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IRS Raises Contribution Limit on ABLE Accounts

Danna Casserly

Many government benefit programs are "means-tested", which means you generally must meet income and/or resource limit(s) to qualify. Because of this, people with disabilities have historically been disincentivized from saving money because they could be penalized by losing their means-tested benefits like Medicaid, TANF, and SNAP (food stamps).  ABLE Accounts changed that dynamic in 2017 when Pennsylvania officially launched the ABLE Savings Program. Now, people with disabilities can set up an ABLE account—a special type of bank account that allows people with disabilities to save money without jeopardizing their government benefits.  

This year, the IRS raised the contrbution limit for ABLE accounts to $18,000, a $1,000 increase from last year. The entire balance of an ABLE account does not affect eligibility for any needs-based programs, including Medicaid Home and Community Based Services (HCBS) Waivers, Temporary Assistance for Needy Families (TANF), and SNAP (food stamps). ABLE accounts do not impact Supplemental Security Income (SSI) as long as the account does not contain over $100,000.  

ABLE account funds can be used any time, so long as the withdrawn money is spent on a Qualified Disability Expenses (QDE).  Interest earned is tax-free.  The following expenses are QDEs:

  • Education/Tuition
  • 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).  The PA Treasury Department will host a webinar entitled "Connecting PA ABLE and Work Incentives for People with Disabilities" on March 21, 2024 from 12-1pm. Register for free here.

Call PHLP’s Helpline at 1-800-274-3258 for assistance if a County Assistance Office does not follow correct policies about ABLE accounts, or with further questions about how ABLE accounts impact eligibility for Medicaid and Waiver programs.