The Continuing Evolvement of ABLE Accounts Under Missouri Law

By: Courtney L. Fletcher

It has now been 11 years since the Achieving a Better Life Experience Act of 2014 (“ABLE Act”), a part of the Tax Increase Prevention Act of 2014, was signed into law on December 19, 2014. This law has been a welcome addition to special needs planning options as it allows for states to establish their own ABLE programs under the federal guidelines. As of 2024, forty-six states, including Missouri, offer ABLE accounts.  It is important to realize that even though the remaining states may not have their own ABLE programs, individuals can still open an ABLE account in a state that accepts out-of-state residents. Missouri Senate Bill 174 created the Missouri Achieving a Better Life Experience (ABLE) effective August 28, 2015. The Missouri Department of Social Services issued IM-96 on October 26, 2015, setting forth regulations regarding how ABLE funds would be treated and the impact of such funds on an individual’s eligibility for Mo. Healthnet, Food Stamps, Temporary Assistance and Child Care Subsidy. Since that date, eligible individuals with disabilities living in Missouri now have an option to set up an investment account, known as a STABLE account, that can be used to save and invest money without losing eligibility for certain public benefit programs—which can be invaluable to those persons who must maintain eligibility for Medicaid and SSI.  One recent change in the federal law has been the increase of the required date of disability from age 26 (which was the initial maximum age under which the individual had to be disabled to be eligible under the Act) which will increase to age 46 as of January 1, 2026, under the ABLE Age Adjustment Act recently passed by Congress.

One of the original purposes of the ABLE act was to encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities in order to maintain their health, independence and quality of life. An ABLE account provides a less expensive and less complicated alternative to the creation and funding of a Special Needs Trust (“SNT”) for the benefit of a disabled beneficiary. A SNT requires the involvement of professionals for its establishment, such as lawyers, trustees and possibly the probate court. With the establishment of the ABLE Act, a tax advantaged investment account can be directly established by a disabled beneficiary or by the parents or legal guardian of such disabled beneficiary without the need of professional assistance.  Obviously, the use of the ABLE account is somewhat limited as it can only accommodate $19,000 per year in contributions for the benefit of a disabled individual and, thus, this Act does not eliminate the need for a properly created and funded Special Needs or Supplemental Needs Trust.

The ABLE Act is modeled after college savings accounts under Internal Revenue Code (“IRC”) Section 529. ABLE accounts are tax-advantaged investment accounts that allow for tax-free growth of the account so long as certain requirements are fulfilled. The requirements are fairly simple:

1. The beneficiary of the ABLE account must be diagnosed with a qualifying disability prior to attaining 26 years of age (this age will increase to 46 as of January 1, 2026); however, the ABLE account itself does NOT need to be created prior to the beneficiary attaining 26 years of age. In order to be eligible, a beneficiary must be disabled (for purposes of the Social Security Administration guidelines) prior to attaining 26 (soon to be age 46) years of age and must meet one of the following: (a) the beneficiary is entitled to receive Supplemental Security Income (‘SSI”) or Social Security Disability Insurance (“SSDI”) or (b) the beneficiary has a disability certification under 26 USC 529A e(2)A which is a certification made by the beneficiary or his/her parent or guardian via a signed doctor’s letter that the beneficiary is blind or has an impairment expected to result in death or which will last at least twelve months and that such disability occurred prior to age 26 (soon to be age 46).
2. Each beneficiary may only have one ABLE account.
3. The annual contributions to an ABLE account are limited to the federal annual gift tax exclusion amount which is indexed for inflation and is currently $19,000 and each contribution is considered a completed gift. Contributions must be in cash and not in kind. The amount of the account then grows tax-free.
4. ABLE accounts are disregarded for purposes of determining the beneficiary’s eligibility for Supplemental Security Income (“SSI”) and Medicaid (MoHealthNet). This is of great importance since this means that the funds held in an ABLE account are considered an “exempt resource” for SSI/MoHealthNet purposes.
5. Eligible working beneficiaries may contribute an additional amount to their ABLE account which is the lesser of their compensation earned or the poverty line for a single member household (currently $15,650).
6. The amount of funds that can be held in an ABLE account is capped at the 529 account maximum in the state in which the ABLE account is set up. Missouri’s 529 account maximum is $550,000; however, it is important to realize that if a beneficiary receives SSI, then his/her eligibility for SSI will be suspended if the beneficiary’s ABLE account exceeds $100,000 and will remain suspended until such time as the account falls below that amount. It is also important to note that the beneficiary’s MoHealthNet eligibility will not be affected, even if the beneficiary’s SSI is suspended.
7. As of the death of the beneficiary, the ABLE account authorizes a payback to the state for the cost of all Medicaid services (but not SSI) provided to such beneficiary after the date of establishment of the ABLE account (which is generally better than the payback which is allowed under a First Party SNT, but which is much worse than the ^uno payback” required when a Third Party SNT is used). It is also possible to pay funeral expenses from the balance of an ABLE account at the death of the beneficiary prior to the satisfaction of the Medicaid payback claim.

