Legislature(2015 - 2016)HOUSE FINANCE 519

04/06/2016 08:30 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 4/7/16 at 7:30 a.m. --
Moved CSHB 47(FIN) Out of Committee
Moved SB 124 Out of Committee
<Bill Hearing Canceled>
Moved CSHCR 4(STA) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
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."                                                                          
9:56:04 AM                                                                                                                    
Co-Chair  Neuman  MOVED  to  ADOPT  the  proposed  committee                                                                    
substitute for  HB 188(FIN), Work  Draft (29-LS0787\I).There                                                                    
being NO OBJECTION, it was so ordered.                                                                                          
Co-Chair  Thompson  called  Mr.  Anderson to  the  table  to                                                                    
review the bill changes.                                                                                                        
BRODIE  ANDERSON,  STAFF,   REPRESENTATIVE  STEVE  THOMPSON,                                                                    
indicated there  were three changes  in the bill.  He looked                                                                    
at  page  1,  line  2.  The  bill  was  amended  by  adding,                                                                    
"limited" before  the word, "property."  He pointed  to page                                                                    
9, lines  2 through 8, which  amended the bill by  adding an                                                                    
exemption  (b)  to  Section  06.65.260,  an  exemption  from                                                                    
creditor claims:                                                                                                                
     (b) If  a designated beneficiary  is default for  30 or                                                                    
     more  days  on a  payment  due  under a  child  support                                                                    
     judgment or order, the money  in the program account is                                                                    
     not  exempt  from a  claim  for  the payment  of  child                                                                    
     support that is in default.                                                                                                
9:58:15 AM                                                                                                                    
AT EASE                                                                                                                         
10:06:02 AM                                                                                                                   
Mr. Anderson pointed to reiterated  that the changes were on                                                                    
page 1, line  2; and the second change was  on page 9, lines                                                                    
2  through 8.  The third  change was  on page  11, line  20,                                                                    
which amended the  bill by adding "except as  provided in AS                                                                    
Vice-Chair   Saddler,  bill   sponsor,   read  the   sponsor                                                                    
     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  Wilson queried  the  number  of people  that                                                                    
could qualify, who currently could not qualify.                                                                                 
10:11:01 AM                                                                                                                   
KIM SKIPPER, STAFF, REPRESENTATIVE  DAN SADDLER, deferred to                                                                    
Patrick Reinhart.                                                                                                               
Representative  Wilson   wondered  why   there  was   not  a                                                                    
consideration of  those with low income  in the legislation.                                                                    
Vice-Chair  Saddler replied  that the  bill was  targeted at                                                                    
Alaskans  with disabilities.  He  stated that  the bill  was                                                                    
designed to equalize the "playing field."                                                                                       
Ms.  Skipper  furthered  that the  bill  was  modeled  after                                                                    
federal legislation.                                                                                                            
Representative Wilson  felt that  the bill was  too limiting                                                                    
to people  with disabilities.  She stressed that  there were                                                                    
people  that had  a  difficult time  sustaining  a job,  and                                                                    
added  that  she  did  not  know  the  exact  definition  of                                                                    
"disabled."    She    expressed    discomfort    with    the                                                                    
differentiation of  groups. Ms.  Skipper replied  that there                                                                    
was a  bill in Congress to  expand "able" to the  age of 46;                                                                    
and   allow  anyone   with  a   college  savings   plan  the                                                                    
opportunity to "roll" the plan into an able account.                                                                            
Representative Wilson  agreed to hear more  information from                                                                    
the department.                                                                                                                 
Representative Edgmon thanked the  sponsor for the bill, and                                                                    
expressed  support   of  the   legislation.  He   queried  a                                                                    
provision in the  bill that would allow the  state to adjust                                                                    
the  age  limit, should  Congress  increase  the age  limit.                                                                    
Vice-Chair  Saddler replied  in the  negative. He  explained                                                                    
that  the  federal  able legislation  set  some  parameters,                                                                    
because  it dealt  with the  Internal Revenue  Service (IRS)                                                                    
provisions. The age parameters were  set at 26, and the stat                                                                    
could  adapt to  that level  or  not. He  restated that  the                                                                    
limit could not be changed at the state level.                                                                                  
Representative  Kawasaki surmised  that the  underage person                                                                    
with the account  would have a parent file  the taxes. Vice-                                                                    
Chair Saddler agreed.                                                                                                           
Representative  Pruitt remarked  that there  was a  recently                                                                    
added  provision  which  allowed  for  a  deceased  person's                                                                    
remaining funds be used to  offset the costs of Medicaid. He                                                                    
wondered where  the program fell  in the priority  of paying                                                                    
out  of a  person's estate.  Ms. Skipper  agreed to  provide                                                                    
that information.  She remarked that  Medicaid automatically                                                                    
