ABLE Act Presentation

ABLE ActCathy BrownDirector of Public Policy and AdvocacyParaquad

Overview of tonight’s presentation Why do we need things like the ABLE

Act/ABLE Accounts? Brief history of State and Federal

passage Key provisions in the legislation Timelines for implementation in

Missouri Key opportunities for families to shape

implementation

Not part of tonight's presentation

Guarantees on final provisions of implementation – this is all in process

Individual financial advice – I am not a wealth management professional, financial advisor or tax professional

The Need. Having a disability can be expensive

(equipment, AT that’s not covered, accessibility features, medical bills, etc)

70% of people with disabilities – of working age – are not in the workforce

People with disabilities are twice as likely than any other minority group to live in poverty

The Need. For people with disabilities who need

personal assistance (need ‘staff’, an attendant, etc) unless families or individuals can pay out of pocket, publicly funded programs - like Medicaid – are the only game in town

The Need. Publicly funded programs (SSI, SSDI,

SNAP, Housing assistance, Medicaid) are means tested programs

That means you have to meet eligibility criteria - functional AND financial

Missouri Medicaid Eligibility In Missouri, to get Medicaid under the “Aged,

Blind and Disabled” category:

monthly income of 85% of Federal Poverty Level ($834 a month for an individual)

Have no more than $999 in assets/resources for an individual

Prove disability status (SSI/SSDI definition)------------------- *Social Security also has an asset limit of $2,000

Conclusion…. If you need to access public benefits due to disability

you are required to be – and stay - extremely poor

Disincentives to wealth accumulation, economic self-sufficiency and employment exist at all levels of our publicly funded systems of support*

Families and individuals needed a way to save money and still access necessary supports and services

-----------*my opinion.

Some families decided they’d do something about it…

First Federal Legislation to allow savings accounts that do not count when determining eligibility for public benefits was introduced in 2006

Families and disability related organizations advocated for its passage

Stephen Beck, Jr., Achieving a Better Live Experience (ABLE) Act of 2014 was included in the Tax Increase Prevention Act of 2014

Through a series of compromises H.R. 5771 (it included other stuff, too) was passed with overwhelming bipartisan support in both chambers of congress and signed into law by President Obama December 19, 2014

What did the Federal Legislation do? The ABLE Act amended Section 529 of the

Internal Revenue Service Code of 1986 to create an opportunity for tax-free savings accounts for individuals with disabilities.

Modeled after “529 College Savings Accounts” (in Missouri its called Missouri MOST)

Federal legislation didn’t actually create the accounts it only allowed States to do so - State action is necessary

Who knew you could like tax code so much?

Missouri’s ABLE Act SB 174 was prefilled by Sen.

Eric Schmitt on December 30th, 2014

Advocates gave him a heads up as the Federal Legislation was making its way through Congress, consulted with him on statutory language, testified and advocated with the Missouri General Assembly

Missouri’s ABLE Act was “Truly Agreed to and Finally Passed” on May 6th, 2014 with overwhelmingly bipartisan support

Witnesses who testified in favor of the legislation included; Cathy Brown, Director of Public Policy and Advocacy, and

Aimee Wehmeir, Executive Director, of Paraquad; Randy Hylton, from the Missouri Association of Sheltered

Workshop Managers; Jeremie Ballinger, of the Down Syndrome Association of Greater

St. Louis; Mike Moorefield, of the Missouri State Treasurer’s Office; Doug Riggs, a father of a son with down syndrome; Cory Backues, a father of a child with a disability; Ann Mangelsdorf, of St. Louis Arc; Wendy Sullivan, CEO of Easter Seals; and Wayne Lee, a disability advocate.

Missouri’s ABLE Act signed into Law Signed by Governor Nixon on June 29th,

2015 at the Southeast Missouri State Autism Center – the Tailor Institute in Cape Girardeau, MO

MO Able Act – Who is an eligible beneficiary? Individuals who acquired their disability

prior to age 26

AND

Meet the disability requirements for SSI/SSDI or must submit certification with a physician’s diagnosis that the individual meets the eligibility criteria

MO Able Act – Who is an eligible beneficiary? The individual with a disability, also known

as the beneficiary, is the same person whose name is on file as the account holder.

In some cases, as in guardians and power of attorneys, the person themselves may not the manager of the account.

