July 3, 2019
This article first appeared in National Disability Institute’s (NDI) May/June Issue of the Washington Insider Newsletter. The ABLE National Resource Center is managed by NDI.
National Disability Institute’s Washington Insider readers will recall that bills in both the U.S. Senate and House to expand the reach and impact of ABLE accounts are now in play, and support for their enactment is growing. The ABLE Age Adjustment Act (S. 651/H.R. 1814) would amend Section 529A(e) of the Internal Revenue Code to increase the eligibility threshold for ABLE accounts for onset of disability from prior to age 26 to prior to age 46. ABLE (Achieving a Better Life Experience) accounts are tax-favored accounts that are designed to enable individuals with disabilities to save for and pay for qualified disability expenses without jeopardizing public benefits.
As currently written, the existing ABLE Act prevents otherwise-eligible individuals with disabilities from realizing the benefits of ABLE accounts. By passing the ABLE Age Adjustment Act, more than 14 million people with disabilities would be allowed to open ABLE accounts, nearly doubling the current eligible population. Moreover, the long-term sustainability, availability and affordability of these programs may be at risk without an expansion of age of onset eligibility and other enhancements.
What’s Needed Beyond Age Adjustment
Regarding additional enhancements, the disability community is broadly committed to advocating for enactment of age adjustment first prior to any concerted efforts to promote additional policy objectives. Indeed, both the House and Senate age adjustment bills currently winding their way through the legislative process deal exclusively with increasing the age of onset eligibility to before age 46 and no other objectives. Nevertheless, it is critical for the disability community to continue to formulate and prepare to advocate for other federal and state improvements to the ABLE Act. In addition to exploring the establishment of a tax-advantage benefit to employers who contribute or match ABLE contributions of their employees, NDI, in partnership with our disability policy colleagues and key congressional policymakers, is developing possible strategies for seeding ABLE accounts, along with expanded education and outreach approaches, utilizing a variety of disability program channels including Medicaid, vocational rehabilitation (VR) and special education.
Two specific policy objectives under consideration are getting some contentious attention recently. While the ABLE Act currently allows states to lay claim to ABLE account funds remaining after the death of an ABLE account beneficiary who received Medicaid services, a growing number of states have enacted legislation prohibiting what many advocates refer to as the Medicaid “clawback.” Yet, the National Association of State Treasurers (NAST) and others are proposing that the Medicaid payback be eliminated at the federal level. Some disability community Medicaid champions, however, are strongly cautioning that such a federal push to prohibit recoupment of Medicaid dollars could backfire politically. Similarly, the role of individual and/or organizational Social Security representative payees to open or even assist in management of beneficiaries’ ABLE accounts is being floated, a strategy which its proponents argue has the potential to vastly increase ABLE account enrollment given the millions of Social Security recipients with representative payees. However, this policy objective is also generating some angst among disability advocates who have long been concerned about widely reported misfeasance in the representative payee program.
IRS ABLE Advocacy
Meanwhile, as the campaign for the ABLE Age Adjustment Act presses on, disability advocates in Washington are also turning their attention to the Internal Revenue Service (IRS) which has yet to publish final rules implementing the ABLE Act. With such final regulations being four years overdue, ABLE Act congressional champion, Rep. Cathy McMorris Rodgers (R-WA-5) is assisting advocates in urging the IRS to either proceed with issuance of final rules or, at a minimum, to provide supplemental sub-regulatory guidance in discrete areas needing the most clarification. The final IRS rules had been rumored to be coming out this summer, but now the latest published agenda of federal regulatory activity would place IRS publication of ABLE Act rules no earlier than Spring 2020. While it is critical that we ultimately have final authoritative rules, the IRS has indicated that the approach the agency took in its 2015 Notice of Proposed Rulemaking (NPRM) and subsequent policy guidance, while not yet officially codified in regulations, is nevertheless a reliable guide for account owners to follow.
What Happens Next?
Co-sponsorship of both the House and Senate versions of the ABLE Age Adjustment Act is growing and on a strong bipartisan basis. As support continues to increase in the Senate, our champions have been engaged in fruitful negotiation with key staff of the Senate Committee on Finance, the body with jurisdiction over the age adjustment legislation. Advocates are encouraged to reach out to their two U.S. Senators and to ask them to co-sponsor S. 651. This is particularly critical to do if your Senator is a member of the Finance Committee; you can find the list of Senate Finance Committee members at https://www.finance.senate.gov/.
Disability advocates in Washington are shifting their attention a bit to the U.S. House where we need to recruit members of the powerful House Ways and Means Committee to help us move H.R. 1814 through the process. Advocates are encouraged to ask your member of the U.S. House to co-sponsor H.R. 1814, and especially if your House member serves on the Ways and Means Committee – https://waysandmeans.house.gov/.