The Achieving a Better Life Experience Act, commonly known as the ABLE Act, created tax-advantaged savings accounts that allow eligible individuals with disabilities to save money for disability-related expenses without automatically jeopardizing eligibility for important means-tested public benefits.
Congress enacted the federal ABLE Act in 2014, and Governor Greg Abbott signed the Texas ABLE Act in 2015. The Texas ABLE Program is administered by the Texas Prepaid Higher Education Tuition Board with assistance from the Texas Comptroller of Public Accounts.
ABLE accounts can be an important planning tool for people who receive Supplemental Security Income (SSI), Medicaid, and other means-tested benefits because they allow funds to be set aside for qualified disability expenses without being treated the same way as funds held in an ordinary bank or investment account.
The rules have changed significantly since Texas ABLE accounts were first introduced. Most notably, beginning January 1, 2026, the age-of-onset requirement increased from age 26 to age 46, making millions of additional Americans potentially eligible.
Why Are ABLE Accounts Important?
Millions of people with disabilities rely on means-tested public benefits such as SSI and Medicaid.
SSI generally imposes a very low resource limit. As a result, an individual who simply accumulates money in a traditional checking, savings, or investment account can risk losing eligibility for benefits.
ABLE accounts create an exception to that problem.
Funds held in a qualifying ABLE account can generally be excluded when determining eligibility for certain means-tested benefits, allowing an eligible person with a disability to maintain savings for qualified expenses while preserving access to critical public benefits.
This can provide the beneficiary with greater independence and a financial cushion for expenses that improve or maintain health, independence, and quality of life.
Who Is Eligible for a Texas ABLE Account?
As of January 1, 2026, a person may qualify for the Texas ABLE Program if:
- The individual is a Texas resident;
- The individual’s qualifying disability was present before age 46; and
- The individual can establish the disability through one of the methods recognized by the program.
The age requirement concerns when the disability began—not the beneficiary’s current age.
For example, a 60-year-old person may qualify if the person’s disability was present before age 46 and the other eligibility requirements are satisfied.
This is a major expansion from the prior rule, which required the disability to have begun before age 26.
How Do You Establish That You Have a Qualifying Disability?
The Texas ABLE Program currently recognizes several ways to establish disability eligibility.
An individual may qualify if the individual:
- Is entitled to receive SSI or Social Security Disability Insurance (SSDI) based on blindness or disability;
- Has had SSI entitlement suspended solely because of excess income or resources;
- Has a qualifying written diagnosis from a licensed physician; or
- Has a condition included on the Social Security Administration’s Compassionate Allowances list.
A physician’s diagnosis generally must establish blindness or a medically determinable physical or mental impairment that results in marked and severe functional limitations and is expected either to result in death or to last for at least 12 months.
Does the Beneficiary Have to Be Under Age 46?
No.
The beneficiary can be any age. The relevant question is whether the qualifying disability was present before the beneficiary reached age 46.
That distinction is particularly important after the 2026 expansion of ABLE eligibility.
Who Owns a Texas ABLE Account?
The eligible individual with a disability is the beneficiary and owner of the ABLE account.
The fact that a parent, guardian, agent, or another representative helps open or manage the account does not make that person the owner of the funds.
The account is established for the benefit of the eligible individual.
Who Can Open a Texas ABLE Account?
An eligible individual who is at least 18 years old can generally open and manage his or her own Texas ABLE account.
If the beneficiary is under age 18, cannot manage the account, or chooses not to exercise authority over it, an Authorized Legal Representative may act on the beneficiary’s behalf.
The Texas ABLE Program recognizes an order of priority for Authorized Legal Representatives that includes:
- An agent acting under a Power of Attorney;
- A legal guardian or conservator;
- A spouse;
- A parent;
- A sibling;
- A grandparent; or
- A representative payee appointed by the Social Security Administration.
The program may require documentation establishing the representative’s authority.
Can Someone Other Than the Beneficiary Contribute to the Account?
