The Achieving a Better Life Experience (ABLE) Act The History, The Mechanics, The Future

Size: px

Start display at page:

Download "The Achieving a Better Life Experience (ABLE) Act The History, The Mechanics, The Future"

Horace Rich
5 years ago
Views:

1 The Achieving a Better Life Experience (ABLE) Act The Histry, The Mechanics, The Future HCBS Cnference September 3, 2015

2 Agenda Histry f the ABLE Act Passage ABLE Act Cre Cmpnents What is the ABLE Act? Hw can yu use an ABLE Accunt? ABLE Act Implementatin Status f Federal and State Implementatin Ntice f Prpsed Rule Making Rle f the ABLE Natinal Resurce Center Questins and Answers 2

3 A histrical nine year jurney What tk us frm here t there! A kitchen table idea President s desk

Mst significant disability legislatin since

4 The ABLE Act Stry A lng, pen rad! 85% f the entire US Cngress supprted the ABLE Act 381 ut f 435 in the US Huse f Representatives 78 ut f 100 in the US Senate Mst significant disability legislatin since the Americans with Disabilities Act (ADA) was passed 25 years ag

Peple with disabilities can nly have $2,000 in assets at any given time t remain eligible fr Medicaid (ur natinal healthcare system fr peple with disabilities) and Scial Security Insurance (SSI)

disabilities are ging t cllege we have 250 pstsecndary prgrams in the US nw Peple with disabilities are pursuing emplyment pprtunities, especially in cmpetitive and integrated settings, like n ther

purpse f supprting individuals with disabilities t maintain health, independence, and quality f life The legislative intent f ABLE Accunts is t prvide secure funding fr disability-related expenses n

5 Peple with disabilities can nly have $2,000 in assets at any given time t remain eligible fr Medicaid (ur natinal healthcare system fr peple with disabilities) and Scial Security Insurance (SSI) Medicaid & SSI d nt prvide all the necessary supprts and services We disincentive emplyment in the US Sheltered Wrkshps and sub-min wage is legal, unemplyment rates are very high in the US Peple with disabilities are ging t cllege we have 250 pstsecndary prgrams in the US nw Peple with disabilities are pursuing emplyment pprtunities, especially in cmpetitive and integrated settings, like n ther time Peple with disabilities want t wrk and can Peple with disabilities are living lnger and have s much t cntribute T encurage and assist individuals and families in saving private funds fr the purpse f supprting individuals with disabilities t maintain health, independence, and quality f life The legislative intent f ABLE Accunts is t prvide secure funding fr disability-related expenses n behalf f designated beneficiaries with disabilities T supplement, but nt supplant, benefits prvided thrugh private insurances, the Medicaid prgram, the supplemental security incme prgram, the beneficiary s emplyment, and ther surces

6 What it tk t get the ABLE Act passed

7 The ABLE Act Becmes the Law f the Land December 19, 2014

8 ABLE Act in the States 33 states have enacted their wn versins f the ABLE Act and shuld be in the prcess f setting up state ABLE prgrams. Thse states are: Alabama, Arkansas, Clrad, Cnnecticut, Delaware, Flrida, Hawaii, Iwa, Kansas, Luisiana (prefederal and pst-federal), Maryland, Massachusetts (pre-federal), Minnesta, Missuri, Mntana, Nebraska, Nrth Dakta, Nevada, Rhde Island, Tennessee, Texas, Utah, Vermnt, Virginia, Washingtn, Wiscnsin and West Virginia 8

9 ABLE Act in the States (Cn t) 9 The fllwing states have passed ABLE related legislatin and are currently awaiting the Gvernr's signature: Illinis, New Yrk, Ohi, Oregn. The fllwing states have ABLE bills filed that are still active: Califrnia, District f Clumbia, Maine, Massachusetts (revisin f pre-federal legislatin), Michigan, New Jersey, Nrth Carlina, and Pennsylvania. We expect mst f these bills t becme law.

