Texas ABLE

A young woman stands at a podium, surrounded by applauding men and women in business attire. A stately building with columns is in the background.

The ABLE Act is a federal law (passed in December of 2014 and amended via H.R. 2029, the Consolidated Appropriations Act of 2016) that amended the Internal Revenue Service Code to create a tax-advantaged savings option for people with disabilities. (Left: Sara Hart Weir, National Down Syndrome Society vice president, stood at the forefront of the lobbying effort to pass the ABLE Act.)

On May 30, 2015, Texas enabled its version of the Act (SB 1664, Perry). For the first time in history, Texans with disabilities can save money (in their own name) to pay for certain disability expenses without the fear of exceeding the Medicaid individual resource limit of $2,000.

After the program is implemented, a Texas ABLE account can help individuals lead more independent, self-directed lives and allow family members to help save for their loved-ones' futures.

FAQ on Texas ABLE

Who qualifies?

Any individual who has a significant disability that was diagnosed before the age of 26, regardless of their current age, qualifies for an account. Texans who meet the age criteria and are already receiving benefits under SSI and/or SSDI will automatically be eligible to establish an ABLE account.

What does a Texas ABLE account do?

A Texas ABLE account is a hybrid savings account with limitations on how much you can save and what you can spend your savings on. Currently a person with a disability can only have a maximum cash savings of $2,000 (individual resource limit) before they lose their Medicaid coverage. That's where Texas ABLE can provide the most benefit; by allowing an individual to exceed the $2,000 asset limit. In fact a person can save as much as $100,000 in a Texas ABLE account (and have $2,000 in other cash assets) before their SSI payments are suspended while continuing to retain their Medicaid coverage.

It is important to note that a beneficiary can only have one ABLE account. And that each account can have more than $100,000 in it, as Texas law allows for a maximum amount of $370,000 in an individual ABLE account. Subsequent amendments allow a person to have an account in another state that has an enabled program. However, it is unclear what the maximum amount is at this time.

How does the program work?

Each year, an account beneficiary can save a total combined amount of $14,000 into an individual Texas ABLE account. The funds can come from earned wages, a family member, a friend, or any other source.

For example, a person with a Texas ABLE account might earn $6,000 throughout the year beyond their personal expenses. They could save that money in their Texas ABLE account. In addition, a grandparent might wish to put another $6,000 into the account, and the beneficiary's parents might add another $2,000 to reach the $14,000 maximum deposit limit. No more money could be deposited into that account that year.

These funds could then be used for a variety of disability related expenses (see below) to ensure financial stability and that the account owner can live a self-directed and independent life.

What expenses qualify?

According to the proposed rules published by the IRS in 2015, qualified disability expenses include, but are not limited to:

Is a Texas ABLE account for me?

Not everyone needs a Texas ABLE account. Other useful estate planning tools exist that may better suit your personal needs. As regulations become clearer and implementation gets underway, families and estate planners will be better able to weigh which savings method would be best for each individual.

Where and when can I apply?

Visit www.texasable.org for more information about the program and apply. The program is accepting applications as of May 4, 2018.

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