If you are setting money aside for someone with a disability, an ABLE account or special needs trust may help protect access to needs-based programs including Supplemental Security Income (SSI) and Medicaid. Neither option is automatically better. The right choice depends on the beneficiary’s circumstances and how the funds will be managed.
How does an ABLE account work?
An ABLE account is a tax-advantaged account that can hold money for qualified disability expenses. The person with a disability owns the account, although an authorized individual may manage it on the beneficiary’s behalf. Funds can generally be used for housing, transportation, education, health care and other qualified disability expenses.
As of 2026, ABLE eligibility generally includes people whose blindness or disability began before age 46. SSI does not count up to $100,000 in an ABLE account when determining resource eligibility.
How does a special needs trust work?
A special needs trust places assets under the control of a trustee for the benefit of the person with a disability. It may be useful when a family needs to manage a larger amount of money, such as an inheritance or settlement.
The rules depend on the type of trust. Certain first-party special needs trusts have Medicaid payback requirements after the beneficiary’s death, while third-party trusts can have different rules.
What is the difference between an ABLE account and a special needs trust?
The choice often depends on how the funds will be managed, the amount involved and the beneficiary’s needs. Consider these factors:
- Control: The beneficiary owns an ABLE account; a trustee manages a special needs trust on the beneficiary’s behalf.
- Access: ABLE funds are generally easier to access for qualifying expenses. Trust distributions must follow the trust’s terms and applicable benefit rules.
- Amount: ABLE accounts have a $20,000 annual contribution limit in 2026, although eligible working beneficiaries may be able to contribute more. A special needs trust may be more practical when a family needs to set aside a larger amount at once.
- Benefit eligibility: Both can be structured to preserve eligibility for SSI and Medicaid, but the rules governing each differ in important ways.
- Medicaid recovery: Certain ABLE accounts and first-party special needs trusts may be subject to Medicaid recovery after the beneficiary’s death. Third-party trusts are generally not subject to this requirement.
Can you use both?
Yes. An ABLE account and a special needs trust can work together. A trust can manage larger assets while an ABLE account can provide easier access to funds for qualified expenses.
Choosing between them requires considering the source and amount of the money, the beneficiary’s needs and who should control the funds. In some situations, using both may provide the most practical approach.
