Fiscal Note
Fiscal Services Division
HF 835 – Achieving a Better Life Experience (ABLE) Accounts (LSB1093HV.1)
Staff Contact: Jess Benson (515.281.4611) jess.benson@legis.iowa.gov
Fiscal Note Version – Final Action
Description
House File 835 amends various provisions related to the Iowa Achieving a Better Life
Experience (ABLE) Savings Plan Trust Accounts.
The Bill allows a person other than the account owner to enter into a participation agreement
and have signature authority over the ABLE Account on behalf of the account owner in
accordance with the Internal Revenue Code and regulations promulgated under federal law.
The Bill also allows any funds retained in a Medical Assistance Special Needs Trust or in a
Supplemental Needs Trust to be transferred to the ABLE Account of the designated beneficiary.
The Bill specifies that to the extent allowed under federal law, the Department of Human
Services (DHS) cannot seek recovery of any account balance remaining in the designated
beneficiary’s ABLE Account for Medicaid, and any remaining account balance may be
transferred to another eligible individual or to the estate of the designated beneficiary or to the
successor.
Background
ABLE Accounts allow individuals and families to save for qualified disability expenses without
losing eligibility for certain assistance programs, like Supplemental Security Income (SSI) and
Medicaid. The earnings on investments are federally tax-deferred and tax-free if used for
qualified disability expenses. ABLE Accounts are limited to $100,000 without affecting Medicaid
eligibility, and the annual contribution to an ABLE Account is limited to $15,000 per year. In
addition, ABLE Accounts may be canceled at will, with the account owner receiving the balance.
Assumptions
• As of January 19, 2021, there were 385 Medicaid Special Needs Trusts monitored by the
DHS, with a total of $53.2 million invested, and total funds have been increasing by 6.0%
annually. This includes:
• 207 Accounts contain less than $100,000, for a total of $6.7 million.
• 107 Accounts contain more than $100,000, of which $100,000 may be available to move
to ABLE Accounts, for a total of $10.7 million.
• 71 individuals have not yet reported the balance of their Account. They are required to
file a report on the Account with the DHS annually.
• A maximum of $15,000 per year may be moved from a Medicaid Special Needs Trust to an
ABLE Account.
• Supplemental Needs Trusts may also be impacted. The DHS does not have data on the
number of Supplemental Needs Trusts or the balances in the Trust accounts.
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Fiscal Impact
The fiscal impact of HF 835 cannot be determined, but it will likely lead to a significant reduction
in Medicaid recoveries over time. If all current Medicaid Special Needs Trust beneficiaries
qualify for an ABLE Account, up to $17.4 million could be transferred to an ABLE Account over
a seven-year time period, in addition to the unknown impact from the Supplemental Needs
Trusts. This could result in fewer potential Medicaid recoveries due to less rigid guidelines to
withdraw funds from an ABLE Account and due to the prohibition on Medicaid recovering ABLE
Account balances. The DHS recovered $1.1 million from the six largest Medicaid Special
Needs Trusts in calendar year 2020.
Source
Department of Human Services
/s/ Holly M. Lyons
June 8, 2021
Doc ID 1220350
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 12I.1, 12I.3, 12I.4, 249A.53, 633C.2
Enrolled: 12I.1, 12I.3, 12I.4, 249A.53, 633C.2