ABLE Accounts vs. Special Needs Trusts: Which One is Right for You?

Planning for long-term financial security is crucial for individuals with disabilities. Two common options for saving money without jeopardizing Supplemental Security Income (SSI) and Medicaid eligibility are ABLE accounts and Special Needs Trusts (SNTs). While both help individuals set aside funds for disability-related expenses, they have distinct advantages and limitations. This guide will help you determine which one is best suited for your financial needs.

What is an ABLE Account?

An Achieving a Better Life Experience (ABLE) account is a tax-advantaged savings account designed for individuals with disabilities. It allows you to save money while still qualifying for benefits like SSI and Medicaid.

Key Features of ABLE Accounts:

Eligibility: Available to individuals who developed a qualifying disability before age 26 (increasing to 46 under the SECURE 2.0 Act in 2026).
Contribution Limit: Up to $18,000 per year (2025 federal limit, varies by state).
Total Account Cap: SSI benefits are only impacted once the balance exceeds $100,000.
Qualified Disability Expenses (QDEs): Funds can be used for housing, education, healthcare, assistive technology, and other disability-related expenses.
Tax Benefits: Earnings grow tax-free, and withdrawals for QDEs are not taxed.
Ownership: The account is owned by the individual with the disability.

What is a Special Needs Trust (SNT)?

A Special Needs Trust (SNT) is a legal arrangement that holds and manages money for a person with a disability. It is designed to protect eligibility for government benefits while providing financial support.

Key Features of Special Needs Trusts:

Types of SNTs:
- First-Party SNT: Funded with the beneficiary’s own money (e.g., inheritance, legal settlement).
- Third-Party SNT: Funded by parents, relatives, or others for the benefit of the individual with a disability.
- Pooled SNT: Managed by nonprofit organizations, pooling multiple beneficiaries' funds for investment purposes.
No Contribution Limits: Unlike ABLE accounts, there is no cap on how much money can be placed in an SNT.
Restrictions on Spending: Funds cannot be used for housing and food expenses without affecting SSI.
Trustee Control: A trustee manages the funds and approves disbursements.
Medicaid Payback (First-Party SNTs Only): Upon the beneficiary’s death, remaining funds may be used to repay Medicaid.

Key Differences Between ABLE Accounts and SNTs

Feature	ABLE Account	Special Needs Trust (SNT)
Eligibility	Disability onset before age 26 (rising to 46 in 2026)	No age restriction
Who Can Contribute?	Anyone (subject to annual cap)	Anyone (no contribution limits)
Contribution Limit	$19,000 per year (2025)	No limits
Asset Limit for SSI	Affects SSI if over $100,000	No impact on SSI asset limits
Who Controls the Money?	Beneficiary	Trustee
Uses of Funds	Housing, food, education, medical, transportation, and more	Cannot pay for housing or food without affecting SSI
Tax Benefits	Tax-free growth & withdrawals for qualified expenses	No tax benefits
Medicaid Payback	Yes, if the beneficiary passes away	Only for First-Party SNTs

Which One is Right for You?

Choose an ABLE Account if:

✔️ You want direct control over your funds.

✔️ You plan to save smaller amounts and use the funds for daily expenses.

✔️ You want a simple, low-cost way to save without legal complexities.

✔️ You want tax-free growth on your savings.

Choose a Special Needs Trust if:

✔️ You don’t qualify for an ABLE account due to age restrictions.

✔️ You need to protect a large sum of money (e.g., inheritance, settlement).

✔️ You want a trustee to manage funds and prevent mismanagement.

✔️ You don’t mind legal setup costs and ongoing management fees.

Can You Have Both?

Yes! Many individuals benefit from having both an ABLE account and a Special Needs Trust.

Use an SNT to hold large sums of money and protect eligibility.
Use an ABLE account for daily expenses like rent, groceries, and utilities.

How Purple Can Help

Managing finances with disability benefits can be overwhelming. Purple makes it easy to track spending, ensure compliance with SSA rules, and maximize your financial resources.

Get started with Purple today and take control of your financial future!