had  a "claw  back"  provision,  but she  did  not know  the                                                                    
Vice-Chair Saddler furthered that  the "claw back" provision                                                                    
was  not   unique  to  the  legislation.   He  deferred  the                                                                    
Department of  Law (DOL) for more  information. He announced                                                                    
that  there was  a provision  in current  Medicaid law  that                                                                    
said  if  a  person  received  value  or  benefit  from  the                                                                    
Medicaid program during their  life, the state could recover                                                                    
as much as possible to cover the cost after death.                                                                              
10:17:56 AM                                                                                                                   
Representative Pruitt  wondered if the state  made effort to                                                                    
recover the cost after death.  Vice-Chair Saddler replied in                                                                    
the affirmative.                                                                                                                
Representative Edgmon asked if the  sponsor would be open to                                                                    
a  conceptual amendment  that would  enable  the program  to                                                                    
adapt to the possible congressional changes.                                                                                    
Vice-Chair  Saddler thought  the  bill already  incorporated                                                                    
that language.                                                                                                                  
Ms.  Skipper  announced  that   the  proposed  language  was                                                                    
already built into the legislation.                                                                                             
Representative  Edgmon  surmised   that  his  concerns  were                                                                    
already addressed in the bill.                                                                                                  
10:20:14 AM                                                                                                                   
PATRICK  REINHART, GOVERNOR'S  COUNCIL  ON DISABILITIES  AND                                                                    
SPECIAL  ED, ANCHORAGE  (via  teleconference), testified  in                                                                    
strong  support of  the bill.  He remarked  that the  effort                                                                    
began to include  all people with disabilities  of all ages,                                                                    
but  Congress chose  to limit  it  to those  people who  had                                                                    
acquired their  disability before the  age of 26.  He shared                                                                    
that there was an effort in  Congress to increase the age to                                                                    
46,  to  rollover the  529  accounts,  and to  increase  the                                                                    
deposit  amounts  based  on  poverty  level  guidelines.  He                                                                    
stated that there was bipartisan  support for those changes,                                                                    
but felt that those changes  probably would not occur in the                                                                    
current  Congress.  He   appreciated  that  the  legislation                                                                    
included language to anticipate changes.                                                                                        
10:23:10 AM                                                                                                                   
LORI KING,  SELF, JUNEAU (via teleconference),  supported HB
188. She  shared that  she was the  mother of  a 25-year-old                                                                    
daughter with  autism, developmental delays, and  was losing                                                                    
her sight. Her  daughter was a recipient  of social security                                                                    
and public assistance. She explained  that her daughter used                                                                    
budgeting  skills,  but  her  income  was  only  $1095.  She                                                                    
announced  that the  bills with  rent,  food, and  utilities                                                                    
totaled $1015.                                                                                                                  
10:27:15 AM                                                                                                                   
JEFF JESSEE,  CHIEF EXECUTIVE OFFICER, ALASKA  MENTAL HEALTH                                                                    
TRUST AUTHORITY, spoke in support  of the bill. He announced                                                                    
that the trustees  had approved funding the  fiscal note. He                                                                    
felt  that the  bill provided  a tremendous  opportunity for                                                                    
its beneficiaries.                                                                                                              
Co-Chair Thompson OPENED public Testimony.                                                                                      
10:29:03 AM                                                                                                                   
SARA KUECIM, SELF,  JUNEAU, spoke in favor of  the bill. She                                                                    
felt  that the  bill would  help individuals  with supported                                                                    
employment  while  also   receiving  Medicaid  support.  She                                                                    
stressed  that  the  bill  helped   to  provide  dignity  to                                                                    
individuals with disabilities.                                                                                                  
10:30:52 AM                                                                                                                   
STUART   SPIELMAN,  AUTISM   SPEAKS,   WASHINGTON  DC   (via                                                                    
teleconference), spoke  in favor of  HB 188. He  shared that                                                                    
he had  been working on the  issue at the federal  level for                                                                    
over 10  years. He remarked  that his interest in  the issue                                                                    
was  not  only  professional,  because  he  has  a  severely                                                                    
autistic   21-year-old  son.   He  pointed   out  that   the                                                                    
legislation was  embraced at  the federal  level as  well as                                                                    
other  states  throughout the  country.  He  shared that  36                                                                    
states  and the  District of  Columbia had  authorized their                                                                    
own state able programs.                                                                                                        
Co-Chair Thompson CLOSED public testimony.                                                                                      
Vice-Chair Saddler reviewed the fiscal notes.                                                                                   
10:33:19 AM                                                                                                                   
