How to Save Money While on Disability: Open an Oregon ABLE Account!

Can you save money while on disability? If you receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), federal rules dictate that you can’t have resources (including savings accounts) that are worth more than $2,000 for a person or $3,000 for a married couple living together. So the answer to the savings question would seem to be “no,” and it was—until December 2014 and the passage of the “Achieving a Better Life Experience Act,” which allows eligible Americans with disabilities the opportunity to save as much as $17,000 a year (and in some cases, more).

Many people with disabilities receive some sort of state or federal benefits, like Social Security, Medicaid, or food or housing assistance. Unfortunately, these benefits come with income and asset caps. In other words, people have to choose between saving (or making) money or keeping necessary benefits. The Achieving a Better Life Experience (ABLE) act resolves this issue: Eligible people with disabilities now have the option to save or invest money in a tax-free account without fearing the loss of benefits. They can save up to purchase a service dog, apply for a well-paying job without worrying about losing benefits, or even buy a new house.

What Are the Benefits of an ABLE Account?

“Having a disability is expensive,” says Kaellen Hessel-Owens, the Oregon State Treasury’s Oregon ABLE Outreach Manager. “Research from the National Disability Institute shows that households with one adult who has a disability need 28% more income on average to obtain the same standard of living as a similar household without a member who has a disability. Oregon ABLE can help make up for some of that gap.”

Besides being tax-free, Oregon ABLE’s Cash Option’s current interest rate is higher than most other rates available, and Oregon ABLE account holders qualify for a refundable income tax credit.

“ABLE accounts seem to be the only way to combat the encouraged impoverishment that is set by asset limits,” says Annie Steiner, Financial Advocacy Specialist at ALSO. “ABLE accounts are the Noah’s ark of savings for people with disabilities.”

Understanding ABLE Account Eligibility

If you have a significant disability with an onset before age 26 and are already receiving SSI and/or SSDI benefits, you’re automatically eligible to open an ABLE account.

But it’s not just people receiving Social Security who can benefit from ABLE accounts. If you acquired a disability before age 26 and meet Social Security’s definition and criteria regarding significant functional limitations, you can file a disability certification. This certification, which includes information about your disability and must be signed by a physician, certifies that you:

• Have a medically determinable physical or mental impairment that is permanent (lasting for a continuous period of not less than 12 months) and/or terminal.
• Are blind (as defined in section 1614(a) (2) of the Social Security Act).

Note that you can be over 26 years old when you open an ABLE account, you just need to have acquired your disability before that age.

That age limit is increasing soon. The ABLE Adjustment Act was signed into law on December 24, 2022, and will increase the age of ABLE eligibility from “before age 26” to “before age 46” effective January 1, 2026. It’s estimated that the new bump in eligibility will allow an additional six million people, including one million veterans, to be able to save in ABLE accounts.

How To Set Up an ABLE Account

Opening an ABLE account is simple. If you are supported by ALSO, Jeanette Nielsen (Jeanette.Nielsen@alsoweb.org ) would be happy to help you.

If you’re not supported by ALSO or would like to set up an Oregon ABLE account on your own, go to Oregon ABLE Savings Plan (or call them at at 1-844-999-2253). You’ll provide limited information about you or your beneficiary (to determine ABLE eligibility), decide how you’ll fund your account, and choose either a cash or investment option.  ABLE accounts in Oregon allow you to save your money in an FDIC-insured savings account or invest it in one of three types of financial portfolios: ABLE Conservative, ABLE Moderate, or ABLE Aggressive. Each investment option contains a different ratio of stocks and bonds within a portfolio of mutual funds. There’s a $25 minimum deposit to open your Oregon ABLE account.

“The account can be managed online,” says Mrs. Hessel-Owens, “so it’s easy to access, contribute, withdraw, or load money to a prepaid card. The Oregon ABLE Savings Plan also offers free monthly webinars that explain Oregon ABLE account plans in detail.”

If you don’t live in Oregon, you can access a similar plan, ABLE for All (powered by the state of Oregon) or check out other options and compare plans at The ABLE National Resource Center (managed by the National Disability Institute). A tip from Mrs. Hessel-Owens: “If someone searches for ABLE accounts online, the top result is usually an ad, and it will not necessarily be for their own state’s program” (which could be important for state tax credit eligibility).

FAQs About ABLE Accounts

• How much are ABLE account fees? The fees for ABLE accounts vary depending on the state and the specific ABLE program. Oregon ABLE accounts carry an annual fee of $35, as well as annual administrative and investment fees that add up to between 0.30% and 0.34% of the account’s balance per year. Other fees may apply.
• What is the ABLE account maximum contribution? According to the IRS, ABLE accounts are limited to the annual gift tax exclusion amount ($17,000 for 2023) ABLE account owners who are employed and do not participate in an employer sponsored retirement plan (within that calendar year) may make additional contributions, up to $13,590 in 2023 for those who reside in the continental U.S. This limit may be subject to change, so it’s important to consult your specific ABLE program or state for the most up-to-date information.
• Are ABLE accounts tax deductible? Contributions made to ABLE accounts are not tax-deductible at the federal level, although some states may allow deductions. Oregon does not offer a tax deduction, but a contribution to an Oregon ABLE account makes one eligible for a refundable state income tax credit of up to $340.
• Are ABLE accounts taxable? ABLE account earnings are not subject to federal income tax as long as the funds are used for qualified disability expenses. However, if ABLE account funds are used for non-qualified expenses, they may be subject to taxes and penalties.
• What can ABLE account funds be used for? ABLE account funds can be used for a wide range of qualified disability expenses (QDEs), including education, food, housing, transportation, assistive technology, employment training and support, personal support services, health care expenses, financial management, and more.
• Who can open an ABLE account? If an eligible person with a disability (see “ABLE Account Eligibility” above) can’t open or manage an ABLE account by themselves, an Authorized Legal Representative (ALR) may do so for them. An ALR can be a person with legal capacity who is selected by the eligible beneficiary, anyone who has Power of Attorney, a conservator or legal guardian, a spouse, parent, sibling, or grandparent, or a representative payee (individual or organization). ALSO is certified as an ALR and may open ABLE accounts for eligible people in their care who wish to have accounts.
• Who can contribute to an ABLE account? Anyone can contribute to an ABLE account on behalf of an eligible individual with a disability, including friends and family members. Contributions can also be made from Special Needs / Pooled Trusts and 529 College Savings Account rollovers.

Are ABLE Accounts Worth It?

“Absolutely”, says Ms. Steiner, who was so impressed with the benefits of ABLE accounts that she opened over twenty ABLE accounts for people supported by ALSO within her first month and a half.

It’s also important for families of children with disabilities to recognize the advantages of opening an ABLE account. “Often, families don’t realize that when their child turns 18, they may begin qualifying for benefits that they weren’t eligible for previously, “ says Mrs. Hessel-Owens. “Saving in an Oregon ABLE account while the child is young allows them to be better prepared for that transition to adulthood.”

“It’s a way to build a future” agree Ms. Steiner. “To be able to participate in your life and the kind of life that you desire while still receiving instrumental government benefits. It’s a way to have a robust and fulfilling life regardless of ability.”

That’s what ALSO is all about, supporting people with disabilities so that they can have they life they want. To learn more about all the ways ALSO can assist you or your family member, contact us today!