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— Guide · 12-min read
Special needs trusts in Florida: three types, SSI and Medicaid rules, and ABLE accounts
How a special needs trust keeps SSI and Medicaid eligibility when a person with a disability receives money: first-party, third-party and pooled trusts, payback, what the trust may pay for, and ABLE accounts ($20,000 limit in 2026).
Updated October 2026
SSI and Medicaid for the aged, blind and disabled are means-tested. An outright inheritance or settlement is counted as income and then as a resource, and a resource total above the limit ends eligibility. A special needs trust holds the money so that it is not a countable resource of the beneficiary. The rules differ by who funded the trust.
- 2026 limits: the SSI resource standard is $2,000 for an individual and $3,000 for a couple, and the federal benefit rate is $994 a month (CMS Informational Bulletin, April 27, 2026; 20 C.F.R. § 416.1205).
- Inheritance is income: "An inheritance is something that comes to you as a result of someone's death," and it is counted as income when received (20 C.F.R. § 416.1121(g)).
- First-party trust: holds the beneficiary's own assets. Federal law requires the State to be repaid from what remains at death, up to the Medicaid paid (42 U.S.C. § 1396p(d)(4)(A)).
- Third-party trust: holds assets of someone else. The payback requirement of § 1396p(d) is written for trusts that hold the individual's assets (§ 1396p(d)(2)(A)). SSA asks whether the beneficiary can terminate the trust and take the assets (POMS SI 01120.200).
- Pooled trust: a nonprofit manages pooled accounts, one per beneficiary (§ 1396p(d)(4)(C)).
- ABLE account: a separate account for a person whose disability began before age 46. The 2026 contribution limit is $20,000 (Rev. Proc. 2025-32, § 4.34).
The three types compared
| Point | First-party | Third-party | Pooled |
|---|---|---|---|
| Funded with | The disabled individual's own assets: settlement, back benefits, an inheritance paid to the individual | Assets of a parent, grandparent, sibling or anyone other than the beneficiary | The individual's own assets, placed in a separate account within a nonprofit's pooled trust |
| Who establishes it | The individual, a parent, grandparent, legal guardian or a court. The individual may establish it since December 13, 2016 (21st Century Cures Act § 5007). | Anyone, including by will | The individual, parent, grandparent, legal guardian or a court, by joining the nonprofit's pool |
| Age and disability test | Individual is disabled and under age 65 when the assets are placed in the trust | None in federal law for the beneficiary | Disabled individual; § 1396p(d)(4)(C) states no age limit |
| Payback at death | Required: the State receives all amounts remaining, up to the total medical assistance paid, ahead of other debts and administrative expenses except those SSA lists | None required by § 1396p(d)(4); the remainder goes where the trust says | Remaining amounts the trust does not retain are paid to the State up to Medicaid paid |
| Sole benefit | Required: no other person may benefit during the beneficiary's life, and the trust may not allow early termination in favor of others | Not required for SSI; see the transfer rule below for Medicaid | Account is established solely for the benefit of the disabled individual |
| Sources | 42 U.S.C. § 1396p(d)(4)(A); POMS SI 01120.203 | POMS SI 01120.200; 42 U.S.C. § 1396p(d)(2)(A) | 42 U.S.C. § 1396p(d)(4)(C); Fla. Admin. Code R. 65A-1.702 |
Florida requires the trustee of a qualified income trust, qualified disabled trust or pooled trust to give the Department of Children and Families quarterly statements of deposits and disbursements (Fla. Admin. Code R. 65A-1.702).
First-party trust requirements
To qualify under the exception in 42 U.S.C. § 1396p(d)(4)(A), SSA's instructions for a trust established on or after December 13, 2016 require all of these (POMS SI 01120.203):
- The trust holds the assets of an individual who is under age 65 and disabled.
- It is established for the individual's benefit through the actions of the individual, a parent, a grandparent, a legal guardian, or a court.
- It provides that the State will receive all amounts remaining on the individual's death, up to the total medical assistance paid under the State Medicaid plan.
- It is for the sole benefit of the individual. Provisions that benefit others during the individual's life, or that allow termination before death with payment to someone else, disqualify it.
Third-party trust and the Medicaid transfer rule
- SSI. When a third party is the grantor, the trust is not a resource of the beneficiary merely because the grantor can revoke it. SSA focuses on whether the beneficiary can terminate the trust and obtain the assets (POMS SI 01120.200).
- Medicaid payback. The payback exception in § 1396p(d)(4) addresses trusts that contain the individual's assets. A trust funded only by a parent or grandparent is outside § 1396p(d)(2)(A), which counts a trust as established by the individual only when the individual's assets form part of the corpus.
- A nursing-home resident who gives assets to a trust for a disabled child. A transfer to a trust established solely for the benefit of a child who is blind or disabled, or of a disabled individual under age 65, is exempt from the transfer penalty (42 U.S.C. § 1396p(c)(2)(B)). Florida's rule defines sole benefit: no one else may benefit at the time of the transfer or in the future, and the beneficiary must be able to receive fair compensation or return of the benefit during the beneficiary's lifetime (Fla. Admin. Code R. 65A-1.712(3)(c)).
