Achieving a Better Life Experience (ABLE) accounts are tax-free savings accounts that allow people with disabilities to save money to pay for life-enhancing experiences without disqualifying them from Supplemental Security Income (SSI) or Medicaid benefits. We explain how this account works and who is eligible to open one in Texas.
Overview of ABLE Accounts in Texas
The Texas ABLE program was established by the legislature in 2014 to “encourage and assist individuals and families in saving funds for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life.” Anyone can contribute to the account and the funds can be used for any disability-related expense, including education, housing, transportation, employment training and support, assistive technology, personal support services, health and wellness activities, legal fees, funeral and burial expenses, and more. Account beneficiaries can save up to $15,000 a year, with a lifetime maximum of $370,000. Having money in an ABLE account will not jeopardize any government benefits for which the account holder is eligible.
Who Is Eligible to Open an ABLE Account?
An account can be opened by Texas residents with a minimum deposit of $50. Any disabled individual is eligible to open an ABLE account. Disability is established in one of the following ways:
- Determination by the Social Security Administration (SSA) that the individual is eligible for SSI or Social Security Disability Insurance (SSDI).
- A written diagnosis of a permanent disability from a licensed physician.
- The person has a condition listed on the SSA’s list of Compassionate Allowances Conditions.
The person’s disability must have been present before the age of 26 and each individual can only have one ABLE account in their name.
How Is an ABLE Account Different From a Special Needs Trust?
While both of these options provide disabled individuals with access to additional funds while collecting government benefits, they are managed differently. ABLE accounts are managed by the disabled individual, to the extent they are capable. The account holder can get a pre-paid debit card so that they can make purchases and experience a sense of independence. A Special Needs Trust (SNT) is managed by a trustee, there is no limit on the amount of money that can be in an SNT, and the funds can be used for anything other than food and housing—as long as it is for the disabled individual named as the beneficiary.
So, Which Should My Loved One With Special Needs Have?
If a family has significant resources that they want to designate for the benefit of a disabled individual, a Special Needs Trust would be the preferred vehicle. However, there is no reason an individual cannot have both an ABLE account and an SNT. The Special Needs Trust attorneys at Ross & Shoalmire can help families determine what kind of account makes sense for their loved one’s needs and how to maximize the benefits of each. If you have a dependent with special needs, contact our team to start planning for their care today.