When you’re planning for a disabled loved one’s future, even a well-intentioned gift can create problems and affect their eligibility for means-tested government benefits like Supplemental Security Income (SSI) and Medicaid.
An Illinois ABLE account offers a way to set money aside for their needs without endangering their other benefits. As of January 1, 2026, more people qualify for these accounts than ever before.
Understanding ABLE accounts and their eligibility
An ABLE account is a tax-advantaged savings and investment account that allows an eligible person with a disability to pay for qualified expenses without jeopardizing certain government benefits. The money can cover needs such as housing, health care, transportation, education and assistive technology.
Previously, a person’s disability generally had to begin before age 26. The expanded rules raise that age to 46, opening the program to people whose disabilities developed later in life. They must also meet one of the disability-related requirements. Generally, that means they:
- Are entitled to SSI or Social Security Disability Insurance (SSDI) based on their disability
- Have a qualifying disability certification from a licensed physician that describes the condition and age of onset
- Have a condition that is listed on the Social Security Administration’s List of Compassionate Allowances
Earnings generally grow tax-free and withdrawals are federally tax-free when spent on qualified expenses. Family members and others can contribute to the account. Illinois taxpayers may also qualify for a state income tax deduction for their contributions, subject to applicable limits.
An ABLE account can offer your loved one useful financial independence, but it is not necessarily a substitute for a special needs trust. Contribution and account balance rules limit how much an ABLE account can hold without affecting certain benefits, so a special needs trust may be better suited to holding a substantial inheritance. The trust and ABLE account can also be arranged to work together.
If you’re interested in special needs planning for a loved one as part of your estate planning goals, seeking an attorney’s guidance is essential.
