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Public Policy Review SNA Spring Meeting Honolulu, HI March 3, 2016

This public policy review discusses recent developments in the Disabled Military Child Protection Act, ABLE programs, SSDI legislation, VA regulations, and housing policy. It also highlights the impact of these changes and pending federal legislation.

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Public Policy Review SNA Spring Meeting Honolulu, HI March 3, 2016

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  1. Public Policy ReviewSNA Spring MeetingHonolulu, HIMarch 3, 2016 Morris Klein 4520 East-West Highway, Suite 700 Bethesda, MD 20814 301-652-4462 morrisklein@morrisklein.com

  2. Overview • Disabled Military Child Protection Act • ABLE • SSDI • VA regulations • Housing policy • SSA POMS • Pending federal legislation • Policy studies on LTSS financing reform

  3. Pentagon Guidance - Disabled Military Child Protection Act • 2014 law allows a military parent to pay their survivor’s benefit plan (“SBP”) into a special needs trust for the benefit of their disabled child. • Pentagon issued guidance to all military branches on December 31, 2015 • Retirees currently paying SBP assigned to a disabled child can make a one-time decision to switch the designated payout to a SNT • Surviving spouse, grandparent or the child's guardian can elect the change • Attorney may certify trust is SNT

  4. Congress Amends ABLEDivision Q, Sec. 303, Protecting Americans from Tax Hike Act of 2015 (P.L. 114-113) • Residency limitation removed • Account can be opened in any state, not just the state of the account owner’s residency • Pro-competitive • Like 529 college savings plans, account holders may “shop.” • Impact on states’ decision to go forward unclear • Will this discourage states from enacting legislation (“let another state deal with this”)? • Will this encourage states to enact legislation (“we want more business”)?

  5. IRS Issues More Guidance:Notice 2015-81(IR-2015-130, Nov. 20, 2015) 1. ABLE programs won’t be required to establish safeguards to determine which distributions are for qualified disability expenses, or to specifically identify or record distributions used for housing expenses. Designated beneficiaries will need to categorize distributions to determine their federal income tax obligations.

  6. IRS Issues More Guidance:Notice 2015-81(IR-2015-130, Nov. 20, 2015) 2. ABLE programs won’t be required to request the ABLE contributor’s TIN if the program has a system in place to reject contributions that exceed the annual and/or cumulative limits, except when an excess contribution is deposited into a designated beneficiary’s ABLE account

  7. IRS Issues More Guidance:Notice 2015-81(IR-2015-130, Nov. 20, 2015) 3. Designated beneficiaries can open an ABLE account by certifying, under penalties of perjury, that they meet the necessary requirements (e.g., they have a signed physician’s diagnosis to provide it to the program or the IRS upon request). Eligible individuals with disabilities will not need to provide the written diagnosis when opening the ABLE account and ABLE programs will not need to receive, retain, or evaluate detailed medical records

  8. ABLE – SSA Issues GuidancePOMS SI 01130.740 • Designated beneficiary of an ABLE account is always considered to be the account owner • Account contributions do not count as the account owner’s income, but if the owner funds their own ABLE account, the receipt of the funds used to establish the account is considered income • Broad definition for Qualified Disability Expenses (QDE) • education, housing, transportation, employment training and support, assistive technology and related services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for ABLE account oversight and monitoring, funeral and burial, and, basic living expenses

  9. ABLE – SSA Issues GuidancePOMS SI 01130.740 • Distributions for non-housing-related QDE are not counted as income and not counted as a resource even if retained after the end of the month • Count as a resource a distribution for a housing-related or for an expense that is not QDE if the distribution is retained into the month following the month of receipt • Housing QDE includes: • Mortgage, Real Property Taxes; Rent; Heating Fuel; Gas; Electricity; Water; Sewer; or Garbage Removal • Details of how suspension of SSI works if ABLE account exceeds $100,000 • Take into account non-ABLE resources in determining eligibility for suspension

  10. Other ABLE News • IRS has not issued final rules • No state has yet to implement ABLE • Impact of lifting of residency requirement? • Cost of start-up fees? • States waiting for IRS to issue final rules? • Disability community working on ABLE II • Raise the age threshold higher • Transfer from college savings plan to ABLE

  11. SSDI LegislationBipartisan Budget Act of 2015 (P. L. 114-74) • Reduction in benefits avoided • 20% reduction beginning in late 2016 rolled back to 2022 • Internal movement of funds between Social Security Programs • Some in Congress still have concerns about SSDI

  12. VA Regulations Update • Proposed rules published Jan. 23, 2015 (80 Fed. Reg. 3840) • Goal to make adjudications consistent and offer “bright-line” standards • 3-year “look-back” period proposed • Could affect how VA treats special needs trusts by excluding only transfers to a vet or vet spouse’s child who is “incapable of self-support” • VA expected to issue final rules later this year

