ABLE Disability Savings Accounts

PDF Button

family saving money in piggy banks

Contents

Purpose

This tip sheet tells you about ABLE savings accounts for eligible people with disabilities. It tells you about IAble, Iowa’s ABLE plan. It compares ABLE accounts to special needs trusts. It tells you about qualified disability expenses. It shows how to use an ABLE account to pay for assistive technology.

Definitions

Assistive Technology: These are items that maintain or increase the functional capabilities of people with disabilities. They can help people walk, talk or hear, and more.

Special Needs Trust: These trusts are funds set up for people with disabilities to supplement programs such as SSI or Medicaid.

SSI or SSDI: SSI is Supplemental Security Income. SSDI is Social Security Disability Insurance.

What is ABLE?


In 2014, Congress passed the Stephen Beck Jr. Achieving a Better Life Experience Act. This act is better known as the ABLE Act. It created ABLE accounts. These are tax-free savings accounts for people with disabilities. These accounts allow people to save for the future and spend in the present, while also protecting their savings from counting against asset limits. 

Am I eligible for ABLE?


You are eligible if you were diagnosed with a disability before the age of 46 and one of the following statements are true:

  • You are eligible for SSI or SSDI because of a disability
  • You are blind as determined by the Social Security Act
  • You have a severe disability with a written diagnosis from a licensed physician
  • Your disability is included on the Social Security Administration’s list of compassionate allowances conditions 

How much can I put in my ABLE savings account?

The person with the disability is always the account owner and beneficiary. Anyone, including the account owner, family members, and others can add funds to a person’s ABLE account up to the federal annual contribution limit, currently $20,000 per year.

ABLE account owners with earned income may contribute additional funds beyond the annual $20,000 contribution limit. The additional contribution amount is equal to the federal poverty level for a one-person household (in your state of residence) or the account owner’s gross wages, whichever is less. Working account owners are not eligible to contribute additional funds if they are already contributing to:

  • A defined contribution plan 401(k)
  • An annuity contract 403(b)
  • An eligible deferred compensation plan 457(b)

Up to $100,000 is disregarded from eligibility for SSI. If the account has more than $100,000, SSI payments will be suspended until the balance falls below that amount. Any amount saved in an ABLE account is disregarded from eligibility for Medicaid, SNAP (Supplemental Nutrition Assistance Program), HUD (Department of Housing and Urban Development), and other means-based programs. There are no income limits for an ABLE account, but income still counts when deciding if someone qualifies for means-tested programs. 

Do I have to live in Iowa to open an ABLE account?

No. Many states offer ABLE plans. IAble is Iowa’s ABLE plan. Anyone can open an IAble account. But if you’re an Iowa taxpayer, you can only receive the Iowa state tax deduction for contributions to Iowa’s plan, IAble. If you are not an Iowa taxpayer, consider before investing whether your home state offers a qualified ABLE program that provides its taxpayers with favorable state tax and other benefits that are only available through investment in the home state’s qualified ABLE program. 

What is the difference between an ABLE account and a special needs trust?

You should learn as much as you can about the advantages and disadvantages of an ABLE account versus a special needs trust before making a decision. See IAble’s “A General Comparison of IAble Accounts and Special Needs Trusts” for comparison information. Key differences are: 

  •  ABLE accounts are easier to set up than special needs trusts. They can be set up online. They can be handled by the beneficiary rather than a trustee. Special needs trusts may require legal terminology.
  • ABLE accounts have a contribution limit. A special needs trust can handle larger sums of money such as an inheritance.
  • ABLE accounts require a participant to have a qualified disability before age 46. A special needs trust does not.
  • ABLE accounts require a Medicaid Pay-Back if the beneficiary dies. A special needs trust does not require this for family-funded accounts.Under Iowa law, the Iowa Medicaid program cannot file a claim to recover moneys in the account following death of the account owner unless such a claim is required by federal law in certain, limited situations. 

What is a Medicaid Pay-Back? If the account owner dies and was receiving Medicaid benefits, the state where the account owner lived may file a claim to all or part of the funds in the account. This claim could equal the amount the state spent on the beneficiary through their state Medicaid program. In the instance of ABLE, these expenses can only be during the time the ABLE account was open.  Learn more by reading from the ABLE National Resource Center’s website frequently asked questions (FAQ) “What happens to the ABLE account after the death of the account owner?” and “Death of an IAbleAccount Owner (PDF)” from IAable.gov.

What are qualified disability expenses?

An expense is qualified if:

  • You incurred the expense as an eligible individual;
  • The expense relates to your blindness or disability; and
  • The expense helps you maintain or improve your health, independence, or quality of life.

A qualified disability expense means any expense related to the designated beneficiary as a result of living a life with disabilities. A designated beneficiary is a person who is eligible based on living with a diagnosed disability. See a list of qualified disability expenses. These expenses may include education, food, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services, and other expenses that help improve health, independence, and/or quality of life.

How can I use an ABLE account to pay for assistive technology?

To use an ABLE account to buy assistive technology (AT), the person must be eligible for the ABLE savings program, and the AT must be a qualified disability expense. The example below shows how to use an ABLE account to pay for assistive technology.

The person:

  • Has cerebral palsy
  • Is 22 years old
  • Gets Social Security Income (SSI) of $735 per month
  • Uses a power wheelchair (sitting only)
  • Allowed up to $2,000 in her savings account without losing her SSI and Medicaid
  • Her parents can only set aside up to $3,000 per year

The AT:

  • A standing power chair
  • Will improve her quality of life
  • The chair costs $9,000

The person meets the requirements for an ABLE savings account. The standing power chair meets the requirements for a qualified expense for AT. She and her parents can set aside up to $20,000 (or possibly more with earned income) each year to purchase this chair without losing her SSI and Medicaid eligibility.


These agencies may also help you learn more about buying assistive technology:

Where can I learn more about ABLE savings accounts?

To learn more about ABLE accounts, you can get in contact with Disability Rights Iowa WIPA (Work Incentive Planning and Assistance) Call the Ticket to Work Help Line at 866-968-7842 or consult with a Community Work Incentive Coordinator about other work incentives that allow someone receiving SSI or SSDI to buy assistive technology.

To learn more about IAble or open an account, visit IAble.gov or call 888-609-8910.

You can also find out more from the ABLE National Resource Center.

 

Disclaimer: This tip sheet is for information only. Iowa Compass makes regular updates to give current and accurate information. We cannot be held liable for any outdated or incorrect information.

Developed by Disability Rights Iowa and IAble in collaboration with Iowa Compass. Last update: May 26, 2026.

 

Back