Introduction
As attorneys representing injury victims, you know that many clients rely on needs-based government benefits such as Medicaid or SSI. A net settlement of anything over $2,000 may jeopardize eligibility unless funds are spent down in the month received or placed into a Special Needs Trust (SNT). Until several years ago, those were the only viable options.
However, the Achieving a Better Life Experience Act (“ABLE Act”) now provides a third planning solution—especially valuable for clients receiving modest settlements who need to preserve eligibility for Medicaid and/or SSI while maintaining flexibility and control over their settlement funds.
The ABLE Act was designed to allow individuals with disabilities and their families to save for and pay for disability-related expenses without sacrificing their needs-based benefits.
ABLE Act Summary
An ABLE account is a tax-advantaged savings account, similar to a 529 plan, designed for individuals with disabilities.
Key Features
- Does not affect eligibility for Medicaid or most needs-based benefits.
SSI benefits are suspended but not terminated if the ABLE account balance exceeds $100,000. - The beneficiary must own the account.
Only one ABLE account is permitted per beneficiary. - Disability onset age rule—Important Update:
- Historically, disability had to begin before age 26.
- On January 1, 2026, the onset-of-disability requirement increased to before age 46.
- This change will significantly expand eligibility for many adult-onset disabilities common in injury cases.
- Historically, disability had to begin before age 26.
- Annual contribution limits.
Total annual contributions from all sources are capped at the federal gift tax exclusion amount (currently $19,000, adjusted periodically).
Additional contributions may be allowed for working beneficiaries under the ABLE to Work provision. - Tax benefits.
- Earnings grow tax-deferred.
- Withdrawals are tax-free when used for qualified disability expenses.
- Earnings grow tax-deferred.
- 529-to-ABLE rollovers are permitted (for the same beneficiary).
This provision, once temporary, is now permanent. - Qualified expenses are broadly defined and include housing, education, transportation, medical care, assistive technology, legal fees, financial services, and more.
State-Specific Updates
Utah Update
Utah enacted the ABLE Act in 2015. The program is administered by the Utah Department of Workforce Services (DWS). Utah residents can now open ABLE accounts through the state’s program or any other state’s nationwide ABLE plan. Utah continues to refine its plan offerings as national ABLE standards evolve.
Texas Update
Texas passed its ABLE legislation in 2015. The program, administered by the Texas Prepaid Higher Education Tuition Board, is fully operational and accepts new accounts. Texas periodically updates its rules to stay aligned with federal ABLE enhancements.
Recent Legislative Improvements (2023–2026)
Recent federal changes make ABLE accounts more flexible and useful:
- ABLE Age Adjustment Act (Effective Jan 1, 2026)
Expands eligibility by increasing disability-onset age from before 26 to before 46.
This is one of the most meaningful improvements for settlement planning clients. - Permanent Extension of Key Provisions
- ABLE to Work (extra contributions for working beneficiaries).
- 529-to-ABLE rollovers.
These provisions have been made permanent or extended long-term, increasing planning flexibility.
- ABLE to Work (extra contributions for working beneficiaries).
Plan Expansion and Adoption
Nearly all U.S. states now operate an ABLE plan, and beneficiaries may generally enroll in any state plan regardless of residence.
Bottom Line for Plaintiffs and Their Attorneys
The ABLE Act gives injured individuals one more option when deciding how to allocate and utilize their settlement funds in a way that won’t jeopardize their continued eligibility for needs-based benefits such as Medicaid and SSI.
Please call us when you are settling a case for a client receiving any kind of government benefit. We specialize in settlement planning and special needs law and can advise your client regarding the advantages and disadvantages of their settlement options in a way that will preserve their needed government benefits.
The ABLE Act gives injured individuals an important additional tool to preserve eligibility for needs-based government benefits while retaining control and flexibility over their settlement funds. With the 2026 expansion of eligibility to individuals whose disability began before age 46, ABLE accounts will soon be available to many more injury victims.
When settling a case involving a client who receives Medicaid, SSI, or any other needs-based benefit, please contact us. We specialize in settlement planning and special needs law and can help your client evaluate the advantages and limitations of ABLE accounts, Special Needs Trusts, spend-downs, and structured settlement options—ensuring their benefits remain protected.
