New rule nearly doubles eligibility for Illinois ABLE savings accounts

Illinois expands ABLE accounts to more residents with disabilities

Illinois raised the age limit for its ABLE savings program from 27 to 47, making about 250,000 more residents eligible. The accounts allow people with disabilities to save for expenses like housing and medical bills without losing Medicaid or SSI benefits.

ILLINOIS - Illinois is making it possible for thousands more people with disabilities to set aside money for their needs without losing critical federal benefits.

A new rule, announced this week by State Treasurer Michael Frerichs, raises the eligibility age so that anyone whose disability began before age 47 can now open an ABLE (Achieving a Better Life Experience) savings account.

The change nearly doubles the number of Illinois residents who can use the program, which lets people with disabilities save and invest money tax-free for qualified expenses. 

Frerichs called the expansion a "game changer," estimating that 250,000 additional Illinoisans and about 6 million people nationwide now qualify. 

"We’re happy to report that ABLE accounts are now available to anyone who acquired their disability before age 46, and I think this is a game changer for a lot of people," Frerichs said.

Until this expansion, ABLE accounts were only available to people who acquired a disability before age 26. That restriction left out veterans, accident survivors, and people diagnosed with disabling conditions later in life. The new rule took effect this year after Congress responded to calls from Illinois advocates and families to expand access.

How ABLE accounts work:

An ABLE account functions much like a 529 college savings account. Account holders, friends, and family can contribute cash, which is then invested. The money grows tax-free as long as it is used for disability-related expenses such as housing, transportation, assistive technology, or education. Illinois also offers a state income tax deduction for contributions.

Before ABLE accounts, people with disabilities who received Supplemental Security Income (SSI) or Medicaid faced strict asset limits. Having more than $2,000 in savings could mean losing those benefits. 

"This created a lot of anxiety for families who were preparing," Frerichs said. "There’s a lot of fear for people who wanted to go out and work. What would happen if my paycheck put me over that threshold? Well, ABLE is the answer."

The program allows up to $100,000 in savings without affecting federal benefits. Earnings and withdrawals remain tax-free if used for qualified expenses.

Real-life impact:

Frerichs shared stories from families who had to make difficult choices before ABLE accounts existed. 

"I talked to parents who had to tell their children's employer don’t give my kid a raise," he said. "I’ve talked to parents who talked with their financial advisors, saying, don’t name your child in your will. We created a system that put parents in horrible positions, but now we have a solution that allows them to do more long-term planning and to truly set their kids up for a better life experience."

Stephanie Cantor, director of the Illinois ABLE program, said the expansion lets her and thousands like her save for expenses that come with disability. 

"Living with a disability just costs more, and it makes me think of all the ways an ABLE account could have been useful to me over the years to be able to save money and pay for these expenses," Cantor said.

What's next:

Illinois has about 8,500 ABLE account holders who have saved $121 million so far. The state treasurer’s office encourages anyone who thinks they may qualify to learn more and apply at illinoisable.com.