- Existing trust that was not drafted for benefits. An authorized trustee with a power to invade principal for a beneficiary with a disability may, unless the instrument says otherwise, move principal to a supplemental needs trust that benefits that beneficiary, if the second trust's beneficiaries are only beneficiaries of the first trust and the move furthers the first trust's purposes (§ 736.04117(4), Fla. Stat. (2026)). "Supplemental needs trust" means a trust the authorized trustee believes would not be considered a resource for government-benefit eligibility (§ 736.04117(1)(j)).
What the trust may pay for
The trust is meant to supplement benefits. How a payment is counted depends on what it buys and who receives it. Table 2 follows the SSI regulations and SSA's trust instructions.
| Payment | SSI treatment | Source |
|---|---|---|
| Cash paid to the beneficiary, including to a personal debit card | Unearned income in the month received | POMS SI 01120.200 |
| Medical care Medicaid does not cover, therapy, education, transportation, professional fees, phone, recreation, entertainment | Generally not income when paid to a third party | POMS SI 01120.200 |
| Non-cash items such as a computer bought for the beneficiary | Not income if the item would be an excluded resource in the following month | POMS SI 01120.200 |
| Shelter: rent, mortgage payments, property taxes, heating fuel, gas, electricity, water, sewerage, garbage collection | In-kind support and maintenance. Valued by the presumed value rule: at most one-third of the federal benefit rate plus the $20 general income exclusion, which is $994 ÷ 3 + $20 = $351.33 in 2026. | 20 C.F.R. § 416.1130(b); § 416.1140 |
| Food | Not counted as in-kind support and maintenance since September 30, 2024 | 89 Fed. Reg. 21199 (Mar. 27, 2024); § 416.1130 |
SSA's POMS section SI 01120.200 (version dated May 6, 2024) still describes food together with shelter. The regulation that took effect September 30, 2024 counts shelter only, and the regulation controls.
ABLE accounts
A Florida ABLE account is created under § 1009.986, Fla. Stat. (2026) and follows 26 U.S.C. § 529A. It is a separate account, not a trust, and the beneficiary can control it.
| Point | Rule | Source |
|---|---|---|
| Who qualifies | A person entitled to Social Security benefits based on blindness or disability that began before age 46, or with a filed disability certification | 26 U.S.C. § 529A(e)(1) |
| Accounts allowed | One ABLE account per eligible individual | 26 U.S.C. § 529A(b)(1)(B) |
| 2026 annual contribution limit | $20,000 from all contributors combined. The gift tax annual exclusion for 2026 is $19,000. A beneficiary who works may add the lesser of compensation or the poverty line, subject to the conditions in § 529A(b)(7). | Rev. Proc. 2025-32, §§ 4.34 and 4.42(1); § 529A(b)(2)(B) |
| SSI | The first $100,000 of the balance is excluded from resources. Above $100,000 SSI is suspended, not terminated, and Medicaid eligibility continues. A housing-expense distribution that is retained into the month after it is received counts as a resource for SSI. | POMS SI 01130.740; Pub. L. 113-295, div. B, § 103 |
| Medicaid at death | Federal law transfers to the State the amounts remaining in the account at the beneficiary's death, not in excess of the total medical assistance paid for the beneficiary after the account was established, net of premiums paid from the account or to a Medicaid Buy-In program. The State is a creditor of the account, not a beneficiary. Florida's statute bars a state Medicaid claim except as federal law requires. | 26 U.S.C. § 529A(f); § 1009.986(7) |
The IRS page ABLE accounts, tax benefit for people with disabilities, shown as reviewed or updated July 23, 2026, states an annual limit of $15,000, "the gift tax exclusion amount for 2018". Rev. Proc. 2025-32 § 4.34 sets $20,000 for 2026. Disability onset before age 46 applies to tax years beginning after 2025 (P.L. 117-328, per the notes to § 529A).
Working People with Disabilities program
Ch. 2026-88, Laws of Fla., created § 409.9041, Fla. Stat. (2026) and took effect May 21, 2026 (act). A working adult with a developmental disability who is enrolled in a listed Medicaid home and community-based waiver keeps eligibility with monthly income up to 550 percent of the SSI federal benefit rate. The agency and the Department of Children and Families disregard assets up to $13,000 for an individual and $24,000 for a couple and exclude IRS-recognized retirement accounts. The Department's written notice to enrollees must include a brief overview of a special needs trust authorized by the Social Security Act (§ 409.9041(5)(e)). The Medicaid planning guide has the program's other requirements.
Retirement accounts and life insurance
- Name the trust, not the individual. A beneficiary designation that pays the individual directly is an inheritance counted as income and then as a resource.
- Retirement accounts. A trust for a disabled or chronically ill beneficiary can qualify as an applicable multi-beneficiary trust, so that life-expectancy payments are available instead of the 10-year rule (26 U.S.C. § 401(a)(9)(H)(iv)-(v)). See the guide on inheriting an IRA.
