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Jess and christian with wheelchair

Saving for a Child with Special Needs – ABLEnow Accounts

by Drew Overton | July 23, 2022 | Financial Planning

My 7-year-old nephew, Christian, has been disabled since birth. He has been in and out of the hospital regularly, undergone numerous surgeries, and receives multiple shots daily, but you’d never know it based on his warm smile and positive attitude. His mother (my sister), Jess, is one of the strongest people I know. She is an incredibly intelligent and loving mother who spends all her time caring for Christian. Due to consistently high medical bills, Jess utilizes federal and state programs such as Medicaid and Supplemental Security Income (SSI) for Christian’s care. To qualify for these programs, their household income and assets must remain under certain levels. Caretakers of disabled individuals like Jess are disincentivized to save money for other financial planning needs to remain eligible for Medicaid and SSI. 

A few years back, she came across ABLEnow. To this day, Jess is utilizing an ABLEnow account for Christian and is currently saving for a down payment on a home – and those savings are not counted toward the asset limitations for Medicaid and SSI. Today we want to share the ins and outs of the ABLEnow account. 

What is an ABLEnow account? 

The Achieving a Better Life Experience (ABLE) Act was signed by President Obama in December 2014. As an amendment to Section 529 of the IRS Code, this law allowed states the ability to create tax-advantaged savings programs for individuals with disabilities. Soon after, in 2015, Virginia became the first state to open a new savings account – called an ABLEnow account. The account is comprised of multiple tax-related incentives for the disabled community including state tax-deductible contributions, tax-deferred investing, and tax-free distributions for qualified disability expenses. The most important benefit it provides is an avenue for long-term savings without jeopardizing other assistance programs such as Medicaid and Supplemental Security Income (SSI).  

Who is eligible to open an ABLEnow account? 

Any U.S. citizen or legal resident may open an ABLEnow account. The eligible individual, the one who the account benefits, must have had a qualifying disability before the age of 26. The qualifying disability can be self-certified or is automatically approved if the individual is already enrolled in SSI or SSDI. Self-certification requires that the impairment started before age 26, results in “marked and severe functional limitations” lasting 12 months or longer (or resulting in death), and the individual must have received a signed disability diagnosis from a licensed physician. 

Opening an Account

If the disabled individual is over age 18, they can open the account themselves. If they are a minor, or if they cannot open the account, an Authorized Representative may open and manage the account for them. ABLEnow provides a list of potential Authorized Representatives based on priority. For example, if you have Power of Attorney, you would be the first individual to become the Authorized Representative of the account. 

To get started, log onto to complete and submit the free application. The online application will provide step-by-step instructions on what information is needed and will provide an email confirmation once the account is opened. Note that there is no minimum initial contribution needed to open the account.

Contributing to an Account

You may contribute to an ABLEnow account either online or by check. Anyone can contribute to the ABLEnow account. However, total contributions from all donors to the ABLE account are limited to $16,000 per year, which follows the annual gift tax exclusion limit. There is a cumulative ABLEnow account value limit which is currently capped at $550,000. Also note that in Virginia, each contributor can qualify for an annual state income tax deduction of up to $2,000 for contributions to an ABLEnow account. 

This can be a great way for friends and family to help. For Christian, we have stopped giving birthday gifts and instead contribute to his ABLEnow account every year. Don’t worry, he has plenty of toys already!  

Investing Your Contributions

The first $2,000 saved is held within the ABLEnow Deposit Account (FDIC-insured). Once the ABLEnow account balance surpasses $2,000, the remaining balance is eligible for investment. ABLEnow allows for four different investment options depending on your risk tolerance and time horizon: Aggressive Growth, Moderate Growth, Conservative Growth, and Money Market. The investment funds are relatively low-cost, ranging from 0.36% to 0.39%. 

Should you decide to invest your eligible account balance, there is a monthly account service fee of $3.25 per month. Similar to a 529 college savings plan, ABLEnow accounts allow you to change the investment selection up to two times per year. Earnings within an ABLEnow account grow federal and state tax-free. 

Withdrawing From Your Account

Using your ABLEnow account for qualified expenses is very easy to do. So, what are qualified expenses? The expense must have been incurred while you were considered an Eligible Individual, and it must have helped maintain or improve your health, independence, or quality of life. Some examples may include housing, education, transportation, basic living expenses, etc. You can use the ABLEnow Card to purchase things directly – like a debit card – or transfer funds from your ABLEnow account to your bank account. The most important thing is that you keep track of your qualified expenses. The IRS, Medicaid, or the Social Security Administration may investigate any distribution to ensure that it was a qualified expense. 


ABLEnow accounts are slowly gaining popularity across the country. It is important to continue educating people on the tax benefits of this account so that we can encourage long-term savings for disabled individuals and their families. For Jess, it gave her the opportunity to save for a home in an account that would not disqualify Christian for other health benefits that he needs. To learn more about Christian’s journey, click here to read Jess’s blog.  

If you have someone in mind that may benefit from using an ABLEnow account, consider sending them this blog or the link to the ABLEnow website ( If you have any questions regarding ABLE accounts, or if you are interested in learning more about how Tull Financial can help you, give our office a call at (757) 436-1122.