SB1383 99TH GENERAL ASSEMBLY

LRB099 08749 JLK 28917 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB1383

Introduced 2/20/2015, by Sen. Scott M. Bennett

SYNOPSIS AS INTRODUCED:

15 ILCS 505/16.6 new

Amends the State Treasurer Act. Creates the "Achieving a Better Life Experience" or "ABLE" account program to encourage and assist individuals and families in saving private funds for the purpose of supporting persons with disabilities in endeavors 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, federal and State medical and disability insurance, the beneficiary's employment, and other sources. Provides that the State Treasurer shall be primarily responsible for the plan but shall work with the Illinois State Board of Investment. Sets forth the requirements of the plan. Requires the State Treasurer to adopt rules to implement the program. Defines required terms.

A BILL FOR

AN ACT concerning State government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The State Treasurer Act is amended by adding Section 16.6 as follows:

(15 ILCS 505/16.6 new)

Sec. 16.6. ABLE account program.

(a) As used in this Section:

"ABLE account" or "account" means an account established for the purpose of financing certain qualified expenses of persons with disabilities as specifically provided for in this Section.

"ABLE account plan" or "plan" means the savings account plan provided for in this Section.

"Account administrator" means the person selected by the State Treasurer to administer the daily operations of the ABLE account plan and provide marketing, recordkeeping, investment management, and other services for the plan.

"Beneficiary" means the ABLE account owner, or the person entitled to apply the savings accrued in an ABLE account, if not the account owner.

"Board" means the Illinois State Board of Investment.

"Disability certification" means a certification by the beneficiary or the parent or guardian of the beneficiary that states the diagnosis of the individual with a disability and is signed by a physician meeting the criteria of Section 1861(r)(1) of the federal Social Security Act.

"Individual with a disability" means an individual who, before the date on which the individual attains age 26: (1) has a medically determinable physical or mental impairment, which results in marked and severe functional limitations and which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; or (2) is blind.

"Participation agreement" means an agreement to participate in the ABLE account plan between an account owner and the State, through its agencies and the State Treasurer.

"Qualified disability expense" means an expense made for the benefit of an individual with a disability who is the beneficiary, including the following expenses: 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 consistent with the purposes of this Section that are approved by the State Treasurer and provided for in duly adopted administrative rules.

"Qualified withdrawal" or "qualified distribution" means a withdrawal from an ABLE account to pay the qualified disability expenses of the beneficiary of the account. A qualified withdrawal may be made by an agent of the beneficiary who has the power of attorney or by the beneficiary's legal guardian.

"Total account balance" means the amount in an account on a particular date or the fair market value of an account on a particular date.

(b) The "Achieving a Better Life Experience" or "ABLE" account program is hereby created and shall be administered by the State Treasurer. The purpose of the ABLE plan 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, federal and State medical and disability insurance, the beneficiary's employment, and other sources. Under the plan, a person may make contributions to an ABLE account to meet the qualified disability expenses of the designated beneficiary of the account. The plan must be operated as an accounts-type plan that permits persons to save for qualified disability expenses incurred by or on behalf of an individual with a disability. A separate account must be maintained for each beneficiary for whom contributions are made, and no more than one account shall be established per beneficiary.

In designing and establishing the plan's requirements and in negotiating or entering into contracts with third parties under this Section, the State Treasurer shall consult with the Board. The State Treasurer shall establish an annual fee to be imposed on participants to recover the costs of administration, recordkeeping, and investment management. The State Treasurer must use his or her best efforts to keep these fees as low as possible, consistent with efficient administration, so that the returns on savings invested in the plan will be as high as possible.

The State Treasurer shall administer the plan, including accepting and processing applications, maintaining account records, making payments, and undertaking any other necessary tasks to administer the plan, including the appointment of an account administrator. Notwithstanding other requirements of this Section, the State Treasurer shall adopt rules for purposes of implementing and administering the plan. The State Treasurer may contract with one or more third parties to carry out some or all of these administrative duties, including providing investment management services, incentives, and marketing the plan.

Prior to the establishment of an ABLE account, an account owner must provide documentation to the State Treasurer that the account beneficiary has been certified as an individual with a disability. The certification must be signed by a physician and meet the criteria established by Section 1861(r)(1) of the federal Social Security Act and any federal regulations issued pursuant to Section 529A of the Internal Revenue Code.

Contributions to an ABLE account are subject to the requirements of Section 529A(b) of the Internal Revenue Code. The maximum balance of an ABLE account may not exceed the limit established by the federal ABLE Act of 2014.