  13. Housing Benefits • Treatment of SNTs for housing benefits in flux • Letter from HUD HQ Feb. 3, 2016 • Social Security Act does not apply to HUD-administered housing programs • Trust distributions may be counted as income • Policy not a barrier to disabled persons receiving subsidized housing • Legal Division memorandum to local multifamily program center • HUD rules silent as to SNTs • Distributions from SNT may not necessarily be considered income Decambre oral argument March 7

  14. Housing Benefits • DeCambre v. Brookline Housing Authority – Federaldistrict court permits local housing authority to include distributions from SNT as income in determining rental payment • On Appeal to the 1st Circuit • Oral argument March 7, 2016

  15. SSA – Rejection of SNTs • SSA as been denying SNTs without stating why • Program not set up to provide explanation • Goldberg v. Kelly (397 U.S. 254 (1970))violation? • SSA expected to issue new procedures in February • Expect notices to identify the problem with the trust and provide the reason for the rejection with relevant POMS citation

  16. POMS for family caregivers • Some SSA workers had questioned trust compensation to family members. • POMS SI 01120.201(F)(2)(c) revised: “NOTE: You should not routinely question the reasonableness of a trustee’s compensation. However, you should consider the factors above to determine if there is a reason to question the reasonableness of the fees or compensation”

  17. SNT Fairness Act(H.R. 670) • To amend Section 1917(d)(4)(A) (42 U.S.C. 1396p(d)(4)(A)) to allow a mentally capable person with disabilities to establish their own SNT • S.349 passed by Senate unanimously September 9, 2015 • House held a hearing on H.R. 670 September 18, 2015 • No movement since the hearing • Unsuccessful attempt by Democrats to include in legislation at end of 2015

  18. SNT Fairness Act(H.R. 670) • Need additional support • Especially from Republicans, and particularly those who are members of the House Energy and Commerce Committee, Health Subcommittee

  19. House E&C Health SubcommitteeRepublicans • Joseph Pitts (Pennsylvania - 16) - Chairman • Brett Guthrie (Kentucky - 02) - Vice Chairman • Ed Whitfield (Kentucky - 01) • John Shimkus (Illinois - 15) • Tim Murphy (Pennsylvania - 18) • Michael Burgess (Texas - 26) • Marsha Blackburn (Tennessee - 07) • Cathy McMorris Rodgers (Washington - 05) • Leonard Lance (New Jersey - 07) • Morgan Griffith (Virginia - 09) • Gus Bilirakis (Florida - 12) • Billy Long (Missouri - 07) • Renee Ellmers (North Carolina - 02) • Larry Bucshon (Indiana - 08) • Susan Brooks (Indiana - 05) • Chris Collins (New York - 27) • Joe Barton (Texas - 06) - Chairman Emeritus • Fred Upton (Michigan - 06) - Ex Officio

  20. House E&C Health SubcommitteeDemocrats • Gene Green (Texas - 29) - Ranking Member • Eliot Engel (New York - 16) • Lois Capps (California - 24) • Janice Schakowsky (Illinois - 09) • G. K. Butterfield (North Carolina - 01) • Kathy Castor (Florida - 14) • John Sarbanes (Maryland - 03) • Doris Matsui (California - 06) • Ben Lujan (New Mexico - 03) • Kurt Schrader (Oregon - 05) • Joseph Kennedy (Massachusetts - 04) • Tony Cárdenas (California - 29) • Frank Pallone (New Jersey - 06) - Ex Officio

  21. House Energy and Commerce Committee Activities • H.R. 1771 – ½ of income for Medicaid spousal annuities payable for cost of care • H.R. 1361 – Limit home equity for Medicaid eligibility to $552,000 (adjusted for inflation) • Republican members have established a Medicaid task force • Preparation for legislation after the election

  22. Disability Integration Act(S. 2427) • Introduced by Senator Schumer (D-NY) 12/18/15 • Reframes HCBS as a civil right, not a welfare entitlement • No public entity or LTSS insurance provider shall deny an individual with an LTSS disability who is eligible for institutional placement, or otherwise discriminate against that individual in the provision of, community-based long-term services and supports that enable the individual to live in the community and lead an independent life. • Requires affordable, accessible, and integrated housing • 5% FMAP Incentive During 10 year Transition • Private/Public Litigation Enforcement Mechanisms

  23. Three important LTSS financing proposals released in February • 1- Bipartisan Policy Center • 2- Leading Edge Pathways • 3- Long-Term Care Financing Collaborative • Common Themes: • Families are unprepared for LTSS; recognition that problem not just for the aged but also for persons with disabilities of all ages • Need public and private sectors to participate • Reform LTC insurance marketplace to make to make policies more affordable • Government responsible for catastrophic coverage • Medicaid strengthened as a safety net for those who cannot insure for their care but stricter eligibility rules for those who can • Recognition of need to remove institutional bias

  24. . Mahalo

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