H.F. 835 Section 1. Section 12I.1, subsection 2, paragraphs b and g, 1 Code 2021, are amended to read as follows: 2 b. “Account owner” means an individual who enters into is 3 the designated beneficiary under a participation agreement 4 under this chapter for the payment of qualified disability 5 expenses on behalf of a the designated beneficiary. 6 g. “Participation agreement” means an agreement between 7 the account owner and establishing an account with the trust 8 entered into under this chapter . 9 Sec. 2. Section 12I.2, subsection 7, Code 2021, is amended 10 to read as follows: 11 7. Enter into participation agreements with account owners . 12 Sec. 3. Section 12I.3, unnumbered paragraph 1, Code 2021, 13 is amended to read as follows: 14 On or after July 1, 2016, the trust may enter into 15 participation agreements with account owners pursuant to the 16 following terms and agreements: 17 Sec. 4. Section 12I.3, subsection 1, paragraph b, Code 2021, 18 is amended to read as follows: 19 b. Unless otherwise permitted under section 529A of the 20 Internal Revenue Code, the account owner must also be the 21 designated beneficiary of the account. However, a trustee or 22 legal guardian may be designated as custodian of an account for 23 a designated beneficiary who is a minor or who lacks capacity 24 to enter into a participation agreement if such designation 25 is not prohibited under section 529A of the Internal Revenue 26 Code . A person other than the account owner may enter into 27 a participation agreement and have signature authority over 28 the account on behalf of the account owner in accordance with 29 section 529A of the Internal Revenue Code and regulations 30 promulgated under that section. 31 Sec. 5. Section 12I.3, subsection 1, Code 2021, is amended 32 by adding the following new paragraph: 33 NEW PARAGRAPH . g. Any funds retained in a medical 34 assistance special needs trust pursuant to chapter 633C, or in 35 -1- LSB 1093HV (4) 89 pf/rh 1/ 6

H.F. 835 a supplemental needs trust pursuant to chapter 634A, may be 1 transferred to the Iowa ABLE savings plan trust account of a 2 designated beneficiary who is also the beneficiary of any such 3 trust, in accordance with the applicable provisions of chapters 4 633C, 634A, and this chapter. 5 Sec. 6. Section 12I.4, subsection 3, Code 2021, is amended 6 to read as follows: 7 3. Moneys in the account of a designated beneficiary may 8 shall not be claimed by the Iowa Medicaid program as provided 9 authorized in section 529A(f) of the Internal Revenue Code and 10 subject to limitations imposed by the treasurer of state unless 11 such claim is required to maintain qualified ABLE program 12 status under section 529A of the Internal Revenue Code . 13 Sec. 7. Section 249A.53, Code 2021, is amended by adding the 14 following new subsection: 15 NEW SUBSECTION . 3. a. Following the death of an individual 16 who is a designated beneficiary of an account established under 17 a participation agreement pursuant to chapter 12I, all of the 18 following shall apply to the extent permitted pursuant to 19 chapter 12I and under federal law including section 529A of the 20 Internal Revenue Code: 21 (1) The department shall not seek recovery of any account 22 balance remaining in the designated beneficiary’s account for 23 medical assistance paid to or on behalf of the designated 24 beneficiary on or after the date the participation agreement 25 was entered into and the account established for the designated 26 beneficiary. 27 (2) The department shall not file a claim for payment under 28 section 529A(f) of the Internal Revenue Code. 29 (3) Any account balance remaining in the designated 30 beneficiary’s account may be transferred to an account for 31 another eligible individual specified by the designated 32 beneficiary, or if another eligible beneficiary is not so 33 designated, then the account balance shall be transferred to 34 the estate of the designated beneficiary or to the successor 35 -2- LSB 1093HV (4) 89 pf/rh 2/ 6

H.F. 835 as defined in section 633.356. 1 b. For the purposes of this section, “designated 2 beneficiary” , “Internal Revenue Code” , and “participation 3 agreement” mean the same as defined in section 12I.1. 4 c. For the purposes of this section, “eligible individual” 5 means the same as defined in section 529A of the Internal 6 Revenue Code. 7 Sec. 8. Section 633C.2, Code 2021, is amended to read as 8 follows: 9 633C.2 Disposition of medical assistance special needs 10 trusts. 11 Any income or assets added to or received by and any income 12 or principal retained in a medical assistance special needs 13 trust shall be used in accordance with a standard that is 14 no more restrictive than specified under federal law. All 15 distributions from a medical assistance special needs trust 16 shall be for the sole benefit of the beneficiary to enhance 17 the quality of life of the beneficiary, and the trustee shall 18 have sole discretion regarding such disbursements to ensure 19 compliance with beneficiary eligibility requirements. Any 20 funds retained in the medical assistance special needs trust of 21 a beneficiary who is also a designated beneficiary as defined 22 in section 12I.1 may be transferred to the Iowa ABLE savings 23 plan trust account of the designated beneficiary in accordance 24 with this chapter and chapter 12I. Any distinct disbursement 25 in excess of one thousand dollars shall be subject to review by 26 the district court sitting in probate. The department shall 27 adopt rules pursuant to chapter 17A for the establishment and 28 disposition of medical assistance special needs trusts in 29 accordance with this section . 30 Sec. 9. Section 634A.2, Code 2021, is amended by adding the 31 following new subsection: 32 NEW SUBSECTION . 8. Any funds retained in a supplemental 33 needs trust of a beneficiary who is also a designated 34 beneficiary as defined in section 12I.1 may be transferred to 35 -3- LSB 1093HV (4) 89 pf/rh 3/ 6

