WEBINAR: Understanding ABLE
> Welcome, everyone. This is Michael Morris, the executive director of the National Disability Institute. We are here today, I'm behalf of the ABLE National Resource Center. On the topic of this webinar is Understanding ABLE: Achieving a Better Life Experience . Public Law 113 -- 295 signed by President Obama on December 19 of last year. Before we move had -- move ahead in this webinar, I'm going to turn it over to Nakia Matthews will give you some of the finer points of participating in the webinar. Nakia.
Thank you, Michael. Good afternoon, everyone. The audio for today's webinar is being broadcast through your computer. Please make sure that your speakers are turned on or that you have your headphones plugged in. You can control the audio broadcast through the audio broadcast panel which you see a screenshot of your below and if you accidentally closed the audio broadcast panel, you can reopen it by going to the communicate menu at the top of the screen, and choosing joint audio broadcast period if you do not have sound capability on your computer or if you prepare Dash prefer to listen by telephone, Diablo toll-free number that you see here and enter this meeting code and please note that you do not need to enter an attendee ID period . Real-time captioning is provided during the webinar and the captions can be found in the media viewer panel which will occur in the lower right-hand corner of the webinar platform and the upper right-hand corner you might need to click the media viewer button to make it appear. If you would like to minimize the viewer panel, you can do so or you can make a larger if you need the captioning area to be bigger. We will have time for a few questions at the end of the webinar. Please use the chat box or the Q&A box to send any questions that you may have to me, Nakia Matthews, and I will direct the questions during the Q&A portion and if you are busy by telephone only and not logged into the web portion, you may also have questions by emailing them to me directly . And note that this webinar is being recorded and that the materials and recording will be placed on the NDI website period if you experience any technical difficulties during the webinar, please use the chat box to send me a message, Nakia Matthews, or you can email me directly at NMatthews@ Ndi-inc.org.
Thank you, Nakia, and thank you all for joining me today. I am pleased that knowing that the preregistration for this webinar went over 900, and that is lines, which means of course, many more people than that potentially participating. I want to tell you first a little bit about it the ABLE National Resource Center. It is a virtual center, it is being managed by National Disability Institute, it currently is a collaboration of 23 national disability organizations either based in Washington DC or New York or New Jersey . Again, our purpose is to help all of you, the multiple stakeholders related to ABLE to provide a consistent it was -- disability voice, to accelerate implementation of the ABLE active a federal and state level. The National Resource Center has five areas of impact. First, it is to serve as a facilitator, between the disability sector, government, and financial service companies to accelerate the effective design and availability of ABLE accounts nationwide period second, it is to educate at the disability community about the opportunities available to save and plan for a better economic future and quality of life experience. Through the establishment of ABLE accounts. Third, it is to educate government at a federal and state level, about consumer needs and challenges, in establishing and/or managing and ABLE accounts. Fourth, it is to educate and inform financial service companies about the needs and interests of the disability community and hope this leads to the offering of investment product choices to help people with disabilities and their families place their funds in ABLE accounts that help meet their needs.
Fifth, educate the public policy makers and other relevant stakeholders about the positive impact of ABLE accounts at an individual and systems level. And hopefully, learning from experience, promote and propose any needed changes for further policy developments. To learn more about the ABLE National Resource Center, if you are a national disability nonprofit organization, we would love to hear from you and we would love for you to join us in this collaboration. There are no membership dues, there is no fees, there is no test of entrance. It is just about getting the disability community to work together to accelerate, implementation of the ABLE Act. For more information about the National Resource Center, please contact Chris Rodriguez at -- . We have been holding monthly meetings that began in January and the next meeting is on Friday, the first Friday of each month, and the next one is coming up in April at 11 AM Eastern standard Time.