The State Treasurer shall promote awareness of the availability and advantages of the ABLE account plan as a way to assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities. The cost of these promotional efforts shall not be funded with fees imposed on participants. The State Treasurer shall not promote ABLE accounts until the Internal Revenue Service has issued its final regulations concerning ABLE accounts.

Account owner data, account data, and data on beneficiaries of accounts are confidential and exempt from disclosure under the Freedom of Information Act.

(c) The State Treasurer may invest the moneys in ABLE accounts in the same manner and in the same types of investments provided for the investment of moneys by the Board. To enhance the safety and liquidity of ABLE accounts, to ensure the diversification of the investment portfolio of accounts, and in an effort to keep investment dollars in the State, the State Treasurer may make a percentage of each account available for investment in participating financial institutions doing business in the State, except that the accounts may be invested without limit in investment options from open-ended investment companies registered under Section 4.32 of the federal Investment Company Act of 1940. The State Treasurer may contract with one or more third parties for investment management, recordkeeping, or other services in connection with investing the accounts.

The State Treasurer may impose annual fees on participants in the plan to recover the cost of investment management and related tasks for the plan. The State Treasurer shall use his or her best efforts to keep these fees as low as possible, consistent with high quality investment management, so that the returns on savings invested in the plan will be as high as possible.

(d) The State Treasurer shall ensure that the plan meets the requirements for an ABLE account under Section 529A of the Internal Revenue Code. The State Treasurer may request a private letter ruling or rulings from the Internal Revenue Service or Secretary of Health and Human Services and must take any necessary steps to ensure that the plan qualifies under relevant provisions of federal law.

A person may make contributions to an ABLE account on behalf of a beneficiary. Contributions to an account made by persons other than the account owner become the property of the account owner. A person does not acquire an interest in an ABLE account by making contributions to an account. Contributions to an ABLE account are subject to the requirements of Section 529A(b) of the Internal Revenue Code. The maximum balance of an ABLE account may not exceed the limit imposed by the Internal Revenue Service. A contribution to any account for a beneficiary must be rejected if the contribution would cause the total account balance of the account to exceed the limit imposed by the Internal Revenue Service.

An account owner shall have the authority to manage the account consistent with the requirements of Section 529A of the Internal Revenue Code and federal regulations issued pursuant thereto. Any change in account owners or beneficiaries must be done in a manner consistent with Section 529A of the Internal Revenue Code.

Notice of any proposed amendments to the rules and regulations shall be provided to all participants prior to adoption. Amendments to rules and regulations shall apply only to contributions made after the adoption of the amendment. Amendments to this Section automatically amend the participation agreement. Any amendments to the operating procedures and policies of the plan shall automatically amend the participation agreement after adoption by the State Treasurer.

All assets of the plan, including contributions to accounts, are held in trust for the exclusive benefit of account owners and beneficiaries. Assets must be held in a separate account in the State treasury to be known as the Illinois ABLE plan account or in accounts with a third-party provider selected pursuant to this Section. Plan assets are not subject to claims by creditors of the State, are not part of the general fund, and are not subject to appropriation by the State. Payments from the Illinois ABLE account plan shall be made under this Section.

The assets of ABLE accounts and their income and operation shall be exempt from all taxation by the State of Illinois and any of its subdivisions. The accrued earnings on investments in an ABLE account once disbursed on behalf of a designated beneficiary shall be similarly exempt from all taxation by the State of Illinois and its subdivisions, so long as they are used for qualified expenses.

(e) Qualified distributions may be made: (1) directly to participating providers of goods and services that are qualified disability expenses, if purchased for a beneficiary; (2) in the form of a check payable to both the beneficiary and provider of goods or services that are qualified disability expenses; or (3) directly to the account owner or beneficiary, if the account owner or beneficiary has already paid qualified disability expenses. Qualified distributions must be withdrawn proportionally from contributions and earnings in an account owner's account on the date of distribution as provided in Section 529A of the Internal Revenue Code. Upon the death of a beneficiary, the amount remaining in the beneficiary's account must be distributed pursuant to Section 529A(f) of the Internal Revenue Code.

(f) The State Treasurer shall adopt rules he or she considers necessary for the efficient administration of ABLE accounts. The rules shall provide whatever additional parameters and restrictions are necessary to ensure that ABLE accounts meet all of the requirements for a qualified state ABLE program under Section 529A of the Internal Revenue Code.