04/15/2010 08:30 AM House FINANCE

SENATE BILL NO. 159                                                                                                           
                                                                                                                                
     "An Act increasing the maximum funeral expenses                                                                            
     payable as a workers' compensation death benefit; and                                                                      
     providing for an effective date."                                                                                          
                                                                                                                                
10:02:29 AM                                                                                                                   
                                                                                                                                
SENATOR JOE  PASKVAN announced that  the bill  increases the                                                                    
maximum  funeral expenses  payable as  worker's compensation                                                                    
death   benefits.  The   bill  addresses   the  statute   AS                                                                    
23.30.215(a)(1)  in Section  1 stating  that the  reasonable                                                                    
and  necessary  funeral  expenses   are  increased  from  $5                                                                    
thousand to  $10 thousand. He  explained that an  average of                                                                    
26 fatalities  per year require payment  of funeral expenses                                                                    
under  the workers'  compensation statutes.  In FY  09 there                                                                    
were 17  fatalities within the  state requiring  payments of                                                                    
workers'   compensation  funeral   expenses.  The   expenses                                                                    
include   the   traditional  funeral   services,   graveside                                                                    
services, or  cremation. He pointed  out that the  funds are                                                                    
not intended  to pay  for extravagant  funerals. The  cap of                                                                    
$10 thousand  will cover  a modest  and average  funeral. He                                                                    
explained his reasons for sponsoring  the bill. If SB 159 is                                                                    
implemented, there  will be no  fiscal impact to  the state.                                                                    
The  overall  workers'  compensation  costs  in  Alaska  are                                                                    
approximately  $200   million.  The  proposed   increase  in                                                                    
funeral expenses will be paid from the system costs.                                                                            
                                                                                                                                
Representative  Foster  asked   about  guidelines  regarding                                                                    
funeral expenses.                                                                                                               
                                                                                                                                
10:06:30 AM                                                                                                                   
                                                                                                                                
Senator Paskvan  responded that there are  no guidelines for                                                                    
the  individual  components.  The  bill  simply  raises  the                                                                    
maximum funeral expenses from $5 thousand to $10 thousand.                                                                      
                                                                                                                                
Representative Foster  stated that  he did not  believe that                                                                    
$10 thousand was extravagant.                                                                                                   
                                                                                                                                
Vice-Chair  Thomas asked  if  cremations  were an  allowable                                                                    
expense. Senator Paskvan responded yes.                                                                                         
                                                                                                                                
Vice-Chair  Thomas asked  if cremations  were listed  in the                                                                    
regulations. Senator  Paskvan believed  that cremation  is a                                                                    
customary funeral expense and would be included.                                                                                
                                                                                                                                
10:07:55 AM                                                                                                                   
                                                                                                                                
PAULA SCAVERA,  SPECIAL ASSISTANT,  DEPARTMENT OF  LABOR AND                                                                    
WORKFORCE DEVELOPMENT introduced herself.                                                                                       
                                                                                                                                
MIKE   MONAGLE,   ADMINISTRATOR,    DIVISION   OF   WORKERS'                                                                    
COMPENSATION introduced himself.                                                                                                
                                                                                                                                
Co-Chair Stoltze  asked if  the administration  supports the                                                                    
legislation. Ms.  Scavera responded that  the administration                                                                    
is neutral.                                                                                                                     
                                                                                                                                
Co-Chair  Stoltze  asked  about regulations  in  place  that                                                                    
govern    flexibility,     especially    regarding    travel                                                                    
expenditures.                                                                                                                   
                                                                                                                                
Mr.   Monagle    responded   that    workers'   compensation                                                                    
regulations do not specify how  the funeral benefits must be                                                                    
spent. In  the event  of a  fatality, the  insurance company                                                                    
contacts  the  family  and  helps   to  make  the  necessary                                                                    
arrangements up to the maximum amount allowed.                                                                                  
                                                                                                                                
Co-Chair Stoltze  asked how the process  works regarding the                                                                    
insurance  adjuster. Mr.  Monagle answered  that the  family                                                                    
would express the  method that they wish the  benefits to be                                                                    
paid  and then  the insurance  company pays  the bills.  The                                                                    
funeral home bills the insurance company directly.                                                                              
                                                                                                                                
Representative  Foster  asked  if   a  portion  of  the  $10                                                                    
thousand could be spent on travel.                                                                                              
                                                                                                                                
Mr.  Monagle responded  yes. The  $10  thousand limit  would                                                                    
include the funeral benefit.                                                                                                    
                                                                                                                                
Representative Foster  imagined that  travel or moving  of a                                                                    
body  would use  a large  portion  of the  $10 thousand.  He                                                                    
expressed support of the legislation.                                                                                           
                                                                                                                                
10:11:23 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Thomas asked  if  legislators  are covered.  Mr.                                                                    
Monagle  responded that  any employee  is covered  under the                                                                    
workers' compensation act.                                                                                                      
                                                                                                                                
Representative Kelly asked about  Alaska's cost of insurance                                                                    
to employers.  Ms. Scavera responded  that Alaska's  cost of                                                                    
insurance to employers is the highest in the nation.                                                                            
                                                                                                                                
10:12:50 AM                                                                                                                   
                                                                                                                                
Representative Fairclough asked about  a potential burden to                                                                    
the  employers. Mr.  Monagle responded  that  an average  is                                                                    
approximately  25  fatality cases  per  year  leading to  an                                                                    
increase  of  $125,000  increase  to  the  system.  Workers'                                                                    
compensation  total benefit  is $250  million per  year. The                                                                    
increase   is  one   tenth  of   one  percent.   The  rating                                                                    
organization contracted by the  state to produce "lost cost"                                                                    
for  Alaska reviewed  the  proposed  legislation and  stated                                                                    
that the  increase would be  negligible on premium  rates in                                                                    
the state.                                                                                                                      
                                                                                                                                
Representative  Fairclough wondered  why with  average costs                                                                    
ranging  from $8  thousand to  $9 thousand,  a $10  thousand                                                                    
limit was  chosen. Senator Paskvan  answered that  there are                                                                    
certain  cases  of  transporting  a body  from  rural  areas                                                                    
leading to greater expenses.                                                                                                    
                                                                                                                                
10:15:15 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze  offered that many  businessmen voluntarily                                                                    
provide financial support. This  increase does not reflect a                                                                    
callousness of Alaska employers.                                                                                                
                                                                                                                                
Representative   Fairclough   wondered    if   the   federal                                                                    
government added $255 as a death benefit.                                                                                       
                                                                                                                                
10:16:57 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze opened public testimony.                                                                                       
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Representative  Fairclough MOVED  to  report SB  159 out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
SB 159 was REPORTED out of Committee with a "do pass"                                                                           
recommendation and with previously published fiscal note:                                                                       
FN 2 (LWF)                                                                                                                      
                                                                                                                                
10:18:13 AM