Representative  Wilson felt  that  the indeterminate  fiscal                                                                    
note should  really be  a zero fiscal  note. She  noted that                                                                    
the Department  of Health and  Social Services  (DHSS) would                                                                    
be  covering  the  count,  rather  than  the  Department  of                                                                    
Revenue (DOR).                                                                                                                  
Ms. Skipper explained  that DHSS would be  a small component                                                                    
of  the  program.  She  deferred   to  Ms.  Leary  for  more                                                                    
PAM  LEARY, DIRECTOR,  DIVISION OF  TREASURY, DEPARTMENT  OF                                                                    
REVENUE, stated that it was  an administrative issue for the                                                                    
pending  fiscal  note  from  DOR, because  the  CS  was  not                                                                    
available. She felt that there  would be similar fiscal note                                                                    
as  the  one from  the  Labor  and Commerce  Committee.  The                                                                    
fiscal note assigned $60,000 in FY  17; and $40,000 in FY 18                                                                    
from Mental Health Trust receipts.                                                                                              
Representative Wilson  looked at  the fiscal  note component                                                                    
number 2077,  which stated that  staff would be  required to                                                                    
monitor   and   track   accounts  and   file   claims;   and                                                                    
administration  of accounts  would involve  account deposits                                                                    
and balances to  confirm that they did  not exceed allowable                                                                    
amounts;  and monitoring  account  dispersements to  confirm                                                                    
that  they  were  qualifying expenses.  She  felt  that  the                                                                    
fiscal  note  was  not related  to  eligibility.  Ms.  Leary                                                                    
replied  that DOR  would oversee  the program,  but was  not                                                                    
sure of  the form of  oversight it would need.  She remarked                                                                    
that  there were  a  number  of states  that  had their  own                                                                    
programs, and also  a number of states that  were creating a                                                                    
consortium  program. She  explained that  it was  envisioned                                                                    
that  most  of  the  work, including  the  determination  of                                                                    
benefits,  would happen  at the  vender level.  She believed                                                                    
that  it was  a requirement  at  the federal  level for  the                                                                    
vender to be responsible for  identifying the records of the                                                                    
Representative Wilson  restated that the fiscal  note should                                                                    
be zero.  She felt that the  work would be done  by DOR, and                                                                    
paid out with  the receipts from payments. She  did not feel                                                                    
that DHSS should be giving  an indeterminate amount of money                                                                    
to provide service that would  not have a cost. She wondered                                                                    
whether   an  individual   must   receive  social   security                                                                    
disability benefits  to be considered "disabled",  or was it                                                                    
any type of  diagnosis before age 26.  Ms. Skipper responded                                                                    
that  a  person did  not  have  to receive  social  security                                                                    
disability  benefits,  rather   have  a  doctor  certificate                                                                    
declaring a disability.                                                                                                         
Representative  Wilson felt  that there  would be  many more                                                                    
people added to Medicaid.                                                                                                       
Co-Chair Neuman requested a comment from the bill sponsor.                                                                      
Mr.  Reinhart   shared  that  he  could   not  fully  answer                                                                    
Representative  Wilson's   question.  He  stated   that  the                                                                    
eligibility  program was  more  related  to the  applicant's                                                                    
relationship with  the IRS. He  remarked that there  was not                                                                    
much eligibility determination by the state.                                                                                    
10:39:54 AM                                                                                                                   
Representative  Wilson shared  that her  son with  Attention                                                                    
Deficit Hyperactivity Disorder (ADHD)  would qualify for the                                                                    
program. She  stressed that  there could  be a  great fiscal                                                                    
impact   to   the  state   with   a   broad  definition   of                                                                    
Vice-Chair  Saddler replied  that  the savings  in the  able                                                                    
account would  be increase  tax free,  but would  not reduce                                                                    
his  taxable  income  below  the point  to  which  he  would                                                                    
qualify for Medicaid.                                                                                                           
Representative Wilson  surmised that  the money in  the able                                                                    
account would not count against Medicaid eligibility.                                                                           
Representative Munoz  wondered if  the means test  was $2000                                                                    
for Medicaid.  Ms. Leary stated  that it was $2000,  and was                                                                    
the social  security amount. She  explained that it  was the                                                                    
total  number  of  assets that  an  individual  could  have,                                                                    
before their benefits were reduced.                                                                                             
10:42:33 AM                                                                                                                   
Representative Pruitt  felt that the fund  was modeled after                                                                    
a 529 account. He shared that  a 529 accounts offered that a                                                                    
parent could  start the account,  but at  the age of  18 the                                                                    
child  could  receive  the  account   or  the  parent  could                                                                    
maintain  ownership of  the account.  Therefore, the  parent                                                                    
