What changes did the One Big Beautiful Bill make to ABLE accounts?

The One Big Beautiful Bill made several enhancements to ABLE accounts, including making contributions eligible for the Saver’s Credit, expanding eligibility age from 26 to 46, and making key provisions permanent, such as tax-free transfers from 529 plans.

How does the Saver's Credit apply to ABLE accounts under the new law?

Under the One Big Beautiful Bill, contributions to ABLE accounts are eligible for the Saver’s Credit, helping low- and moderate-income individuals save for the future. Starting in 2027, the maximum eligible contribution will increase to $2,100.

What is the ABLE-to-Work provision?

The ABLE-to-Work provision allows eligible working individuals with disabilities to contribute additional funds to their ABLE account beyond the standard limit. The maximum contribution is based on either the federal poverty line or the individual's annual compensation.

The One Big Beautiful Bill and Medicaid: Part Four – The Good News

Q: What are ABLE accounts and how do they benefit individuals with disabilities?

ABLE accounts, or Achieving a Better Life Experience accounts, allow individuals with disabilities to save money without losing Medicaid eligibility or other benefits. They provide tax advantages and can be used for various qualified disability expenses.

Q: How does having an ABLE account affect Medicaid eligibility?

Funds in an ABLE account do not affect Medicaid eligibility, and up to $100,000 in the account does not count towards the asset limit for Supplemental Security Income (SSI), allowing individuals to save without losing benefits.

This marks the final article of my 4-part series about OBBB Medicaid impacts. In this piece, I focus on ABLE (Achieving a Better Life Experience) accounts.

ABLE accounts allow individuals with disabilities to save money without losing Medicaid eligibility or other benefits. The “One Big Beautiful Bill” (OBBB) has made several significant enhancements. These enhancements include changes that:

Expand eligibility
Make key provisions permanent
Strengthen savings incentives for people with disabilities

Thus, for those with disabilities or loved ones with disabilities, there is some good news regarding OBB Medicaid impacts.

Enhanced ABLE Savings Incentives

The OBBB, signed into law on July 4, 2025, immediately makes contributions to an ABLE account eligible for the Saver’s Credit. This change helps low- and moderate-income individuals save for the future. Also, starting in 2027, the Saver’s Credit becomes more generous for ABLE accounts. The maximum eligible contribution increases to $2,100, with a potential maximum tax credit of $1,050.

Permanent Provisions

Many ABLE provisions were previously scheduled to end at the close of 2025. However, instead, the OBBB makes several important provisions permanent. These include ABLE-to-Work: This feature allows eligible working individuals with disabilities to contribute additional funds to their ABLE account above the standard annual limit. The maximum contribution is either the federal poverty line for a single person or the individual’s annual compensation, whichever amount is smaller. Additionally, tax-free transfers from 529 college savings plans to ABLE accounts are now permanently permitted.

More good news: Expanded Eligibility

Effective January 1, 2026, the age limit for ABLE account eligibility will increase from 26 to 46. This is good news for a substantial number of individuals who incurred their disability between the ages of 26 and 46. They can now open an ABLE account with all the benefits.

Additional Benefits Protection in the OBB & ABLE Act

The enhancements I’ve touched on above build upon the foundation of the original ABLE Act of 2014, which created tax-advantaged savings and investment accounts for people with disabilities. In addition, the ABLE act provides protection for benefits: Up to $100,000 in an ABLE account does not count towards the asset limit for Supplemental Security Income (SSI), and the funds do not affect Medicaid eligibility.

Keep in mind that ABLE account funds can be used for a variety of “qualified disability expenses,” including housing, education, transportation, healthcare, and other essential living costs.

The best defense is a good offense. Plan proactively for Medicaid so that you’re not caught unprepared.

If you or a loved one has been diagnosed with a physical or cognitive impairment, review your (or your loved one’s) Medicaid eligibility status. Ensure your personal, financial, and legal documents are readily available.

For personalized guidance, call my office at (470) 235-7868 to discuss how estate and asset protection, long-term care planning, and crisis management strategies may need to shift going forward.

If you missed my previous posts about the One Big Beautiful Bill you can read them here:

Part 1: The One Big Beautiful Bill and Medicaid
Part 2: Prepare for the Harsh Realities of the One Big Beautiful Bill (OBBB)
Part 3: The OBBBA Makes Medicaid Planning More Important Than Ever

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