If you or a loved one has a disability, you've probably heard about ABLE accounts and special needs trusts as ways to save money without losing benefits. Both can help—but they work very differently and serve different purposes.
In this article, we'll cover:
- What an ABLE account is
- What a special needs trust is
- Key differences between ABLE accounts and special needs trusts
- Who qualifies for each option
- When to use one, the other, or both
1. What Is an ABLE Account?
An ABLE (Achieving a Better Life Experience) account is a tax-advantaged savings account for people with disabilities. It works similarly to a 529 college savings plan but can be used for a wide range of disability-related expenses.
Key features of ABLE accounts:
- Save up to $18,000 per year (2024 limit, adjusts annually)
- Account balances up to $100,000 don't count against SSI eligibility
- Tax-free growth when used for qualified expenses
- The account holder controls the funds (or their representative)
- Relatively easy and inexpensive to open
ABLE accounts are great for day-to-day savings and expenses like housing, transportation, education, and healthcare.
2. What Is a Special Needs Trust?
A special needs trust (SNT) is a legal arrangement where a trustee manages assets on behalf of a person with a disability. The trust holds funds separately from the beneficiary's personal assets, protecting benefit eligibility.
Key features of special needs trusts:
- No contribution limits—can hold unlimited assets
- Assets don't count against SSI or Medicaid
- A trustee manages the funds (not the beneficiary)
- Can receive inheritances, settlements, or large gifts
- Requires legal setup and ongoing administration
Special needs trusts are ideal for larger amounts of money, such as inheritances or legal settlements.
3. Key Differences Between ABLE Accounts and Special Needs Trusts
| Feature | ABLE Account | Special Needs Trust | |---------|--------------|---------------------| | Annual contribution limit | $18,000 | None | | Total balance limit | $100,000 (for SSI purposes) | No limit | | Who controls funds | Account holder | Trustee | | Setup cost | Low (often free) | High (attorney fees) | | Ongoing costs | Minimal | Trustee/admin fees | | Flexibility | Account holder decides | Trustee decides | | Medicaid payback | Required at death | Depends on trust type |
Important: ABLE accounts have a Medicaid payback provision. When the account holder passes away, remaining funds may need to repay Medicaid for services received. Some special needs trusts avoid this requirement.
4. Who Qualifies for Each Option?
ABLE account eligibility:
- Disability onset before age 26 (expanded to age 46 starting in 2026)
- Eligible for SSI or SSDI, OR
- Meet Social Security's disability criteria with a signed diagnosis
Special needs trust eligibility:
- Any person with a disability can be a beneficiary
- No age-of-onset requirement
- Can be set up by the person with a disability, family members, or courts
The age requirement for ABLE accounts used to be more restrictive, but recent changes have expanded access significantly.
5. When to Use One, the Other, or Both
Use an ABLE account when:
- You want to save modest amounts for everyday expenses
- You want direct control over your funds
- You need a simple, low-cost option
- You're saving for housing, transportation, or education
Use a special needs trust when:
- You're receiving a large inheritance or legal settlement
- You need to protect more than $100,000 in assets
- You want to avoid Medicaid payback requirements
- A family member wants to leave you money in their estate plan
Use both when:
- You have a special needs trust but want easier access to funds for daily expenses
- The trust can contribute to your ABLE account annually
- You want the flexibility of both options
Many families use both tools together. The trust holds larger assets for long-term security, while the ABLE account provides accessible funds for regular expenses.
6. How Purple Helps You Manage ABLE Accounts
Understanding your options is the first step. Managing your ABLE account effectively is the next.
Purple makes ABLE account management simple:
- Track qualified expenses with automatic categorization
- Monitor your balance to stay within SSI limits
- Connect your ABLE account for a complete financial picture
- Get alerts when you're approaching contribution limits
- Access your funds easily for disability-related purchases
We designed Purple for people with disabilities who want to manage their money independently—without risking their benefits.