What’s an ABLE Account and How Does It Work for Disability Support?

If you have a child with a disability — or you’re managing your own — you know how complicated money can get. You’re trying to save, plan, and protect benefits all at once. And if you’ve ever worried that saving “too much” might cost you SSI or Medicaid, that’s exactly the problem ABLE accounts were created to solve.

How ABLE Accounts Work

An ABLE account is a tax-advantaged savings tool for people whose disability began before age 26. (That age limit goes up to 46 starting in 2026.) If you qualify for SSI or SSDI, you likely meet the requirements.

You can put in up to the federal gift tax exclusion each year — about $19,000 in 2025. If the person with the disability works and doesn’t have a workplace retirement plan, they can also contribute extra, up to their earnings or a poverty-level cap.

Like a 529 college savings plan, ABLE accounts grow tax-free. Withdrawals are also tax-free if used for qualified disability expenses (QDEs) — things like education, housing, transportation, medical costs, assistive technology, legal fees, and even funeral expenses.

Why This Matters for Benefits

Programs like SSI have strict asset limits — for example, owning more than $2,000 in assets can end benefits. But ABLE accounts give breathing room. The first $100,000 in an ABLE account doesn’t count toward the SSI asset cap, and Medicaid eligibility is protected even if the account grows beyond that.

That means you can save and spend for disability-related needs without putting core benefits at risk.

ABLE vs. Special Needs Trusts

ABLE accounts aren’t a replacement for everything. They have lower contribution limits and more rules about how money can be used — but they’re also simpler and cheaper to set up. Many families use both: 

• The trust protects larger sums for the long term. 
• The ABLE account offers flexible, day-to-day spending power. 

Why IL ABLE Is Worth a Look

Anyone who’s a U.S. citizen or legal resident can open an IL ABLE account, no matter where they live. In Illinois, contributions up to $10,000 for individuals ($20,000 for couples) are deductible on your state income tax return. 

And like the federal rules, the first $100,000 in the account is excluded from SSI’s asset limit

How to Use ABLE in Estate Planning

Parents and grandparents can make gifts directly to an ABLE account during the beneficiary’s lifetime. You can also make ABLE part of your will or trust plan — just keep the annual contribution cap and tax timing in mind. 

What’s best depends on the size of the gift and the benefits involved. If Medicaid eligibility is important, it’s critical to plan so extra funds don’t accidentally push the person over income or asset limits. 

At McGrath Law Office, P.C., we help families make these decisions in a way that works in the real world. If you’d like to see whether an ABLE account could be part of your plan, call our Mackinaw office at 309-359-3461 or our Morton office at 309-266-6211.