Yes.
Contributions can generally be made by the beneficiary, family members, friends, a trust, a corporation, or another legal entity.
However, the annual limit applies to the total contributions from all sources combined. It does not mean that each parent, grandparent, friend, or other contributor can contribute the full annual amount separately.
How Much Can Be Contributed to a Texas ABLE Account in 2026?
For 2026, the basic annual contribution limit is $20,000 from all sources combined.
This amount is tied to federal tax rules and can change over time.
Accordingly, an article or estate plan that refers to an older contribution limit should be reviewed periodically.
Can a Working Beneficiary Contribute More Than the Annual Limit?
Potentially, yes.
Certain employed ABLE beneficiaries may be eligible to make additional contributions above the ordinary annual contribution limit.
The rules are subject to specific federal requirements and can depend on the beneficiary’s compensation and whether contributions are being made on the beneficiary’s behalf to certain employer-sponsored retirement plans.
Because those limits can change from year to year, working beneficiaries should verify the current limit before making an additional contribution.
What Is the Maximum Texas ABLE Account Balance?
The current Texas ABLE Program lifetime account balance limit is $500,000.
Once the account reaches the applicable balance limit, additional contributions generally cannot be made until the balance falls below the limit. Investment earnings may continue to accrue.
However, the $500,000 Texas program limit should not be confused with the separate SSI rule.
What Happens if the ABLE Account Exceeds $100,000?
For an SSI recipient, an ABLE account balance above $100,000 can affect SSI eligibility.
Generally, SSI benefits may be suspended while the excess ABLE balance causes the beneficiary to exceed the applicable SSI resource limitation.
SSI can generally resume once the balance falls sufficiently and the beneficiary otherwise remains eligible.
Importantly, exceeding $100,000 in an ABLE account does not automatically terminate Medicaid eligibility solely because of the ABLE account balance.
Does a Texas ABLE Account Affect Medicaid Eligibility?
Texas ABLE account balances are generally disregarded when determining the beneficiary’s eligibility for Medicaid.
This is one of the program’s most important benefits.
A beneficiary can therefore accumulate significantly more than would ordinarily be permitted in a conventional account while maintaining Medicaid eligibility, subject to the applicable ABLE rules.
Does a Texas ABLE Account Affect Other Means-Tested Benefits?
ABLE accounts can also receive favorable treatment for other benefit programs.
For example, federal guidance provides exclusions in certain circumstances for programs such as Supplemental Nutrition Assistance Program (SNAP) benefits and certain federal housing benefits.
Texas also generally disregards ABLE account balances when determining eligibility for state means-tested assistance.
Because each public benefit program has its own rules, however, beneficiaries should verify the treatment of an ABLE account under every program on which they rely.
What Can Money in a Texas ABLE Account Be Used For?
ABLE funds can be used for Qualified Disability Expenses.
These are expenses related to the beneficiary’s disability that help maintain or improve the beneficiary’s health, independence, or quality of life.
The category is intentionally broad. Qualified expenses may include:
- Education;
- Housing;
- Transportation;
- Employment training and support;
- Assistive technology;
- Personal support services;
- Healthcare;
- Prevention and wellness expenses;
- Financial management services;
- Administrative services;
- Legal fees;
- Expenses for oversight and monitoring;
- Funeral and burial expenses; and
- Other expenses related to the beneficiary’s disability.
The IRS has historically interpreted Qualified Disability Expenses broadly rather than limiting them solely to medical expenses.
Can an ABLE Account Pay for Housing?
Yes.
Housing can qualify as a Qualified Disability Expense.
However, SSI has special rules involving housing expenses and the timing of ABLE withdrawals.
For beneficiaries who receive SSI, careful administration is important because funds withdrawn from an ABLE account for housing should generally be spent appropriately within the relevant period rather than allowed to remain as ordinary countable resources.
You can read more in Will Distributions From an ABLE Account for Food or Shelter Reduce SSI Benefits?
