New Special Needs Trust Rules (2024-2026) | What Changed & What to Do

Last updated February 21, 2026

If You Haven’t Reviewed Your Trust Since 2023, Read This

Several rules affecting special needs trusts changed in 2024 and 2025 — and more take effect in 2026. Some are genuinely big deals. Others are proposals that haven’t become law yet, no matter what you’ve read online.

As a special needs parent with over 15 years navigating this world, I know how hard it is to separate real changes from rumors and wishful thinking. So here’s every rule change that matters for your family’s special needs trust, ABLE account, and government benefits — what actually happened, what’s coming, and what’s still just a proposal.

I’ve organized this from newest to oldest so you can see what’s changed since you last looked.

Every Change at a Glance

This table covers everything — then I’ll walk through each one in detail below.

2026 Changes

ABLE Accounts: Age Expansion from 26 to 46 (January 1, 2026)

This is the biggest special needs planning change in years.

Since ABLE accounts launched in 2014, you could only open one if your disability began before age 26. That cut out millions of people — anyone with a traumatic brain injury at 30, a degenerative condition diagnosed at 35, or late-identified autism at 28.

Starting January 1, 2026, the ABLE Age Adjustment Act expands eligibility to anyone whose disability began before age 46. Approximately 6 million more Americans now qualify, including roughly 1 million veterans.

What this means for trust planning:

• If you or your family member was previously ineligible for ABLE because the disability started between ages 26-45, you can now open an account
• ABLE accounts and special needs trusts work best together — the trust handles large, long-term assets while ABLE provides day-to-day spending independence
• A trustee can fund the ABLE account from the trust (up to $20,000/year in 2026) for expenses the beneficiary manages themselves
• The first $100,000 in an ABLE account doesn’t count toward SSI’s $2,000 asset limit

If you set up your trust before ABLE accounts existed, your trust document may not include language authorizing the trustee to fund an ABLE account. Talk to your attorney about adding this — it’s a simple amendment that opens up a powerful coordination strategy.

Learn more: Our complete ABLE account guide has 2026 details, and our ABLE vs SNT comparison helps you decide how to use both.

2026 ABLE Contribution Limit: $20,000

The annual ABLE contribution limit increased from $19,000 (2025) to $20,000 for 2026. This includes contributions from anyone — the account holder, family members, the trust, or friends.

If the account holder works and doesn’t have an employer retirement plan, they can contribute an additional $15,650 through the ABLE-to-Work provision — for a potential total of $35,650 in 2026.

2026 SSI Payment Amounts

The 2026 cost-of-living adjustment (COLA) is 2.8%:

Some states add a supplement on top of the federal amount. Check your state guide for details.

Why this matters for trusts: The asset limit for SSI is still $2,000 for an individual and $3,000 for a couple (unchanged since 1989). That means the trust continues to be essential — you still can’t save more than $2,000 outside of protected vehicles like an SNT or ABLE account without risking SSI eligibility.

2026 SSDI Amounts

If your family member receives SSDI (based on work history, not assets), these limits went up:

Why this matters: SSDI isn’t asset-tested, so a trust doesn’t directly affect SSDI eligibility. But if the beneficiary receives both SSI and SSDI (concurrent benefits), the trust still matters for the SSI portion. And the SGA limit determines how much a beneficiary can earn from work before losing SSDI — the higher limit in 2026 means slightly more room.

California: Medi-Cal Asset Limits Return (January 1, 2026)

This is a major change for California families specifically. During 2024 and 2025, California eliminated Medi-Cal asset limits entirely — there was no cap on how much you could have and still qualify.

Starting January 1, 2026, asset limits return:

• $130,000 for an individual
• $195,000 for a couple
• A Medi-Cal look-back period also begins phasing in — starting at 0 months in 2026 and gradually increasing to 30 months by July 2028

What California families need to do: If you used the no-asset-limit window to accumulate savings outside of a trust, those assets may now need protection. A special needs trust remains exempt from Medi-Cal asset calculations. If you haven’t set up a trust yet, now is the time — the window of flexibility is closing.

