose to 46, a change that opens the accounts to a large group of people who became disabled in their late twenties, thirties, or early forties and were previously shut out.
The expansion is expected to make several million more Americans eligible, including many veterans and people who developed a qualifying condition in mid-adulthood. A person still generally has to meet the disability standard — either by receiving SSI or Social Security disability benefits, or by having a doctor certify a qualifying condition — but the earlier hard cutoff that disqualified anyone whose disability arrived after their mid-twenties no longer applies.
For an older household caring for an adult child with a disability, or for a person who became disabled in mid-life and has watched every dollar of savings threaten their benefits, the account changes a long-standing bind. It lets a beneficiary hold real money — an emergency fund, savings for a home modification, a reserve for future care — without forfeiting the SSI and Medicaid that make daily life possible. It can also receive rollovers from a family member’s 529 college-savings plan within limits, giving families another way to move set-aside money into an account the beneficiary controls.
After the 2026 change, the main step left for many newly eligible people is simply learning that the door is now open to them. Opening an account takes little more than confirming eligibility and choosing a state program, and once it exists it can sit ready even before there is much to put in it. For a group long forced to stay poor to stay covered, the account is a rare tool that lets saving and benefits coexist.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
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