In this conversation, ABLE NRC Director Jody Ellis discusses the benefits and impact of ABLE accounts, a financial tool that allows individuals with disabilities to save money without jeopardizing their eligibility for SSI, Medicaid, and other public benefits. She explains key eligibility requirements, including the upcoming 2026 expansion that will increase access for millions. Jody highlights how ABLE accounts can be used for tax-free savings and withdrawals on qualified disability expenses such as housing, healthcare, and education. She also clarifies common misconceptions, including the difference between asset protection and income limits for Medicaid eligibility. The conversation concludes with practical advice on opening an ABLE account, contribution limits, and the need to raise awareness about this underutilized financial resource.
Jody Ellis: Thank you Katie for inviting me to join you in the conversation about ABLE accounts, a financial tool for people with disabilities and their families. And it's vastly underutilized. So, I'm happy to talk all things ABLE and help spread awareness on the impact that ABLE accounts can make.
Jody Ellis: And ABLEN NRC's mission is to educate, support, and promote the positive impact that ABLE can make on the lives of millions of Americans with disabilities and their families.
Katie Wilkinson: Yeah, that's awesome. I would love if you could, start by just sharing a little bit more about what is an ABLE account, who's eligible to open one, sort of the basics of, what this financial tool is.
Jody Ellis: I'll start by sharing what the acronym ABLE stands for, which is achieving a better life experience. And the ABLE act was signed into law in 2014 as a pathway for individuals with disabilities to save for their current and future needs without impacting their public benefits.
Jody Ellis: accounts are tax advantage savings accounts and many ABLE plans also have investment accounts and I compare an ABLE account to a Roth IRA but without the retirement age requirement to begin withdrawing the In an ABLE account investment growth is Funds can be withdrawn at any time and as often as needed. And then to follow up about the second part of the question about who would be eligible to open up an ABLE account and there are two factors to evaluate if someone is eligible. One is the age that the disability began or disability onset and the second is severity of disability.
Jody Ellis: So for age in 2025, a person must have their disability onset before the age of 26. But the good news is that effective January 1st, 2026, that age limit is expanding and individuals with a disability onset before the age of 46 will be eligible to have an ABLE account. And then the second part of that equation is the severity of disability. and individuals who are blind or individuals who are receiving supplemental security income or or Social Security disability insurance SSDI are automatically eligible.
Jody Ellis: And then individuals are also eligible if they have a severe disability. And that is defined as it results in marketked functional limitations and has either already lasted or is expected to last 12 months or is terminal. And the Social Security Administration has a compassionate allowance list of conditions that qualify someone to have an ABLE account. And it's important to know that someone's working status, whether or not they're employed or unemployed, and whether or not they have either currently received benefits, previously received social security benefits, or never received benefits, that does not have an effect on ABLE eligibility.
Jody Ellis: And then another point that I want to clarify regarding the age of onset of disability is that someone can open an ABLE account at any age from toddlers to seniors. So an example is a parent could open up an ABLE account for their three-year-old child or someone who is 60 years old could open an ABLE account if they have a qualifying disability. And the person with the disability is always the account owner even if they are a minor or if they have authorized representation
Katie Wilkinson: Yeah, I mean this sounds amazing and so helpful. I want to take us back just real quick before we dive in deeper. you mentioned that they're tax advantaged accounts. and might be comparableish to a Roth IRA.
Katie Wilkinson: For someone that doesn't know what that means what is a tax advantaged account? Can you talk a little bit about that?
Jody Ellis: what I mean by tax advantage is that if you have investment growth, whether it's in a money market, a savings, or an actual investment plan an ABLE plan offers, that is tax-free. The account owner will not be taxed on that growth. So that's kind of what I mean by having it be taxed advantage.
Katie Wilkinson: And then you talked a little bit about how these ABLE accounts don't affect someone's other benefits. So, Givers, works most specifically with people, family caregivers, who are caring for someone who's on Medicaid. can you just share a little bit more about the interaction between these things? How someone's benefits may or…
Katie Wilkinson: may not be affected, what kind of considerations people need to have?
