Senate File 2070 - Introduced SENATE FILE 2070 BY RAGAN , MATHIS , BOULTON , CELSI , J. SMITH , JOCHUM , WAHLS , KINNEY , DOTZLER , R. TAYLOR , BISIGNANO , LYKAM , GIDDENS , BOLKCOM , QUIRMBACH , HOGG , T. TAYLOR , and PETERSEN A BILL FOR An Act relating to trusts for persons with disabilities. 1 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 2 TLSB 5223XS (6) 88 pf/rh

S.F. 2070 Section 1. Section 12I.3, subsection 1, Code 2020, is 1 amended by adding the following new paragraph: 2 NEW PARAGRAPH . g. Any funds retained in a medical 3 assistance special needs trust pursuant to chapter 633C, or in 4 a supplemental needs trust pursuant to chapter 634A, may be 5 transferred to the Iowa ABLE savings plan trust account of a 6 designated beneficiary who is also the beneficiary of any such 7 trust, in accordance with the applicable provisions of chapters 8 633C, 634A, and this chapter. 9 Sec. 2. Section 12I.4, subsection 3, Code 2020, is amended 10 to read as follows: 11 3. Moneys in the account of a designated beneficiary may 12 shall not be claimed by the Iowa Medicaid program as provided 13 authorized in section 529A(f) of the Internal Revenue Code and 14 subject to limitations imposed by the treasurer of state unless 15 such claim is required to maintain qualified ABLE program 16 status under section 529A of the Internal Revenue Code . 17 Sec. 3. Section 249A.53, Code 2020, is amended by adding the 18 following new subsection: 19 NEW SUBSECTION . 3. a. Following the death of an individual 20 who is a designated beneficiary of an account established under 21 a participation agreement pursuant to chapter 12I, all of the 22 following shall apply to the extent permitted pursuant to 23 chapter 12I and under federal law including section 529A of the 24 Internal Revenue Code: 25 (1) The department shall not seek recovery of any account 26 balance remaining in the designated beneficiary’s account for 27 medical assistance paid to or on behalf of the designated 28 beneficiary on or after the date the participation agreement 29 was entered into and the account established for the designated 30 beneficiary. 31 (2) The department shall not file a claim for payment under 32 section 529A(f) of the Internal Revenue Code. 33 (3) Any account balance remaining in the designated 34 beneficiary’s account may be transferred to an account for 35 -1- LSB 5223XS (6) 88 pf/rh 1/ 4

S.F. 2070 another eligible individual specified by the designated 1 beneficiary, or if another eligible beneficiary is not so 2 designated, then the account balance shall be transferred to 3 the estate of the designated beneficiary or to the successor 4 as defined in section 633.356. 5 b. For the purposes of this section, “designated 6 beneficiary” , “Internal Revenue Code” , and “participation 7 agreement” mean the same as defined in section 12I.1. 8 c. For the purposes of this section, “eligible individual” 9 means the same as defined in section 529A of the Internal 10 Revenue Code. 11 Sec. 4. Section 633C.2, Code 2020, is amended to read as 12 follows: 13 633C.2 Disposition of medical assistance special needs 14 trusts. 15 Any income or assets added to or received by and any income 16 or principal retained in a medical assistance special needs 17 trust shall be used in accordance with a standard that is 18 no more restrictive than specified under federal law. All 19 distributions from a medical assistance special needs trust 20 shall be for the sole benefit of the beneficiary to enhance 21 the quality of life of the beneficiary, and the trustee shall 22 have sole discretion regarding such disbursements to ensure 23 compliance with beneficiary eligibility requirements. Any 24 funds retained in the medical assistance special needs trust of 25 a beneficiary who is also a designated beneficiary as defined 26 in section 12I.1 may be transferred to the Iowa ABLE savings 27 plan trust account of the designated beneficiary in accordance 28 with this chapter and chapter 12I. Any distinct disbursement 29 in excess of one thousand dollars shall be subject to review by 30 the district court sitting in probate. The department shall 31 adopt rules pursuant to chapter 17A for the establishment and 32 disposition of medical assistance special needs trusts in 33 accordance with this section . 34 Sec. 5. Section 634A.2, Code 2020, is amended by adding the 35 -2- LSB 5223XS (6) 88 pf/rh 2/ 4

S.F. 2070 following new subsection: 1 NEW SUBSECTION . 8. Any funds retained in a supplemental 2 needs trust of a beneficiary who is also a designated 3 beneficiary as defined in section 12I.1 may be transferred to 4 the Iowa ABLE savings plan trust account of the designated 5 beneficiary in accordance with this chapter and chapter 12I. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill relates to trusts for persons with disabilities. 10 The bill provides that any funds retained in a medical 11 assistance special needs trust or in a supplemental needs trust 12 of a beneficiary with a disability who is also a designated 13 beneficiary of an Iowa ABLE saving plan trust account may be 14 transferred to the Iowa ABLE savings plan trust account of the 15 designated beneficiary in accordance with the provisions of the 16 Code chapters applicable to the specific trusts. 17 The bill also provides that following the death of an 18 individual who is a designated beneficiary of an ABLE savings 19 account established under a participation agreement pursuant 20 to Code chapter 12I (disabilities expenses savings plan 21 trust), to the extent permitted pursuant to Code chapter 12I 22 and under federal law including section 529A of the Internal 23 Revenue Code, the department of human services (DHS) shall 24 not seek recovery of any account balance remaining in the 25 designated beneficiary’s account for medical assistance paid 26 to or on behalf of the designated beneficiary on or after 27 the date the participation agreement was entered into and an 28 account established for the designated beneficiary; DHS shall 29 not file a claim for payment under section 529A(f) of the 30 Internal Revenue Code; and any account balance remaining in 31 the designated beneficiary’s account may be transferred to 32 an account for another eligible individual specified by the 33 designated beneficiary, or if another eligible beneficiary 34 is not so designated, then the account balance shall be 35 -3- LSB 5223XS (6) 88 pf/rh 3/ 4

S.F. 2070 transferred to the estate of the designated beneficiary or to 1 the successor. 2 The bill provides definitions for terms used in the bill and 3 makes conforming Code changes. 4 The disabilities expenses savings plan trust is also known 5 as the Iowa ABLE savings plan trust which was established as 6 a qualified ABLE program under section 529A of the Internal 7 Revenue Code. The purpose of ABLE savings accounts is to 8 encourage and assist individuals and families in saving 9 private funds for the purpose of supporting individuals with 10 disabilities to maintain health, independence, and quality 11 of life and to provide secure funding for disability-related 12 expenses on behalf of designated beneficiaries with 13 disabilities that will supplement, but not supplant, benefits 14 provided through private insurance, the Medicaid program, 15 the federal supplemental security income program, and other 16 sources. ABLE savings accounts allow eligible individuals the 17 opportunity to save and fund a variety of qualified disability 18 expenses without endangering eligibility for certain benefits 19 such as Medicaid and supplemental security income. 20 -4- LSB 5223XS (6) 88 pf/rh 4/ 4