Employers and ABLE accounts: How to help employees with disabilities save more

On December 23, 2022, Congress passed the Consolidated Appropriations Act of 2023, which contains the SECURE 2.0 Act of 2022 (the “Act”). Part of this legislation includes expanding access for millions of Americans to the tax-favorable ABLE account.

The SECURE 2.0 Act of 2022 expanded ways that employees can interact with their retirement accounts. But building long-term savings can be difficult for employees with disabilities, especially if they receive disability benefits from Supplemental Security Income (SSI) and Medicaid.

ABLE accounts (short for “Achieving a Better Life Experience”) were created in 2014 to help ease financial strain on people with disabilities. Currently, an individual is eligible to enroll in an ABLE account only if their disability occurred before the age of 26. SECURE 2.0 changed that — increasing the age to 46 for taxable years beginning after December 31, 2025. This greatly expands eligibility for these advantageous accounts.

What is an ABLE account?

Many individuals with disabilities rely on SSI and Medicaid benefits to maintain their independence. But these benefits are “means-tested”; to receive the benefits, the individual cannot own too many assets (often less than $2,000 in total). This strict limitation greatly impedes their ability to build wealth for a secure financial future over time.

ABLE accounts are designed to help qualified individuals save up and pay for disability-related expenses without jeopardizing their eligibility for government benefits. The balance in an ABLE account does not count against the total assets measured for means-tested benefits. ABLE accounts are state-sponsored, tax-deferred accounts (under the same tax code as 529 education plans), and the funds can be used for nearly anything related to quality of life for a person with a disability.

Account holders can accumulate up to $100,000 in an ABLE account without affecting their benefit payments from Supplemental Security Income (SSI). Depending on specific state limits, ABLE account holders can accumulate $500,000 or more without interrupting their medical coverage and other supports through Medicaid.

How does this affect employers?

Through our research, Voya found significant physical, emotional, and financial impacts on caregiving employees and employees with disabilities. If ignored, companies may pay billions of dollars annually in higher health benefits costs, lost productivity, legal liabilities, loss of talent and more.¹

Employers can significantly reduce these costs and retain talent by addressing the needs of these individuals. ABLE accounts give employers the opportunity to do just that, as these accounts help provide a path towards greater economic independence for employees with disabilities and their families.

How do ABLE accounts fit in employer-sponsored benefits packages?

Unfortunately, employees with disabilities often must opt out of valuable employer-sponsored benefits — including 401(k) and 403(b) plans — to maintain government benefit eligibility. Opting out may affect their total compensation and cause them to lose out on the employer match, which is a significant benefit for those who participate.

ABLE accounts offer an avenue for these employees to establish long-term savings. With plans available in nearly every state — and individuals in states that have not established a program still can participate in other state’s programs that accept out-of-state residents — they are low-cost investments with low minimums and easy access, which often includes debit cards. Caregivers, loved ones and even employers can contribute to an ABLE account for an eligible individual.

Contributions are limited to $19,000 for 2025, but individuals who are employed and not participating in employer retirement plans can contribute an additional $15,060 for a total potential contribution of $34,060 for 2025. It’s easy to see how employees can really make progress towards their financial goals with ABLE accounts.

How employers can offer support through ABLE accounts

In the workplace, ABLE can be a viable complement to an employer-sponsored retirement plan for employers who want to help employees with disabilities and caregivers better prepare for the future.

When the increased age limit takes effect in 2026, employers may see a larger number of employees interested in these plans. The National Disability Institute estimates² that the passage of this provision in the Act increases ABLE eligibility from 8 million to 14 million Americans and allows 1 million more veterans³ to participate. Notable demographic groups may include:

• Young adults who have sustained catastrophic injuries or been diagnosed with life-changing chronic conditions, such as immune disorders, neuromuscular diseases or mental illness. The onset of their disabilities often is after the age of 26, denying them the opportunity to sustain employment and independent living in their adulthood.
• American veterans who were injured while in the service of our country. The average age⁴ of a service member medically retired due to disability is 34 years old for enlisted members and 39 years old for officers. Additionally, veterans may be diagnosed with chronic conditions that can lead to disability after returning home, including post-traumatic stress syndrome (PTSD). Programs for many veterans with disabilities also may be needs-based with asset limitations, such as Veterans Pension benefits, so ABLE accounts can help maintain eligibility in these situations.
• Individuals with disabilities who are employed. Over 22% (and trending upward) of people with disabilities are employed.⁵ As mentioned, these individuals walk a fine line to earn money and maintain eligibility for means-tested government benefits. This often means they must opt out of valuable employer benefits. ABLE accounts may help them improve their financial wellness.
• Family caregivers — spouses, aging parents, siblings and loved ones — who provide unpaid care to individuals with disabilities. Building assets within an ABLE account could help them pay for needed care, instead of paying out of their own pockets.

Steps employers can take to offer ABLE account support to eligible employees

1. On the simplest level, employers can offer education about ABLE options and even help with access to a direct ABLE program.
2. Employers can help employees with enrollment as well as allow for payroll deduction and direct deposit to facilitate saving.
3. Employers that want to go a step further can even offer a matching contribution to ABLE accounts. This step can help bridge the gap between the benefits received by those who are participating in defined contribution retirement plans and those who might choose an ABLE account instead.

Employers: Learn More About ABLE Accounts in the Workplace