People with disabilities will be able to open new, tax-free savings accounts under at least two programs offered nationally this summer.  This week, Ohio launched its’ STABLE Account program. With the launch of this program, Ohio became the first state in the country to offer ABLE accounts to qualified individuals with disabilities

The state-sponsored accounts are formally known as 529 ABLE, or 529A, accounts. Authorized in 2014 by the Achieving a Better Life Experience Act (ABLE Act), the accounts are modeled loosely on the easy-to-use 529 college savings accounts.

The main benefit of the new accounts is that they allow disabled people to accumulate significant savings without jeopardizing their eligibility for need-based government help like Supplemental Security Income  (SSI)or Medicaid. Disabled people, their families and friends can contribute as much as $14,000 a year without putting federal benefits at risk.

Millions of individuals with disabilities and their families are often relegated to a life of poverty as a result of not being allowed to build even the most modest levels of resources. Individuals receiving supports through Social Security, Medicaid, and other publically funded programs, are often disqualified from those supports if they have more than $2,000 worth of resource or assets.  Now, for the first time, individuals with disabilities and their families will be able to take a step to better secure their financial futures and to help offset the often significant financial challenges that can accompany living with a disability.

A special needs trust, also called a supplemental needs trust, can be used to shelter a disabled person’s assets, but can be more expensive to establish and maintain. ABLE accounts are intended to offer a simpler, less costly option, when the amount being protected is smaller (less than $14,000 per year). These ABLE accounts have at least some limitations. Unlike funds in placed in supplemental needs trust, funds remaining in an ABLE account may be utilized to repay state Medicaid costs after a beneficiary’s death.

What are ABLE Accounts?

ABLE Accounts are an investment account available to eligible individuals with disabilities. ABLE Accounts are made possible by the federal Achieving a Better Life Experience (“ABLE”) Act. ABLE Accounts allow individuals with disabilities to save and invest money without losing eligibility for certain public benefits programs, like Medicaid, SSI, or SSDI. Earnings in a ABLE Account are not subject to federal income tax, so long as you spend them on “Qualified Disability Expenses.”

ABLE Accounts have some similar features to normal bank accounts, but they are not checking or savings accounts. ABLE Accounts are investment accounts, similar to 529 college savings accounts or 401(k) retirement accounts. When you deposit money into your ABLE Account, your money will be invested in different options that you choose. While you can still withdraw and spend your money whenever you need it, ABLE Accounts also allows you to grow your money and to save long-term for disability expenses.

Federal ABLE Legislation

The Achieving a Better Life Experience (“ABLE”) Act was passed in December of 2014. It is the federal legislation that allows families and individuals with disabilities the opportunity to create tax-advantaged accounts that can be used to help maintain health, independence, and quality of life. To read the legislation, visit this link.

What about Michigan’s ABLE account?

Michigan has not yet launched its ABLE account plan. While the original law passed in 2014 did stipulate that an individual had to open an account in their state of residency, this provision was eliminated by Congress in 2015.  This means that regardless of where you might live and whether or not your state has decided to establish an ABLE program, you are free to enroll in any state’s program once they are accepting enrollees.

Michigan provides for a $14,000 total annual contribution and an account limit of $500,000.00.  House Bill 4543 allows for a $5,000 income tax deduction for single tax filers and a $10,000 for joint tax filers.

How To Open a STABLE Account

Ohio’s ABLE Account is called a STABLE account.  The account set up and enrollment is all online. No bank trips are necessary.

When you open your account, you will be asked to create your own username and password for Ohio’s online account portal. You will put in your basic information, such as your name, address, birth date, etc. (If you are a parent or other representative opening an account for someone else, you will need to put in your information and the account holder’s information.) You will also be asked a few questions regarding your disability, in order to confirm your eligibility to open an account.

Once you have input your information, you will make your initial contribution and choose your Investment Options.

The Probate Pro can help!

More questions?  Need information?  The Probate Pro is happy to assist in establishing ABLE Accounts. Please call us at (248) 399-3300.


–Please keep reading for more important information–

Account Cost

In Ohio, setting up your account online is free.  You will need to make an initial contribution of at least $50 in order to set up your account.

There are minimal costs associated with maintaining your account. Ohio residents will pay $2.50 per month ($30 annually) to maintain their accounts. Residents of other states will pay $5.00 per month ($60 annually) to maintain their accounts. Ohio residents will also have a small asset-based fee of between 0.19% and 0.34%, depending on their chosen Investment Options. Similarly, non-Ohio residents will have an asset-based fee of between 0.45% and 0.60%, depending on their chosen Investment Options.

