Implementing ABLE: 2016

Transcription

1 Implementing ABLE: 2016 Mderatr: Michael Mrris, Executive Directr Natinal Disability Institute (NDI) ablenrc.rg

2 Agenda Slide 2 ABLE Basics and Cre Cmpnents Status f Federal and State Implementatin Ntice f Prpsed Rule and IRS Ntice Presentatin frm SSA n POMS State Perspective and Prgram Sptlight Questins and Answers ablenrc.rg

3 The ABLE Act is Law Slide 3 The Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act became law n December 19, 2014 creates a new ptin fr sme peple with disabilities and their families t save fr the future, while prtecting eligibility fr public benefits. ablenrc.rg

4 What is an ABLE Accunt? Slide 4 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, but the first prgrams are expected in early-mid 2016 Assets in and distributins fr qualified disability expenses will be disregarded r given special treatment in determining eligibility fr mst federal means-tested benefits ablenrc.rg

5 What are sme imprtant requirements f ABLE accunts? Each eligible individual may have nly ne ABLE accunt. Slide 5 Designated beneficiary is the accunt wner (althugh anther persn such as a parent r guardian may be allwed signature authrity ver the accunt). Originally accunts were required t be established in the designated beneficiary s state f residence, r in a cntracting state, THIS IS NO LONGER THE CASE AS A RESULT OF A RECENT CONGRESSIONAL AMENDMENT TO THE LAW*. Ttal annual cntributins may nt exceed the federal gift tax cntributin, which is currently $14,000 (this will peridically be adjusted fr inflatin). Multiple individuals may make cntributins t an ABLE accunt. Aggregate cntributins may nt exceed the state limit fr 529 savings accunts, typically set at ver $250,000. ablenrc.rg

6 Wh is eligible t be an ABLE accunt beneficiary? T be eligible, individuals must meet tw requirements: Slide 6 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) and are receiving thse benefits, Submit a disability certificatin assuring that the individual hlds dcumentatin f a physician s diagnsis and signature, and cnfirming that the individual meets the functinal disability criteria in OR the ABLE Act (related t the severity f disability described in Title XVI r Title II f the Scial Security Act)*. ablenrc.rg

7 What may funds frm an ABLE accunt be used fr? Slide 7 Distributins frm an ABLE accunt may be made fr qualified disability expenses. 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. ablenrc.rg

8 Qualified disability expenses may include the fllwing: 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 Distributins fr nn-qualified expenditures will be subject t tax cnsequences and may affect eligibility fr federal means tested benefits. Slide 8 ablenrc.rg

9 Hw d ABLE accunt assets impact eligibility fr federal benefits? Slide 9 ABLE assets will be disregarded r receive favrable treatment when determining eligibility fr mst federal means-tested benefits: Supplemental Security Incme(SSI): Fr SSI, nly the first $100,000 in ABLE accunt assets will be disregarded. SSI payments (mnthly cash benefit) 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 intended t receive the same treatment as all husing csts paid by utside surces. Hwever, new SSA instructins (POMS) will treat husing expenses as resurces nly if distributed in ne mnth and held until the fllwing mnth. (mre later) ablenrc.rg

10 Impact n Federal Benefits (cnt.) Slide 10 Medicaid: ABLE assets are disregarded in determining Medicaid eligibility Medicaid benefits are NOT suspended if the ABLE accunt balance exceeds $100,000 (that is nly applicable t the SSI cash benefit) Medicaid Payback: Any assets remaining in the ABLE accunt when a beneficiary dies, subject t utstanding qualified disability expenses, can be used t reimburse a state fr Medicaid payments made n behalf f the beneficiary after the creatin f the ABLE accunt (the state wuld have t file a claim fr thse funds)* Fr purpses f this sectin, the state is cnsidered a creditr f the ABLE accunt, nt a beneficiary ablenrc.rg

