Understanding Qualified Disability Expenses for ABLE Accounts: What You Need to Know

As a financial tool designed to help individuals with disabilities save money without jeopardizing their eligibility for crucial government benefits, ABLE (Achieving a Better Life Experience) accounts have become increasingly popular. One key aspect of these accounts is the concept of Qualified Disability Expenses (QDEs). In this blog post, we’ll explore what QDEs are and provide examples to help you better understand how ABLE account funds can be used.

What are Qualified Disability Expenses?

Qualified Disability Expenses are costs related to the account beneficiary’s disability that help maintain or improve their health, independence, or quality of life. The IRS and ABLE programs interpret this definition broadly, allowing for a wide range of expenses to qualify.

It’s important to note that while ABLE account holders have significant flexibility in using their funds, they should be prepared to demonstrate how an expense relates to their disability if asked by the IRS or government benefit programs.

Examples of Qualified Disability Expenses

To give you a better idea of what qualifies as a QDE, here’s a list of common examples:

1. Education

   – Tuition for preschool through post-secondary education

   – Books, supplies, and educational materials

   – Tutoring services

   – Special education services

2. Housing

   – Rent or mortgage payments

   – Property taxes

   – Utility bills

   – Home modifications for accessibility

3. Transportation

   – Purchase or lease of a vehicle

   – Car modifications for accessibility

   – Public transportation costs

   – Ride-sharing services

4. Employment Support

   – Job coaching

   – Costs associated with starting a business

   – Work-appropriate clothing

   – Assistive technology for work

5. Health and Wellness

   – Medical treatments not covered by insurance

   – Mental health services

   – Dental and vision care

   – Fitness programs related to disability management

6. Assistive Technology

   – Communication devices

   – Adaptive equipment

   – Computer software and hardware

7. Personal Support Services

   – Home health aides

   – Personal care attendants

   – Housekeeping and errand services

8. Legal Fees

   – Attorney fees for disability-related issues

   – Guardianship costs

   – Estate planning

9. Financial Management

   – Financial planning services

   – Tax preparation fees

10. Basic Living Expenses

    – Food

    – Clothing

    – Personal care items

11. Funeral and Burial Expenses

    – Costs associated with pre-planning a funeral

    – Burial plot purchase

Remember, this list is not exhaustive. The key is that the expense should be related to the individual’s disability and contribute to their quality of life, health, or independence.

What’s Not Considered a Qualified Disability Expense?

While the definition of QDEs is broad, there are some expenses that typically don’t qualify:

– Purely recreational items with no connection to the disability

– Illegal goods and services

– Purchases made for someone other than the account beneficiary

It’s always a good idea to keep detailed records of how ABLE account funds are used, including receipts and explanations of how each expense relates to the beneficiary’s disability.

Conclusion

ABLE accounts offer individuals with disabilities a valuable opportunity to save and spend money on their needs without risking their eligibility for government benefits. By understanding what qualifies as a Qualified Disability Expense, account holders can make the most of this financial tool to improve their quality of life and work towards greater independence.

Remember, while this guide provides general information, it’s always best to consult with a financial advisor or the specific ABLE program for guidance on your individual situation. Every person’s needs are unique, and what qualifies as a QDE can vary based on an individual’s specific disability and circumstances.