Illinois to Create Federally-Approved ABLE Accounts

Illinois to Create Federally-Approved ABLE Accounts

Provided By: Alan G. Orlowsky

This year, the Illinois legislature passed a statute creating ABLE (Achieving a Better Life Experience) accounts, which serve as savings accounts for disabled individuals. The law is based on a federal statute passed in 2014 that aims at giving those with disabilities more freedom to accumulate savings and control their expenses, without risking disqualification from receiving Medicaid and social security benefits.

ABLE Accounts

Prior to the passage of the ABLE Act, individuals with disabilities were discouraged from establishing savings accounts for future expenses, because without a trust, those individuals were at risk of being disqualified from receiving social security and Medicaid benefits if the assets totaled more than $2,000. The new law now allows a qualifying individual to accumulate up to $100,000 above and beyond the $2,000 limit in a tax-free ABLE account without having to forego benefits received through government programs. However, if an account’s balance does exceed $100,000, the beneficiary will cease to receive Supplemental Security Income (SSI) payments until his or her resources fall below $100,000. Even when SSI benefits are suspended, beneficiaries will still maintain their eligibility to receive Medicaid benefits.

Qualifying Beneficiaries

To qualify for an ABLE account, a person must:

  • Be entitled to benefits on the basis of blindness or disability under the SSI program; or
  • Have certification of a medically determinable physical or mental impairment, which results in severe functional limitations and which can be expected to result in death or last for at least one year.

In order to be eligible, certification must include a copy of the beneficiary’s diagnosis signed by a physician. Furthermore, the disability or blindness must have occurred before the beneficiary turned 26 years old

Qualifying Expenses

ABLE account funds must be used to pay for certain expenses or they will may become subject to a 10 percent tax on top of the beneficiary’s typical income tax rate. Qualified expenses include costs related to the beneficiary’s disability, such as:

  • Health care;
  • Housing;
  • Education;
  • Transportation;
  • Job training and support;
  • Assistive technology and personal support services;
  • Prevention and wellness;
  • Financial management and administrative services;
  • Legal fees;
  • Oversight and monitoring
  • Funeral and burial costs; and
  • Any other costs approved by the Secretary of the Treasury.

Contributions can be made by any person, including relatives, friends, and the account beneficiary. However, the deposits must be made in cash and cannot exceed the annual gift-tax exemption, which is $14,000 a year.

ABLE accounts are not meant to act as an alternative to establishing a special needs trust, but are viewed as a potentially valuable addition to other forms of estate planning. Establishing an ABLE account can help families ensure that their loved ones will be provided for, so if you have a disabled family member and you live in the Northbrook, Evanston, Skokie, Glenview, Glencoe, or Highland Park areas, it is important to obtain the advice of an attorney who can help you set up the necessary accounts and trusts. Please contact Orlowsky & Wilson, Ltd. Attorneys at Law by calling 847-348-8863 or by completing one of our quick contact forms and a member of our legal team will help you schedule an initial consultation.



Updated as of July 2019
  • Email
  • Mailing Address
    250 Parkway Dr. Lincolnshire, IL 60069
  • One Northfield Plaza 560 W Frontage Rd STE 300 Northfield, IL 60093
  • 115 S LaSalle St STE 2600, Chicago, IL 60603

Quick Contact