Relating to the transfer between trusts for persons with disabilities

Topics:Health care Families & human services Medicaid

Same legislation: SF 60, SF 474, SSB 1228, SF 527, HF 835

Write your legislators about itWhat changed before it passed

Official bill page Lobbyist declarations One-pager to print

Where it is now

Done: IntroducedJanuary 12, 2021
Done: SubcommitteeFebruary 22, 2021
Done: House committeeMarch 5, 2021
Skipped: Passes the HouseContinued as HF 835
Next: Senate committee
Next: Passes the Senate
Next: To the Governor
Next: Signed into law

Became HF 835 → Its progress continues under the new number. Go to HF 835 What’s a funnel?

What’s in it

AI summary People with disabilities who have both a special needs trust and an Iowa ABLE savings account can move money between them. This allows funds from medical or supplemental needs trusts to be transferred into an ABLE account. These accounts help individuals save money for disability-related expenses without losing their government benefits.¹

Read the official explanation

This bill relates to the transfer between trusts for persons with disabilities. The bill provides that any funds retained in a medical assistance special needs trust or in a supplemental needs trust of a beneficiary with a disability who is also a designated beneficiary of an Iowa ABLE saving plan trust account may be transferred to the Iowa ABLE savings plan trust account of the designated beneficiary in accordance with the provisions of the Code chapters applicable to the specific trusts. The disabilities expenses savings plan trust is also known as the Iowa ABLE savings plan trust which was established as a qualified ABLE program under section 529A of the Internal Revenue Code. The purpose of ABLE savings accounts is to encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life and to provide secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, the Medicaid program, the federal supplemental security income program, and other sources. ABLE savings accounts allow eligible individuals the opportunity to save and fund a variety of qualified disability expenses without endangering eligibility for certain benefits such as Medicaid and supplemental security income.

Changed since by amendment S-3136; see Amendments.

Full bill text · What changed before it passed²

House subcommittee

Named March 2, 2021. On March 3, 2021 it recommended amendment and passage. Vote Total: 3-0.

Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part

Fiscal note

AI summary This bill allows others to have signature authority over ABLE accounts and permits funds from certain special needs trusts to be transferred into these accounts. The fiscal impact cannot be determined, but it will likely lead to a significant reduction in Medicaid recoveries over time. If all current Medicaid Special Needs Trust beneficiaries qualify, up to $17.4 million could be transferred to an ABLE Account over a seven-year time period.³

Read the fiscal note

Description

House File 835 amends various provisions related to the Iowa Achieving a Better Life Experience (ABLE) Savings Plan Trust Accounts.

The Bill allows a person other than the account owner to enter into a participation agreement and have signature authority over the ABLE Account on behalf of the account owner in accordance with the Internal Revenue Code and regulations promulgated under federal law. The Bill also allows any funds retained in a Medical Assistance Special Needs Trust or in a Supplemental Needs Trust to be transferred to the ABLE Account of the designated beneficiary. The Bill specifies that to the extent allowed under federal law, the Department of Human Services (DHS) cannot seek recovery of any account balance remaining in the designated beneficiary’s ABLE Account for Medicaid, and any remaining account balance may be transferred to another eligible individual or to the estate of the designated beneficiary or to the successor.

Background

ABLE Accounts allow individuals and families to save for qualified disability expenses without losing eligibility for certain assistance programs, like Supplemental Security Income (SSI) and Medicaid. The earnings on investments are federally tax-deferred and tax-free if used for qualified disability expenses. ABLE Accounts are limited to $100,000 without affecting Medicaid eligibility, and the annual contribution to an ABLE Account is limited to $15,000 per year. In addition, ABLE Accounts may be canceled at will, with the account owner receiving the balance.

Assumptions

As of January 19, 2021, there were 385 Medicaid Special Needs Trusts monitored by the DHS, with a total of $53.2 million invested, and total funds have been increasing by 6.0% annually. This includes:
207 Accounts contain less than $100,000, for a total of $6.7 million.
107 Accounts contain more than $100,000, of which $100,000 may be available to move to ABLE Accounts, for a total of $10.7 million.
71 individuals have not yet reported the balance of their Account. They are required to file a report on the Account with the DHS annually.
A maximum of $15,000 per year may be moved from a Medicaid Special Needs Trust to an ABLE Account.
Supplemental Needs Trusts may also be impacted. The DHS does not have data on the number of Supplemental Needs Trusts or the balances in the Trust accounts.

Fiscal Impact

The fiscal impact of HF 835 cannot be determined, but it will likely lead to a significant reduction in Medicaid recoveries over time. If all current Medicaid Special Needs Trust beneficiaries qualify for an ABLE Account, up to $17.4 million could be transferred to an ABLE Account over a seven-year time period, in addition to the unknown impact from the Supplemental Needs Trusts. This could result in fewer potential Medicaid recoveries due to less rigid guidelines to withdraw funds from an ABLE Account and due to the prohibition on Medicaid recovering ABLE Account balances. The DHS recovered $1.1 million from the six largest Medicaid Special Needs Trusts in calendar year 2020.