Understanding ABLE accounts in California

Many of the safety nets designed to support the disabled, such as Social Supplemental Income (SSI), Social Security Disability Income (SSDI), and Medi-Cal (Medicaid), impose strict asset limits often capping eligibility at around $2,000 in total savings, cash, and retirement funds. For years, these asset restrictions forced disabled people to choose between building even modest financial security and keeping the critical benefits they depend on.

What is a CalABLE account?

On December 19^th, 2014, the Achieving a Better Life Experience (ABLE) Act was signed into federal law, opening the door for individuals with disabilities to create tax-advantaged investment accounts and save money while remaining eligible for vital public benefits.

Once launched, the California legislature moved to implement the ABLE Act across the state, calling it the CalABLE program, and began offering disabled individuals and their families a pathway to save and plan for their future.

Who is eligible?

You may be eligible for a CalABLE account in one of two ways:

• You are eligible for SSI or SSDI because of a disability OR
• Your licensed physician signs a disability self-certification form specifying the diagnosis and stating that you meet Social Security’s definition of “marked and severe” functional limitations which began before age 46*.
  • Examples of such functional limitations include blindness, a condition on the Social Security’s Listing of Impairments, or a condition on Social Security’s List of Compassionate Allowances.

* The age of onset for a qualifying disability increased from age 26 to 46 beginning January 1, 2026.

Key Benefits

• Low cost and simple to set up
• Investment income is federal and California tax-free.
• Funds can be withdrawn tax-free if used for qualifying disability expenses.
• For SSI recipients, the first $100,000 of CalABLE account funds are protected from being counted towards the $2,000 SSI asset limit.
• Up to $529,000 can be saved without impacting someone’s current or future eligibility for other needs-based programs such as, FAFSA (Free Application for Federal Student Aid), HUD (House and Urban Development), SNAP (Supplemental Nutrition Assistance Program), Medi-Cal, Medicare, SSDI, or VRS (Vocational Rehabilitation Services).
• As of 2026, contributions are capped annually at $20,000. However, employed account owners are allowed to save an additional $15,650 (the federal poverty level) on top of the standard limit, meaning total contributions could reach $35,650 for 20261.
• Any person can contribute to another person’s ABLE Account. Family, friends, and trusts such as Special Needs Trusts are included.
• Funds in a CalABLE accounts are protected from creditors and generally exempt from Medi-Cal estate recovery.
• A lifetime maximum of $35,000 can be rolled over to a Roth IRA for the disabled individual.

Key Drawbacks

• Contribution limits may not provide enough savings for individuals with higher disability-related expenses. The annual limits apply to all contributions regardless of how many people contribute.
• Investment options are limited to 8 static asset allocation portfolios with pre-selected investments.
• Funds are not protected from Medi-Cal estate recovery if passed through probate2.
• Only individuals that meet the disability criteria and the age of onset requirement are eligible to open an account.

What expenses qualify for tax-free treatment?

Some examples of eligible expenses are:

• Education including tuition, books, supplies, computers, or other assistive technology.
• Housing including rent, purchase of a primary home, expenses of a primary home, mortgage payments, mortgage insurance if required by a lender, property taxes, utility charges, home improvement, changes, maintenance, and repairs.
• Transportation including use of mass transit, vehicle purchase, alteration of vehicle to accommodate a disability, moving expenses, taxis or ride sharing service.
• Employment Support including costs related to gaining and maintaining employment, job-related training, a job coach, employment training, benefits planning.
• Health and Wellness including premiums for health insurance, mental health, medical, vision, and dental expenses, habilitation and rehab services, durable medical equipment, therapy, respite care, long-term care, nutritional management, and personal assistance.
• Assistive Technology and Personal Support including costs, communication services and devices, adaptive equipment.
• Miscellaneous Expenses including financial management and administrative services, legal fees, oversight and monitoring, funeral and burial expenses.

When a CalABLE account makes sense

CalABLE accounts may be a good fit for disabled individuals who have less than $100,000 or who seek independence and direct control over their own savings. Large sums such as settlements, inheritances, transferring a home, an IRA, or an amount larger than $100,000, are usually better handled via a Special Needs Trust.

Resources

Open a CalABLE Account

¹ CalABLE Program Statement

² CalABLE Account Impacts on Medi-Cal Eligibility Fact Sheet

The information provided herein is for educational purposes only, and should not be construed as advice, including, but not limited to tax, legal, insurance, investment, or retirement advice. For your specific planning needs, please seek the advice of Integris Wealth Management, your tax accountant, attorney, insurance agent, or other professional as appropriate. Investing involves the risk of loss.