I want to thank the individuals who have generously donated their time to participate on this webinar. It has been an outstanding collaborative effort, bringing together disability organizations with two leading experts on the College Savings Plans Network. I will be moderating the panel. When we turn to this panel of experts, in addition to my participation, you will be hearing from Marty Ford, who is the senior executive officer public policy for the arc of the United States, many of us in the disability community know Marty as one of our leading experts , if not the lead expert on Social Security and Medicaid and she has ever 30 years of experience in the federal public policy issues affecting people with disabilities. > We will also be hearing from Stuart Spielman, who is the senior policy advisor and counsel for Autism Speaks. Stuart has been leading for Autism Speaks efforts on Capitol Hill and before federal agencies that can help improve the lives of children and adults on the autism spectrum. As we have learned in working with Stuart, he brings many years of experience from his work at the IRS, he, like Marty, is an attorney by background and has played a pivotal role in helping us think about the designer for implementation of the ABLE Act.
Next, we will be also hearing from Sara Weir was the president of the National Down Syndrome Society, appointed president in December 2014, after serving as vice president of advocacy and affiliate relations since 2012. Those of you who work very hard for the passage of the ABLE Act know that Sara was there every day on Capitol Hill for years, working with so many other organizations but really helping members of the staff and leaders in the House and Senate , truly understand the meaning, the importance, and the power of ABLE that we now will be able all to enjoy as the program will be rolling out across the country. > Under the leadership of Sara Weir, NDSS was at the forefront of the passage of this landmark and historical legislation, the Stephen Beck Junior Achieving a Better Life Experience act and a little bit later on, we will ask Sara to talk a little bit about Stephen Beck who played such an important role. We will also be hearing from Mary Anne Busse, managing director of the great disclosures, a private firm but Mary Anne works directly with 529A program administrators across the country and she has been also very involved with us , helping bridge the gap of information and knowledge about how 529 plans work and helping as shape our own comments and thoughts being directed to treasury and the IRS who are busy working on regulatory developments.
Mary Anne , like our next speaker, Kathleen McGrath, are both attorneys. Mary Anne spent many years after the Secretary, and is very familiar with complex financial tools, products, and the industry. Our last speaker and part of our panel, will be Kathleen McGrath, who is the bureau director for the Pennsylvania 529 college savings program. She has been director of that program since 1998 and she is an active member of the College Savings Plans Network , currently serving on the executive board and cochairing the legal and state affairs committee.
She has been taking a leadership role within CSPN in terms of helping the states and planned administrators really understand and begin to design what ABLE accounts will look like in the future. Let me thank you, again, all of our panelists and presenters. I think this will make this webinar particularly meaningful for the very diverse audiences who are now listening and.
The webinar will have several major components. First, you will hear a PowerPoint presentation that will start with Marty Ford and continue with others but you will hear about core components of able, you will then hear about the status of federal and state implementation. And you will also, then, listen to the panel answer questions . Some had come in an advance. We, among panelists, through questions back and forth at each other and I will moderate the discussion and time permitting, we hope to take questions from you across the country. > So, with that, let me turn it over to Marty Ford, to sort of just level the playing field. We know some people on the telephone are very familiar with the law and very active in the work that is now going on in the state, but to just level the playing field, I have asked Marty to start off and provide some background and the elementary key components, core components of ABLE. Marty, let me turn to you.
Thank you, Michael. I will dig right in. But first I should probably say that with all of the attorneys on this telephone call, we should probably indicate that we are not giving legal advice. But anyway, as indicated earlier, the Stephen Beck achieving a better -- a better life expense act became law on December 19 and create a new option for some people with disabilities and their families to save for the future while protecting eligibility for public benefits. That is a loaded statements. We will get into many of the details that make that statement come to life as we go through this PowerPoint. > I have indicated a caveat here that this presentation is based on what we know now and what we presume now. There is much that is yet to be determined as you will hear as we continue our discussion. Next.
What is in ABLE account? And ABLE account -- able -- ABLE accounts are established in the new section 529A qualified ABLE programs created by the law. The accounts are qualified savings accounts, that received preferred federal tax treatment and, again, we will get into more detail, they enable eligible individuals, which is a defined term to say for disability related expenses, also a defined term. And they are actually not yet available and there are still many unknowns. One important aspect for many, many people is that the assets in the account and distributions for qualified disability expenses from the account will be disregarded or given special treatment in determining eligibility for most federal means tested programs.
