HOUSE BILL 467
52nd legislature - STATE OF NEW MEXICO - first session, 2015
INTRODUCED BY
W. Ken Martinez and Bill B. O'Neill
AN ACT
RELATING TO DISABILITY BENEFITS; CREATING THE ACHIEVING A BETTER LIFE EXPERIENCE ACT TO SECURE FEDERAL TAX-ADVANTAGED FUNDING FOR DISABILITY-RELATED EXPENSES OF DESIGNATED BENEFICIARIES TO SUPPLEMENT BENEFITS PROVIDED THROUGH OTHER SOURCES; PROVIDING HOW BENEFITS ARE TAXED.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Achieving a Better Life Experience Act".
SECTION 2. [NEW MATERIAL] PURPOSE.--The purpose of the Achieving a Better Life Experience Act is to establish an achieving a better life experience program in New Mexico that provides for federally tax-advantaged savings accounts through Section 529A of the Internal Revenue Code of 1986, as amended, to:
A. encourage and assist eligible persons and their families in saving private funds for the purpose of supporting persons with disabilities to maintain health, independence and quality of life; and
B. 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 19 of the federal Social Security Act, the supplemental security income program under Title 16 of that federal act, the designated beneficiary's employment and other sources.
SECTION 3. [NEW MATERIAL] DEFINITIONS.--As used in the Achieving a Better Life Experience Act:
A. "account" means an individual tax-free savings account held in trust for a designated beneficiary established as part of the eligible program;
B. "account owner" means the person who enters into an account agreement with the office;
C. "blind" means a person has central visual acuity of twenty/two hundred or less in the better eye with the use of a correcting lens; provided that an eye that is accompanied by a limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than twenty degrees shall be considered as having a central visual acuity of twenty/two hundred or less; and provided further that a person is also considered to be blind if the person is blind as defined under a state plan approved pursuant to Title 10 or Title 16 of the federal Social Security Act in effect for October 1972 and received aid under such plan, on the basis of blindness, for December 1973, so long as the person has been continuously blind;
D. "contracting state" means a state that has not set up an eligible program and contracts with New Mexico to manage accounts for its residents;
E. "designated beneficiary" means an eligible person at the time the account is established or the eligible person who replaces a designated beneficiary, who is the beneficiary of the account and whose qualified disabled expenses may be paid from the account;
F. "disability certification" means a certification to the satisfaction of the United States secretary of the treasury by an eligible person or the eligible person's parent or guardian that certifies that the eligible person has a medically determinable physical or mental impairment that results in marked and severe functional limitations and that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve months, or is blind and that such blindness or disability occurred before the date on which the eligible person attained age twenty-six, and which certification is accompanied by a copy of the diagnosis relating to the eligible person's relevant impairment that is signed by a physician;
G. "eligible person" means a person who:
(1) is entitled to federal social security benefits based on blindness or disability under 42 U.S.C. Section 401 or 42 U.S.C. Section 1381 and whose blindness or disability occurred before the age of twenty-six; or
(2) has filed a disability certification with the secretary of the United States treasury for such taxable year;
H. "financial organization" means an organization that is authorized to do business in New Mexico and is:
(1) licensed or chartered by the office of superintendent of insurance;
(2) licensed or chartered by the financial institutions division of the regulation and licensing department; or
(3) subject to the jurisdiction of the federal securities and exchange commission;
I. "management contract" means the contract executed by the office and a financial organization selected to act as a depository and manager of the qualified program;
J. "office" means the investment office;
K. "qualified program" means an achieving a better life experience program established and maintained by the state or an agency or instrumentality of the state; and
L. "qualified disability expense" means an expense related to an eligible person's blindness or disability that is made for the benefit of the eligible person as designated beneficiary.
SECTION 4. [NEW MATERIAL] ACHIEVING A BETTER LIFE EXPERIENCE PROGRAM--CREATED--OFFICE POWERS AND DUTIES.--
A. The "achieving a better life experience program" is created in the office. The qualified program shall be administered by the office. The office may enter into account agreements to provide accounts for the benefit of designated beneficiaries. The qualified program shall provide that:
(1) family members and other persons may make contributions for a taxable year for the benefit of a designated beneficiary to an account that is established to help the designated beneficiary to supplement, not supplant, the costs of qualified disability expenses without losing other sources of income;
(2) a designated beneficiary is limited to one account; and
(3) an account shall be only for a designated beneficiary who is a resident of New Mexico or a resident of a contracting state.
B. The qualified program shall be exempt from taxation under Section 529A of the Internal Revenue Code of 1986, as amended.
C. Contributions to an account shall be accepted only in cash and as long as a contribution does not result in aggregate contributions to an account from all contributors for the taxable year exceeding fourteen thousand dollars ($14,000) for the calendar year in which the taxable year begins.
D. The office shall develop and administer the qualified program in accordance with the federal Stephen Beck, Jr., ABLE Act of 2014 and the Achieving a Better Life Experience Act and in a manner that allows account owners and designated beneficiaries to obtain and maintain federal income tax benefits or treatment provided by the Internal Revenue Code of 1986, as amended, and exemptions under federal securities laws.
E. The office may enter a management contract with one or more financial organizations. The office and the financial organization shall account for each contribution by an account owner. The office may charge administrative and other qualified program fees for services rendered pursuant to the Achieving a Better Life Experience Act.
