[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1872 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1872

   To amend the Internal Revenue Code of 1986 to provide for the tax 
  treatment of ABLE accounts established under State programs for the 
   care of family members with disabilities, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 15, 2011

  Mr. Casey (for himself and Mr. Burr) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to provide for the tax 
  treatment of ABLE accounts established under State programs for the 
   care of family members with disabilities, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Achieving a Better Life Experience 
Act of 2011'' or the ``ABLE Act of 2011''.

SEC. 2. PURPOSES.

    The purposes of this Act are as follows:
            (1) 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.
            (2) 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, the Medicaid program under 
        title XIX of the Social Security Act, the supplemental security 
        income program under title XVI of such Act, the beneficiary's 
        employment, and other sources.

SEC. 3. ABLE ACCOUNTS.

    (a) Establishment.--
            (1) In general.--Section 529 of the Internal Revenue Code 
        of 1986 is amended by redesignating subsection (f) as 
        subsection (g) and by inserting after subsection (e) the 
        following new subsection:
    ``(f) ABLE Accounts.--
            ``(1) General rules.--For purposes of any other provision 
        of law with respect to a qualified ABLE program and an ABLE 
        account, except as otherwise provided in this subsection--
                    ``(A) a qualified ABLE program and an ABLE account 
                shall be treated in the same manner as a qualified 
                tuition program and an account described in subsection 
                (b)(1)(A)(ii), respectively, are treated, and
                    ``(B) qualified disability expenses with respect to 
                a program or account described in subparagraph (A) 
                shall be treated in the same manner as qualified higher 
                education expenses are treated.
            ``(2) Qualified able program.--For purposes of this 
        subsection, the term `qualified ABLE program' means a program 
        established and maintained by a State or agency or 
        instrumentality thereof--
                    ``(A) under which a person may make contributions 
                to an ABLE account which is established for the purpose 
                of meeting the qualified disability expenses of the 
                designated beneficiary of the account,
                    ``(B) which meets the requirements of the preceding 
                subsections of this section (as modified by this 
                subsection), determined by substituting--
                            ``(i) `qualified ABLE program' for 
                        `qualified tuition program', and
                            ``(ii) `ABLE account' for `account', and
                    ``(C) which meets the other requirements of this 
                subsection.
            ``(3) Qualified disability expenses.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified disability 
                expenses' means any expenses which are made for the 
                benefit of an individual with a disability who is a 
                designated beneficiary.
                    ``(B) Expenses included.--The following expenses 
                shall be qualified disability expenses if such expenses 
                are made for the benefit of an individual with a 
                disability who is a designated beneficiary and are 
                related to such disability:
                            ``(i) Education.--Expenses for education, 
                        including tuition for preschool thru post-
                        secondary education, books, supplies, and 
                        educational materials related to such 
                        education, tutors, and special education 
                        services.
                            ``(ii) Housing.--Expenses for a primary 
                        residence, including rent, purchase of a 
                        primary residence or an interest in a primary 
                        residence, mortgage payments, real property 
                        taxes, and utility charges.
                            ``(iii) Transportation.--Expenses for 
                        transportation, including the use of mass 
                        transit, the purchase or modification of 
                        vehicles, and moving expenses.
                            ``(iv) Employment support.--Expenses 
                        related to obtaining and maintaining 
                        employment, including job-related training, 
                        assistive technology, and personal assistance 
                        supports.
                            ``(v) Health, prevention, and wellness.--
                        Expenses for health and wellness, including 
                        premiums for health insurance, mental health, 
                        medical, vision, and dental expenses, 
                        habilitation and rehabilitation services, 
                        durable medical equipment, therapy, respite 
                        care, long term services and supports, 
                        nutritional management, communication services 
                        and devices, adaptive equipment, assistive 
                        technology, and personal assistance.
                            ``(vi) Miscellaneous expenses.--Financial 
                        management and administrative services; legal 
                        fees; expenses for oversight; monitoring; home 
                        improvements, and modifications, maintenance 
                        and repairs, at primary residence; or funeral 
                        and burial expenses.
                            ``(vii) Assistive technology and personal 
                        support services.--Expenses for assistive 
                        technology and personal support with respect to 
                        any item described in clauses (i) through (vi).
                            ``(viii) Other approved expenses.--Any 
                        other expenses which are approved by the 
                        Secretary under regulations and consistent with 
                        the purposes of this section.
                    ``(C) Individual with a disability.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), an individual is an individual 
                        with a disability for a year if the individual 
                        (regardless of age)--
                                    ``(I) 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 
                                month, or
                                    ``(II) is blind.
                            ``(ii) Disability certification required.--
                        An individual shall not be treated as an 
                        individual with a disability for a year unless 
                        the individual--
                                    ``(I) is receiving (or, for 
                                purposes of title XIX of the Social 
                                Security Act, is deemed to be, or 
                                treated as, receiving) benefits under 
                                the supplemental security income 
                                program under title XVI of such Act, or 
                                whose benefits under such program are 
                                suspended other than by reason of 
                                misconduct,
                                    ``(II) is receiving disability 
                                benefits under title II of such Act, or
                                    ``(III) files a disability 
                                certification with the Secretary for 
                                such year.
                            ``(iii) Disability certification defined.--
                        The term `disability certification' means, with 
                        respect to an individual, a certification to 
                        the satisfaction of the Secretary by the 
                        designated beneficiary or the parent or 
                        guardian of the designated beneficiary that--
                                    ``(I) the individual meets the 
                                criteria described in clause (i), and
                                    ``(II) includes a copy of the 
                                designated beneficiary's diagnosis, 
                                signed by a physician meeting the 
                                criteria of section 1861(r)(1) of the 
                                Social Security Act.
                            ``(iv) Restriction on use of 
                        certification.--No inference may be drawn from 
                        a disability certification for purposes of 
                        establishing eligibility for benefits under 
                        title II or XVI of the Social Security Act.
            ``(4) Rollovers from able accounts.--The limits on 
        contributions pursuant to subsection (b)(6) shall not apply to 
        any amount paid or distributed from an ABLE account to the 
        extent that the amount received is paid, not later than the 
        60th day after the date of such payment or distribution, into--
                    ``(A) another ABLE account for the benefit of--
                            ``(i) the same beneficiary, or
                            ``(ii) an individual who--
                                    ``(I) is the spouse of such 
                                individual with a disability, or bears 
                                a relationship to such individual with 
                                a disability which is described in 
                                section 152(d)(2), and
                                    ``(II) is also an individual with a 
                                disability,
                    ``(B) any trust which is described in subparagraph 
                (A) or (C) of section 1917(d)(4) of the Social Security 
                Act and which is for the benefit of an individual 
                described in clause (i) or (ii) of subparagraph (A), or
                    ``(C) a qualified tuition program--
                            ``(i) for the benefit of the designated 
                        beneficiary, or
                            ``(ii) to the credit of another designated 
                        beneficiary under a qualified tuition program 
                        who is a member of the family of the designated 
                        beneficiary with respect to which the 
                        distribution was made.
        The preceding sentence shall not apply to any payment or 
        distribution if it applied to any prior payment or distribution 
        during the 12-month period ending on the date of the payment or 
        distribution.
            ``(5) Transfer to state.--Subject to any outstanding 
        payments due for qualified disability expenses, in the case 
        that the designated beneficiary dies or ceases to be an 
        individual with a disability, all amounts remaining in the 
        qualified ABLE account not in excess of the amount equal to the 
        total medical assistance paid for the designated beneficiary 
        after the establishment of the account, net of any premiums 
        paid from the account or paid by or on behalf of the 
        beneficiary to a Medicaid Buy-In program, under any State 
        Medicaid plan established under title XIX of the Social 
        Security Act shall be distributed to such State upon filing of 
        a claim for payment by such State. For purposes of this 
        paragraph, the State shall be a creditor of an ABLE account and 
        not a beneficiary. Subsection (c)(3) shall not apply to a 
        distribution under the preceding sentence.
            ``(6) Regulations.--Not later than 6 months after the date 
        of the enactment of this section, the Secretary may prescribe 
        such regulations or other guidance as the Secretary determines 
        necessary or appropriate to carry out the purposes of this 
        section, including regulations to prevent fraud and abuse with 
        respect to amounts claimed as qualified disability expenses.''.
            (2) Conforming amendment.--Paragraph (2) of section 6693(a) 
        of the Internal Revenue Code of 1986 such Code is amended by 
        striking ``and'' at the end of subparagraph (D), by striking 
        the period at the end of subparagraph (E) and inserting 
        ``and'', and by inserting after subparagraph (E) the following 
        new subparagraph:
                    ``(F) section 529(d) by reason of 529(f) (relating 
                to ABLE accounts).''.
    (b) Annual Reports.--
            (1) In general.--The Secretary of the Treasury shall report 
        annually to Congress on the usage of ABLE accounts under 
        section 529(f) of the Internal Revenue Code of 1986.
            (2) Contents of report.--Any report under paragraph (1) 
        shall include--
                    (A) the number of people with an ABLE account,
                    (B) the total amount of contributions to such 
                accounts,
                    (C) the total amount and nature of distributions 
                from such accounts,
                    (D) issues relating to the abuse of such accounts, 
                if any, and
                    (E) the amounts repaid from such accounts to State 
                Medicaid programs established under title XIX of the 
                Social Security Act.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 4. TREATMENT OF ABLE ACCOUNTS UNDER CERTAIN FEDERAL PROGRAMS.

