The party said Geoffrey Clark, who is standing for Kent County Council, would not be a UKIP councillor if elected.
Mr Clark said on his website he did not endorse the abortion idea but suggested it to cut the national debt.
Learning disability charity Mencap said it was disgusted and horrified at Mr Clark's personal manifesto.
UKIP said Thursday's ballot paper would still list him as its candidate but, pending an investigation, he would not be a UKIP councillor.
Chartered accountant Mr Clark, 66, who is also standing for Meopham North ward on Gravesham Borough Council in Thursday's by-election, says on his website his comments are personal and do not reflect UKIP policy.
He calls for a national debate and an urgent government review of the NHS, which he says "risks becoming unaffordable in the future".
The review should look at "compulsory abortion when the foetus is detected as having Down's, spina bifida or similar syndrome which, if it is born, could render the child a burden on the state as well as on the family".
He says the review should also look at medical treatment for those aged over 80, "which is disproportionately costly to the NHS" and might also include "legalising euthanasia and giving free euthanasia advice to all folk over 80".
He told the BBC: "I don't intend to offend.
"What I am trying to do is to provoke a debate in the nation because I am so disenchanted with our politicians."
Mark Goldring, chief executive of Mencap, said: "Much has been written about the Paralympics this summer changing attitudes towards disabled people for the better.
"Yet in the very same year, a council candidate has proposed forced eugenics against disabled people.
"It is abhorrent that Geoffrey Clark sees disabled people solely as a burden when people with a learning disability lead full lives and make valuable contributions to their communities and families.
"We question if he is fit for public office."
Mr Clark, who describes himself as a member of Meopham Parochial Church Council, Rotary International, the Royal British Legion and the Youth Hostels Association, says population, immigration and threats to the green belt are linked issues close to his heart.
If elected, he promises to promote the Christian ethic and British culture, roll back Islam, contain UK population growth and restrict immigration.
A UKIP spokesman said the party rejected Mr Clark's "abhorrent" views.
"The party was not aware of these views when it allowed him to stand under our name," he said.
"Mr Clark has been formally suspended as a UKIP candidate and will not be standing for the party again.
"We would like to apologise to anyone who has suffered distress as a result of this matter."
A UKIP candidate who called for an NHS review to look at compulsory abortion of foetuses with Down's syndrome or spina bifida has been suspended.