10 What is an ABLE Accunt? 10 ABLE accunts: Are established in the new Sectin 529A Qualified ABLE Prgrams Are qualified savings accunts that receive preferred federal tax treatment Enable eligible individuals t save fr disability related expenses Are NOT yet available, and there are still sme unknwns *Assets in and distributins fr qualified disability expenses will be disregarded r given special treatment in determining eligibility fr mst federal means-tested benefits

11 What are sme imprtant requirements f ABLE accunt? 11 Each eligible individual may have nly ne ABLE accunt. Designated beneficiary is the accunt wner Accunt must be established in the designated beneficiary s state f residence, r in a cntracting state Ttal annual cntributins may nt exceed the federal gift tax limit, which is currently $14,000 Multiple individuals may make cntributins t the ne ABLE accunt Aggregate cntributins may nt exceed the state limit fr 529 savings accunts

12 Wh is eligible t be an ABLE accunt beneficiary? 12 T be eligible, individuals must meet tw requirements: 1) Age requirement: must be disabled befre age 26 2) Severity f disability: Have been determined t meet the disability requirements fr Supplemental Security Incme (SSI) r Scial Security disability benefits (Title XVI r Title II f the Scial Security Act) Submit a disability certificatin, including a physician s diagnsis, that the OR individual meets criteria t be further established in regulatins (essentially equal t Scial Security level f disability)

13 What may funds frm an ABLE accunt be used fr? 13 Distributins frm an ABLE accunt may be made fr qualified disability expenses, related t the individual s disability r blindness and made fr his/her benefit, including: Educatin Husing Transprtatin Emplyment training and supprt Assistive technlgy and persnal supprt services Health, preventin, and wellness Financial management and administrative services Legal fees Expenses fr versight and mnitring Basic Living Expenses (NPRM) Funeral and burial expenses Any ther expenses apprved by the Secretary f the Treasury under regulatins cnsistent with the purpse f the prgram Expenditures fr nn-qualified expenditures will be penalized (tax and ptential SSI penalties)

14 Hw d ABLE accunt assets impact eligibility fr federal benefits? 14 ABLE assets will be disregarded r receive favrable treatment when determining eligibility fr mst federal means-tested benefits Fr SSI nly, the first $100,000 in ABLE accunt assets will be disregarded SSI payments will be suspended if the beneficiary s accunt balance exceeds $100,000 but SSI benefits (eligibility) will nt be terminated. Funds abve $100,000 will be treated as resurces Husing expenses are intended t receive the same treatment as all husing csts paid by utside surces (SSI benefits subject t reductin f 1/3 federal SSI payment, as applicable)

15 Impact n Federal Benefits (Cn t) 15 Medicaid: ABLE assets are disregarded in determining Medicaid eligibility Medicaid benefits are NOT suspended if the ABLE accunt balance exceeds $100,000 Medicaid Payback: Any assets remaining in the ABLE accunt when a beneficiary dies, subject t utstanding qualified disability expenses, will be used t reimburse a state fr Medicaid payments made n behalf f the beneficiary after the creatin f the ABLE accunt Fr purpses f this sectin, the state is cnsidered a creditr f the ABLE accunt, nt a beneficiary

16 Tax Implicatins n an ABLE Accunt 16 Cntributins t an ABLE accunt are made with pst-tax dllars Federal taxatin: In general, ABLE prgrams are exempt frm taxatin. Distributins frm ABLE accunts fr qualified disability expenses are exempt frm taxatin. With certain exceptins, distributins nt used fr qualified disability expenses are taxable and subject t an additinal 10% tax State taxatin: State tax cnsequences will vary. Sme states prvide significant tax incentives fr cntributins t 529 accunts and may prvide similar incentives fr cntributins t ABLE accunts

17 When will ABLE accunts be available? 17 Befre ABLE accunts becme available, States need t pass authrizing legislatin Each state must decide whether (and hw) t ffer a qualified ABLE prgram t residents sme cnsidering authrizing legislatin nw Analyze Ntice f Prpsed Rule Making The timing f ABLE prgram availability will vary frm state t state

Meet Brian Brian is a 26 year ld man with Dwn Syndrme Brian wrks 20 hurs a week at a cmmunity rehabilitatin prgram making sub-minimum wage but has expressed his desire t wrk in an integrated

