CS FOR HOUSE BILL NO. 106(FIN) "An Act establishing the senior care program and relating to that program; creating a fund for the provision of the senior care program; repealing ch. 3, SLA 2004; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. 6:02:01 PM JOEL GILBERTSON, Commissioner, Department of Health and Social Services, explained that this bill, which is sponsored by Governor Frank Murkowski, would strengthen the Senior Care Program implemented the previous year. The purpose of "the Senior Care Program is to provide assistance for the cost of prescription medicine to low income seniors in the State". He noted that prescription drugs are not currently provided for by the federal Medicare program, and absent the Senior Care Program, seniors would be required to pay out of pocket or purchase supplemental medical insurance policy. The initial Alaska Senior Care Program provided $120 a month equating to $1,440 a year, to seniors living below 135-percent of poverty level. A prescription drug subsidy is provided to seniors living between 135-percent and 150-percent of poverty. Commissioner Gilbertson stated that HB 106 would accomplish two things. First, it "would extend the cash assistance benefit for those seniors living below 135-percent of poverty. That income threshold" is approximately $16,000 a person or $21,600 a couple. In addition a qualifying single individual could have liquid assets of up to $6,000; $9,000 for a couple. The cash assistance program would assist qualifying seniors until they transition on to the new Medicare Part D Prescription Drug Benefit Program anticipated to become available in early 2006. Commissioner Gilbertson communicated that "the bill would also extend the prescription drug assistance to seniors between 135- percent and 175-percent of poverty. The household income for a person living at the 175-percent of poverty level would be $20,900 for an individual and $28,053 for a couple. When the Medicare Part D benefit becomes available, any senior wishing to participate must enroll in the program which would "have a premium and a deductible, separate and distinct and in addition to their existing premiums and deductibles that they pay for Medicare". The premium would be $35 a month or $670 a year, and the deductible would be $250 a month for seniors living between the 135-percent and 175-percent poverty level; those living below 135-percent of the poverty level would be federally exempt from both the premium and the deductible. Once the Medicare Part D program becomes available, the Senior Care Program would continue to assist seniors living between 135-percent and 175-percent in paying the costs of their premiums and deductibles. Commissioner Gilbertson anticipated that the State's cash assistance program would continue to serve approximately 7,000 seniors, and that approximately 4,000 seniors living between 135- percent and 175-percent of poverty would qualify for the State's proposed prescription drug assistance program. 6:05:41 PM Commissioner Gilbertson stated that a summary of the anticipated program expenses is provided on page three of Fiscal Note #8, dated May 5, 2005, prepared by the Department's Division of Finance and Management Services. The total costs associated for those living at 135-percent of poverty is anticipated to be approximately $5,000,000 in FY 06. The amount depicted for FY 06 would provide for the second half of FY 06 as the initial program was budgeted through January 2006. The FY 07 full-year expenses are anticipated to be $10,000,000. Commissioner Gilbertson explained that the expenses for the assistance that would be provided to seniors living between 135- percent and 175-percent are similarly depicted. The FY 06 half-year expenses would be approximately $1,200,000. The expenses for the full year of FY would be approximately $2,600,000. Commissioner Gilbertson noted that the "Combined Program and Administrative Costs" summary reflected a total cost of $6,800,000 for FY 06 and $13,000,000 for FY 07. Commissioner Gilbertson explained that when the Legislature established the Senior Care Program, it forward-funded the Program through the first half of FY 06. A surplus of approximately eight million dollars is expected to be in that account on January 1, 2006; therefore there would be no need for additional general fund dollars in FY 06. It is projected that $1,249,000 of that surplus would be carried forward into FY 07. This would be married up with an $11,962,600 general fund request to fund the entire FY 07 program expenses. Commissioner Gilbertson stated that further details about the Senior Care program are provided in a Department handout titled "Comparison of Qualifications and Benefits Beginning January 2006" [copy on file]. Commissioner Gilbertson reiterated that other than a prescription drug discount card and the availability of a prescription drug subsidy to some low-income seniors, "seniors are not receiving any prescription drug assistance from the federal government. It is anticipated that a lot of confusion would occur this year and into the year 2006 in regards to the new federal drug benefit. This legislation would assist in eliminating some of the confusion and burden on seniors. Commissioner Gilbertson noted that a program termination date of June 30, 2007 is specified in the bill. In addition, any excess funds remaining in the Program's account at that time would revert back to the general fund. 6:09:33 PM Co-Chair Wilken asked whether the federal poverty level for Alaska is the basis for this legislation. Commissioner Gilbertson stated that this legislation recognizes the Alaska poverty level, which is a 25-percent increase over the federal national poverty level. In other words, a 175-percent of the national poverty level for the contingent states would be recognized at a 200-percent level in Alaska. Co-Chair Wilken asked whether an individual's Permanent Fund Dividend (PFD) check is factored into their eligibility calculation. JOHN SHERWOOD, Department of Health and Social Services, responded that the PFD is not factored into the calculation. Unless it is required by federal statute, the PFD is "disregarded". Senator Olson noted that that policy "would be consistent" for all hold-harmless provisions relating to public assistance programs. Senator Olson asked whether the $1,200,000 balance anticipated to be available on January 1, 2006 could be used to increase the monthly payment amount. Commissioner Gilbertson responded that $6,800,000 of the eight million dollars that would be available on January 1, 2006 would fund the remainder of FY 06 program expenses. The balance would be carried forward into FY 07 to assist in paying that fiscal year's expenses. An additional $12,000,000 in general funds would be required to fund total FY 07 expenses. "The entire Trust fund account would be depleted at the completion of this program." Senator Olson acknowledged. Co-Chair Wilken moved to adopt committee substitute Version 24- GH1090\I as the working document. Co-Chair Green clarified that Version "I" was the document to which Commissioner Gilbertson's comments applied. [NOTE: While the Version "I" was not formally adopted, that was the implied intent of the Committee.] Co-Chair Green voiced that furtherance of this bill would allow the Senior Care program to continue to provide assistance to seniors in need, uninterrupted. Co-Chair Wilken moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, SCS CS HB 106(FIN) was REPORTED from Committee with four May 5, 2005 fiscal notes from the Department of Health and Social Services as follow: $163,900 fiscal note #5 from the Division of Health Care Services; $59,000 fiscal note #6 from the Division of Senior and Disabilities Services; $6,614,400 fiscal note #7 from the Division of Public Assistance; and zero fiscal note #8 from the Division of Finance and Management Services. AT EASE 6:12:32 PM / 6:15:39 PM