Read more: Our California special needs trust guide covers the full Medi-Cal picture.

2025 Changes

529-to-ABLE Rollovers Are Now Permanent (July 4, 2025)

Before this change, the ability to roll 529 college savings plan funds into an ABLE account was set to expire on December 31, 2025. The One Big Beautiful Bill Act made this provision permanent.

How it works:

• You can roll 529 funds into the beneficiary’s ABLE account tax-free
• The rollover counts toward the annual ABLE contribution limit ($20,000 in 2026)
• The 529 account must have been open for at least 15 years
• Only contributions made more than 5 years ago are eligible for rollover
• The ABLE account beneficiary must be the same person as (or a family member of) the 529 beneficiary

Why this matters for families: If you started a 529 plan for your child before the disability was identified — or if the child won’t use it for college — those savings can now be redirected into an ABLE account permanently. This is a genuine planning tool you can count on, not a temporary provision that might expire.

Separate from 529-to-Roth IRA rollovers: SECURE 2.0 also allows rolling 529 funds into a Roth IRA (up to $35,000 lifetime). These are two different options — one goes to ABLE, one goes to Roth — and both are now permanent. Different rules apply to each.

2024 Changes Still Taking Effect

Trusts Can Now Pay for Food Without Reducing SSI (September 30, 2024)

This one matters for every family with a special needs trust.

For decades, if a trust paid for a beneficiary’s food, SSA considered it “in-kind support and maintenance” (ISM) and reduced the SSI payment by up to one-third plus $20 (about $351/month in 2026). That rule forced families into absurd workarounds — the trust could pay for a vacation or a new laptop, but not a bag of groceries.

Effective September 30, 2024, food is no longer counted as ISM. The SSA’s final rule (89 FR 22003) removed food from the ISM calculation entirely.

What trustees can now do:

• Pay for groceries directly
• Pay for restaurant meals
• Pay for meal delivery services
• Provide food assistance without triggering any SSI reduction

What still triggers an ISM reduction:

• Housing costs — rent, mortgage, property taxes, homeowner’s insurance, utilities, and household maintenance still count as ISM
• The maximum SSI reduction for housing ISM is still one-third of the federal benefit rate plus $20 (roughly $351/month in 2026)

Important detail: The trust should pay vendors directly (grocery store, restaurant, delivery service) rather than giving cash to the beneficiary. Cash to the beneficiary is always a problem, regardless of what it’s intended for.

This change doesn’t require amending your trust document. The rule changed at the federal level — your trustee just needs to know they can now make food purchases without penalty.

Rental Subsidy Policy Expanded Nationwide (September 30, 2024)

Previously available in only 7 states, the rental subsidy policy now applies everywhere. Here’s what it does:

If the SSI beneficiary lives in someone else’s household and pays rent that equals or exceeds the presumed maximum value (PMV) of the shelter they receive, SSA doesn’t count the living arrangement as ISM. In 2026, the PMV is approximately $351/month (one-third of the federal benefit rate plus $20).

What this means for trust planning: If a trust pays rent for the beneficiary at or above the PMV amount, there may be no SSI reduction at all. Previously, this protection was only available in a handful of states. Now it’s a nationwide option.

This is especially relevant for beneficiaries living with family. If the trust pays the family a reasonable rent amount (at least the PMV), the beneficiary avoids the ISM penalty entirely. Talk to your attorney about structuring this correctly.

Foundation Changes (2016–2022)

These aren’t new for 2026, but they’re important if your trust was drafted before they happened — and they still show up frequently in “new rules” searches because many families are just discovering them.

You Can Create Your Own First-Party Trust (2016)

The Special Needs Trust Fairness Act, signed into law on December 13, 2016, changed who can establish a first-party special needs trust.

