Coming Soon To A State Near You! Savings Plan for Disabled Marylanders: The MD ABLE Program


In order to qualify for certain need based federal and state benefits in connection with a significant disability, individuals typically cannot have assets exceeding $2,000.00. While some assets are exempt from this requirement, the restriction often creates a barrier to save for those who need savings the most.

The Federal Achieving a Better Life Experience Act (ABLE) was enacted on December 19, 2014 to address this concern. The law creates a new option for eligible disabled individuals to save money in a tax deferred account for qualified expenses while still receiving federal public benefits. Each state was tasked with the job of structuring and implementing the program. In 2016, Maryland passed legislation creating the Maryland Able Program. The program is administered by the Maryland 529 Board and is slated to be online this fall.

While many details are still forthcoming, here is what we know so far:

Eligibility: Individuals with significant disabilities with onset prior to age 26 either qualified for SSI/SSDI or able to demonstrate significant functional limitations as certified by a licensed physician.

Contributions: $14,000.00 annually from all sources not to exceed a maximum value of $350,000.00, though further restrictions for SSI recipients. MD permits an annual income deduction of up to $2,500.00.  

Qualified Expenses: Withdraws from accounts are tax-free as long as they are used for qualified expenses including, education, housing, transportation, health, and funeral expenses.  

Benefits: Disabled Individuals can accumulate more than $2,000.00 in assets without jeopardizing SSI benefits. Disabled individuals may open and manage their own account.

Challenges: Fee structure, penalty at closing if monies are not spent down, funds remaining at death must be used to reimburse the government for Medicaid related Services.

The Bottom Line: The ABLE account is a valuable tool to provide supplemental care for individuals with disabilities without jeopardizing eligibility for state and federal benefits which are crucial to care. Such accounts can be used along with Special Needs Trusts to enhance the quality of life for disabled individuals.

This blog was written by Laura Melia at Miles & Stockbridge.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Accessing this blog and reading its content does not create an attorney-client relationship with the author or with Miles & Stockbridge. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.