The Qualified ABLE Program: tax-advantaged savings accounts.

Existing federal law, the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE Act) , encourages and assists individuals and families to save private funds for the purpose of supporting persons with disabilities to maintain their health, independence, and quality of life by excluding from gross income distributions used for qualified disability expenses by a beneficiary of a qualified ABLE program established and maintained by a state, as specified. Existing law establishes the Qualified ABLE Program, administered by the California ABLE Act Board, in this state for purposes of implementing the federal ABLE Act. Existing law requires the board to segregate the moneys coming into the ABLE program trust into 2 funds: the program fund, which is continuously appropriated, and the administrative fund, which is available upon appropriation by the Legislature. All moneys paid by designated beneficiaries or eligible individuals in connection with ABLE accounts are required to be deposited, as received, into the program fund, promptly invested, and accounted for separately. Existing law defines "ABLE account" and "designated beneficiary" for purposes of the act. Existing law prohibits acceptance of a contribution to an ABLE account that is not in cash or if the contribution would result in aggregate contributions exceeding a specified amount. Existing law authorizes, to the extent allowed under federal law, all amounts in the designated beneficiary's ABLE account to be transferred into the ABLE account of another designated beneficiary's account. Existing law requires the board to notify all designated beneficiaries of the potential tax consequences of transferring funds from one ABLE account to another, as specified. Under existing law, following the death of a designated beneficiary, and only after the department has received approval by the federal Centers for Medicare and Medicaid Services, the state is prohibited from seeking recovery under the Medi-Cal estate recovery provisions of any amount remaining in the designated beneficiary's ABLE account for any amount of medical assistance paid under the state's Medicaid plan, and prohibits the state from filing a claim for the payment under the ABLE Act. This bill would, among other things, instead authorize a change in the designated beneficiary of an ABLE account to take effect upon the death of the designated beneficiary, as specified. The bill would remove the requirement on the board to notify all designated beneficiaries of the potential tax consequences described above. This bill would also define "CalABLE account" for purposes of the act to mean an ABLE account established pursuant to those provisions and administered by the board. The bill would adjust the aggregate contribution limit on contributions to ABLE accounts. The bill also would provide that the above-described Medi-Cal estate recovery provisions apply to ABLE accounts and CalABLE accounts established prior to January 1, 2023, and to CalABLE accounts established on or after January 1, 2023, thereby limiting the application of the prohibition on the above-described Medi-Cal estate recovery provisions to CalABLE accounts for accounts established after January 1, 2023.