- Estate planning. A third-party trust can be created in a will or in a living trust. A will-based trust is funded through probate.
Trustee duties in Florida
- Administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries (§ 736.0801).
- Inform and account. The trustee must keep qualified beneficiaries reasonably informed and provide trust accountings (§ 736.0813). Records of each payment also support SSI and Medicaid reporting.
- Loyalty, impartiality and prudent administration apply to every trustee (§ 736.0802; § 736.0803; § 736.0804).
- Compensation. If the trust does not specify the trustee's compensation, the trustee is entitled to compensation that is reasonable under the circumstances (§ 736.0708(1)).
- Discretion. A creditor of a beneficiary cannot compel a distribution that is subject to the trustee's discretion (§ 736.0504(2)).
Sources
Last checked: October 17, 2026. Statutes are cited to the 2026 Florida Statutes on the Florida Senate site.
- 42 U.S.C. § 1396p. Liens, adjustments and recoveries; transfers of assets; treatment of trusts.
- CMCS Informational Bulletin, Updated 2026 SSI and Spousal Impoverishment Standards, April 27, 2026.
- 20 C.F.R. § 416.1205, § 416.1121, § 416.1130 and § 416.1140. SSI resource limit; types of unearned income; in-kind support and maintenance; presumed value rule.
- 89 Fed. Reg. 21199 (Mar. 27, 2024). Omitting food from in-kind support and maintenance calculations, effective September 30, 2024.
- SSA POMS SI 01120.200 and SI 01120.203. Trusts; exceptions to counting trusts established on or after January 1, 2000.
- SSA POMS SI 01130.740. ABLE accounts.
- 26 U.S.C. § 529A and Rev. Proc. 2025-32. ABLE programs; 2026 inflation adjustments.
- § 1009.986, Fla. Stat. (2026). Florida ABLE program.
- § 409.9041, Fla. Stat. (2026) and Ch. 2026-88, Laws of Fla.. Working People with Disabilities program.
- § 736.04117, § 736.0504, § 736.0708, § 736.0801 and § 736.0813, Fla. Stat. (2026). Florida Trust Code.
- Fla. Admin. Code R. 65A-1.702 and R. 65A-1.712. SSI-related Medicaid trusts and resource criteria.
- 26 U.S.C. § 401(a)(9). Required distributions; applicable multi-beneficiary trust.
— Common questions
What people ask us about this.
What is the SSI resource limit in 2026?
$2,000 for an individual and $3,000 for a couple, as listed in the Centers for Medicare & Medicaid Services bulletin of April 27, 2026 and 20 C.F.R. § 416.1205.
What is the difference between a first-party and a third-party special needs trust?
A first-party trust holds the disabled person's own assets, must be for the person's sole benefit, and must repay the State from the remainder up to the Medicaid paid (42 U.S.C. § 1396p(d)(4)(A)). A third-party trust holds someone else's assets, and the payback requirement written for trusts holding the individual's assets does not apply to it.
Can a person with a disability set up their own special needs trust?
Yes, since December 13, 2016, if the person is under age 65 and disabled. Section 5007 of the 21st Century Cures Act added the individual to the persons who may establish the trust, according to SSA's instructions (POMS SI 01120.203).
Does the trust have to repay Medicaid?
A first-party trust and the remainder of a pooled-trust account not retained by the nonprofit must repay the State up to the total medical assistance paid. A third-party trust funded only by someone other than the beneficiary is not within the § 1396p(d)(4) payback requirement.
Can a special needs trust pay the beneficiary's rent?
Yes, but SSA counts shelter paid by someone else as in-kind support and maintenance. The reduction is limited by the presumed value rule: at most one-third of the federal benefit rate plus the $20 general income exclusion ($351.33 in 2026) (20 C.F.R. § 416.1140).
Can a special needs trust pay for food?
Food is no longer counted as in-kind support and maintenance under the regulation effective September 30, 2024 (89 Fed. Reg. 21199). Cash paid to the beneficiary is still unearned income.
How much can go into a Florida ABLE account in 2026?
$20,000 from all contributors combined for taxable years beginning in 2026, under Rev. Proc. 2025-32 § 4.34. A beneficiary who works may contribute more under 26 U.S.C. § 529A(b)(7), within the limits stated there.
Does an ABLE account affect SSI?
The first $100,000 is excluded from SSI resources. Above that SSI is suspended while the balance exceeds $100,000, and Medicaid eligibility continues (POMS SI 01130.740).
Can a sibling serve as trustee?
Yes. Unless the instrument specifically disqualifies them, any person, including a family member or friend, is eligible to serve as trustee (stated in the attorney-trustee disclosure paragraph, § 736.0708(4)(a)1.). The trustee owes the duties in §§ 736.0801 to 736.0813, including loyalty, impartiality, prudent administration and the duty to inform and account, and, if the trust does not specify compensation, is entitled to reasonable compensation (§ 736.0708(1)).
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