BILL ANALYSIS �
SJR 18
Page 1
Date of Hearing: June 18, 2012
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
SJR 18 (Pavley) - As Introduced: February 23, 2012
Majority vote.
SENATE VOTE : 38-0
SUBJECT : Individuals with disabilities: tax exempt accounts
SUMMARY : Urges the President and the Congress of the United
States to enact the Achieving a Better Life Experience Act of
2011 (ABLE Act). Specifically, this resolution notes all of the
following:
1)Many families are searching for a way to plan for the future
of a child with developmental disabilities, which are costly
to society and to families;
2)The ABLE Act, proposed in H.R. 3423 and S. 1872, would create
disability savings accounts for individuals with developmental
or other disabilities and their families, as a way to save for
future needs with funds 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)While many families are currently able to save for the
educational needs of children through "529" college tuition
plans, these 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 the 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
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without the use of those benefits and state resources;
7)The ABLE Act would create a savings fund for those with
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 would 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 : Provides tax-exempt status to qualified tuition
plans (QTPs) governed by Internal Revenue Code Section 529.
QTPs are programs established and maintained by a state (or by
an eligible educational institution) under which a person may
purchase tuition credits or make cash contributions to meet the
qualified higher education expenses of a designated beneficiary.
Contributions to a QTP cannot exceed the amount necessary to
provide for the beneficiary's qualified higher education
expenses. Distributions to a beneficiary are excluded from
income. However, contributions made to a QTP are not
deductible.
FISCAL EFFECT : Unknown.
COMMENTS :
1)The author has provided the following statement in support of
this resolution:
SJR �18] would state the intent of the California State
Legislature to urge the President and the Congress of the
United States to immediately enact the Achieving a Better
Life Experience Act of 2011. The ABLE Act would allow
individuals with disabilities and their families to set
funds aside in a special savings account that allows moneys
to be withdrawn to cover costs of health care, housing,
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transportation, the purchase of technology and lifelong
education. The ABLE account would be tax exempt and not
counted as part of any asset limits for eligibility to
federal programs. The funds supplied by these accounts
will supplement but not replace benefits provided through
Medicaid, Social Security and private insurance.
Families of individuals with developmental or other
disabilities recognize that their loved ones may live for
many decades beyond the ability of the parents or other
family to provide financial assistance and support. The
ABLE account will ensure a higher level of financial
security that families might not otherwise be able to
achieve for family members with disabilities.
2)Proponents of this resolution note:
The �ABLE] Act would allow individuals with disabilities
and their families to set funds aside in a special savings
account that allows funds to be withdrawn to cover costs of
health care, housing, transportation, the purchase of
technology and lifelong education.
Many families recognize that family members with
developmental or other disabilities may live for many
decades beyond the ability of the parents or other family
to provide financial assistance and support. The ABLE
account will ensure a higher level of financial security
that families might not otherwise be able to achieve for
their loved ones with disabilities.
3)Committee Staff Comments:
a) The ABLE Act of 2011 : The ABLE Act would allow for the
creation of tax-exempt ABLE accounts, modeled after QTPs,
to meet the "qualified disability expenses" of a designated
beneficiary. The proposed legislation would cover a wide
range of expenses, including expenses for education,
housing, transportation, employment support, medical care,
and assistive technology.
The ABLE Act defines an individual with a disability as
someone who is blind or has a medically determinable
physical or mental impairment, which results in marked and
severe functional limitations, as specified.
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Funds held in ABLE accounts would be disregarded in
determining eligibility for Medicaid and other means-tested
federal programs. The legislation would, however, suspend
the payment of supplemental security income benefits to an
individual during any period in which the individual has
excess resources attributable to an ABLE account.
b) Prior legislation : This resolution is modeled after SJR
31 (Pavley), Chapter 54, Statutes of 2010, which urged the
President and Congress to enact the ABLE Act of 2009. SJR
31 passed both houses of the Legislature on consent. The
ABLE Act of 2009, however, failed to pass in Congress.
REGISTERED SUPPORT / OPPOSITION :
Support
Association of Regional Center Agencies (sponsor)
PAR 4 Kids' Sake
The Arc and United Cerebral Palsy in California
2 individuals
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098