Understanding How ABLE Funds Can Be Used
Funds in an ABLE account can be used for qualified disability-related expenses (QDEs) that are expenses for supplies or services related to the account owner’s blindness or disability that assists them in increasing and/or maintaining their health, independence and/or quality of life. These may include expenses related to education, food, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses. The term QDE should be broadly understood to include “basic living expenses.” QDEs supplement items or services provided by other programs and are not meant to replace them. The Social Security Administration considers food a QDE.
Topics at a Glance
What can funds in an ABLE account be used for?
Funds in an ABLE account are meant to be used to off-set the costs associatedwith living with a disability. Funds are meant to assist a person in the purchase of items and services thatare covered as QDEs.
What are “qualified disability expenses”?
A qualified disability expense (QDE) is any expense related to the account owner’s blindness or disability that assists them in increasing and/or maintaining their health, independence and/or quality of life. These may include expenses related to education, food, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other disability-related expenses that the ABLE account owner might incur as a result of having a disability.
Who makes sure that ABLE funds are being used appropriately?
The Internal Revenue Service (IRS) and the Social Security Administration (SSA) may monitor an ABLE account to be sure funds are used properly.
Should I keep records of the qualified disability expenses paid for by my ABLE account?
We recommend that you save the receipts of your purchases in case you are ever questioned by the IRS. Some ABLE programs even have ways to track your spending online. We also recommend that you consider keeping a record of how each expense is related to your disability and how it helped you increase or maintain your health, independence, and/or quality of life. This may come in handy if the IRS and/or SSA ask questions.
What happens if I spend ABLE funds on a non-qualified expense?
It is important to keep in mind that misuse of the funds in an ABLE account may result in penalties and may affect the account owner’s eligibility for public benefits.
Additional Information
Fast Facts
- ABLE funds must be used for qualified disability expenses.
- The IRS and SSA is responsible for making sure ABLE funds are being used correctly.
- Misuse of ABLE funds will result in tax penalties and may affect the account owner’s eligibility for public benefits.
“Understanding Qualified Disability Expenses” Webinar
The webinar,#ABLEtoSave Series: Understanding Qualified Disability Expenses, details what funds in an ABLE account can cover, such as housing, transportation, job training, education and more. Actual, or soon-to-be, ABLE account holders discuss what they plan to use their ABLE accounts for, and ABLE program administrators discuss which types of expenses would be considered “qualified disability expenses” and how this is determined.
