Legislature(2015 - 2016)BARNES 124
03/09/2016 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB188 | |
| HB337 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 188 | TELECONFERENCED | |
| *+ | HB 337 | TELECONFERENCED | |
| *+ | HB 314 | TELECONFERENCED | |
HB 188-PERSON W/DISABILITY SAVINGS ACCOUNTS
3:33:15 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 188, "An Act relating to financial accounts for
persons with disabilities; relating to financial institutions;
relating to property exemptions; relating to securities; and
providing for an effective date."
3:33:39 PM
REPRESENTATIVE DAN SADDLER, speaking as the sponsor, read from
the following sponsor statement [original punctuation provided]:
HB 188 seeks to help Alaskans cope with the challenges
of living with a disability by allowing individuals
and families to set up tax-free savings accounts,
called "ABLE accounts," to pay for education, housing,
transportation or other disability-related expenses.
The U.S. Congress passed the "Achieving a Better Life
Experience (ABLE) Act" in 2014, authorizing states to
create special savings accounts for disability-related
expenses modeled after the successful "529 college
savings programs," named after the relevant section of
IRS code. ABLE accounts, also known as "529A"
accounts, allow individuals with disabilities to
improve their financial security by using private
investments to supplement their benefits from
insurance, employment, Supplemental Security Income
(SSI), Medicaid, and other sources. Assets held in an
ABLE account would not be counted under means tests
required for Medicaid or SSI, although SSI cash
benefits would be suspended if the ABLE balance
exceeded $100,000. ABLE accounts could be spent for
education, transportation, job training and support,
assistive technology, health and wellness, legal and
other qualified services. Contributions would be
limited to $14,000 per year, and capped at $400,000. A
person could have only one account. To be eligible for
an ABLE account, a person must have become blind or
disabled before the age of 26. The Governor's Council
on Disabilities and Special Education estimates that
about 13,770 Alaskans - 10 percent of those with a
disability - might qualify for ABLE accounts. By
empowering Alaskans with disabilities and their
families to build their financial independence, HB 188
will help them meet more of their life challenges by
relying on private resources, without eroding the
value of public benefits to which they are entitled.
ABLE accounts will be important tools for helping them
live full, productive lives in their communities.
REPRESENTATIVE SADDLER noted that the current version of the
bill places administration of the [Stephen Beck, Jr., Achieving
a Better Life Experience (ABLE) Act of 2014], accounts with the
Department of Commerce, Community & Economic Development
(DCCED), but a forthcoming proposed committee substitute would
place administration with the Department of Revenue (DOR).
3:37:49 PM
CHAIR OLSON asked whether the $400,000 cap on ABLE accounts
would only be contributions, or could include interest.
REPRESENTATIVE SADDLER was unsure.
REPRESENTATIVE LEDOUX expressed her understanding that the bill
allows a disabled person with $400,000 in assets to continue to
benefit from various state and federal entitlement programs.
REPRESENTATIVE SADDLER said yes.
REPRESENTATIVE HUGHES asked what mechanism is used to determine
eligibility for account holders.
REPRESENTATIVE SADDLER stated there is a federal certification
to establish one's disability. In further response to
Representative Hughes, he said an account can be held by someone
who is older than 26 years of age.
REPRESENTATIVE KITO asked how DOR would administer the program
differently than would DCCED.
3:40:10 PM
KIM SKIPPER, Staff to Representative Saddler, answered that
DCCED has a conflict of interest because they audit and regulate
the affected industry; however, DOR can manage ABLE accounts.
In further response to Representative Kito, she said she was
unsure whether DOR manages similar accounts, and deferred his
question to DOR.
REPRESENTATIVE SADDLER observed that the current Alaska 529
savings plan for college education is currently housed in the
University of Alaska (UA).
REPRESENTATIVE COLVER questioned whether there was a way for
individuals to open 529 plans through brokerage houses instead
of having the state administer accounts.
REPRESENTATIVE SADDLER said yes. He advised that the 529(A)
federal enabling legislation does allow individuals to set up
private investment accounts with brokerage houses.
REPRESENTATIVE TILTON requested a review of the monetary
guidelines.
REPRESENTATIVE SADDLER restated that the annual cap on
contributions to one account is $14,000, and the lifetime
maximum is $400,000. In further response to Representative
Tilton, he said if the balance in the account exceeds a
threshold of $100,000, SSI cash benefits to the account holder
would be suspended.
