Why is Eligibility for An Able Account Capped at 26?

Dec 01, 2020

Anonymous asks, quote:

Why is the age of disability onset for ABLE account holders capped at 26 and is anything being done to change that?

end quote.

What is an ABLE Account?

According to the ABLE National Resource Center, ABLE accounts are:

quote: …tax-advantaged investment accounts that help qualified individuals with disabilities, and their families, save for disability‐related expenses. end quote

Basically, it lets people with disabilities (potentially) not be poor while still receiving necessary benefits like Medicaid and SSI.

Why an ABLE Account is Necessary

Most government benefit programs like Medicaid and SSI limit the assets an individual can have and still qualify for the program (this includes things like retirement funds and even items of significant value) — usually around two‐thousand dollars. Not only is this amount far below the average cost of living for people enrolled in these programs, but it also precludes them from being able to save up for larger expenses or emergencies related to their disability. Essentially, disabled people must live in poverty in order to qualify for government assistance. ABLE accounts aim to fix that by providing a tax‐free savings account that individuals and their families can contribute to.

Who is Eligible for an ABLE Account?

Once again, I’ll quote the ABLE National Resource Center:

quote: The ABLE Act limits eligibility to individuals with significant disabilities with an age of onset of disability before turning 26 years of age. If you meet this age criteria and are also already receiving benefits under SSI and/or SSDI, you are automatically eligible to establish an ABLE account. If you are not a recipient of SSI and/or SSDI, but still meet the age of onset disability requirement, you could still be eligible to open an ABLE account if you meet Social Security’s definition and criteria regarding significant functional limitations and receive a letter of certification from a licensed physician. You need not be under the age of 26 to be eligible for an ABLE account. You could be over the age of 26, but must have had an age of onset before your 26th birthday. end quote

If you currently receive SSI or SSDI or would other wise qualify based on your disability and the onset of your disability was before the age of 26, you qualify for an account.

Why is the Cut‐Off For Eligibility Set at 26?

Currently, I can’t find anything that explicitly states why eligible individuals must have had their disability occur before they turn 26. But, I have a few guesses based on current legislation and the stated goal of the act itself.

The goal of the ABLE Act is to allow individuals with disabilities and their families save for disability‐related expenses. Being born disabled puts you at a much greater disadvantage financially than your non‐disabled peers or even those who became disabled later in life. And I think that’s the demographic that the ABLE Act is specifically designed to help. I don’t think the sponsors of the bill were considering things like injury or cancer diagnosis and assumed that individuals who were not eligible for ABLE accounts would instead receive disability benefits through their employer. I’m not saying this was the correct choice, I’m just trying to highlight the possible reasons for this type of age restriction.

The second reason I think 26 was chosen as the cut‐off date is because that’s the current cut‐off date for keeping your children on your health insurance plan.

What is Being Done to Improve the Law?

26 is way too restrictive of a cut‐off for this bill. Luckily, a new bill has been proposed (The ABLE Age Adjustment Act) that would raise the age limit from 26 to 46.