11 Tax Implicatins Slide 11 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. ablenrc.rg

12 When will ABLE accunts be available? Slide 12 Befre ABLE accunts becme available, a State must pass authrizing legislatin t begin t establish a prgram. Each state must decide whether (and hw) t ffer a qualified ABLE prgram. The timing f ABLE prgram availability will vary frm state t state, hwever due t the eliminatin f the residency requirement, qualified beneficiaries may be able t enrll in a prgram as sn as the first prgram is up and running*. ablenrc.rg

13 Federal Implementatin Slide 13 The Department f Treasury, in cnjunctin with the IRS, has released a Ntice f Purpsed Rule Making (NPRM) and tw ther Advanced Ntices. We expect final rules t be published in mid-late 2016 (states can begin t enrll qualified beneficiaries regardless f when the final rules are published). The Scial Security Administratin (SSA) has released a guidance n ABLE thrugh its Prgram Operatins Manual System (POMS) and their wn NPRM regarding reprting requirements. We d expect further supplemental guidance frm ther federal agencies that administer varius federal means tested prgrams (ex. CMS, Educatin, and HUD). ablenrc.rg

14 State Implementatin Slide states have enacted their wn versins f the ABLE Act and shuld be in the prcess f setting up state ABLE prgrams. We expect there culd be anywhere frm 5-7 prgrams ffering ABLE accunts in 2016, the first f which is expected t launch in March. While there will be a significant amunt f cnsistency between prgrams, there will als be a certain level f variatin frm prgram t prgram. This variatin shuld be taken int cnsideratin when chsing a prgram that best meets the needs f the accunt wner (the beneficiary). ablenrc.rg

15 Ntice f Prpsed Rule Making (NPRM) Slide 15 On June 19 th the 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. The NPRM acts t: assist states and prgram administratrs in better understanding the guidelines n hw t develp and maintain an ABLE prgram; and give additinal clarificatin t parts f the law which may benefit frm further explanatin and/r guidance ablenrc.rg

16 NPRM and Ntice Highlights (that have nt already been mentined) Slide 16 Eligibility and Re-Certificatin Transfers and Rllvers Cntributins Distributins Qualified Disability Expenses ablenrc.rg

17 Eligibility and Re-Certificatin Slide 17 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. ablenrc.rg

18 Transfers and Rllvers Slide 18 The prpsed regulatins prvide that: 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 transfer 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). ablenrc.rg

19 Distributins Slide 19 The prpsed regulatins prvide that: 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. ablenrc.rg

20 Cntributins Slide 20 The prpsed regulatins prvide that: 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 ablenrc.rg

21 Legal and Plicy Questins fr the Future Slide 21 Impact n services under a HCBS waiver Challenges t the Medicaid payback prvisin Infrmed cnsent and supprted decisinmaking ablenrc.rg

22 WEBINAR: ABLE Accunts, Trusts, Financial and Benefits Planning March 29, :00pm t 3:30pm Slide 22 The ABLE Natinal Resurce Center invites yu t learn frm a panel f experts abut hw ABLE accunts might interact, and cmpare t, special needs trust, pled incme trusts, and financial and benefits planning. Questins t be addressed: What are critical factrs t make infrmed decisins? What are the differences between varius types f trusts? Wuld I want t pen an ABLE accunt in additin t r instead f a trust? What is the range f csts invlved in pening a trust r an ABLE accunt? What is benefits planning and hw des it relate t financial planning? ablenrc.rg

23 WEBINAR: ABLE Accunts, Trusts, Financial and Benefits Planning March 29, :00pm t 3:30pm Slide 23 Mderatr: Michael Mrris, Executive Directr f Natinal Disability Institute Panelists: Ylanda Mazyck, Executive Directr f Shared Hrizns Pled Special Needs Trust Kelly Thmpsn, Trust and Estate Attrney James Sheldn, Supervising Attrney at Neighbrhd Legal Services Inc. Mark Friese, Vice President at Merrill Lynch, Menick-Friese Grup William Thmpsn, Deputy Executive Directr f Flrida Prepaid Cllege Bard, Flrida ABLE Prgram Registratin infrmatin can be fund at: ablenrc.rg

24 Slide 24 Michael Mrris ablenrc.rg