18 Meet Brian Brian is a 26 year ld man with Dwn Syndrme Brian wrks 20 hurs a week at a cmmunity rehabilitatin prgram making sub-minimum wage but has expressed his desire t wrk in an integrated envirnment making a cmpetitive wage Brian lives at hme with his parents wh have partial guardianship ver Brian, including supprt t versee his finances Brian wishes t eventually live n his wn with limited supprts & becme as financially independent as pssible Brian is heavily dependent n the supprts and services prvided thrugh Medicaid, Scial Security & ther federally funded prgrams Brian, with the supprt f his family, has just recently established an ABLE accunt t assist in his gals 18

Meet Mlly Mlly was injured in a car accident when she was 23 and has since been reliant n a wheelchair fr mbility Mlly is currently 34 & unemplyed Mlly wants t wrk Mlly is afraid she will lse her

19 Meet Mlly Mlly was injured in a car accident when she was 23 and has since been reliant n a wheelchair fr mbility Mlly is currently 34 & unemplyed Mlly wants t wrk Mlly is afraid she will lse her federally funded benefits which are imperative in cvering her living expenses & paying fr her medical necessities related t her disability Mlly recently established an ABLE accunt in her state 19

20 Ntice f Prpsed Rule Making (NPRM) On June 19 th, the US Department f Treasury, in cnjunctin with the IRS, released a Ntice f Prpsed Rule Making (NPRM) regarding the Achieving a Better Life Experience (ABLE) Act 20 The NPRM acts t: assist states and prgram administratrs in better understanding the guidelines n hw t develp and maintain an ABLE prgram give additinal clarificatin t parts f the law which may benefit frm further explanatin and/r guidance allw fr a 90 day perid fr the public, including individuals with disabilities and their families, disability related advcacy grups, state administratrs, and ther stakehlders, t prvide input n the varius cmpnents f the NPRM

21 Majr Areas f the NPRM 21 Establishing an Accunt and Signature Authrity Eligibility and Re-Certificatin Transfers, Rllvers, Residency Requirements Cntributins Distributins Qualified Disability Expenses Cmmunity Develpment Financial Institutins (CDFIs)

22 Establishing an Accunt and Signature Authrity 22 The prpsed regulatins prvide that: The eligible individual is respnsible fr establishing the accunt The designated beneficiary is the wner f the accunt

23 Establishing an Accunt and Signature Authrity (Cn t) HOWEVER 23 If an eligible individual is unable t establish an ABLE accunt n his r her wn behalf, the ABLE accunt may be established by the eligible individual s agent under a pwer f attrney r, if nne, by a parent r legal guardian f the eligible individual. AND If the designated beneficiary is nt able t exercise signature authrity ver his r her ABLE accunt r chses t establish an ABLE accunt but nt exercise signature authrity, the designated beneficiary s agent under a pwer f attrney r, if nne, a parent r legal guardian f the designated beneficiary may be given signature authrity.

24 Eligibility and Re-Certificatin 24 The prpsed regulatins prvide that: Eligibility shuld be determined fr each taxable year, and that determinatin applies fr the entire year A qualified ABLE prgram may impse different peridic recertificatin requirements fr different types f impairments A qualified ABLE prgram must specify the dcumentatin that must be prvided, bth at the time an ABLE accunt is established and thereafter, t ensure that the designated beneficiary is, and cntinues t be, an eligible individual

25 Lss f Qualificatin as an Eligible Beneficiary 25 The prpsed regulatins prvide that: If the qualified beneficiary ceases t be an eligible beneficiary the accunt will still remain an ABLE accunt and the individual will cntinue t be a designated beneficiary HOWEVER beginning n the first day f the designated beneficiary s first taxable year fr which the designated beneficiary des nt satisfy the definitin f an eligible individual, additinal cntributins t the designated beneficiary s ABLE accunt are n lnger allwed and distributins will nt be cnsidered qualified disability expenses. If the individual regains eligibility the mratrium will be lifted.