Before: A first-party trust (funded with the disabled person’s own money) could only be established by a parent, grandparent, guardian, or court. The actual person with the disability — whose money it was — couldn’t create their own trust.

After: A mentally competent person with a disability under age 65 can now establish their own first-party trust without court involvement or a third party.

Why it still matters: Many families don’t know this option exists. If your adult child with a disability receives an inheritance, a lawsuit settlement, or other windfall, they may be able to set up their own first-party trust to protect benefits — without waiting for a court to act. Time matters in these situations because benefits can be suspended while assets sit in the beneficiary’s name.

Disabled Beneficiaries Can Stretch Inherited IRAs (SECURE Act, 2020)

The SECURE Act (2020) changed how inherited retirement accounts work. Most non-spouse beneficiaries now must withdraw the entire account within 10 years — which can create a massive, sudden asset that destroys benefit eligibility.

But there’s a critical exception: beneficiaries with disabilities (and chronically ill individuals) are classified as “eligible designated beneficiaries” and can still stretch distributions over their life expectancy.

What this means for trust planning:

• If you have an IRA or 401(k) and want to leave it to a disabled beneficiary, you can name a properly drafted special needs trust as the beneficiary
• The disabled beneficiary (through the trust) can take distributions over their lifetime rather than being forced to withdraw everything in 10 years
• This preserves both the tax advantages and the benefit eligibility
• The trust must be a “see-through” trust that meets specific IRS requirements — your attorney needs to draft this correctly

If your trust was drafted before 2020 and you’re planning to leave retirement account assets to it, ask your attorney whether the trust language works under the SECURE Act rules.

SECURE 2.0: More Tools for Trust Planning (2022–2024)

The SECURE 2.0 Act (December 2022) added several provisions relevant to special needs planning, with some phasing in through 2024:

529-to-ABLE rollovers — Described above. Originally temporary, now permanent as of July 2025.

529-to-Roth IRA rollovers (effective January 1, 2024) — You can roll up to $35,000 lifetime from a 529 plan into a Roth IRA for the beneficiary. The 529 account must have been open 15+ years, contributions must be 5+ years old, and the beneficiary must have earned income. Annual rollovers are limited to the Roth IRA contribution limit ($7,000 in 2026, or $8,000 if 50+).

Charitable remainder beneficiaries — SNTs can now name a charity as the remainder beneficiary without triggering the 10-year distribution requirement on inherited IRAs. This gives families more flexibility in trust design.

RMD age increase — Required minimum distribution age rose to 73 in 2023 (moving to 75 in 2033). This gives more time before retirement account distributions begin, which helps families plan their trust funding strategy.

Legislation to Watch — NOT Yet Law

SSI Asset Limit Increase — $2,000 to $10,000 (Proposed)

The SSI Savings Penalty Elimination Act was reintroduced in April 2025 with bipartisan support. It would:

• Raise the individual SSI asset limit from $2,000 to $10,000
• Raise the couple limit from $3,000 to $20,000
• Index the limits to inflation permanently

The current $2,000 limit has been in place since 1989 — 37 years without adjustment. Adjusted for inflation, the original 1989 limit would be approximately $5,200 today.

What it would mean for trusts: If this passes, families with modest assets might not need a trust at all. But for any family with more than $10,000 in assets earmarked for their loved one’s care, a special needs trust would still be essential. Don’t delay trust planning while waiting for this to pass — the bill has been introduced multiple times over several years without becoming law.

SSI Marriage Penalty Elimination (Proposed)

Currently, when two SSI recipients marry, their combined asset limit drops from $4,000 ($2,000 each) to $3,000 as a couple — and their combined payment drops by about 25%. Multiple bills have proposed eliminating this penalty. None have passed.

For trust planning: The marriage penalty is one reason couples with disabilities sometimes avoid legal marriage. If your family member is considering marriage, a special needs trust can help protect individual assets regardless of whether this penalty is eventually eliminated.

