A Smart Tool for Disability Planning

ABLE Accounts in California

For individuals with disabilities, saving money has traditionally come with a catch: accumulating too much could result in a loss of vital public benefits like SSI and Medi-Cal. Fortunately, ABLE accounts have changed that.

Thanks to the Achieving a Better Life Experience (ABLE) Act, eligible individuals can now save money in a tax-advantaged account without risking their needs-based benefits. At Cookman Law, we’re big fans of ABLE accounts and we regularly recommend our clients integrate them into their broader special needs plans.

Please note that Cookman Law does not handle the paperwork involved in opening an ABLE account, but we have resources to guide you through the process and are happy to answer questions.

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What Is an ABLE Account?

An ABLE account is a special savings account available to individuals with disabilities who developed their disability before age 46. The account allows for tax-free growth and protected savings that can be used for a wide range of qualified expenses without affecting public benefits eligibility.

In California, ABLE accounts are managed through the CalABLE program, and accounts can be opened online at www.calable.ca.gov.

Why ABLE Accounts Matter

Many people with disabilities rely on programs like SSI and Medi-Cal, which have strict asset limits – SSI’s asset limit is $2,000 and Medi-Cal’s asset limit is currently $130,000 in California. ABLE accounts allow individuals to save beyond this limit while maintaining eligibility.

Key benefits include:

  • Using funds for a wide range of qualified disability expenses
  • Avoiding ISM reductions (In-Kind Support and Maintenance) when paying for shelter expenses
  • Tax-free growth when used for eligible expenses
  • Easy access via online banking and a debit card
  • Low annual fees and accessible minimum contributions

SSI, ISM, and Preserving Benefits

One of the most powerful uses of an ABLE account is avoiding reductions in SSI benefits due to In-Kind Support and Maintenance (ISM).

Here’s how it works:

  • If a trust or family member pays directly for a person’s food or shelter, the SSI benefit may be reduced by about $350/month.
  • But if that same money is first deposited into an ABLE account, and the account holder then uses the funds to pay for their own shelter expenses, it doesn’t count as ISM and the full SSI benefit is preserved.

In short: ABLE accounts can be a strategic tool for maintaining SSI benefits while paying for basic living costs.

Real-Life Example

“Nina has had an ABLE account for several years now. We’ve used it to receive stimulus funds and larger family gifts. With the balance growing, we’ve split the funds between investments and banking. Our next step is setting up a recurring rent payment, which will help her qualify for a larger SSI payment. It’s a step toward independence.”
– Connie, parent

“We set up an ABLE account for our son Robbie when he turned 18. His grandparents wanted to contribute gifts like they do for their other grandkids’ 529 plans. With the account, we’ve covered respite camps, travel, and mobility devices. It’s been a total win.”
– Beth Goddard

ABLE Account vs.
Third-Party Special Needs Trust

Both ABLE accounts and Third-Party Special Needs Trusts (SNTs) offer financial tools for individuals with disabilities, but they serve different purposes.
Here’s how they compare:

Expenses You Can Use an ABLE Account For

Funds must be used for qualified disability expenses, a broad category that includes:

  • Rent and housing costs
  • Food and groceries
  • Medical and dental care
  • Education and training
  • Transportation
  • Assistive technology
  • Legal fees
  • Employment support
  • Recreation and travel

In practice, ABLE accounts give individuals more financial flexibility and autonomy, especially when used alongside a Special Needs Trust.

Getting Started with CalABLE

To open an ABLE account in California:

1. Visit www.calable.ca.gov
2. Set up your account with a $25 minimum contribution
3. Choose from investment or FDIC-insured savings options
4. Link a bank account and receive a Visa debit card
5. Begin using the account for qualified disability expenses

Annual account fees currently start at $37/year, with optional investment options available.

ABLE Accounts + Estate Planning

At Cookman Law, we often recommend using ABLE accounts in tandem with Special Needs Trusts, especially for individuals with capacity who want more financial independence.

We help you:

  • Understand eligibility and contribution limits
  • Coordinate gifts or inheritances with an ABLE or SNT
  • Avoid unintentional SSI or Medi-Cal disruptions
  • Craft a plan that evolves with your loved one’s needs

Let’s Build a Plan That Supports Independence

ABLE accounts are an empowering option for people with disabilities who want to save, spend, and live with greater financial freedom without losing benefits that are critical to their care.

We’re here to help you integrate this powerful tool into your family’s special needs plan.

Schedule a consultation today to learn how an ABLE account can support your loved one’s long-term well-being.

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