26 Transfers, Rllvers, Residency Requirements 26 The prpsed regulatins prvide that: A qualified ABLE prgram may cntinue t maintain the ABLE accunt after that designated beneficiary changes his r her residence t anther State Funds in a qualified tuitin accunt (typical 529) will nt be allwed t be rlled ver t an ABLE accunt absent tax cnsequences and penalties A qualified ABLE prgram is allwed a prgram-t-prgram transfers t effectuate a change f qualified ABLE prgram r a change f designated beneficiary t anther eligible individual (prvided that the successr is a sibling f the frmer beneficiary and the transfer is made prir t the death f the transferring accunt wner)

27 Cntributins The prpsed regulatins prvide that: A qualified ABLE prgram may accept cash cntributins in the frm f cash r a check, mney rder, credit card payment, r ther similar methd f payment 27 The ttal annual cntributins t an ABLE, ther than amunts received in rllvers and prgram-t-prgram transfers, must nt exceed the individual gift tax exclusin in effect fr that calendar year (currently $14,000) in which the designated beneficiary s taxable year begins A qualified ABLE prgram must prvide adequate safeguards t ensure that ttal cntributins t an ABLE accunt d nt exceed that State s limit fr aggregate cntributins under its qualified tuitin prgram

28 Cntributins (Cn t) The prpsed regulatins prvide that: 28 A qualified ABLE prgram must return cntributins in excess f the annual gift tax exclusin (excess cntributins) t the cntributr(s), including net incme attributable t the excess cntributins A qualified ABLE prgram must return all cntributins, alng with all net incme attributable t thse cntributins, that caused an ABLE accunt t exceed the limit established by the State fr its qualified tuitin prgram (excess aggregate cntributins) If an excess cntributin r excess aggregate cntributin is returned t a cntributr, the qualified ABLE prgram must ntify the designated beneficiary f such return at the time f the return In rder t avid penalties and tax cnsequences the fund must be returned n a last in, first ut basis and n later than the due date f the beneficiary s tax return fr the year in which the excess cntributins were made

29 Distributins The prpsed regulatins prvide that: 29 An ABLE accunt may be used fr lng-term benefit and/r shrt-term needs f the designated beneficiary It wuld be reasnable t expect distributins and frequency f distributin t reflect that

30 Qualified Disability Expenses 30 The prpsed regulatins prvide that: Qualified disability expenses are expenses that relate t the designated beneficiary s blindness r disability and are fr the benefit f that designated beneficiary in maintaining r imprving his r her health, independence, r quality f life The term qualified disability expenses shuld be bradly cnstrued t permit the inclusin f basic living expenses and shuld nt be limited t: expenses fr items fr which there is a medical necessity, r which prvide n benefits t thers in additin t the benefit t the eligible individual.

31 Qualified Disability Expenses (Cn t) 31 A qualified ABLE prgram must establish safeguards t distinguish between distributins used fr the payment f qualified disability expenses and ther distributins. A qualified ABLE prgram must permit the identificatin f the amunts distributed fr husing expenses as that term is defined fr purpses f the Supplemental Security Incme prgram f the Scial Security Administratin.

32 Cmmunity Develpment Financial Institutins (CDFIs) 32 As a means t ffset administrative burden, the prpsed regulatins expressly allw a qualified ABLE prgram t cntract with ne r mre Cmmunity Develpment Financial Institutins (CDFIs) that cmmnly serve disabled individuals and their families t prvide ne r mre required services.

33 Next Steps 33 The deadline fr submitting public cmment is September 21 st, 2015 The NPRM can be fund at (including instructins n hw t submit public cmments): There will be a public hearing held in Washingtn DC n Octber, 14 th at 10am Preliminary Summary f Highlights fr Individuals with Disabilities and their Families:

34 34 ABLE Natinal Resurce Center

35 ABLE Natinal Resurce Center Cllabratin f ver 30 Natinal Disability Organizatins Managed by Natinal Disability Institute and Natinal Dwn Syndrme Sciety Prvide a cnsistent disability vice t accelerate ABLE Act implementatin at the federal and state levels 35

36 36 Questins frm the Audience

37 Cntact Infrmatin 37 Sara Hart Weir President Natinal Dwn Syndrme Sciety Chris Rdriguez Senir Public Plicy Advisr Natinal Disability Institute

Implementing ABLE: 2016

Implementing ABLE: 2016 Mderatr: Michael Mrris, Executive Directr Natinal Disability Institute (NDI) ablenrc.rg Agenda Slide 2 ABLE Basics and Cre Cmpnents Status f Federal and State Implementatin Ntice