Monthly Archives: May 2017

Federal contractors now must provide training to their employees on protection of Personally Identifiable Information

New requirements were placed on Federal contractors this year, to train their employees on the protection of personally identifiable information (known as “PII”).  Under a new rule that went into effect in January 2017, all federal contractors that handle or have access to the personally identifiable information of others must provide training to their employees.  The rule applies not only to large government contractors, but also to contractors “at or below the simplified acquisition threshold (SAT), and to contracts and subcontracts for commercial-items, including contracts and subcontracts for commercially available off-the-shelf (COTS) items.” The rule requires prime contractors to flow down these privacy training requirements to their subcontractors.  Personal identifiable information (“PPI”) is any type of information that may be used to trace or distinguish an individual’s identity.

Government contractors and subcontractors must ensure that their employees complete an initial privacy training course, and thereafter undergo annual refresher training. An employee must receive training if they:

  • Have access to any system of records
  • Design, maintain, develop, or operate the contractor’s system of records
  • Store, collect, create, use, maintain, or dispose of personal identifiable information on behalf of the contractor.

The training is to include:

  • Explanation of the authorized and official use of personal identifiable information, and of records containing such information
  • How to appropriately safeguard and handle private information
  • Applicable restrictions of the use, collection, access, disclosure, and disposal of personal identifiable information
  • Procedures to be followed during a suspected or confirmed breach of security for personal identifiable information

Contractors are required to customize their privacy training to fit particular employee’s duties, and the training must include foundational levels of privacy training, as well as advanced privacy training where appropriate. Employees must be tested to ensure they have the level of knowledge necessary to keep personal identifiable information private. Contractors are required to keep records of training to show what type of training particular employees received, and these records are subject to audit by the government.

Federal contractors and subcontractors need to consider which of their employees (if any) handle or have access to the personally identifiable information of others, and prime contractors need to ensure that their subcontractors comply with these new training requirements.  In addition to providing the required training, contractors and subcontractors also must comply with the record-keeping requirements in the new rule.

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A new, less expensive alternative to special needs trusts will become available in late 2017

Persons with disabilities often confront substantial financial difficulties — especially as adults — because ownership of more than $2,000 in assets will make them ineligible for government benefits that are critical for their care and support.  Families with the resources necessary to create special needs trusts have used these trusts to hold assets for the benefit of disabled persons without those assets affecting eligibility for government benefits or programs.

At the end of 2014, President Obama signed the federal ABLE Act, modeled after the Section 529 of the Tax Code governing college savings plans.  The ABLE Act allows states to establish programs whereby disabled people may save money in tax-deferred accounts that may be used to pay for qualified disability expenses, without losing eligibility public benefits as a result of owning assets held in these accounts.  Withdrawals from ABLE accounts will be tax-free, as long as they are used for qualified disability expenses.  States also may choose to offer a state tax deduction for contributions to these accounts.

Unlike 529 college savings accounts, only the disabled individual or a legal guardian (or someone holding a power of attorney) may open an ABLE account, and each disabled person may only have a single ABLE account.  Accounts cannot be opened by other people on behalf of a disabled person.  Multiple individuals can contribute to a disabled person’s ABLE account, but the total contributions in a particular year may not exceed the federal gift limit, which is currently $14,000.  Total lifetime contributions may not exceed $350,000.  When the beneficiary passes away, and if that person used Medicaid, the Medicaid program can be reimbursed out of funds remaining in the account.

Assets in an ABLE account are disregarded for purposes of determining Medicaid eligibility.  For purposes of determining eligibility for Supplemental Security Income (SSI), however, only the first $100,000 in ABLE account assets are disregarded.  SSI payments of monthly cash benefits will be suspended if the beneficiary’s ABLE account balance exceeds $102,000.  In other words – unlike the current situation, in which a disabled person may hold no more than $2,000 in personal assets without losing government benefits – a disabled person may now hold up to $102,000 in an ABLE account without losing SSI benefits.

The Maryland Legislature has established a Maryland ABLE program, and the program is in the process of being set up.  Maryland has decided to make the first $2,500 per year in contributions to an ABLE account deductible from state taxes (in addition to all earnings on the accounts being tax-free).  Maryland plans to decide, by the end of this summer, which investment company will serve as the program manager, and Maryland ABLE accounts are scheduled to become available to the public by approximately November 1, 2017.

While ABLE accounts perform many of the same functions as a special needs trust, costs for an ABLE account are far lower than the cost to establish and maintain a special needs trust.  While there still will be some situations in which a special needs trust is needed, for many families an ABLE account will meet all of their needs at a substantially lower cost.  Individuals can maintain both an ABLE and account and a special needs trust, if necessary.

More information about ABLE accounts may be found at Maryland529.org/MDABLE.

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