There could also be other costs (e.g., a return check fee) depending upon your particular account activity.

IRS Regulations

The Internal Revenue Service (IRS) has provided proposed regulations for ABLE Accounts. These proposed regulations offer guidance to states, beneficiaries, and other interested parties. To read the proposed regulations, visit this link.

Eligible Individuals

ABLE AccountsAn “Eligible Individual” is someone who developed their disability before the age of 26. The individual must have been living with their disability for at least one year, or they must expect their disability to last for at least a year.

In addition, the individual must meet at least one of the following criteria:

  • Be entitled to Supplemental Security Income (SSI) because of their disability;
  • Be entitled to Social Security Disability Insurance (SSDI) because of their disability;
  • Have a condition listed on the Social Security Administration’s List of Compassionate Allowances Conditions; or
  • Be able to “self-certify” their disability and diagnosis (see details below) when opening a STABLE Account.

“Self-certification” simply requires an individual to agree to the following statements during enrollment:

  • The individual has a written, signed diagnosis from a licensed physician (Note: individuals do not have to provide us with a copy of the diagnosis during enrollment, but a copy of the diagnosis must be available upon request); and
  • The individual is either:  (1) blind, within the meaning of the Social Security Act, or (2) has another medically determinable physical or mental impairment that results in marked and severe functional limitations.
Both physical and mental disabilities (including certain mental illnesses) may qualify someone to open a STABLE Account. To see if you or someone you know is eligible, click here to take Ohio’s Eligibility Quiz.

Proving Eligibility

You will be asked a series of questions when you open your account. If you are self-certifying your disability, you will need to provide your doctor’s name and address, and the date of your diagnosis. Although you will not need to produce a copy of your diagnosis in order to open an account, you must have a record of the diagnosis readily available.

Nationwide Availability

You can open an Ohio STABLE Account regardless of your state of residency. It is open to all eligible individuals across the country.

Who Can Open the Account

An Eligible Individual can open an account for him or herself. The Eligible Individual is known as the “Beneficiary” of the STABLE Account. A parent, legal guardian, or the holder of a power of attorney* can also open, set up, and manage a STABLE Account for their loved one. These individuals are known as “Authorized Legal Representatives.”

What Is a “Qualified Disability Expense”?

An expense is considered a “Qualified Disability Expense” if:

(1)  You incurred the expense at a time when you were an Eligible Individual;
(2)  The expense relates to your disability; and
(3)  The expense helps you to maintain or improve your health, independence, or quality of life.

Examples of Qualified Disability Expenses
(Note:  This list contains many examples, but it is not exhaustive. There are many other types of Qualified Expenses that are not listed here.)

• Tuition for preschool through post-secondary education
• Books
• Supplies and educational materials

• Expenses for a primary residence
• Rent
• Purchase of a primary residence
• Mortgage payments
• Real property taxes
• Utility charges
NOTE: SSI benefits can be affected if you use ABLE funds for any housing expenses. See the “Benefits” section of our website for more information. 

• Expenses for transportation
• Use of mass transit
• Purchase or modification of vehicles
• Moving expenses

Employment Support
• Moving expenses
• Expenses related to obtaining and maintaining employment
• Job-related training

Health Prevention and Wellness
• Expenses for health and wellness
• Premiums for health insurance
• Mental health, medical, vision, and dental expenses
• Habilitation and rehabilitation services
• Durable medical equipment
• Therapy
• Respite care
• Long term services and supports
• Nutritional management
• Communication services and devices
• Adaptive equipment
• Assistive technology
• Personal assistance

Assistive Technology and Personal Support

• Expenses for assistive technology and personal support

Miscellaneous Expenses
• Financial management and administrative services
• Legal fees
• Expenses for oversight
• Monitoring
• Home improvement, modifications, maintenance and repairs
• Funeral and burial expenses

Documenting Your Expenses

It is up to you to track how you spend the money in your STABLE Account. We do not ask how you plan to spend your money. However, the IRS has the right to ask you to verify your expenditures. For this reason, you should keep perfect records on how you are spending your STABLE Account funds.

Non-Qualified Expenditures

If you spend your STABLE Account funds on a non-qualified expense, you will have to pay regular income taxes, plus a 10% additional tax, on the earnings portion of those non-qualified funds. Additionally, the non-Qualified funds you withdraw could be counted against you for purposes of determining your eligibility for means-tested public benefits programs, like Medicaid or SSI.