Texas ABLE Account: How to Save Without Losing SSI or Medicaid

The $2,000 Problem Every Texas Family Knows

If your adult child receives Supplemental Security Income, you already know the math doesn't add up. SSI pays a maximum of $994 per month in 2026, and the moment your child's bank account crosses $2,000 on the first of any month, benefits stop. Birthday checks from grandparents, a tax refund, or a small inheritance can trigger an overpayment notice that takes months to resolve.

Texas ABLE accounts exist specifically to solve this. They let people with disabilities save and invest money without it counting against the $2,000 SSI resource limit — up to $100,000.

What a Texas ABLE Account Actually Is

ABLE stands for Achieving a Better Life Experience. Congress created these tax-advantaged savings accounts under Section 529A of the Internal Revenue Code in 2014, and Texas launched its program through the Texas Prepaid Higher Education Tuition Board.

The account works like a 529 college savings plan, but instead of being restricted to education expenses, ABLE funds can be spent on any disability-related expense. The account owner is the person with the disability — not a parent or guardian — though a parent with power of attorney or a legal guardian can manage the account on their behalf.

To open a Texas ABLE account, the account owner must have a disability that began before age 46. That threshold was raised from age 26 by the ABLE Age Adjustment Act, which took effect in 2026.

2026 Contribution Limits and the ABLE-to-Work Bonus

For 2026, the standard annual contribution limit is $20,000. Anyone can contribute — the account owner, parents, relatives, friends — as long as the total from all sources stays under the cap.

There is one exception. If the ABLE account owner has earned income and does not participate in an employer-sponsored retirement plan (like a 401(k) or 403(b)), they can contribute an additional $15,650 or their total gross earnings for the year, whichever is less. This "ABLE-to-Work" provision effectively raises the annual cap to $35,650 for employed account owners who meet the criteria.

Contributions are not tax-deductible on your federal return. However, investment growth inside the account is tax-free as long as withdrawals go toward qualified disability expenses.

How ABLE Accounts Interact with SSI and Medicaid

This is where families need to pay close attention, because ABLE accounts have different rules for SSI cash benefits versus Texas Medicaid:

SSI: The first $100,000 in an ABLE account is completely excluded from the SSI resource limit. If the balance exceeds $100,000 by enough that the excess, together with other countable resources, exceeds the SSI resource limit, SSI cash payments are suspended. Medicaid can continue as long as the individual remains otherwise eligible. Once countable resources drop back below the limit, SSI may resume if the individual remains otherwise eligible.

Texas Medicaid: The entire ABLE account balance is excluded from Medicaid resource calculations, regardless of the amount. Even if the ABLE balance is $200,000, it does not affect Medicaid eligibility. This is a critical safety net — your child can lose their SSI check temporarily but will not lose their Medicaid coverage.

What Counts as a Qualified Disability Expense

The IRS defines qualified disability expenses broadly. They include:

• Housing (rent, mortgage, utilities, property taxes)
• Transportation (vehicle purchase, gas, insurance, public transit)
• Education and training
• Health and wellness costs not covered by Medicaid
• Assistive technology and devices
• Employment training and support
• Financial management and administrative services
• Legal fees related to the disability
• Basic living expenses (food, clothing)

Non-qualified withdrawals are subject to income tax on the earnings portion plus a 10% penalty on earnings. Keep receipts for every withdrawal in case of an IRS review.

How to Open a Texas ABLE Account

Texas participates in the national ABLE program network, and residents can open an account through the state's designated program or through another state's program that accepts out-of-state residents. The steps:

1. Verify eligibility. The account owner must have a qualifying disability with onset before age 46. If they already receive SSI or SSDI based on a disability that began before age 46, they meet the Social Security-based eligibility route. Otherwise, a physician must certify the disability.
2. Choose a program. Compare investment options and fees between Texas and other state programs. You are not required to use your home state's plan.
3. Complete the application online. You will need the account owner's Social Security number, date of birth, and a funding source.
4. Set up contributions. Most programs allow automatic monthly contributions from a bank account, which is the easiest way to build savings without accidentally exceeding the $2,000 SSI limit.

ABLE Account vs. Special Needs Trust

Both ABLE accounts and special needs trusts protect assets without jeopardizing benefits, but they serve different purposes:

For most Texas families, the practical answer is both. Use the ABLE account for day-to-day disability expenses and short-term savings. Use a special needs trust for larger assets — an inheritance, a personal injury settlement, or long-term investment holdings.

Common Mistakes to Avoid

Exceeding the $100,000 SSI threshold without planning. If the ABLE balance exceeds $100,000 by enough that the excess, together with other countable resources, exceeds the SSI resource limit, SSI payments are suspended. Plan withdrawals so the countable resources stay below the limit unless the temporary loss of SSI cash is acceptable.

Forgetting to report the account to SSA. While ABLE balances below $100,000 are excluded from resource calculations, the account itself must still be disclosed during SSI financial reviews. Failing to report it can create complications.

Using ABLE funds for non-qualified expenses. The 10% penalty on earnings from non-qualified withdrawals is small in dollar terms, but it can trigger a review of your child's benefit status.

If your child is approaching the SSI age-18 redetermination or you are setting up financial protections for the first time, the Texas SSI at 18 & Adult Disability Benefits Guide walks through how ABLE accounts fit into the full picture — alongside Medicaid waivers, supported decision-making agreements, and the redetermination evidence file.

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