Can an ABLE Account Pay for Food?
ABLE distributions are not treated as income merely because they are withdrawn from the account.
Food and other everyday expenses may qualify when they satisfy the applicable Qualified Disability Expense requirements.
This can make an ABLE account especially useful when family members want to help an SSI beneficiary with everyday expenses without simply depositing unrestricted funds into the beneficiary’s personal account.
Are Texas ABLE Contributions Tax Deductible?
ABLE contributions are made with after-tax dollars and are not deductible for federal income tax purposes.
The principal federal tax benefit occurs inside the account.
Investment earnings can grow on a tax-deferred basis, and distributions used for Qualified Disability Expenses are generally exempt from federal income tax.
Are ABLE Account Earnings Taxed?
Generally, not when withdrawals are used for Qualified Disability Expenses.
Investment earnings accumulate inside the ABLE account without current federal income taxation, and qualified distributions are generally tax-free.
If a distribution is not used for a Qualified Disability Expense, the earnings portion may be subject to income tax and an additional federal tax.
Can a Beneficiary Have More Than One ABLE Account?
Generally, an eligible beneficiary may have only one active ABLE account at a time, subject to rules governing rollovers and program-to-program transfers.
This does not necessarily mean the beneficiary must remain in the Texas program forever. Transfers between qualified ABLE programs may be possible if statutory and program requirements are satisfied.
Does the Beneficiary Have to Use the Texas ABLE Program?
A Texas resident who meets Texas ABLE eligibility requirements can use the Texas program.
ABLE programs can differ in fees, investment choices, program features, and residency requirements.
Before opening an account, it may be useful to compare available programs and determine whether another state’s program is available and more appropriate.
You should review state-specific benefits and eligibility requirements before making that decision.
Can a Special Needs Trust Contribute to an ABLE Account?
Potentially, yes.
A trustee may be able to make distributions from a properly drafted special needs trust to an ABLE account, subject to the trust terms and applicable contribution limits.
This can be useful because an ABLE account and a Special Needs Trust serve different purposes.
A Special Needs Trust can hold substantial assets for a beneficiary without the relatively low annual ABLE contribution cap. An ABLE account, however, may give the beneficiary greater practical control over funds and can be especially useful for recurring Qualified Disability Expenses such as housing.
The two tools can therefore complement each other rather than compete.
What Is the Difference Between an ABLE Account and a Special Needs Trust?
Both can help preserve eligibility for means-tested benefits, but they work differently.
An ABLE account belongs to the beneficiary and is subject to annual contribution and overall program limits.
A third-party Special Needs Trust can generally receive substantially larger amounts from parents, grandparents, or others and can continue to be managed by a trustee according to the terms of the trust.
ABLE accounts tend to provide greater day-to-day flexibility. Special Needs Trusts tend to provide greater flexibility for holding larger inheritances and controlling how assets are managed over time.
For many families, the best plan uses both.
Can Parents Leave an Inheritance Directly to an ABLE Account?
Only within the applicable contribution limits.
An ABLE account is generally not an appropriate destination for a large inheritance because annual contributions are capped.
If parents or grandparents expect to leave a substantial inheritance to a person who receives means-tested benefits, a properly drafted Special Needs Trust may be a better primary vehicle.
The trustee can then potentially fund the beneficiary’s ABLE account periodically when appropriate.
What Happens if an ABLE Beneficiary Stops Being Eligible?
If the beneficiary no longer meets ABLE eligibility requirements, additional contributions may be restricted beginning in the applicable period.
Expenses incurred during a period in which the beneficiary is not an eligible individual may also fail to qualify as Qualified Disability Expenses for tax purposes.
The beneficiary or Authorized Legal Representative is responsible for notifying the program of changes in eligibility.
What Happens to a Texas ABLE Account When the Beneficiary Dies?
When the beneficiary dies, the account does not simply disappear.
Funds may first be used for certain outstanding expenses, including qualified disability expenses and funeral or burial costs as permitted under applicable rules. Medicaid may also have rights against the account in some circumstances.