Medicaid Estate Recovery Repeal (Proposed)

The Stop Unfair Medicaid Recoveries Act (introduced January 2026) would eliminate the federal requirement that states recover Medicaid costs from deceased recipients’ estates. Currently, this is why first-party trusts require a Medicaid payback clause — when the beneficiary dies, the state is reimbursed for Medicaid services before remaining trust assets pass to heirs.

What it would mean: If passed, first-party trusts would no longer require Medicaid payback, making them significantly more attractive. But this is far from certain — estate recovery generates revenue for states, and opposition is expected.

Current reality: Estate recovery rules vary dramatically by state. Some states only recover from probate assets (favorable for trusts). Others pursue non-probate assets aggressively. Check your state guide for how your state handles estate recovery today.

Do You Need to Update Your Trust?

Not every rule change requires a trust amendment. Some changes affect how your trustee operates day-to-day, not what’s in the document. Here’s how to think about it:

You Should Talk to Your Attorney If:

• Your trust was created before 2016 — It may not reflect the self-establishment rules, ABLE coordination language, or current trust code provisions. A comprehensive review is worth the cost.
• Your trust doesn’t mention ABLE accounts — If the trustee doesn’t have explicit authority to fund an ABLE account, they may be reluctant to do so. Adding ABLE coordination language is a simple amendment.
• You’re leaving retirement accounts to the trust — The SECURE Act changed how inherited IRAs work. Your trust must be properly structured as a “see-through” trust to preserve the stretch distribution for disabled beneficiaries. Pre-2020 trusts may need adjustment.
• You’re in California — With Medi-Cal asset limits returning and the look-back period phasing in, your planning strategy may need to change. What worked in 2024-2025 may not work in 2026.
• Your trust has restrictive distribution language — Some older trusts specifically prohibit food purchases or limit distributions to “supplemental” needs only. With the food rule change, you may want broader language.

You Probably Don’t Need to Amend If:

• Your trust was drafted in the last 3-5 years by a special needs planning attorney — modern trusts are generally written with flexible language that accommodates rule changes.
• The food rule change is the only relevant update — Your trustee just needs to know they can now make food purchases. No document change required.
• You have a pooled trust — The nonprofit managing the trust handles compliance updates.

Either Way, Your Trustee Needs to Know

Even if the trust document doesn’t need amending, your trustee should understand the current rules. The most common problem isn’t an outdated trust — it’s a trustee still following outdated rules. Make sure your trustee knows:

1. Food expenses are now allowed without SSI penalty
2. Housing costs still reduce SSI (this hasn’t changed)
3. ABLE accounts can be funded from the trust for day-to-day expenses
4. The rental subsidy policy now applies in every state

What to Do Next

You don’t need to do everything at once. But here’s a sensible priority list based on where you are:

If You Don’t Have a Trust Yet

These rule changes don’t eliminate the need for a special needs trust. The SSI asset limit is still $2,000, Medicaid still has eligibility requirements, and most families have (or will have) assets that exceed those limits. If anything, the ABLE expansion makes having both a trust and an ABLE account the strongest strategy available.

• Read your state guide for local rules, costs, and pooled trust options
• Use our free calculator to assess your situation
• Find a qualified special needs attorney — look for CELA certification or Special Needs Alliance membership

If You Already Have a Trust

1. Tell your trustee about the food rule change — They can start paying for groceries and meals immediately
2. Check if ABLE coordination language exists — If not, ask your attorney about adding it
3. Review beneficiary designations — Are your IRAs, 401(k)s, and life insurance directed to the trust (not the individual)?
4. If you’re newly ABLE-eligible (disability onset at age 26-45), open an ABLE account and coordinate with your trust
5. Schedule a trust review if it’s been more than 5 years since the last one

If You’re in California

The return of Medi-Cal asset limits on January 1, 2026 makes this urgent. If you accumulated assets during the no-limit period, you need a plan for protecting them. A special needs trust is exempt from Medi-Cal asset calculations. Don’t wait for the look-back period to phase in. Read our California guide.