    (a) Account Funds Disregarded for Purposes of Certain Other Means-
Tested Federal Programs.--Notwithstanding any other provision of 
Federal law that requires consideration of 1 or more financial 
circumstances of an individual, for the purpose of determining 
eligibility to receive, or the amount of, any assistance or benefit 
authorized by such provision to be provided to or for the benefit of 
such individual, any amount (including earnings thereon) in any ABLE 
account (as defined in section 529(f) of the Internal Revenue Code of 
1986) of such individual, and any distribution for qualified disability 
expenses (as defined in paragraph (3) of such section) shall be 
disregarded for such purpose with respect to any period during which 
such individual maintains, makes contributions to, or receives 
distributions from such ABLE account, except that, in the case of the 
supplemental security income program under title XVI of the Social 
Security Act, a distribution for housing expenses (as defined in 
subparagraph (B)(ii) of such paragraph) shall not be so disregarded, 
and in the case of such program, only the 1st $100,000 of the amount 
(including such earnings) in such ABLE account shall be so disregarded.
    (b) Suspension of SSI Benefits During Periods of Excessive Account 
Funds.--
            (1) In general.--The benefits of an individual under the 
        supplemental security income program under title XVI of the 
        Social Security Act shall not be terminated, but shall be 
        suspended, by reason of excess resources of the individual 
        attributable to an amount in the ABLE account (as defined in 
        section 529(f) of the Internal Revenue Code of 1986) of the 
        individual not disregarded under subsection (a) of this 
        section.
            (2) No impact on medicaid eligibility.--An individual who 
        would be receiving payment of such supplemental security income 
        benefits but for the application of the previous sentence shall 
        be treated for purposes of title XIX of the Social Security Act 
        as if the individual continued to be receiving payment of such 
        benefits.
                                 <all>