December 19, 2016

The Stephen Beck Jr. Achieving a Better Life Experience (ABLE) Act

2nd Anniversary Report

Anne Gerhardt, daughter of NDSS Board Member Chip Gerhardt, opens the first ABLE account

National Down Syndrome Society8 E 41st Street, 8th Floor, New York NY 10017

www.ndss.org

After eight years of tireless work by our Congressional Champions, the National Down Syndrome Society, advocates from across the country and other disability organizations, the Stephen Beck Jr.

Achieving a Better Life Experience (ABLE) Act (Public Law 113-295) was signed into law by President Obama on December 19, 2014.While the passage of the ABLE Act took almost a decade, the ABLEAct implementation continues to move quickly. In the last two years,47 states and the District of Columbia have enacted ABLE laws and 10 state ABLE programs have launched, with many more expected to launch soon. This report provides an update on ABLE two years after

its passage and a look back at how ABLE came into existence.

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ABLE Anniversary Report

• Ohio – STABLE launched June 1, 2016• Tennessee – ABLE TN launched June 13, 2016• Nebraska – Enable Savings Plan launched June 30, 2016• Florida – ABLE United launched on July 1, 2016, for Florida residents only• Michigan – MiABLE launched on November 1, 2016• Oregon – Two programs launched on December 6, 2016: Oregon ABLE Savings Plan for Oregon

residents and ABLE for ALL Savings Plan for residents of any state

Overview of the ABLE Act

The ABLE Act amends the Internal Revenue Service Code of 1986, adding Section 529A, to create tax-free savings accounts for individuals with disabilities. The ABLE law aims to ease financial strains faced by individuals with disabilities, which are exacerbated by the $2,000 cap on assets that is required to preserve critical government supports. Funds saved in an ABLE account do not count toward the $2,000 asset cap. ABLE accounts are meant to supplement, not supplant, benefits provided through private insurances, the Medicaid program, the supplemental security income program, the beneficiary’s employment and other sources. ABLE accounts may fund a variety of essential expenses for individuals to maintain health, quality of life and independence, including medical and dental care, education, community based supports, employment training, assistive technology, housing NDSS staff and advocates eagerly await news of ABLE’s passage in and transportation. the US House of Representatives in December 2014

The ABLE Act provides individuals with disabilities the same types of flexible savings tools that have long been enjoyed by other Americans through college savings accounts, health savings accounts and individual retirement accounts. Families who have been able to set up regular 529 college savings accounts for their non-disabled children can now save for their children with disabilities. ABLE accounts promise to enhance the quality of life and promote independence for people with disabilities.

ABLE Accounts - Finally a Reality

As of December 19, 2016, 47 states plus the District of Columbia have enacted state ABLE laws (all except Idaho, Mississippi and Wyoming) and the following 10 states have launched ABLE programs:

4Ohio was the first state to launch an ABLE program – the STABLE Program – in June 2016

• Kentucky – Launched STABLE Kentucky on December 13, 2016, for Kentucky residents only• Alaska – Alaska ABLE Plan launched on December 15, 2016• Rhode Island - RI's ABLE launched on December 16, 2016• Virginia – Launched ABLEnow on December 19, 2016

With the exception of Florida and Kentucky, which limit their programs to state residents, the states listed above offer ABLE accounts to residents of any state. At least nine other states are expected to launch their ABLE programs within the next couple months:

• Illinois• Iowa• Kansas• Minnesota• Missouri• Nevada• New Jersey• Pennsylvania• Vermont

Trends in Basic Structure of State ABLE Programs

There are many commonalities in the legislative design of state ABLE programs. The vast majority of the states have designated the State Treasurer or State 529 Plan Administrator as the ABLE program administrator. A

handful of states have empowered other government departments, such as Health and Human Services, to run their ABLE programs. Many states have set up Advisory Committees or Boards as part of their ABLE programs.

Under the federal ABLE Act, states may contract with another state to provide ABLE accounts to residents of the other state or to allow their own residents to participate in another state’s ABLE program. States which have opted to do this include Vermont and Kentucky, which are partnering with Ohio, and Alabama, which is partnering with Nebraska.

ABLE champions: Representative Ander Crenshaw (R-FL), Representative Pete Sessions (R-TX), Representative Cathy McMorris Rodgers (R-WA) and Senator Richard Burr (R-NC)

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ABLE Anniversary Report

To lower costs and leverage quality investment options, Illinois is leading the creation of an ABLE consortium, which is currently in development. The states participating in the consortium to date include Alaska, Illinois, Iowa, Kansas, Minnesota, Missouri, Nevada, New Jersey, North Carolina, Pennsylvania and Rhode Island.