H.F. 835 the Iowa ABLE savings plan trust account of the designated 1 beneficiary in accordance with this chapter and chapter 12I. 2 EXPLANATION 3 The inclusion of this explanation does not constitute agreement with 4 the explanation’s substance by the members of the general assembly. 5 This bill relates to trusts for persons with disabilities. 6 The bill amends provisions relating to the Iowa ABLE 7 savings plan trust. The disabilities expenses savings plan 8 trust under Code chapter 12I is also known as the Iowa ABLE 9 savings plan trust which was established as a qualified ABLE 10 program under section 529A of the Internal Revenue Code. 11 The purpose of ABLE savings accounts is to encourage and 12 assist individuals and families in saving private funds for 13 the purpose of supporting individuals with disabilities to 14 maintain health, independence, and quality of life and to 15 provide secure funding for disability-related expenses on 16 behalf of designated beneficiaries with disabilities that will 17 supplement, but not supplant, benefits provided through private 18 insurance, the Medicaid program, the federal supplemental 19 security income program, and other sources. ABLE savings 20 accounts allow eligible individuals the opportunity to save 21 and fund a variety of qualified disability expenses without 22 endangering eligibility for certain benefits such as Medicaid 23 and supplemental security income. 24 The bill amends Code chapter 12I relating to persons 25 eligible to enter into a participation agreement and have 26 signature authority over an account on behalf of an eligible 27 individual. The bill provides that a person other than the 28 account owner may enter into a participation agreement and 29 have signature authority over the account on behalf of the 30 account owner in accordance with the Internal Revenue Code and 31 regulations promulgated under federal law. These provisions 32 of the bill are in response to Internal Revenue Code final 33 regulations for qualified ABLE programs published November 34 19, 2020, which in part, broadened the categories of people 35 -4- LSB 1093HV (4) 89 pf/rh 4/ 6

H.F. 835 who may establish an ABLE account for an eligible individual 1 to provide greater flexibility and reduce the burden on 2 the eligible individual. The final regulations permit an 3 ABLE account to be established by the eligible individual, 4 a person selected by the eligible individual, or if the 5 eligible individual is unable to establish the individual’s 6 own account, by the individual’s agent under a power of 7 attorney or, if none, by a conservator or legal guardian, 8 spouse, parent, sibling, grandparent, or a representative payee 9 appointed by the social security administration, in that order. 10 Additionally, the final regulations allow the ABLE program to 11 rely on self-certification of the individual establishing the 12 account for their basis of authority and priority. The final 13 regulations also provide for signatory authority over the ABLE 14 account by the designated beneficiary, an individual other than 15 the designated beneficiary who establishes the account, or a 16 person selected by the beneficiary. 17 The bill also includes provisions relating to transfers 18 between similar types of trusts and allows that any funds 19 retained in a medical assistance special needs trust or in a 20 supplemental needs trust of a beneficiary with a disability who 21 is also a designated beneficiary of an Iowa ABLE savings plan 22 trust account may be transferred to the Iowa ABLE savings plan 23 trust account of the designated beneficiary in accordance with 24 the provisions of the Code chapters applicable to the specific 25 trusts. 26 With regard to the disposition of account balances following 27 the death of a designated beneficiary, the bill provides that 28 following the death of an individual who is a designated 29 beneficiary of an ABLE savings account established under a 30 participation agreement, to the extent permitted pursuant to 31 Code chapter 12I and under federal law including section 529A 32 of the Internal Revenue Code, the department of human services 33 (DHS) shall not seek recovery of any account balance remaining 34 in the designated beneficiary’s account for medical assistance 35 -5- LSB 1093HV (4) 89 pf/rh 5/ 6

H.F. 835 paid to or on behalf of the designated beneficiary on or after 1 the date the participation agreement was entered into and an 2 account established for the designated beneficiary; DHS shall 3 not file a claim for payment under section 529A(f) of the 4 Internal Revenue Code; and any account balance remaining in 5 the designated beneficiary’s account may be transferred to 6 an account for another eligible individual specified by the 7 designated beneficiary, or if another eligible beneficiary 8 is not so designated, then the account balance shall be 9 transferred to the estate of the designated beneficiary or to 10 the successor. 11 -6- LSB 1093HV (4) 89 pf/rh 6/ 6