Jody Ellis: One of the most impactful features of AEL is how it tested benefits. So many people with disabilities rely on Medicaid or SSI for essential services and income. And these programs are often limited limit savings as little as $2,000, which can make it very difficult to build any financial cushion and pay for large expenses. And with an ABLE account, those restrictions are lifted in a very meaningful way.
Jody Ellis: So, it's my opinion that it's the intersectionality between benefit programs like SSI and Medicaid and ABLE accounts where a person can experience the true transformational power of ABLE. For example, you can save up to $100,000 in an ABLE account without jeopardizing SSI eligibility. So, think about that. if you are receiving SSI, you could save $100,000 instead of $2,000 and still remain eligible. And this message continues to get better because any amount of funds saved in an ABLE account does not impact eligibility for other public benefits programs.
Jody Ellis: and that includes Medicaid, I, nutrition assistance programs, federal student aid assistance. So, any amount of savings in that ABLE account up to the plan limit those assets and your eligibility for those public benefits programs are completely protected. And this really means that individuals can use their ABLE accounts to cover out-ofpocket expenses, medical costs, assisted technology, and even a down payment of a home without fear of losing critical health care coverage in the case of Medicaid or other critical supports that they receive. And able means that having a disability does not need to equate to living in poverty.
Katie Wilkinson: Yeah, I mean that's so important. and I mean a huge difference obviously between 2,000 and 100,000. for some people that number might feel totally out of reach even like the ability to save. can you talk about if and how a caregiver or family members or even friends who can contribute to an ABLE account for the owner?
Jody Ellis: So right now it really is a great question…
Jody Ellis: because I think caregivers and family members play such a big role in supporting many able account owners. So first it's good to know that anyone family friends an employer a community fundraiser any entity or any person can contribute to an ABLE account.
Jody Ellis: And in 2025, the annual contribution limit from all sources is $19,000. But if the account owner works and doesn't contribute to an employer sponsored retirement plan, they can add extra funds under the Ableto Work Act for an additional $15,60. So, this could mean that an ABLE account owner who works in 2025 could possibly have annual contributions as high as $34,60. And then also, caregivers could step in as an authorized representative if the account owner needs assistance with managing the account.
Jody Ellis: And it could include helping to open the account, set up recurring deposits, making withdrawals that are withdrawals that are called qualified disability expenses, keeping receipts, staying having organized records of all of those transactions to ensure that that account is properly managed. And then another great tool in terms of contributions are gifting pages. So many of the able plans have their own gifting pages. there are opportunities for family and friends to make contributions directly into an ABLE account in lie of a traditional gift for holidays, birthdays, other milestones that will really help the account owner to build savings for their future needs.
Katie Wilkinson: Yeah, that was very comprehensive.
Katie Wilkinson: Thank what was I going to ask you? you started to mention qualified what funds can be used for out of the ABLE account. I forget the term you just used. tell us more.
Jody Ellis: Yeah. Yes.
Jody Ellis: Qualified disability expenses or QDE. But yeah, ABLE funds can be used for a wide range of expenses and the IRS says that an expense that allows an account owner to maintain health, independence, quality of life is a qualified disability expense or we call it QDE for short. And these can include health, employment, education, legal, food, housing, adaptive technology, transportation expenses.
Jody Ellis: And at AbelNRC, we get a lot of questions about these QDEEs because these are very broad categories and they're not an exhaustive list. So, it's really up to the account owner to evaluate if the expense improves their health, independence, and quality of life. And as I mentioned earlier, funds can be withdrawn from an ABLE account at any time. And the funds that are used for these QDES are not considered a form of income to any benefits programs. And another flexibility of ABLE funds is that the expense must benefit the account owner but not the account owner exclusively.