Following the elimination of the state residency requirement in December 2015 (discussed in detail in the next section), some states decided not to establish ABLE programs including: New Mexico, North Dakota, South Dakota and Wisconsin. These states are currently providing information to residents to assist them in participating in other states’ ABLE programs.

While all states have aligned with the federal ABLE Act by excluding funds in ABLE accounts from taxable income, some states have gone further and offered tax deductions for contributions to ABLE accounts. States with enacted legislation that allows a deduction include Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, Ohio, Oregon, South Carolina, Virginia and Wisconsin. (Although Wisconsin has decided not to establish an ABLE program, it passed legislation to allow a tax deduction for residents who participate in other states’ ABLE programs.) One state, Utah, allows a tax credit.

Developments at the Federal Level

Following the passage of the federal ABLE Act in December 2014, the US Department of the Treasury actively collaborated with NDSS and other disability organizations and stakeholders regarding next steps. In March 2015, the Department of the Treasury and the Internal Revenue Service (IRS) issued Notice 2015-18 which gave the green light for states to establish ABLE programs prior to issuance of federal guidelines on Section 529A. This step led to the rapid enactment of state ABLE bills. By the end of 2015, 34 states and the District of Columbia had enacted ABLE legislation and an additional 13 bills passed in 2016.

On June 19, 2015, the US Treasury issued proposed regulations and rules for the federal ABLE Act. NDSS welcomed the proposed regulations as a positive step toward effective implementation, but had significant concerns that the proposed regulations would create administrative hurdles for both individuals who need ABLE accounts and the states that administer the programs. NDSS collaborated with leading disability organizations as well as other stakeholders to provide comprehensive comments, which were submitted in September 2015. NDSS President Sara Hart Weir and NDSS Board Member Sara Wolff also provided testimony at the IRS public hearing on the proposed ABLE regulations on October 14, 2015.

Senator Robert Casey, Jr. (D-PA) receives a Congressional Champion of Change Award from NDSS President Sara Hart Weir and NDSS Board Member Chip Gerhardt

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IRS Guidance on ABLE Program Implementation

On November 20, 2015, the IRS issued interim guidance to simplify the administration of ABLE programs, which was favorably received by NDSS and other disability advocates. The guidance included:

• Categorization of distributions is not required: ABLE programs need not include safeguards todetermine which distributions are for qualified disability expenses, nor are they required to specificallyidentify those used for housing expenses. Designated beneficiaries still need to categorize distributionswhen determining their federal income tax obligations.

• Contributors’ taxpayer identification numbers (TINs) are not required: ABLE programs are notrequired to request the TINs of contributors to the ABLE account at the time when the contributions aremade as long as the program has a system in place to reject contributions that exceed the annual limits.

• Disability diagnosis certification is permitted: Designated beneficiaries can open an ABLE account bycertifying, under penalty of perjury, that they meet the qualification standards, including their receiptof a signed physician’s diagnosis if necessary, and that they will retain that diagnosis and provide it tothe program or the IRS upon request. This means that eligible individuals with disabilities do not needto provide the written diagnosis when opening the ABLE account, and ABLE programs do not need toreceive, retain or evaluate detailed medical records.

NDSS welcomed these changes that make ABLE programs less burdensome for states and more accessible to people with disabilities and their families. Although this guidance has not yet been finalized, NDSS is confident that the guidance on these critical issues will not change due to recent discussions with the US Treasury.

Elimination of the State Residency Requirement

The original federal ABLE Act included a key restriction – qualified individuals were only allowed to open ABLE accounts in their state of residence. The ABLE Act was amended for the first time on December 18, 2015, when the state residency requirement was eliminated as part of the Consolidated Appropriations Act of 2016 (HR 2029, Section 303).

NDSS strongly supported the elimination of the state residency requirement, and the benefits of its elimination have been evident in the past year. Removal of the state residency requirement has given qualified individuals quicker access to ABLE accounts both because individuals have not had to wait for their home state to establish an ABLE program and because it has spurred some states to move quickly to launch their ABLE programs. Also, this change has increased competition in the marketplace, allowing eligible individuals and their families to compare ABLE programs and choose the plan that best suits their needs. In addition, it has encouraged some states to consider providing incentives to their residents to open an account in their home state, such as state income tax deductions. NDSS continues to work closely with state ABLE administrators and legislators to make sure that this change has the most beneficial impact on the disability community as possible.

