Last month, my office hosted an informational webinar on the PA ABLE Savings program. The Pennsylvania ABLE Savings Program is administered by the Pennsylvania Treasury Department. ABLE (Achieving a Better Life Experience) is a program that provides individuals with disabilities the opportunity to work and save money in a way that does not affect their “means-tested benefits” such as Social Security, SNAP and more. This way, someone with a disability can develop savings without losing essential programs.
ABLE accounts are essential for those with disabilities who want to save unspent work earnings or Social Security benefits for a future purchase without violating the rule that the recipient of SSI and Medicaid cannot accumulate more than $2,000. An example of this might be a wheelchair user who needs a ramp placed in his or her home. Instead of losing essential benefits they might receive under Medicaid due to a disability if they have $2000 or more in a traditional bank account, an ABLE account would let them save for such an expense and is essential for future planning and to enable fiscal responsibility.
The federal ABLE Act was enacted in 2014 after five special-needs parents got together to discuss ways to help improve their children’s futures. The program soon evolved into the ABLE program of today and is housed under the auspice of the 529 College and Career Savings program. Unlike a 529 account, wherein multiple individual accounts can exist for the benefit of a single individual, individuals can have only one ABLE account.
Over 12% of Americans have a disability, 13.7% of Pennsylvanians have a disability and 26.8% of households have a member with a disability. People with a disability are twice as likely to live in poverty, leading to housing and food insecurity. The wage gap for those with disabilities is 74 cents for every dollar earned by those without a disability. One in four of today’s 20-year-olds will become disabled before they reach age 67.
To qualify for the PA ABLE program, one’s disability must occur before their 26th birthday, and they must be eligible for SSI/SSDI, or self-certify regarding their disability. Starting in 2026, the age of onset of a disability for eligibility purposes rises to 46, allowing millions more people to take advantage of this beneficial program.
PA ABLE offers a variety of savings options, ranging from a typical checking or savings account to a combination of a checking account and investment options that offers multiple asset allocation, including stocks, bonds and cash.
Those who qualify for PA ABLE can save up to $19,000 annually without it impacting their benefits. Individuals with an PA ABLE account who are employed may be able to contribute more than $19,000 under the ABLE to Work Act if they meet certain criteria. The maximum amount an employed person can contribute to an ABLE account through the ABLE to Work Act in a year is $34,060 – which is the annual limit of $19,000 plus $15,060 -- the additional allowable amount under ABLE to Work. You can find more information at the link below.
Individuals who receive Supplemental Security Income (SSI) can grow their PA ABLE account up to $100,000 without affecting their SSI benefit. This is essential for those trying to save for assistive technology and devices which can be tremendously expensive. Any account owner who does not receive Supplemental Security Income (SSI) can grow their PA ABLE account to $511,758. After the account maximum is reached, no more money can be contributed, but it may continue to grow in value due to investment returns. You can find more information here.
Traditionally, persons with disabilities or their family members have used “special needs trusts” (or “supplemental needs trusts”) to allow families to plan and care for family members with disabilities without dismantling support services essential to their survival. A PA ABLE account can be used in conjunction with a special needs trust and an attorney is best positioned to help families decide. That said, one of the intentions behind the PA ABLE program was to help families and individuals plan for their futures without paying costly fees. A PA ABLE account might be beneficial for an individual who inherits under $19,000 from a relative, rather than going to the trouble of setting up a special needs trust, as some don’t realize they might be jeopardizing service access by directing funds to a relative with a disability rather than to their special needs trust. ABLE Accounts are also sometimes used to hold a small litigation settlement or other unexpected windfall. An attorney can discuss in detail how these two programs interact.
PA ABLE accounts can be managed by the beneficiary him or herself if he or she retains legal capacity, or they may authorize an individual to manage funds on their behalf. Accounts for minors and adults without legal capacity to enter contracts must be opened by an Authorized Individual who has the legal right to do so on behalf of the other person.
Deposits can be made directly by an individual/family/friend/business/employer into a holder’s account. Similar to the 529 program, Ugift allows family and friends to directly contribute to an account with a link. This is particularly beneficial for savings on behalf of someone receiving SSI so that funds can be accumulated on their behalf for essentials without risking loss of SSI benefits. A 529 college savings account can also be transferred tax free to a PA ABLE account at an amount of up to $19,000/year.
PA ABLE accounts can be used for a wide-range of disability-related expenses. Expenses do not need to be "medically necessary" and do not need to be for the sole benefit of an account owner. For instance, another user in the home may also use a wheelchair ramp installed in a home through use of another individual’s ABLE funds. Education-related expenses may include tuition for preschool through postsecondary education, books, supplies, and educational materials. Housing expenses may include the purchase of a primary residence, mortgage payments, property taxes, rent, utilities, home modifications, maintenance, and repairs. Examples of qualifying transportation-related expenses may include using public transportation, purchase or modification of vehicles. Employment expenses may include job-related training and costs to help obtain or maintain employment. Additional expenses can include communication devices, hearing aids, mobility aids, and residence or vehicle modifications to improve accessibility and accommodate a disability. Other qualifying expenses include those related to health, prevention and wellness, financial management, legal fees, oversight and monitoring (like caregivers) and funeral or burial services.
PA ABLE does not evaluate whether an expense is qualified, and account holders should retain receipts in the case of an audit by the IRS or SSA. Everyone using a PA ABLE account must be aware that using funds for Non-Qualified Expenses may have tax consequences and can impact a person’s eligibility for benefits.
We are grateful for the Pennsylvania Department of Treasury for helping us clarify some information from the webinar. I was happy to learn more about this essential program and to share what I learned with you. If you have questions, you can visit https://www.paable.gov/ or contact info@paable.gov directly.