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IRS Raises ABLE Account Annual Contribution Limit

ABLE accounts are a resounding success for the disability community. Since 2014, ABLE accounts been adopted in over 47 states, including Pennsylvania. ABLE accounts help people with disabilities save money while not interfering with their eligibility for certain government benefits like Medicaid. There is no limit to how much money you can save in an ABLE account. However, there is a limit on how much you can deposit into the account in one year. This is called the annual contribution limit, or ACI. 

For years, the ACI for ABLE accounts was equal to the IRS’s Federal Gift Tax exclusion. Since raising the ACI to $15,000 in 2018, however, there have been no further increases, despite inflation. To address these concerns, starting this month, the IRS has raised the ACI for ABLE accounts to $16,000. 

This increase is especially helpful for people with disabilities on Medicaid (also called Medical Assistance in Pennsylvania). The entire balance of an ABLE account is not counted toward the resource limit to qualify for programs such as Medicaid, Home and Community Based Services (HCBS) Waivers, Temporary Assistance for Needy Families (TANF), and the Supplemental Nutrition Assistance Program (SNAP or food stamps). ABLE accounts do not impact Social Security benefits as long as the account does not contain over $100,000.

The funds in an ABLE account can be used at any time and are not counted as a resource or income, so long as the money is spent on a Qualified Disability Expenses (QDE). According to PAable.gov, the following expenses are QDEs:

  • Education
  • Housing
  • Transportation
  • Employment Training/Support
  • Assistive Technology/Personal Support Services
  • Health
  • Prevention/Wellness
  • Financial Management/Administrative
  • Legal Fees
  • Expenses For Oversight/Monitoring
  • Funeral/Burial Expenses
     

For more information about setting up an ABLE account, visit www.PAABLE.gov or call 1-855-529-ABLE (2253). You can even set up an ABLE account online or by phone in a few simple steps. Pennsylvania’s Office of Long-Term Living (OLTL) is also hosting a webinar on ABLE Accounts on January 28, 2022 from 1:00-2:00 PM. You can register for the webinar here: https://register.gotowebinar.com/register/4688310303994863883. 

Please contact PHLP’s Helpline at 1-800-274-3258 for help if your local County Assistance Office does not follow appropriate policies about ABLE accounts, or with any questions about how ABLE accounts impact eligibility for Medicaid and Waiver programs.