Kansas ABLE Act. H.B. 2216
ABLE (Achieving a Better Life Experience) is federal legislation that allows states to administer a program in which families and individuals can save in a tax-advantaged account for the disability-related expenses of an individual with a disability. The legislation is modeled after the 529 education savings program legislation and provides similar federal income tax advantages – contributions grow tax deferred and are tax exempt when used for “qualified disability expenses.”
- Eligible individual is defined as being entitled to benefits based on blindness or disability under Title II or XVI of the Social Security Act, or has a “disability certification” filed with the Treasury Secretary and who became disabled before age 26.
- Yearly eligibility. The beneficiary must be disabled (including having a certification, if needed) in each year in which a contribution is made.
- Exclusion from means-tested federal programs. ABLE accounts are not included for means-tested federal programs including Medicaid. For Supplemental Security Income programs: (1) distributions for housing expenses are not excluded; and (2) account values over $100,000 are included in the asset test and could result in the suspension but not termination of benefits .
- Account Owner. The beneficiary is the account owner. The Kansas act allows for custodians or guardians. There may be only one account per beneficiary.
- Change of beneficiary. The beneficiary can be changed to a disabled member of the family of the old beneficiary. But, if the new beneficiary is not eligible, then it is treated as a non-qualified withdrawal.
- Contribution limit. Annual contributions per beneficiary are limited to the federal gift tax limitation (currently $14,000). Contributions will no longer be allowed when the account reaches a maximum amount set by the state which is currently $370,000.
- Investment direction. The beneficiary is allowed to change the investments twice in a calendar year
- Distributions. Distributions are not taxed if used for “qualified disability expenses” which include expenses for: 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 Other expenses approved by the Treasury Secretary.
- Tax penalty. There is a 10% federal tax penalty for distributions not used for qualified disability expenses. No penalty for distributions made after the death of the beneficiary.
- Medicaid assistance claim. Upon the death of the beneficiary, the state can make a claim for funds in the account up to the net amount the state paid in medical assistance.