Understanding Needs-Based Benefits and Why ABLE Accounts Matter
By: Connor W. Kavanaugh CTFA, ChSNC
Updated December 4th, 2025
Before diving into ABLE accounts, it’s important to understand why they exist in the first place. Nearly every life care plan for an individual with a disability depends on needs-based government benefits such as Supplemental Security Income (SSI) and Medicaid. These programs provide essential financial support, health coverage, employment services, housing assistance, and long-term care.
But eligibility comes with a strict rule: an individual must have less than $2,000 in countable assets in their name. That limit has not changed in decades. It includes checking accounts, savings, custodial accounts, cash value life insurance, CDs, and other personal financial assets.
In other words, the law requires individuals with disabilities to remain in financial poverty to access vital services. For decades, advocates across the country fought to change that reality. The result was the passage of the ABLE Act, one of the most meaningful shifts in disability policy in years.
What Is the ABLE Act?
The ABLE Act expanded the existing IRS 529 code (originally used for education savings) to allow families to save money for a person with a disability without jeopardizing eligibility for needs-based benefits.
An ABLE account allows up to $100,000 in savings to be held for the benefit of an individual with a qualifying disability without impacting eligibility for SSI. Medicaid eligibility continues even if the account grows beyond that amount. Funds grow tax free, and withdrawals are also tax free when used for qualified disability expenses.
ABLE accounts must be funded with cash, not stocks or transfers of property. As of 2025, almost every state has an active ABLE program, including Oregon and Washington, and individuals may choose to open an account in another state’s program if it better fits their needs.
What Can an ABLE Account Pay For?
Funds in an ABLE account must be used for the benefit of the individual with a disability. Qualified disability expenses are defined broadly and may include:
• Housing and utilities
• Food and groceries
• Transportation
• Assistive technology
• Employment support
• Health and wellness
• Education and training
• Personal support services
• Financial management and administrative fees
If the expense improves or supports the health, independence, or quality of life of the individual, it generally qualifies.
Benefits of ABLE Accounts
ABLE accounts provide three major advantages.
Tax advantages.
Funds grow tax free, and withdrawals for qualified disability expenses are also tax free. Some states offer additional tax incentives. Oregon offers its ABLE savers and contributors a refundable state tax credit of up to $360 per year for married individuals filing jointly and $180 for single filers (2025).
Protection of government benefits.
Individuals who would otherwise lose SSI for having more than $2,000 in assets may keep eligibility as long as their ABLE account balance stays below $100,000. Even above that amount, Medicaid eligibility continues.
Greater independence and empowerment.
The account is owned by the individual with a disability. This structure allows them to develop budgeting skills, manage approved expenses, and participate more fully in their financial life. Many families choose to use the optional ABLE debit card to help the beneficiary learn money management in a safe, structured way.
Are There Limitations?
While ABLE accounts are powerful, they are not ideal for every situation.
• Eligibility requires the onset of disability before age 46 (effective January 1st, 2026)
• Annual contributions are capped. For 2025, the limit is $19,000 from all sources.
• Beneficiaries who work may make additional contributions under ABLE to Work rules, provided they do not participate in an employer retirement plan.
• If the account exceeds $100,000, SSI cash payments are suspended until the balance drops back below the limit.
• Some states recover Medicaid expenses from the account after the beneficiary passes away. Oregon, however, does not require Medicaid recovery for ABLE accounts, which is a significant advantage for Oregon families.
Bringing the Plan Together
ABLE accounts are becoming a core component of special needs planning, complementing special needs trusts rather than replacing them. Many families use a hybrid approach: allowing the ABLE account to grow for long-term tax-free gains while using the special needs trust for ongoing expenses, or vice versa depending on SSI rules and individual circumstances.
When thoughtfully integrated, ABLE accounts can significantly enhance financial flexibility, independence, and long-term stability for individuals with disabilities.
If you want help determining how an ABLE account fits into your family’s plan or how it coordinates with a special needs trust, Palladio Consulting LLC is here to guide you.