The Missouri Department of Social Services (“DSS”) has issued guidance providing that contributions and earnings credited to an ABLE account are not income, and thus are disregarded for benefit eligibility beyond MoHealthNet, including Food Stamps, Temporary Assistance and Child Care Subsidy program. In addition, the guidance from DSS provides a broad definition of “qualified disability expenses” with regard to qualified distributions made from an ABLE account and which are defined to include “any expenses related to the beneficiary’s blindness or disability including the following: 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 and funeral and burial expenses.” 1M #96 (10/26/15). This broad definition of ^“qualified disability expense” means that distributions from an ABLE account do not have to be limited to medical necessity and do not have to provide a sole benefit to the beneficiary. This is much more versatile than a First-Party SNT which requires that the trust must be administered for the ^“sole benefit” of the disabled beneficiary. In addition, distributions for housing from an ABLE account will not trigger an in-kind support and maintenance (ISM) reduction in benefits. This general rule that expenditures from an ABLE account are generally not subject to SSI’s ISM rule, makes the ABLE account a helpful tool in supplementing the in-kind support and maintenance expenses of a beneficiary without causing the beneficiary a monthly benefit reduction.

It is important to note that any distribution from an ABLE account that is determined NOT to be a qualified disability expense will result in such distribution being treated as income to the beneficiary and will subject the distribution to the imposition of a 10% penalty. If the designated beneficiary is no longer disabled, then distributions during such time period will also fail to be qualified disability expenses, but ABLE account status can be reinstated if the beneficiary’s disability returns.

The guidelines from DSS ensure that the benefits available from an ABLE account will make these types of accounts easy to set up and use. Since there is little formality involved, the beneficiary or his or her “Attorney-in-Fact” can retain control over the funds held in an ABLE account.

Obviously, the ability to use an ABLE account will be limited by the amount of funds involved, but in a situation where there is an existing Uniform Transfers to Minors Account (“UTMA”) or Uniform Gifts To Minors Account (“UGMA”), which need to be converted over to the disabled beneficiary once he or she attains the age of 18 or 21, or there are settlements or gifts from family, all of which total less than $19,000, the creation of an ABLE account is an easy-to-use option.

The ABLE account also allows for the creation of a fund to save for large purchases (car, home, etc.), which would otherwise not be allowed under SSI rules. Also, if the funds held in the ABLE account are spent each year, then there is less of a risk of a Medicaid payback at the death of the beneficiary. ABLE accounts are also a vehicle for money in excess of the $2,000 MoHealthNet resource limit since these excess funds can be contributed to an ABLE account and will then be treated as exempt.

As of August 8, 2025, there were over 5,000 active ABLE accounts under the STABLE platform in Missouri. Since states differ on whether non-residents can open an ABLE account (Missouri does not allow a non-resident to open an account), it is possible that a Missouri resident may have established an ABLE account in another state; however, under federal law individuals are limited to only one ABLE account.

All in all, the adoption and evolution of ABLE accounts under Missouri law provide increased planning options to disabled beneficiaries and families of disabled beneficiaries. If you have additional questions regarding the use of ABLE accounts, Special Needs planning options, including setting up a First Party or Third Party Special Needs Trust or whether the use of an ABLE account will work in your particular situation, please feel free to contact me to discuss those planning options!