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ABLE Anniversary Report

Federal ABLE Improvement Bills

On March 17, 2016, members of the US House of Representatives and US Senate introduced three bills to improve certain aspects of the ABLE Act. This bicameral and bipartisan group included Representatives Pete Sessions (R-TX), Ander Crenshaw (R-FL), Chris Van Hollen (D-MD) and Cathy McMorris Rodgers (R-WA) along with Senators Robert Casey, Jr. (D-PA) and Richard Burr (R-NC). NDSS supported these bills aimed at making ABLE accounts more effective in promoting financial independence and more accessible to a wider population of the disability community. Unfortunately, the bills did not pass during the 114th Congress.

• The ABLE to Work Act (HR 4795 /S 2702) would have enabled ABLEbeneficiaries who work and earn income to save additional amounts in their ABLE account above thecurrent annual maximum contribution ($14,000, tied to the Federal Gift Tax) and to be eligible forthe Saver’s Credit, an existing federal tax credit that low and middle-income individuals can currentlyclaim when they make contributions to a retirement account.

• The ABLE Financial Planning Act (HR 4794 / S 2703) would have enabled ABLE beneficiaries toroll over regular 529 accounts to 529A (ABLE) accounts up to the annual maximum contribution,and also would have allowed for a reverse rollover if the beneficiary ceases to be disabled.

• The ABLE Age Adjustment Act (HR 4813 / S 2704) would have raised the required age of onset ofdisability from 26 to 46, which is halfway to retirement age.

NDSS actively advocated for the passage of these bills, and especially for the ABLE to Work Act, which is part of NDSS’ broader #DSWORKS® employment initiative. Two of the bills—the ABLE to Work Act and the ABLE Financial Planning Act—advanced through the Senate Finance Committee and were scored as “negligible,” thereby not requiring an offset. By contrast, the ABLE Age Adjustment Act received a $2 billion score, which was deemed unworkable and the bill did not advance. Although none of these bills passed during the 114th Congress, NDSS is confident that they will be introduced again in the 115th Congress, along with other potential improvements to ABLE.

Looking Ahead at the Federal Level

Stakeholders are still waiting for final guidance from the US Treasury on the ABLE Act, as well as from other federal agencies such as the Social Security Administration (SSA), the Centers for Medicare and Medicaid Services (CMS), the US Department of Housing and Urban Development (HUD) and the US Department of Education (ED). SSA issued Programs Operations Manual System (POMS) relating to ABLE at the end of December 2015 but is expected to issue further guidance and clarifications in the future. NDSS is hopeful that these federal agencies will interpret ABLE as broadly as possible and will uphold the spirit and intent of the law in allowing ABLE account owners to retain eligibility for certain benefits as they save for their future.

Advocates call on Congress to pass the ABLE Act

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Front row: Representative Chris Van Hollen (D-MD), Representative Cathy McMorris Rodgers (R-WA), Representative Pete Sessions (R-TX), NDSS staff member Chris Burke and Representative Ander Crenshaw (R-FL) listen to Sara Wolff address the need to pass the ABLE Act

ABLE Alliance for Financial Empowerment

In February 2016, the ABLE Alliance for Financial Empowerment was created through the collaboration of national disability groups, policymakers and financial stakeholders committed to supporting individuals with disabilities in their efforts to achieve financial empowerment and economic independence. The Alliance was co-founded by NDSS President Sara Hart Weir and Charles Hammerman, President and CEO of the Disability Opportunity Fund. It is led by Executive Director John Ariale, the former Chief of Staff to Congressman Crenshaw, who was the principal sponsor and author of the ABLE Act. Alliance partners include NDSS, Autism Speaks, the Disability CDFI Coalition, the Disability Opportunity Fund, the Financial Services Institute, First National Bank of Omaha, NAIFA and SIFMA.

The key objectives of the Alliance are to:

• Promote and market the widespread availability and diverse utilization of ABLE accounts to eligibleindividuals and their families

• Advocate for legislative and regulatory policies, at both the federal and state levels, to ensure effective ABLEAct implementation and full participation

• Create and support initiatives that advancefinancial literacy tools for all persons withdisabilities

• Educate eligible beneficiaries and their familymembers and caretakers on ABLE accounts,their use as a savings vehicle, how they interactwith public assistance programs and ways toprotect beneficiaries from financial abuse

The Alliance will serve as a key advocate and resource to people with disabilities and their families regarding ABLE and broader financial empowerment opportunities.

