Maryland Special Needs Trust vs ABLE Account

Both special needs trusts and ABLE accounts protect assets without disqualifying a disabled person from SSI and Medicaid — but they work differently, cost differently, and serve different purposes. For Maryland families managing finances for a disabled adult, the right choice (or combination) depends on the amounts involved and who's contributing.

The SSI Resource Problem

SSI recipients cannot hold more than $2,000 in countable resources ($3,000 for couples) as of 2026. Exceed that threshold, and SSI benefits are suspended — which can also trigger a loss of Medicaid eligibility depending on the person's situation.

Both special needs trusts and ABLE accounts exist to hold assets outside that $2,000 limit. But they do it through different legal mechanisms with different rules.

ABLE Accounts: The Simpler Option

Maryland's ABLE accounts (Achieving a Better Life Experience) are tax-advantaged savings accounts established under federal law. Key 2026 rules:

• Annual contribution limit: $20,000 (up from $19,000 in 2025)
• SSI exclusion: Up to $100,000 is completely excluded from the $2,000 resource limit. If the balance exceeds $100,000, SSI is suspended but Medicaid continues.
• ABLE-to-work enhancement: Working beneficiaries not in an employer retirement plan can contribute an additional amount up to their earnings or the federal poverty level, capped at an extra $15,960 in 2026
• Eligibility expansion: Starting January 1, 2026, the disability onset age increased from 26 to 46, making millions more people eligible
• Account ownership: The disabled person owns and controls the account (or their guardian/POA agent manages it)
• Qualified expenses: Housing, education, transportation, health, assistive technology, employment training, legal fees, and more

The main advantages: easy to open (no attorney required), low cost, the account owner controls the funds, and deposits/withdrawals are straightforward.

The main limitation: the $20,000 annual contribution cap and the SSI suspension trigger at $100,000. For families with significant assets to protect, an ABLE account alone may not be enough.

Special Needs Trusts: The Flexible Option

Special needs trusts (also called supplemental needs trusts) have no contribution limit or balance cap — they can hold any amount without affecting SSI or Medicaid eligibility. But they come with more complexity and cost.

Two types exist:

First-party (self-settled) trust. Funded with the disabled person's own assets — inheritances, lawsuit settlements, retroactive benefit payments. Must include a Medicaid payback provision (any remaining funds at death go to reimburse Medicaid for services provided). Must be established before the beneficiary turns 65.

Third-party trust. Funded by someone other than the disabled person — parents, grandparents, family members. No Medicaid payback requirement. No age limit for establishment. Remaining funds at death pass to whoever the trust designates.

Setup costs: $2,000–$5,000+ for attorney drafting fees, depending on complexity. Ongoing costs include trustee fees (if using a professional trustee) and annual tax return preparation.

When to Use Each

Using Both Together

The strongest asset protection strategy combines both tools. The special needs trust holds the bulk of protected assets (inheritance, large gifts), while the ABLE account provides a more flexible spending vehicle for day-to-day expenses.

Trust distributions to the ABLE account count toward the annual contribution limit but otherwise transfer smoothly. This combination gives you the trust's unlimited capacity with the ABLE account's ease of use for routine spending.

One practical consideration: retroactive lump-sum payments from the Social Security Fairness Act (WEP/GPO repeal) or other benefit adjustments can push an SSI recipient over the $2,000 resource limit within a single deposit. Review the effect on countable resources promptly; if countable resources remain above the limit, SSI and Medicaid eligibility can be suspended. Representative payees managing these payments need to act quickly when large deposits arrive.

The Maryland Adult Guardianship & Alternatives Guide includes a benefits-asset tracker designed to help families monitor SSI resource limits and coordinate between ABLE accounts, trusts, and representative payee obligations.

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