F. The office may contract with other states that do not have qualified programs to provide qualified program services to residents of the contracting states.
SECTION 5. [NEW MATERIAL] QUALIFIED DISABILITY EXPENSES.--Qualified disability expenses include the following:
A. education;
B. housing;
C. transportation;
D. employment training and support;
E. assistive technology and personal support services;
F. health, prevention and wellness;
G. financial management and administrative services;
H. legal fees;
I. expenses for oversight and monitoring;
J. funeral and burial expenses; and
K. other expenses approved by the United States secretary of the treasury.
SECTION 6. [NEW MATERIAL] OFFICE RULES.--The office shall prescribe such rules as the office determines necessary or appropriate to carry out the purposes of the Achieving a Better Life Experience Act, including rules to:
A. enforce the single account per eligible person limit;
B. provide for the information required to be presented to open an account;
C. generally define qualified disability expenses;
D. prevent fraud and abuse with respect to amounts claimed as qualified disability expenses; and
E. allow for transfers from one account to another account.
SECTION 7. [NEW MATERIAL] NOTICE OF ACCOUNT.--The office shall submit a notice to the United States secretary of the treasury upon the establishment of an account. The notice shall contain the name and state of residence of the designated beneficiary and such other information as the secretary may require.
SECTION 8. [NEW MATERIAL] FUNDS CREATED--TRUST FUND AND ADMINISTRATION FUND.--
A. The "ABLE program trust fund" is created as a nonreverting fund in the state treasury. The trust fund shall be administered by the office to carry out the purposes of the Achieving a Better Life Experience Act. The trust fund shall consist of separate trust accounts held in the name of account owners. Income from investment of the trust fund shall be credited to the separate accounts. The fund shall be invested by the office or a financial organization with which the office has a management agreement.
B. The "ABLE program administration fund" is created as a nonreverting fund in the state treasury. The fund consists of all administrative and other fees received by the office pursuant to agreements with account owners and management contracts and any other money credited to the fund, including earnings from investment of the fund. Money in the fund may be used to pay costs of establishing, marketing and otherwise administering the qualified program. Money in the fund shall be invested by the office. Disbursements from the fund shall be by warrant of the secretary of finance and administration on vouchers signed by the state investment officer or the officer's designated representative.
SECTION 9. [NEW MATERIAL] REPORTS--AGGREGATED INFORMATION.--
A. The office shall make monthly reports to designated beneficiaries with respect to contributions, distributions, the return of excess contributions and such other matters involving the state of a designated beneficiary's account.
B. The office shall report annually to the governor, the legislature, account owners and designated beneficiaries on:
(1) the qualified program's fiscal transactions during the preceding fiscal year;
(2) the market value of the program as of the end of the preceding fiscal year;
(3) the asset allocations of the qualified program expressed in percentages of stocks, fixed income securities, cash or other financial assets; and
(4) the rate of return on the investment of the qualified program assets during the preceding fiscal year.
C. For research purposes, the office shall make available reports containing aggregate information, by diagnosis and other relevant characteristics and on contributions and distributions from the qualified program. An item shall not be made available to the public if such item can be associated with, or otherwise identify, directly or indirectly, a particular person.
SECTION 10. [NEW MATERIAL] ELECTRONIC DISTRIBUTION STATEMENTS.--The office shall submit electronically on a monthly basis to the commissioner of social security, in the manner specified by the commissioner, statements on relevant distributions and account balances from all accounts.
SECTION 11. [NEW MATERIAL] STATE AS CREDITOR OF ACCOUNTS.--Subject to any outstanding payments due for qualified disability expenses, upon the death of the designated beneficiary, all amounts remaining in the designated beneficiary's 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 designated beneficiary to a medicaid buy-in program under the state medicaid plan established under Title 19 of the Social Security Act, shall be distributed to the state upon filing of a claim for payment by the state. For purposes of this section, the state shall be a creditor of an account and not a beneficiary.
SECTION 12. [NEW MATERIAL] TREATMENT OF ACCOUNTS UNDER FEDERAL MEANS-TESTED PROGRAMS.--
A. Notwithstanding any other provision of federal law that requires consideration of one or more financial circumstances of a person when determining eligibility to receive benefits or determining the amount of assistance, such provisions shall not apply to a designated beneficiary except that, in the case of the supplemental security income program under Title 16 of the Social Security Act:
(1) a distribution for housing expenses shall not be so disregarded; and
(2) in the case of the program, any amount in an account, including earnings on investment of the account, shall be considered a resource of the designated beneficiary to the extent that such amount exceeds one hundred thousand dollars ($100,000).
B. The benefits of a designated beneficiary under the supplemental security income program under Title 16 of the Social Security Act shall not be terminated, but shall be suspended, by reason of excess resources of the person attributable to an amount in the account, within the meaning of Section 529A of the Internal Revenue Code of 1986, as amended, of the person not disregarded pursuant to Subsection A of this section.
C. A person who would be receiving payment of supplemental security income benefits but for the application of Paragraph (1) of Subsection A of this section shall be treated for purposes of Title 19 of the Social Security Act as if the person continued to be receiving payment of such benefits.
SECTION 13. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2015.
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