was  given  the  ability  to   ensure  that  the  money  was                                                                    
appropriately spent.  He remarked that, at  a certain point,                                                                    
unspent money could be rolled into  a new 529 account or the                                                                    
money became taxable. He noted  that the difference with the                                                                    
proposed legislation  is that the  owner of the  account was                                                                    
the  actual  designee.  He  queried   an  advantage  of  the                                                                    
importance to place the money in the hands of a parent.                                                                         
Vice-Chair  Saddler asked  Representative Pruitt  to restate                                                                    
the question.                                                                                                                   
Representative   Pruitt  felt   that  there   was  a   major                                                                    
difference in  the proposal and  a 529 account.  Ms. Skipper                                                                    
thought   that  Representative   Pruitt  was   correct.  She                                                                    
explained   that   the   account   holder   could   have   a                                                                    
representative to make the decisions.                                                                                           
Representative Pruitt  felt that the parent  should have the                                                                    
ability to maintain some control.  He surmised that the only                                                                    
claim that could  go against the program  was child support.                                                                    
He  queried the  development of  the provision.  Ms. Skipper                                                                    
replied  that  in  any  situation   of  child  support,  the                                                                    
judgment   would  overrule.   She  explained   that  similar                                                                    
legislation   included  exemptions   from  creditor   claims                                                                    
without the  need for child  support. She furthered  that an                                                                    
individual had  asked that the specification  be included in                                                                    
the bill.                                                                                                                       
10:47:18 AM                                                                                                                   
Representative Pruitt remarked that  the provision was not a                                                                    
federal policy. Ms. Skipper replied in the affirmative.                                                                         
Representative Pruitt  stressed that the $100,000  could not                                                                    
be used to make restitution.  Ms. Skipper responded that the                                                                    
account  could  technically  have  a  maximum  of  $400,000,                                                                    
because of the college  savings plan contribution limit. She                                                                    
furthered that  the money was  more fluid, because  it would                                                                    
be used for expenses that were not covered by Medicaid.                                                                         
Representative Pruitt stressed that  the focus should not be                                                                    
on what  would likely happen,  rather there needed to  be an                                                                    
examination of  all the  potential occurrences.  He remarked                                                                    
that  the  bill  did  not   specifically  mention  that  the                                                                    
individual was the  only person that could  deposit into the                                                                    
account. Ms.  Skipper replied  that anyone  could contribute                                                                    
up to $14,000 per year.                                                                                                         
Vice-Chair  Saddler  felt  that  it would  take  $14,000  to                                                                    
achieve the $40,000 cap on the account.                                                                                         
Co-Chair Thompson would be gaveling out in about 5 minutes.                                                                     
Representative Wilson  wanted to amend the  fiscal note. She                                                                    
thought it should be zero.                                                                                                      
Vice-Chair  Saddler indicated  that the  fees associated  by                                                                    
the program were  the fees could be covered by  the fees set                                                                    
by  the investment  company that  managed  the accounts.  He                                                                    
remarked that the indeterminate  note was because the number                                                                    
of applicants was unknown.                                                                                                      
10:52:40 AM                                                                                                                   
AT EASE                                                                                                                         
10:53:15 AM                                                                                                                   
Co-Chair  Thompson indicated  that  the  committee would  be                                                                    
recessing to accommodate floor session.                                                                                         
10:53:27 AM                                                                                                                   
1:25:19 PM                                                                                                                    
Co-Chair Thompson indicated HB 188  would be set aside for a                                                                    
HB  188  was  HEARD  and   HELD  in  committee  for  further                                                                    

Document Name Date/Time Subjects
HB47 Sponsor Statement.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB47 Summary of Changes ver A to ver N.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB47 Supporting Documents amended statutes.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB47 Supporting Documents Employers impacted by salary floor.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB47 Supporting Documents effected employers.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB47 Supporting Documents PERS Employer Salaries for FY08 - FY12 Affected Muniticaplities.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB47 Supporting Documents PERS cities by 2010 population.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB47 Supporting Documents PERS Employer Salaries for FY08 - FY12.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB47 Supporting Documents Total Active PERS employees.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB 47 NEW FN DCCED CRA 4-1-16.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB 188 NEW FN DHSS HCMS 4-1-16.pdf HFIN 4/6/2016 8:30:00 AM
HB 188
HB 47 CS WORKDRAFT FIN vI 4-5-16.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB 047 - Actuarial Analysis.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB 47 NEW FN PERS 4-5-16.pdf HFIN 4/6/2016 8:30:00 AM
HB 47
HB 188 NEW FN DHSS HCMS 4-6-16.pdf HFIN 4/6/2016 8:30:00 AM
HB 188
HB 188 NEW FN DOR T&T 4-6-16.pdf HFIN 4/6/2016 8:30:00 AM
HB 188
HCR 4 Article 5 HFIN.pdf HFIN 4/6/2016 8:30:00 AM