Recent moves by federal lawmakers are set to enhance and expand access to special accounts that allow people with disabilities to save money without jeopardizing Medicaid and other government benefits.
Tucked inside President Donald Trump’s signature “One Big Beautiful Bill Act,” which passed in July, are several provisions affecting ABLE accounts.
Established under a 2014 federal law, the accounts offer people with disabilities the opportunity to save up to $100,000 without sacrificing eligibility for Social Security and other government benefits. Medicaid can be retained no matter how much is in the accounts.
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Money saved in the accounts can be used to pay for qualified disability expenses including education, health care, transportation and housing. Interest earned is tax-free.
A handful of rules governing how the accounts are used were set to expire at the end of this year, but the recent legislation now makes them permanent. That includes the option for ABLE account holders who are employed to save extra money in their accounts if they don’t participate in an employer-sponsored retirement plan as well as the ability to roll over funds from a traditional 529 college savings plan into an ABLE account. That provision is designed to help families that set up college savings plans before knowing their child had a disability.
In addition, the recent legislation ensures that ABLE contributions remain eligible for what’s known as the Saver’s Credit.
The changes will bring “increased confidence in using ABLE accounts,” according to Paul Curley of ISS Market Intelligence, which tracks ABLE account trends.
As of the end of June, there were 213,855 ABLE accounts open with $2.68 billion in assets, according to the firm.
That’s following what the National Association of State Treasurers described as a record year for ABLE accounts in 2024, with the highest year-over-year increase in new accounts and assets.
Uptake is expected to grow further when the population of people with disabilities eligible for ABLE accounts expands dramatically next year.
Since inception, the accounts have been limited to those with disabilities that onset prior to age 26. Starting in January, however, that age limit will rise to 46, which will increase the estimated number of eligible individuals from 8 million to 14 million.
As of earlier this year, the National Association of State Treasurers’ ABLE Savings Plans Network was already working to prepare and communicate with the public about the broader eligibility, according to Catherine Seat, communications director for the organization.