After applicable claims and expenses have been addressed, remaining funds can pass according to the Texas ABLE account documents and applicable estate law. If the beneficiary has designated an appropriate remainder beneficiary under the program, remaining assets may pass accordingly.
If funds instead become payable to the beneficiary’s estate, the beneficiary’s Will—or Texas intestacy law if there is no valid Will—may determine who ultimately receives them.
Does Medicaid Have a Claim Against the ABLE Account at Death?
Potentially.
Federal ABLE law permits a state Medicaid agency to assert a claim in certain circumstances for Medicaid benefits paid after the establishment of the ABLE account, subject to applicable deductions and state rules.
This is often referred to as Medicaid payback.
Families should therefore consider the Medicaid payback rules when deciding how much property should be directed to an ABLE account compared with a third-party Special Needs Trust.
Is an ABLE Account a Substitute for Estate Planning?
No.
An ABLE account is one financial planning tool.
A comprehensive plan for a person with a disability may also involve:
- A Special Needs Trust;
- A Will or revocable living trust for parents or other family members;
- Beneficiary designation planning;
- Powers of attorney;
- Guardianship or alternatives to guardianship;
- Public benefits planning;
- Life insurance; and
- Coordination among family members who plan to provide financial support.
It is especially important that well-meaning relatives do not accidentally leave property outright to a beneficiary if doing so could disrupt means-tested benefits.
Should Family Members Give Money Directly to the Beneficiary or to the ABLE Account?
That depends on the beneficiary’s circumstances.
Giving money directly to an SSI recipient can create problems if the funds become countable income or resources. Contributing to an ABLE account can often be a more efficient way to help with Qualified Disability Expenses while preserving public benefits.
However, annual contribution limits still apply, and large gifts may be more appropriately directed to a properly structured Special Needs Trust.
How Do You Open a Texas ABLE Account?
The Texas ABLE Program operates online.
The beneficiary or Authorized Legal Representative generally must confirm eligibility, gather identifying information and supporting documentation, select investment options, and make the required initial contribution.
The current minimum initial contribution is $50.
Because program rules, fees, investment options, and contribution limits can change, applicants should review the current Texas ABLE Program Disclosure Statement before enrolling.
What Records Should an ABLE Beneficiary Keep?
Good recordkeeping is important.
Beneficiaries or their representatives should consider retaining records showing:
- Who made contributions;
- The amount and date of contributions;
- Account statements;
- Receipts for expenditures;
- The purpose of withdrawals; and
- Documentation showing that expenditures were related to Qualified Disability Expenses.
These records can be important for tax reporting and for demonstrating compliance with public-benefit rules.
How Often Should You Review ABLE Account Rules?
Regularly.
ABLE rules have changed substantially since the program was created. For example, the eligibility age increased from 26 to 46 beginning in 2026, and annual contribution limits have increased over time.
Program balance limits, federal tax provisions, work-related contribution rules, and public-benefit policies can also change.
Beneficiaries and families should therefore avoid relying indefinitely on contribution limits or eligibility rules contained in older articles or planning documents.
Texas ABLE Accounts Can Be a Valuable Part of Special Needs Planning
A Texas ABLE account can give an eligible individual with a disability something that traditional public-benefit rules often make difficult: the ability to accumulate meaningful savings while maintaining access to important assistance programs.
But an ABLE account is not a complete special needs plan. Annual contribution limits, SSI rules, Medicaid considerations, qualified-expense requirements, and Medicaid recovery at death all need to be considered.
For families planning a significant inheritance, the most effective strategy may involve coordinating an ABLE account with a Special Needs Trust and the family’s broader estate plan.
Rania Combs is licensed to practice law in Texas and North Carolina and helps families create estate plans designed to protect beneficiaries with disabilities while preserving access to public benefits.
Schedule a consultation to discuss how ABLE accounts and Special Needs Trusts may fit into your family’s estate plan.