What’s NOT Changing (Despite What You May Have Heard)

Misinformation spreads fast online. Let me be clear about what has not changed:

• SSI asset limit is still $2,000/$3,000 — The proposed increase to $10,000 is not law. Plan accordingly.
• Housing costs still reduce SSI — Only food was removed from ISM. Rent, mortgage, utilities, and property taxes still trigger a reduction.
• The marriage penalty still exists — Married SSI couples still receive 25% less than two individuals.
• Medicaid estate recovery is still required — First-party trusts still require a Medicaid payback clause at death.
• The $2,000 Medicaid resource limit applies in most states (though some states have higher limits or have eliminated asset tests for certain programs).
• Special needs trusts are still necessary — None of these changes eliminate the fundamental need for a trust if your family has assets to protect.

Frequently Asked Questions

Can a special needs trust pay for food now?

Yes. As of September 30, 2024, food is no longer counted as in-kind support and maintenance (ISM) by Social Security. A trustee can now pay for groceries, restaurant meals, and food delivery without reducing the beneficiary’s SSI payment. The trust should pay vendors directly rather than giving cash to the beneficiary. Housing costs (rent, utilities, mortgage) still count as ISM and still reduce SSI.

Do I need to amend my special needs trust because of the new rules?

Not necessarily. The food rule change doesn’t require a trust amendment — your trustee just needs to know the rule changed. However, you should consider an amendment if your trust was created before 2016, doesn’t include ABLE account coordination language, or if you’re planning to leave retirement accounts to the trust under SECURE Act rules. A trust review every 3-5 years is good practice.

What is the ABLE account age limit in 2026?

Starting January 1, 2026, ABLE accounts are available to individuals whose disability began before age 46 (previously age 26). You must also receive SSI or SSDI, or have a physician’s certification of a qualifying disability. About 6 million more Americans become eligible under this expansion.

Has the SSI asset limit changed?

No. The SSI asset limit remains $2,000 for individuals and $3,000 for couples — the same since 1989. The SSI Savings Penalty Elimination Act, which would raise the limit to $10,000, has been proposed but not enacted. Do not plan based on this proposal. A special needs trust remains the primary way to protect assets above $2,000 without losing SSI.

Can I roll a 529 plan into an ABLE account?

Yes, and this is now permanent as of July 2025. The 529 account must have been open for at least 15 years, only contributions made more than 5 years ago are eligible, and the rollover counts toward the annual ABLE limit ($20,000 in 2026). The ABLE account beneficiary must be the same person as the 529 beneficiary or a family member.

How does the SECURE Act affect special needs trusts?

The SECURE Act requires most inherited IRA beneficiaries to withdraw the full account within 10 years. But beneficiaries with disabilities are exempt — they can still stretch distributions over their life expectancy. If you’re leaving retirement accounts to a special needs trust, the trust must be structured as a “see-through” trust to qualify for this exception. Pre-2020 trusts may need review.

What changed about housing and SSI?

Two things. First, the rental subsidy policy — which protects SSI recipients from reductions when they pay fair-market rent — expanded from 7 states to all 50 states plus DC (September 30, 2024). Second, food was removed from the ISM calculation, but housing costs (rent, mortgage, utilities) still count as ISM. If a trust pays for shelter, SSI can still be reduced by up to one-third of the federal benefit plus $20.

Is the Medicaid payback rule going away?

Not yet. The Stop Unfair Medicaid Recoveries Act has been proposed but not enacted. First-party special needs trusts still require a Medicaid payback clause — when the beneficiary dies, the state must be reimbursed for Medicaid costs before remaining funds are distributed. Third-party trusts (funded by parents, grandparents, or others) have no payback requirement.

Related Guides

Written by a special needs parent. Not legal advice — always consult a qualified attorney for your specific situation. This page is updated as rules change. Last reviewed February 2026.