REPRESENTATIVE TILTON inquired as to the maker of the monetary
guidelines.
REPRESENTATIVE SADDLER said the $400,000 maximum was established
by the state for 529 savings accounts, and the $100,000
threshold is a federal requirement.
REPRESENTATIVE LEDOUX questioned why there is an age limit for
eligible disabilities.
REPRESENTATIVE SADDLER stated the age limit is based in the
federal legislation, and suggested that in order to limit the
number of potential beneficiaries, those who become disabled
later in life are not eligible.
REPRESENTATIVE LEDOUX directed attention to the bill on page 6,
lines 24-26, which read:
SEC. 06.65.150. Program account contributions.
(a) A person may not make a contribution to open or
add to a program account unless the person makes the
contribution in cash.
REPRESENTATIVE LEDOUX asked why securities are not acceptable.
3:47:08 PM
MS. SKIPPER responded that this provision would be changed in
the forthcoming committee substitute.
REPRESENTATIVE LEDOUX asked how the meaning of "member of the
family" is described in the federal authorizing statute.
REPRESENTATIVE SADDLER said he would inquire and provide this
information.
REPRESENTATIVE COLVER expressed his reluctance to approve the
appropriation indicated in the attached fiscal note which adds
two employees to the Division of Banking and Securities, DCCED.
REPRESENTATIVE SADDLER remarked:
The intent of the legislation, the authorizing federal
legislation, does not envision the state doing
investment work, but contracting with an organization
like Ameritrade or ... T. Rowe Price which is, who
does the 529 for Alaska, and having them do the actual
investment and so forth, and providing the quarterly
or annual reports. There is some expense for the
state required to make sure reports are done for the
state to the [Internal Revenue Service, U.S.
Department of the Treasury] and so forth. I hope
there is a way to do that ... we're working on trying
to reduce the costs.
MS. SKIPPER added that the forthcoming committee substitute
allows DOR to contract out with other services instead of hiring
staff, resulting in a lower fiscal note. In addition, the state
may partner with other states to lower costs.
REPRESENTATIVE LEDOUX suggested imposing a charge on those who
are setting up an account.
MS. SKIPPER pointed out that the bill operates in a similar
manner to the college savings accounts, and fees would be
charged. In further response to Representative LeDoux, she said
she was unsure whether the fees would cover all of the state's
costs.
REPRESENTATIVE HUGHES asked whether the state incurs an annual
cost for the college savings accounts.
MS. SKIPPER said yes. However, UA has reduced the cost by
creating a large pool of account holders; in fact, the pool
creates sufficient income to pay for staffing.
REPRESENTATIVE HUGHES observed that if the legislature creates
an enabling statute, that would encompass the state's
obligation.
MS. SKIPPER advised that the state does not have to authorize
the accounts because disabled persons could establish accounts
in other states; however, establishing enabling legislation
benefits Alaska because residents could direct contributions to
the accounts from their permanent fund dividends, and a
provision in the forthcoming committee substitute allows
Medicaid services to be repaid to the state after the death of
an account holder.
3:54:04 PM
CHAIR OLSON opened public testimony on HB 188.
3:56:38 PM
MILLIE RYAN, Executive Director of REACH, Inc., said her
organization serves those with intellectual and developmental
disabilities who would benefit from HB 188. She is also the
president of Key Coalition of Alaska, which strongly endorses
the bill. Those with disabilities and their family members
would like the opportunity to save a down payment for a house or
for transportation, an opportunity that is taken for granted by
others. In fact, those with disabilities often live with
extraordinary expenses, and need services and support such as
Medicaid waivers and disability income; currently, however,
after saving more than $2,000, disability income and support are
taken away. Ms. Ryan advised that REACH would encourage its
beneficiaries to begin saving for their needs and to work for
things that are important.
3:58:18 PM
ROBERT FRICK said he lives in Juneau and has worked for Club
Demonstration Services (CDS) at Costco for 16 years
demonstrating food products. He is 62 years old and expressed
his support for HB 188. The bill would help him save for a
house or car and a service dog.
