Summary of HB 5923 (Michigan 2025-2026 Session)
Purpose and intent
- This bill amends the Michigan Achieving a Better Life Experience (ABLE) program act (2015 PA 160) to designate a survivor beneficiary for ABLE accounts and to exempt certain ABLE-related assets and activities from Michigan Medicaid estate recovery practices, aligning state policy with federal ABLE program provisions.
- It ties the measure to HB 5922 (a tie-bar), indicating the two bills are intended to move together through the Legislature.
Key provisions and changes
1) Definitions and framework (Sec. 2)
- Clarifies terms used in the ABLE program, including:
- ABLE savings account and account owner
- Designated beneficiary and designated representative
- Designated representative authority for minors or incapacitated individuals
- Program manager, contract, and savings plan
- Qualified disability expenses and qualified withdrawals
- References to 529A (federal) provisions and related internal revenue code definitions
- Establishes that the Michigan ABLE savings program is administered in coordination with a program manager under the treasurer’s oversight.
2) Account opening, ownership, and contributions (Sec. 7)
- ABLE accounts may be established beginning January 1, 2016 (existing timeline retained).
- Eligibility: Michigan residents or residents of contracting states may open an ABLE account; each account has a single designated beneficiary.
- The account owner and designated beneficiary relationship:
- The designated beneficiary is the default account owner unless the beneficiary is a minor or lacks capacity; a designated representative may open and manage the account for a minor or incapacitated individual.
- Account agreements: The program must use a standardized Michigan ABLE savings program agreement, approved by the treasurer and program manager, including required identifying information.
- Contributions: May be made by any person, subject to 529A limits and applicable treasurer rules; allowed contribution methods include cash, checks, credit cards, or similar methods approved by the treasurer (not in-kind property).
- Asset protection: Money in ABLE accounts is exempt from creditor processes (garnishment, attachment, seizure) for most debts, but the state may have a claim upon the beneficiary’s death as provided under 529A(f).
- Distributions: Can be made via checks, electronic transfers, or payments directly to providers for qualified disability expenses.
- Separate accounting: Each savings plan must maintain separate accounting for each designated beneficiary.
3) Changes in ownership, beneficiaries, and survivor designations (Sec. 8)
- Permissible changes, subject to federal law:
- An account owner may change the designated beneficiary to a family member of the previous beneficiary.
- Transfers to another ABLE account with a new designated beneficiary who is a family member of the prior beneficiary are allowed.
- If the account owner is a designated representative, they may designate a successor owner upon their death.
- A survivor beneficiary designation is allowed. If the survivor is an eligible individual, they become the successor owner after final distributions; if not, remaining proceeds are paid to the survivor and the account is closed.
- Restrictions: Changes cannot create excess contributions or violate investment rules.
- If no survivor beneficiary is designated and the designated beneficiary dies, remaining proceeds go to the beneficiary’s estate.
4) Medicaid estate recovery and eligibility treatment (Sec. 17)
- Clarifies treatment of ABLE accounts for public assistance eligibility:
- Amounts in an ABLE account, contributions, and qualified distributions are disregarded for purposes of determining eligibility or benefit amounts for state assistance programs (to the extent provided by section 10g of the Social Welfare Act).
- Upon death of the designated beneficiary, the remaining ABLE account funds are not subject to Michigan Medicaid estate recovery under section 112g of the Social Welfare Act, unless otherwise required by federal law (federal law controls when applicable).
Effective date and enacting provisions
- The act contains an enacting section stating it does not take effect unless tie-bar legislation (HB 5922 or related Senate bill) is enacted into law.
- Acts into effect only if the specified companion bills become law.
Administrative and political context
- Sponsors: multiple representatives, with a list of co-sponsors.
- Committee action: referred to Appropriations (as of the latest action history).
- The bill includes a tie-bar with HB 5922, indicating coordinated consideration.
Potential impact
- Beneficiaries and families
- Provides a designated survivor benefit option, allowing continued access to ABLE funds after the death of the designated beneficiary under certain conditions.
- Enhances estate planning flexibility for ABLE accounts through survivor designations and potential successor ownership.
- Financial management and protections
- Maintains and strengthens asset protection from creditors for ABLE funds, while preserving a pathway for the state to recover certain costs upon death as allowed by federal law.
- Medicaid and public benefits
- Reinforces federal-compliant treatment of ABLE accounts in determining eligibility for means-tested programs and excludes ABLE assets from Medicaid estate recovery in Michigan, aligning with federal provisions, subject to any federal constraints.
- Administrative complexity
- Requires program management and separate beneficiary accounting, with detailed designation rules and transfer procedures to ensure compliance with 529A and other tax rules.
Note: This summary focuses on the substantive elements currently in the bill text and announced action. Readers should consult the final enacted language and related fiscal notes for complete details and any changes made during the legislative process.
