Living Columns & Blogs

Pa. rolls out savings program for disability-related expenses

In April, Pennsylvania rolled out its ABLE Act Savings Program for disability-related expenses. Authorized by the federal ABLE Act of 2014 (Achieving a Better Life Experience) sponsored by Sen. Bob Casey, D-Pa., the program provides an opportunity for people who suffered disabilities prior to age 26 to have a tax-free savings account to pay for expenses related to their disabilities, while preserving their rights to means-tested government benefits.

In many ways similar to 529 College Savings Plans, the ABLE Act authorizes states to set up savings programs for people who suffer disabilities and have so suffered since before age 26. An individual can establish an ABLE account in any state, but the Pennsylvania program has several unique benefits for Pennsylvanians, including Pennsylvania income tax deductions for plan contributions.


To qualify, an individual must have suffered a qualifying disability prior to age 26. A person who receives Supplemental Security Income or Social Security Disability Income based on blindness or disability qualifies for the disability component, For example, a qualifying person whose countable assets exceed the $2,000 asset limit for SSI could establish an ABLE account to shelter some of the excess assets. In addition, a person who certifies that he or she has a disabling condition that would qualify for SSI or SSDI and retains written record of a disability-related diagnosis signed by a physician can establish an account. Under either test, individuals must also meet the age component.

A person may establish his or her own account, or an agent, parent or guardian may do so. Each person may only have one account, whether in Pennsylvania or elsewhere. The person, or anyone who wants to make a gift to the person, may deposit funds into an ABLE account up to a maximum of $14,000 from all sources. Thus, in a single year, if a parent puts $10,000 in a child’s ABLE account, the child may deposit another $4,000. The maximum size of an ABLE account is $511,758 (although an account with more than $100,000 will cause the suspension of SSI benefits without affecting other programs like Medicaid). These numbers are adjusted annually for inflation.

Investment Options

Like College Savings Plans, Pennsylvania offers various six investment options for ABLE account, ranging from aggressive through various levels of moderate to conservative, all of which bear normal investment risks. Even the most aggressive fund is spread over ten nationally known index funds which mitigates the risk slightly. In addition a seventh option is an FDIC-insured interest bearing checking account that can be accessed with checks or a debit card. The checking account offers an opportunity for an individual with disabilities to decide and make his or her own expenditures, although it carries some record-keeping responsibilities discussed below.

Qualified Disability Expenses

These accounts are intended to be used for “qualified disability expenses.” In general, these are defined as education, housing, transportation, employment training/support, assistive technology/personal support services, health, prevention/wellness, financial management/administrative, legal fees, expenses for oversight/monitoring and funeral/burial expenses. Expenditures for these purposes are tax free and generally do not affect qualifications for other benefits like SSI. Withdrawals for any other purchase are subject to tax (on the accumulated growth withdrawn) and penalties, as well as potentially causing loss or reduction in other benefits.


The Pennsylvania program, while required to report an individual’s aggregate withdrawals for the year, does not require documentation for expenditures. However, agencies administering programs like SSI may ask for documentation to prove that withdrawals were for permitted purposes. The operating manual for SSI offices appears to suggest that upon request a beneficiary should be able to produce the amount of any distributions, the distribution dates and who received the distributions as well as a statement that the distributions were for disability related expenses.

Terminating An Account

Upon a participant’s death, the account terminates. While both the enabling federal legislation and Social Security procedures defining ABLE Accounts appear to require that funds remaining be used to reimburse state Medicaid agencies, the Pennsylvania law specifically prohibits the state from filing a claim against the ABLE account. The remaining assets can be rolled into another person’s ABLE account or paid to the deceased person’s estate. In the estate of a decedent over age 55, ACLE Act proceeds are subject to Estate Recovery just like any other probate assets.

Amos Goodall is certified as an elder law attorney by the National Elder Law Foundation. He has an LL.M. in elder law (with distinction) from Stetson College of Law, and he practices in State College.