History of the ABLE Act

The ABLE Act was a legislative concept that took four US Congresses and almost a decade to enact

into federal law. The idea behind the ABLE Act started around a kitchen table in Northern Virginia, after several parents from the Board of the Down Syndrome Association of Northern Virginia (DSANV) were discussing the injustice in the current system related to the ability of individuals with disabilities and their families to save for the future. These five parents - Steve, Phil, Jenn, Rick and Christina - along with the NDSS staff were instrumental in the introduction of the first ABLE bill by Congressman Ander Crenshaw (R-FL) in 2006.

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ABLE Anniversary Report

Making Bipartisan, Bicameral History

The passage of ABLE Act in the 113th Congress was led by Senators Robert Casey, Jr. (D-PA) and Richard Burr (R-NC), and Representatives Ander Crenshaw (R-FL), Cathy McMorris Rodgers (R-WA), Chris Van Hollen (D-MD) and Pete Sessions (R-TX), along with their Congressional staffs.

The momentum behind the ABLE Act intensified in the 113th Congress after the bill continued to receive record-breaking cosponsors and media attention. On July 23, 2014, the Senate Finance Subcommittee on Taxation and IRS Oversight held a Congressional hearing entitled, Saving for an Uncertain Future: How the ABLE Act can Help People with Disabilities and their Families, where NDSS Board Member and self-advocate Sara Wolff testified.

On July 31, 2014, the House Ways and Means Committee unanimously passed the ABLE Act out of Committee. On December 3, 2014, the US House of Representatives passed the ABLE Act with 404 votes in favor and 17 against, and a few days later, the US Senate passed the ABLE Act as part of the Tax Extenders Package of 2014. ABLE was cosponsored by 380 of 435 US Representatives and 78 of 100 US Senators, making it one of the most bipartisan laws ever passed in the history of any Congress in the

United States.

The ABLE Act is named after the late NDSS Vice Chairman and quarterback of the legislation, Stephen Beck, Jr., one of the original “kitchen table parents” and a father of two daughters, one of whom has Down syndrome. Beck cheered loudly in the House gallery with NDSS staff and other advocates when, on behalf of Representative Cheri Bustos (D-IL), Brianna Pitzele, a young girl with Down syndrome from California, pushed the button to cast the 218th vote in the House, officially passing ABLE. Tragically, Beck passed away shortly after this vote and less than two weeks before President Obama signed the ABLE Act into law on December 19, 2014.

Steve Beck with his wife, Catherine Beck, and their daughters on the evening that ABLE passed the US House of Representatives

Representative Ander Crenshaw (R-FL), principal sponsor and author of the ABLE Act

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Real People, Real Stories Make a Difference and Make History

NDSS and Autism Speaks were leaders in the advocacy effort behind the passage of the ABLE Act, along with almost 100 national disability organizations and other key stakeholders. There are many, many advocates from across the country that aided in the passage of this landmark legislation. All of these advocates played a vital role in helping pass the ABLE Act into law by telling their own personal stories on how the ABLE Act would change their lives for the better.

One of the most famous faces and stories was that of NDSS Board Member and self-

advocate Sara Wolff from Moscow, Pennsylvania. In February 2014, Wolff authored a Change.org petition calling on Congress to pass the ABLE Act. The petition garnered almost 270,000 signatures and served as the impetus for Wolff sharing her own personal story about how the ABLE Act would change her life. Wolff ’s petition also led to the ABLE Act’s endorsement by the New York Times and is featured in a 2015 Change.org video about the power of the online petition.

Sara Wolff’s online petition to pass the ABLE Act was signed byalmost 270,000 people

Conclusion

As 2016 comes to an end, ABLE advocates have much to celebrate – ABLE laws in 47 states plus the District of Columbia, and the launch of 10 state ABLE programs with many more soon to follow. Nevertheless, there is still much more work to be done to empower individuals with disabilities and their families to enjoy the same rights and opportunities as everyone else so that all individuals with disabilities may “achieve a better life experience.”

For more information, please visit the NDSS website: www.ndss.org/ABLE and www.ndss.org/stateABLE.

Questions may be sent to Heather Sachs, NDSS Vice President of Advocacy & Public Policy, at hsachs@ndss.org.