Jody Ellis: And an example of what I'm talking about is a parent may use a child's ABLE account to purchase a vehicle that the child would be transported in as well as other families would be transported in that same vehicle. And that would be a QDE.
Katie Wilkinson: That's super helpful. It sounds like there's some room for interpretation or…
Katie Wilkinson: personalization on what qualifies a QTE. is there anything that would be hard no, you can't use this. This is a restriction on how to use your ABLE funds.
Jody Ellis: Yeah, we try not to give a hard no…
Jody Ellis: because it really is such a individualized decision because we don't know what everyone's individual circumstances are like.
Jody Ellis: but for example, ABLE funds could be used to pay for legal expenses. So an ABLE account funds could be used to set up a trust, but to make a contribution into the trust once it's already established, that would not be considered a QD because it's a transfer of funds into a different account. So, that would just be one example, but really again, it's up to that account owner to kind of make that assessment and use these broad categories as examples areas of need that typical account owners can use to spend their funds with.
Katie Wilkinson: Yeah, thank you. what happens to touch on a reality?
Katie Wilkinson: Account order passes after their death? What happens to the funds in their account?
Jody Ellis: Yeah, this is an important topic and…
Jody Ellis: one that often raises a lot of questions. If the account owner passes away, funds in the ABLE account can be used to cover pay for any outstanding qualified disability expenses and that can include funeral and burial costs. For Medicaid recipients, federal law allows states to recoup funds for services provided to that account owner after the ABLE account was established. But this is not automatic and many states do not seek Medicaid recovery, sometimes it's referred to as clawback or Medicaid payback.
Jody Ellis: And it's always a good idea to check with your state's policies. And then other options include you could transfer remaining ABLE funds to an eligible siblings ABLE account. And what that would do is it would avoid paying taxes on investment earnings and it also keeps the funds within the family. But if there is not a sibling that is able eligible funds can be distributed to another beneficiary but taxes on the investment growth would apply.
Jody Ellis: So there would be some tax implications for doing that and I think proper planning such as naming a beneficiary or consulting with a financial advisor can help ensure that funds are distributed according to the account owner's wishes.
Katie Wilkinson: Yeah, that's helpful. I know that estate recovery is one of the top questions that we get just, obviously that's a big concern before signing up for benefits.
Jody Ellis: Yes. Yeah.
Katie Wilkinson: So, maybe you could for those that are interested in opening an ABLE account, tell us the actual process to do that.
Jody Ellis: as we're having this conversation in 2025, there are 49 different ABLE plans in the United States that you can choose from. And many plans allow outofstate residents to open an account.
Jody Ellis: plan features such as investment options, fees, availability of a debit card or prepaid card, systems that support organizational authorized repres representatives, and even an enrollment incentives could vary. And we always promote the practice of checking out your own state plan first because there could be tax advantages in terms of debits or credit deductions or credits that may be available to you. And the abelnrc.org ORG website has state plan comparison tools and there are direct links to the state plans and that those tools can help you find the plan that is best suited for your needs. And the plans all have an online application or enrollment process.
Jody Ellis: And for individuals that would prefer a different method, you could contact that state plan and many have other alternatives such as mailing out, being able to mail in a hard copy of an application. And the state of Maine actually has an in-person banking option that you can open up an ABLE account in Maine in the Bangor bank. Yeah. Yeah.
Katie Wilkinson: That's awesome. I don't think I recognized before this conversation how many different plan options there were. this might be a bit of a curveball question, but are there any other you mentioned you can open an account outside of your state, but are there any state differences between ABLE accounts or beyond what you've said? is there anything to consider state byst state related to
Jody Ellis: really just the features that I mentioned before there are difference in investment options. So depending upon how you plan on using your ABLE account, what your financial goals are maybe a certain investment option might be more important to you. There's also differences in state plan limits of what's your maximum that you could keep in your ABLE account.