3:59:35 PM
MALLORY HAMILTON said she is the parent of a young woman who
experiences autism, Down syndrome, and a seizure disorder. She
is in support of the proposed legislation. Although she is
grateful that her daughter is on a waiver and receives SSI
benefits, her daughter must keep her income at well below
poverty level, which restricts her choices for items such as
eyeglasses. The bill would allow her daughter to save for a
home and to save any money she may receive from her relatives.
Ms. Hamilton pointed out that in the event of her daughter's
death, the state would have the option to claim any funds her
daughter has saved to pay for care she received during her
lifetime. The bill would allow her daughter to live a more
typical life and to have a job, which is important to her self-
worth. Speaking as a parent, Ms. Hamilton urged the committee
to pass the bill.
4:02:46 PM
STUART SPIELMAN, Senior Policy Advisor and Counsel, Autism
Speaks, informed the committee Autism Speaks is the nation's
largest autism science and advocacy organization. Mr. Spielman
said he is the parent of a son severely affected by autism. He
has been involved with ABLE Act legislation for over ten years
and because of his training as a tax lawyer, he was influenced
by the aspect that a person with autism is in a fundamentally
different position than a person who does not; for example, his
son without autism has a 529 college savings account, but his
son with autism must avoid putting assets in his own name. This
is one of the reasons the disability community and U.S. Congress
is supportive of this legislation. Beyond the technical aspects
of the bill, he stressed that the bill inspired overwhelming
support from Congress in December 2014, and every state is
considering legislation, or has authorized a program. Mr.
Spielman noted that people with disabilities are more than twice
as likely as others to live in poverty; the ABLE Act represents
one effort to improve the status of those with disabilities.
With the bill, parents of children with disabilities can provide
a little more help to ensure their children have more secure and
successful lives.
REPRESENTATIVE LEDOUX asked why the bill limits eligibility to
those with a disability that occurred prior to the age of 26
years.
MR. SPIELMAN explained that the provision represents a
compromise in the federal bill.
REPRESENTATIVE LEDOUX expressed her interest in knowing how much
the legislation would cost the federal government compared to
the cost with no age limit.
MR. SPIELMAN offered to provide information from the
Congressional Budget Office.
CHAIR OLSON asked whether other states have achieved a zero
budget impact.
MR. SPIELMAN said funding mechanisms vary between states, such
as intergovernmental loans and fees, and consortiums have the
potential for sharing costs.
REPRESENTATIVE LEDOUX asked for the effect on the state's
Medicaid bill.
4:10:44 PM
REPRESENTATIVE SADDLER opined that the bill would not affect the
state's Medicaid costs unless the state recovers Medicaid
expenses after a beneficiary's death.
REPRESENTATIVE LEDOUX surmised that if the bill does not affect
the state's Medicaid budget, there would not have been a
compromise needed to affect the cost of the federal legislation.
REPRESENTATIVE SADDLER said he was unsure of the explanation;
however, the forthcoming committee substitute will have a more
accurate fiscal note.
MR. SPIELMAN clarified that the age limit affects the total
number of people who could qualify for an ABLE account.
REPRESENTATIVE LEDOUX stated that there must be costs to the
federal government, other than additional staff, that led to a
compromise age limit. Her concern is that there will be a cost
to the state.
MR. SPIELMAN acknowledged that there is a federal tax cost
because the accounts are tax-preferred accounts and are not
subject to federal taxation.
CHAIR OLSON added that children are dropped off of their
parents' medical insurance at age 26.
REPRESENTATIVE SADDLER said another possible expense would be
tax reporting.
4:16:21 PM
RICK NELSON said he is a self-advocate speaking in support of
the ABLE Act, and currently works for the Governor's Council on
Disabilities and Special Education, Department of Health and
Social Services. Before the ABEL Act, he was only allowed to
save up to $2,000, and was unable to buy anything like a house
or a means of transportation, or assisted technology to help him
communicate with others. Mr. Nelson said the bill is a big
game-changer for people with severe disabilities, and will level
the playing field for people with disabilities. If a child
needs eyeglasses, and they are a preteenager, they don't want
the frames that are offered by Medicaid. The bill would allow a
teenager to buy eyeglasses that meet her needs, put her in her
peer group, and save the state money. Mr. Nelson urged the
committee to pass the ABLE Act.
4:21:09 PM
CHAIR OLSON announced that public testimony would remain open.
[HB 188 was held over.]