Consultants are often called into cases that involve a person who has become disabled because of their illness or injury. At Arcadia, one of our focuses has been on knowing what resources can be utilized to ensure a settlement creates the best possible outcome and gives the injured person the security and financial dignity they need to move forward with their lives post-settlement. One such resource is an ABLE account.
Created through the Achieving a Better Life Experience Act (the “ABLE Act”) in 2014, ABLE accounts were significantly expanded last year as part of the Omnibus Spending Bill in 2022. The law increased the age of ABLE eligibility from “before age 26” to “before age 46” effective January 1, 2026, and is expected to make ABLE accounts available to an additional six million disabled persons.
Despite being around for some time, ABLE accounts are not as heavily utilized in the settlement planning process as other mechanisms, such as Special Needs Trusts. An ABLE account is an account for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life while providing secure funding for disability-related expenses of beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, title XVI (Supplemental Security Income) and title XIX (Medicaid) of the Social Security Act, the beneficiary’s employment, and other sources.
ABLE Accounts have tremendous flexibility, and the funds can be used on any “qualified disability expense,” which is defined as any expense related to the beneficiary as a result of living a life with a disability, including education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention, and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses and other expenses, that are approved by the Secretary under regulations. As part of the overall settlement planning process, ABLE accounts can even be done in conjunction with a Special Needs Trust, where funds “pour over” from the SNT into the ABLE Account. For maximum tax efficiency and a secure source of funding, consider leveraging a tax-free structured settlement to pay into the SNT or ABLE account.
For more information on ABLE accounts, go to the National ABLE Resource Page. To find out if there is an ABLE program in your state (or if not, for states that accept non-residents), go to the state resource page.
By John McCulloch | Structured Settlement Consultant, Vice Chairman
John holds an MBA from the University of Phoenix, a JD from Kaplan University, and a BA in Business from St. Martin’s College. In addition, he has completed graduate studies in Electronic Commerce at the University of San Diego and holds the following professional designations: CSSC, FLMI, WCLS, AIAA, ACS, and CMSS™, as well as an accounting certification from the Department of Defense. His formal insurance training includes casualty, property, fidelity and Workers’ Compensation claims, as well as Life and Health underwriting.
