BILL ANALYSIS
SJR 31
Page 1
Date of Hearing: June 15, 2010
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Jim Beall, Jr., Chair
SJR 31 (Pavley and Alquist) - As Amended: June 7, 2010
SENATE VOTE : 33-0
SUBJECT : Individuals with disabilities: tax exempt accounts
SUMMARY : Urges the President and Congress to immediately enact
the Achieving a Better Life Experience Act of 2009 (ABLE Act),
creating tax-exempt accounts for individuals with disabilities.
Specifically, this resolution makes the following findings:
1)Many families are searching for a way to plan for the future
of a child with developmental or other disabilities, which are
costly to society and to families;
2)The ABLE Act of 2009, H.R. 1205 and S. 493, currently pending
in Congress, would create disability savings accounts for
individuals with developmental or other disabilities and their
families, as a way to save for future needs that could accrue
interest tax free;
3)The ABLE Act would give individuals with developmental or
other disabilities and their families an option for saving for
their future financial needs in a way that supports their
unique situation and makes it more feasible to live full and
productive lives in their communities;
4)"529" college tuition plans do not fit the needs of children
with developmental or other disabilities;
5)Many families recognize that loved ones with developmental or
other disabilities may live for many decades beyond the
ability of their parents or other family members to provide
financial assistance and support;
6)Many families also want to ensure the financial security of
family members who have the level of disability required for
Medicaid eligibility, but for now, are managing to function
without the use of those benefits and state resources;
7)The ABLE Act creates a savings fund for those with
SJR 31
Page 2
developmental or other disabilities that could be drawn upon
for a variety of essential expenses, including medical and
dental care, education and employment training and support,
assistive technology, housing and transportation, personal
support services, and other expenses for life necessities;
8)Savings accounts opened under the ABLE Act provide substantial
flexibility to meet the specific needs of the individual, with
a broad array of allowable expenses and no age limitations so
that these funds can be used whenever they are needed; and,
9)The flexibility in expenses would also allow families to save
with confidence even though they cannot always predict how
independent their child will become.
EXISTING LAW
1)Under federal law, provides incentives and subsidies through
the tax system for various types of savings plans, including
"529" education savings plans.
2)Conforms state law with federal law pertaining to tax-deferred
529 education savings plans.
FISCAL EFFECT : None
COMMENTS : Federal and state governments provide incentives and
subsidies through the tax system for certain types of savings
plans. For example, under federal law, Section 529 of the
Internal Revenue Code provides tax-exempt status to "qualified
tuition programs" (QTPs), commonly referred to as 529 savings
plans. QTPs are programs established and maintained by a state,
an agency, or an eligible educational institution to purchase
tuition credits or make cash contributions on behalf of
designated beneficiaries. Currently, there are no tax-benefited
savings options available for families to save for the needs of
a person with disabilities.
The ABLE Act would give individuals with disabilities and/or
their families access to savings accounts that would allow
individual choice and control while protecting eligibility for
Medicaid, SSI, and other important federal benefits for people
with disabilities. They could create a disability savings
account that would accrue interest tax-free. Withdrawals would
not be taxed as long as they are used to pay for qualified
SJR 31
Page 3
expenses. The account could fund a variety of essential
expenses for the person with a disability, including:
Expenses for education, including tuition for preschool
thru post-secondary education, books, supplies, and
educational materials related to such education, tutors,
and special education services.
Expenses for housing, including rent, mortgage payments,
home improvements and modifications, maintenance and
repairs, real property taxes, and utility charges.
Expenses for transportation, including the use of mass
transit, the purchase or modification of vehicles, and
moving expenses.
Expenses related to obtaining and maintaining
employment, including job-related training, assistive
technology, and personal assistance supports.
Expenses for the health and wellness, including premiums
for health insurance, medical, vision, and dental expenses,
habilitation and rehabilitation services, durable medical
equipment, therapy, respite care, long term services and
supports, and nutritional management.
Expenses for life necessities, including clothing,
activities which are religious, cultural, or recreational,
supplies and equipment for personal care, community-based
supports, communication services and devices, adaptive
equipment, assistive technology, personal assistance
supports, financial management and administrative services,
expenses for oversight, monitoring, or advocacy, funeral
and burial expenses.
Any other expenses which are approved by the Secretary
under regulations and consistent with the purposes of this
section.
Expenses for assistive technology and personal support
with respect to any of the above items.
Savings accounts opened under the ABLE Act would differ from
other savings instruments with tax advantages because they
provide substantial flexibility:
The individual with disabilities could hold/control the
account, or parents or a guardian could hold it in trust.
The allowed expenses are designed to be broad enough to
accommodate the individual needs of account-holders.
Most of the allowed expenditures are not limited to
adulthood or retirement age, so they can be used whenever
SJR 31
Page 4
they are needed.
The flexibility in expenses also allows families to save
with confidence even though they cannot always predict how
independent their child will become.
A family that has saved money in a traditional account
for a child who becomes disabled later in life can roll
over the funds into a disability savings account without
penalty.
The account should be easy and inexpensive to open, like
a simple savings account.
Unlike some savings instruments, such as 529 college
accounts, the ABLE Act accounts would be created and
regulated on the federal level, so they would operate under
the same rules in every state, ensuring that they are
portable for individuals and families who move across state
lines.
Individuals and families who find that the current
individual or pooled trusts available under the Medicaid
program will better address their needs may roll-over the
account into the trusts.
The ABLE accounts can be managed by pooled trusts, if
the individual or family so choose.
In a manner similar to the treatment of Medicaid trusts, funds
remaining in the accounts at the individual's death would be
used to "pay back" the state Medicaid program up to the value of
services provided to the individual during life.
According to the author, "[a]sset development is one step toward
improving economic self-sufficiency, and the federal
legislation's focus on encouraging asset development will
greatly incentivize people with disabilities to live more
productive lives through earning and saving resources for their
future." The ABLE Act would give individuals with disabilities
and their families an option for saving for their future
financial needs in a way that supports their unique situation
and makes it more feasible to live full, productive lives in
their communities.
REGISTERED SUPPORT / OPPOSITION :
Support
Alliance of California Autism Organizations (ACAO) (Sponsor)
Association of Regional Center Agencies (ARCA) (Sponsor)
SJR 31
Page 5
Opposition
None on file.
Analysis Prepared by : Eric Gelber / HUM. S. / (916) 319-2089