Jody Ellis: So, for instance, that ranges from around $250,000 is one of the lower amounts and there is a state that has a state plan limit of nearly 600,000. so, I guess, it really does depend upon your financial goals as well as how you plan on using your ABLE account. Yeah.
Katie Wilkinson: That's helpful. this next question is not one we talked about in advance, so we could scrap it if it doesn't work. I'm just curious, some of our caregivers they want to get on Medicaid so they can get on a Medicaid waiver so that their caregiver can get paid at home to care for their loved one. sometimes someone applying for Medicaid is just above the income limit or they just don't apply.
Jody Ellis: Yes.
Katie Wilkinson: Is an ABLE account able to be used in that way to tuck your money somewhere else where it's not being counted against the income limits? I'm not looking for a cheat code. I'm curious for people that might be interested in there is this kind of awkward middle ground where people are struggling but not eligible for Medicaid.
Jody Ellis: So, with this question, you really bring up a good point because an ABLE account can protect someone's eligibility for Medicaid in terms of asset limitations, right? So, funds that are saved in up to a certain amount for SSI are not considered an asset.
Jody Ellis: But an ABLE account does not change the way benefits programs treat countable income. So the ibility require requirements may still apply. And so it is possible that someone may not be eligible for Medicaid or SSI because of income received not related to the assets that they have saved.
Katie Wilkinson: That's great.
Katie Wilkinson: Yeah, thank you for making that distinction. is there anything we've missed? anything you feel like resources people need to know about related to APEL accounts that we haven't yet talked about?
Jody Ellis: Yeah, the aelnrc.org website has lots of different resources including decision guides, helpful hints for getting started, strategies to maximize your ABLE account.
Jody Ellis: frequently asked questions, webinars on demand, toolkits, lots of other information that can help someone along their able journey. Whether you're a person with a disability, a caregiver, family member, professional supporter, there's lots of information out there that can certainly help someone on their way.
Katie Wilkinson: Why do you think you see a gap in the knowledge base of people knowing about ABLE accounts? Do you feel like there's an opportunity for this to be more widespread?
Jody Ellis: Yeah, as I mentioned in the very beginning,…
Jody Ellis: ABLE accounts are vastly underutilized. So, right now in 2025, there are about 8 million people who are eligible for There are just under 200,000 accounts open nationwide. And with the Able Age Adjustment Act going into effect January 1st of 2026, that's going to allow another 6 million more Americans to be ABLE eligible. And I do think part of it is raising awareness and you can't open an ABLE account if you don't know that option even exists to you or for your family member.
Jody Ellis: So some of it is knowledge and some of it is just having misperceptions maybe that it's too hard to open an account or kind of having some stumbling and road roadblocks I just don't know enough about investment investments so I'm not going to open up an ABLE account. And the advice that I give individuals is you don't have to know everything about ABLE to get started. The important piece is the sooner you start saving the longer you can benefit from having an ABLE account.
Jody Ellis: So, it is okay to get started with just opening up a savings account with a small amount of money. As little as in some state plans, $10 could open up an ABLE account.
Katie Wilkinson: Here's Yeah,…
Jody Ellis: Some plans might have a $50 limit or even 250 is the highest. So it does depend a little bit but you can really get started on your AEL journey without having to invest a lot in terms of resources or in terms of knowledge.
And in closing, I just really want to thank you for the opportunity to share about the power of ABLE accounts. To me, they're truly a game changer for people with disabilities. They offer a pathway to greater financial independence while still preserving critical benefits that people need.
Jody Ellis: And to anyone listening or watching, whether you're a caregiver, family member, individual with a disability, an ABLE account really is a tool worth exploring. It's not just about the ability to save money. It's about creating opportunities, reducing financial stress, empowering people to achieve their goals, and really investing in the future. So, visit abelnrc.org RG for resources that can help you get started and to help you learn how to maximize your ABLE account.
Katie Wilkinson: Yeah, Jody, thank you so much for agreeing to talk to us and giving us all this information. This has been awesome. I think it'll be really helpful to people.
