Achieving a Better Life Experience (ABLE) Public Forum October 22, 2015

Webinar and Public Forum Format All lines will be muted by the organizer until the end of the session. Questions may be asked via the “chat” feature (typewritten) or by utilizing the “raise hand” feature (indicating a verbal question) at anytime. Everyone please locate and press your hand symbol to ensure you know how to ask questions in this manner. The organizer will “unraise” all hands. Questions and comments will be addressed after the presentation.

What this Webinar & Public Forum Will Do Provide basic information about the federal ABLE Act Provide basic information on what components are required of State programs Provide an overview of what features Maryland is contemplating for its own program

What this Webinar & Public Forum Cannot Do Cannot answer questions about specific eligibility or money management scenarios (e.g., questions about ABLE accounts for individuals who are under guardianship) Cannot provide a specific timeframe when a program will be available in Maryland or another state Please remember: NO STATE – including Maryland – has a functioning ABLE program yet (although many states, like Maryland, have passed legislation instructing State agencies to create programs) Final federal regulations have not yet been released

The Federal ABLE Act

The Federal ABLE Act Signed by President Obama on December 19, 2014 (Public Law 113-295) Adds ABLE Accounts to Section 529A of the IRS tax code Want to read more? See the Maryland Department of Disabilities website at www.mdod.maryland.gov

What Does the Federal ABLE Act Do? The Federal ABLE Act allows states to: create a new option for eligible people with disabilities to save money in a tax-exempt account that may be used for qualified disability expenses while still keeping their eligibility for federal public benefits.

Eligible Individuals with Disabilities To be eligible for an ABLE account, you must: Have developed a disability prior to the age of 26 => You do not need to have been formally diagnosed with the disability, but must be able to show documentation that you had the disability Meet the Social Security definition of disability You can show this by: Showing you have been found eligible for Supplemental Security Income (SSI) or Social Security disability benefits OR Providing “disability certification” from a doctor stating that you meet the Social Security-level of disability

Tax-Exempt Accounts: Advantages Withdrawals of money in these accounts are tax-exempt so long as they are used for the account’s intended purpose (qualified disability expenses) States may choose to offer a tax deduction for contributions to these accounts

Tax-Exempt Accounts: Limitations Ownership: The eligible individual (person with a disability) is the ABLE account “designated beneficiary”. Only the eligible individual or a legal guardian/power of attorney may open an account. Number: Each designated beneficiary may have only one ABLE account. Accounts cannot be opened by other people on behalf of a designated beneficiary. Residency: Currently, the account must be opened in the designated beneficiary’s state of residency or a contracting state (i.e., if your state has a contract with another state to administer the program)

Tax-Exempt Accounts: Limitations Contributions: Multiple individuals may contribute to the account, but total annual contributions may not exceed the federal gift tax limit, which is currently $14,000. Medicaid “clawback”: When a beneficiary passes away, if that person used Medicaid, Medicaid can get reimbursed out of the funds remaining in the ABLE account.

Qualified Disability Expenses Money in the ABLE account may be made for qualified disability expenses, related to the individual’s disability or blindness, 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 Any other expenses approved by the Secretary of the Treasury under regulations consistent with the purpose of the program

Eligibility for Benefits Money in the account (up to $100,000) does not count “against” you for the purposes of establishing or maintaining eligibility for federal means-tested programs, e.g., Medicaid and SSI What does this mean? Individuals can accumulate more than $2,000 in assets without losing SSI benefits.

Federal Requirements for State Programs Be established and maintained by a State or a State's agency or instrumentality; Create a program that provides certain oversights, including: Ensuring designated beneficiaries meet disability and residency eligibility requirements Ensuring that designated beneficiaries have only one account Creating safeguards to ensure that designated beneficiaries are using contributions for qualified disability expenses Returning contributions that exceed the $14,000 annual contribution limit Additionally, programs must: Maintain a separate accounting for each ABLE account Allow designated beneficiaries no more than two opportunities a year to provide investment direction Prohibit the use of interest accrued by an ABLE account as a security for a loan

ABLE Act and Maryland

Maryland’s Legislation During the 2015 legislative session, Maryland passed SB 761, which created the Task Force on Maryland’s ABLE Program Over 30 states have passed ABLE Act legislation, but no program is operational yet; many states are waiting for final federal regulations to come out

Task Force’s Charge Develop a plan for implementing the Maryland ABLE program and study issues related to the Maryland ABLE program, including writing a report and making legislative recommendations about: (1) Structure of the program (2) Which agency is in charge of the program (3) Staffing and funding needs (including how Maryland will pay for start-up) (4) Membership of the Board that will provide oversight for the program (5) State tax benefits

Task Force’s Timeline Recommendation Timeline Implementation Timeline The Task Force is not authorized to create or implement the ABLE program, just make legislative recommendations. The Task Force’s report and legislative recommendations are due on or before December 1, 2015 to the General Assembly This means that the earliest any legislation creating an ABLE Act program in Maryland can be passed is between January to April 2016. There may also need to be additional time to implement/set up the actual program.

Overview of Major Considerations Does Maryland want to designate one agency or multiple agencies (one lead that must consult, one or more coequal agencies) to have oversight of the program? Does Maryland want the responsible agency to be directly responsible for the program (perhaps with an advisory board consulting), or to act as the chair of a Board that is authorized to act for the program? Does Maryland consider this program to be a “disability” program or an “investment” program? Can a Maryland ABLE Program “afford” tax breaks for contributions, and will these tax breaks be meaningful to the contributors?

Tentative Recommendations from Task Force Place College Savings of Maryland “in charge” of the program, but involve Maryland Department of Disabilities for the disability certification, qualified expenses, and reporting piece Add Secretary of the Department of Disabilities to the College Savings Board Request general funds to provide additional staff to support this program within College Savings/MDOD Tax break recommendations are pending

Agency Selection in Other States From a survey of states which have passed legislation to create ABLE programs: Offices of the Treasurer (13), College Savings Programs (7), Health & Human Services agencies (6)

Board Membership in Other States Programs are equally split between having boards and not having boards (although some may have boards that are not outlined in legislation). Of the programs that have boards outlined in statute, they are nearly equally split between serving in a purely advisory or oversight capacity and being able to implement, administer and contract on behalf of the ABLE program.

Tax Breaks in Other States It is commonly understood among states that ABLE account money will not be considered income for the purposes of state or federal taxes. However, at least six states are also offering tax deductions for contributions to ABLE accounts. (Remember that the total amount of aggregate contributions by anyone to a single ABLE account per year is $14,000.)

Funding Recommendations in Other States State estimates for start up costs range from: $0 $2 million

Additional considerations Not federally required, but can be addressed in the Task Force report or legislation: How the disability certification process will work Customer service, including benefits counseling Impact on state means-tested programs Additional fraud prevention/safeguards

Want to learn more? The Developmental Disabilities Council is hosting an ABLE webinar on November 19th. You can learn additional information and get updates on the work of the Maryland Task Force and any changes to the federal regulations or progress being made in other states. See their website at www.md-council.org Further information can also be found on the Maryland Department of Disabilities website at: www.mdod.Maryland.gov

Questions or Comments? Speaker will address: “Chat” feature questions per the que (typewritten) (2) “Raised Hand” questions per the que (verbal)- (3) The speaker will unmute lines one at a time. “Raise Hand” or utilize “Chat” to comment further. All lines will unmute at the end for phone users to ask questions.