Limited to one account per individual with a disability that must be established in the state of residency

MO ABLE Act – How much can you save? $14,000 annual contribution limit per

account The first $100,000 in an account is exempt

from SSI Once the balance exceeds $100,000, the

value counts as an asset and one could lose his or her SSI benefits or have them suspended

$325,000 lifetime aggregate cap on the account balance

MO ABLE Act – where’s all this money coming from?

Anyone can contribute to ABLE accounts

The account holder Family Friends Employer Tax refunds Electronic Transfers Settlements from lawsuits Inheritances Etc…..

MO ABLE Act – what can you do with the money?

You may only withdraw money for “qualified disability expenses”.

Qualified disability expenses include basic living expenses and are not limited to items for which there is a medical necessity or which solely benefit an individual with a disability.

Education Housing Transportation Employment training and

support Administrative services Assistance for personal care

attendants Assistive technology Healthcare expenses,

prevention and wellness Financial management Legal fees

MO ABLE Act – how is that going work? TBD…. State and Federal Regulations will specify

things like: how you prove ‘disability related expense’

Maybe you’ll just have to check a box saying you certify it is then keep documentation incase you are audited

how you get the money Debit card type option? By transaction? Direct

to store/provider? Lump sum per month?

MO ABLE Act – YOUR input on Implementation is important… Proposed federal regulations are currently out for public

comment until September 21, 2015

Regulations take opinions and comments into consideration, and publish final regulations as they become available

via the Federal e-Rulemaking Portal at:http://www.regulations.gov (IRS REG-102837-15) https://

www.federalregister.gov/articles/2015/06/22/2015-15280/guidance-under-section-529a-qualified-able-programs

What kinds of things will the Federal regulations address?

The Treasury Department and the IRS request comments on all aspects of the proposed rules. 

The Treasury Department and the IRS request comments on what other conditions should be deemed to meet the requirements of section 529A(e)(2)(A)(i) (Disability definitions/certification of disability

The Treasury Department and the IRS request comments regarding how a qualified ABLE program will be able to demonstrate eligibility in subsequent years if it allows deemed re-certifications.

Because the designated beneficiary will be subject to gift and/or generation-skipping transfer tax if the successor designated beneficiary is not a sibling of the designated beneficiary, the Treasury Department and the IRS request comments regarding whether the final regulations should permit States to require that a successor designated beneficiary also must be a sibling of the designated beneficiary.

The Treasury Department and the IRS request comments as to whether and to what extent a qualified ABLE program should be permitted to require that funds from another State's ABLE program be accepted only through program-to-program transfers.

The Treasury Department and the IRS request comments regarding what types of expenses should be considered qualified disability expenses and under what circumstances.

MO ABLE Act – YOUR input on Implementation is important…

Even though the Federal Government said states can move forward, then come into compliance with final Federal Regulations when they are published, it is likely Missouri will wait, according to the STO’s office

MO ABLE Act – YOUR input on Implementation is important… State regulations are published by the

Secretary of State’s office (http://www.sos.mo.gov/adrules/csr/csr.asp) and open for a comment period before they are finalized

The Missouri State Treasurer’s office estimates people will be able to start opening accounts Q3, FY’16 (July/Aug/Sept)

Back to the need… Having a disability can be expensive

(equipment, AT that’s not covered, accessibility features, medical bills, etc)

70% of people with disabilities – of working age – are not in the workforce

People with disabilities are twice as likely than any other minority group to live in poverty

A Note on ABLE Accounts An advocate said “ABLE Accounts are

not economic development tools, they are tools for the economically developed”

This doesn’t address the issue of poverty for everyone

ABLE Accounts will only solve some problems for some people

Still have to qualify for Medicaid at this level – LOW monthly eligibility and at $1,000 need a special acct. In Missouri, to get Medicaid under the “Aged, Blind

and Disabled” category:

monthly income of 85% of Federal Poverty Level ($834 a month for an individual)

Have no more than $999 in assets/resources for an individual

Prove disability status (SSI/SSDI definition)------------------- *Social Security also has an asset limit of $2,000

Other policy change to ensure people with disabilities can achieve economic some self-sufficiency Increase Medicaid monthly income eligibility Increase asset limits – ensure we don’t

create huge disparities across the disability community Do you really want to have to create an ABLE

Account if you have an extra $200? $500? Adjust Missouri’s Medicaid Buy-in Program

(TTWHAP) so people can earn more money and pay a premium for Medicaid coverage

Questions?

Cathy BrownDirector – Public Policy and [email protected]

Special Needs Trust vs. ABLE Account

http://www.pathfindersforautism.org/articles/view/able_accounts_vs_special_needs_trusts