This is very, very important. So who is eligible to be in ABLE account beneficiary? To be eligible, people must meet two important requirements essentially. The first is the age requirement. You must be disabled before the age of 26. The second requirement is that -- a severity of disability requirements. You basically have to meet a level of disability that is pretty much equivalent to the level of impairment for being eligible for Social Security disability programs and you prove that, first of all, by either being eligible or the SSI program, the supplemental security income program or the Social Security disability benefits programs entitled 2 so either the Title XVI or the title 2 programs of the Social Security act.
The second way of showing your eligibility for the severity of disability is to submit a disability certification. This would include a physician's diagnosis that the individual meets the criteria which will be further established in regulation. Part of it is written into the law but it very clearly indicates that it will be further developed in regulation. So it is age 26, I mean, eligibility before age 26 and meeting the severity of disability criteria. > Next. What are some of the important requirements of an ABLE account? Each eligible individual may have only one ABLE account. This is different from the education accounts that these were modeled on. Once an individual opens an account, they become known as the designated beneficiary. That designated beneficiary is the account owner. The account must be established in the designated beneficiaries state of residence or in a contracting states. That is a state that contracts with the state of that beneficiary's residence.
So you can have it in one of two places, your own home state or a state that your home state contracts with. Total annual contributions it may not exceed the federal gift tax limit, which this year is $14,000. Now, this is a source of lots of confusion. People think that it means that each gift may be up to $14,000 and that in fact is not the case. The entire amount that can go into one of these accounts per year is the $14,000 or whatever it is next year or the following year.
A gift tax limit applies to the entire account. For that year. So it is different and slightly odd use of that gift tax limit , but it is what the Congress used as a measure for the total annual contributions for these accounts. On the other hand, lots of individuals may make contributions to that one account for that one designated beneficiary and there are no limits as to who can make the contributions. But the aggregate contributions for the account also have a limited and that limit is the state limit for the 529 savings account. The regular education accounts. So if the limit in that state happens to be $250,000, that would be the limit on the accounts for that state.
What may funds for an account be used for? Funds or distributions from an ABLE account -- I am sorry -- next by. Funds for divisions from an ABLE account may be for qualified disability expenses related to the individual disability or blindness and made for his or her benefit, including education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention, and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and any other expenses approved by the Secretary of the treasury under regulations consistent with the purposes of the program. > Expenditures for nonqualified expenses, if somebody actually spends money on something that is not included in that list, we will be penalized and that is going to include tax penalties and, if the person is on SSI and/or Medicaid, probably penalties in those areas also. This will all be subject to probably being further defined by regulation. Next. > How do ABLE account assets impact eligibility for federal benefits? ABLE assets will be disregarded or receive federal treatment when determining eligibility for most federal means testing programs. There is a very broad statement in the law that pulls in all federal means tested programs. It very -- the law very specifically has some requirements dealing with the SSI program and the Medicaid program, however, and so I will point these out to you. > For the SSI program, only the first $100,000 in an ABLE account will be disregarded. SSI payments will be suspended , the benefit payments will be suspended if the beneficiaries account about reaches $100,000 but the eligibility will not be terminated. You are basically put in a suspension status. > The fan above $100,000, though, if a person goes about that will be treated as resources and we will need to see how regulations develop to see exactly what that means for an individual and we are not sure how that will play out. Again, for SSI purposes, housing expenses are intended to receive the same treatment as all housing costs paid by outside sources. So SSI benefits are subject to a reduction of up to one third of the federal SSI payments and that is what was intended and that language that is in the law and, again, we will have to see how the regulatory language plays out. Next, I Medicaid, the ABLE assets are disregarded in determining Medicaid eligibility and Medicaid benefits are not suspended if at the ABLE account balance exceeds $100,000.
So it is not treated the same way as SSI in that case but there is a Medicaid pay back and if there are any assets remaining in the ABLE account when the -- beneficiary dies, and subject to having any outstanding expenses taken care of, or paid, anything that is left in the account when a person dies will be used to reimburse the state for Medicaid payments that were made on that person's behalf after the account was established. So they count will not owe for anything that was paid on behalf of the person before the count was established but it would allow for anything in the account -- pay for the person after the count was established. For purposes of this section, the state is considered a creditor of the ABLE account and not a beneficiary and this is an aspect of the law that was added because of some experiences with the trust. And I will be there at that and turned it over to Stewart's.