What Counts as a Qualified Disability Expense
The IRS reads QDEs broadly under 26 U.S.C. §529A. Common examples include:
- Housing costs (rent, mortgage, utilities, property taxes)
- Education and job training
- Transportation, including a vehicle and modifications
- Assistive technology and personal-support services
- Health, prevention, and wellness expenses Medicaid does not cover
- Financial management and legal fees
- Funeral and burial expenses
- Basic living expenses such as food and clothing
Records matter. The account owner should keep receipts in case the IRS or the ABLE program asks for documentation. Non-qualified withdrawals are subject to ordinary income tax on the earnings plus a 10 percent federal penalty, and they may also count as a resource for SSI or ALTCS in the month spent.
Why QDEs Pair Well With a Special Needs Trust
An ABLE account the beneficiary controls is the cleanest way to pay for everyday QDEs without the trustee-distribution paperwork required from a special needs trust. Many Arizona families use the SNT for big-ticket items (a vehicle, a down-payment assist, long-term care add-ons) and the ABLE account, funded by trust distributions or family gifts, for monthly living costs the beneficiary manages directly.
Housing Note
Housing is a QDE for ABLE purposes, but housing payments from a third-party SNT can trigger in-kind support and maintenance reductions to SSI. Routing housing through the ABLE account avoids that penalty. This single planning point is one of the biggest reasons families open an ABLE account alongside an SNT.
Trustee tip: the SNT distribution cheatsheet shows, expense by expense, whether to pay from the SNT, the ABLE account, or not at all, and how each choice affects SSI. The interactive SNT Distribution Checker lets trustees log a planned expense and see the SSI verdict in real time.