CS FOR HOUSE BILL NO. 188(FIN) "An Act establishing a program for financial accounts for individuals with disabilities; exempting the procurement of contracts for the program from the State Procurement Code; exempting certain information on participants in the program from being subject to inspection as a public record; providing that an account under the program for an individual with a disability is not a security; allowing a state to file a claim against an individual's financial account under the program to recover Medicaid payments after the individual's death; and providing for an effective date." 2:32:27 PM REPRESENTATIVE DAN SADDLER, SPONSOR, introduced the legislation and read from the Sponsor Statement: 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 divulged that the bill had evolved during the legislative process to make sure that money in ABLE account was not unavailable to creditors should the account holder go bankrupt or fail to pay their debts. He noted that there were specific benefits to having a state authorized ABLE account; first, by passing the bill Alaska could join a consortium of other states in obtaining the economies of scale and lower account fees for account holders. Secondly, Alaskans could go to DOR directly if there were problems with their accounts. He said that the contribution limits would be matched to the college savings plan; $400,000, the highest in the nation. He concluded that passage of the bill would demonstrate concern for disables Alaskans by providing them a way to improve their lives, without increasing any state costs. 2:36:31 PM Senator Olson wondered how many people were expected to take advantage of the program. Representative Saddler replied that it was estimated that there were 130,000 disabled Alaskan residents, 10 percent of which would qualify for the program. 2:36:53 PM Senator Olson wondered whether the program would negatively impact the resources for those who did not qualify for the program and relied on support from the Department of Health and Social Services (DHSS). Representative Saddler stated that the program would have no effect on the DHSS budget or the resources for others. He asserted that this would be an opportunity for people who would create the accounts to deposit private funds. He thought that the program could benefit DHSS. 2:37:39 PM Vice-Chair Micciche noted that the costs associated with the bill would be covered by the Alaska Mental Health Trust Authority (AMHTA). Representative Saddler replied in the affirmative. He furthered that many of the beneficiaries of AMHTA were disabled and would benefit from the legislation. He said that after initial implementation, fees would support the program at no cost to the state. 2:38:22 PM Co-Chair MacKinnon requested a Sectional Analysis. 2:38:43 PM AT EASE 2:39:33 PM RECONVENED 2:39:40 PM KIM SKIPPER, STAFF, REPRESENTATIVE DAN SADDLER, discussed the Sectional Analysis (copy on file): Sec. 1: Cites this as the Alaska ABLE Act Savings  Program Act  Sec. 2: Creates a new chapter 65. Alaska Savings  Program for Eligible Individuals  Sec. 06.65.010: Program authorized. Authorizes Alaska ABLE savings program in the Department - which is the Alaska Department of Revenue. Allows it to implement and administer the program under the Federal ABLE Act. Sec. 06.65.020: General department duties.  Outlines the duties of the department in implementing and administering the program. Sec. 06.65.030: Modification of program. Gives the Department authority to modify the program in accordance to any federal law changes Sec. 06.65.040: Additional department powers.  Allows department to set fees for program transactions and services and also develop marketing plan to promote the ABLE program Sec. 06.65.050: Contracting authority;  procurement exemption. Allows department to contract with a person to assist in implementing the program, provide services, join other states to obtain or provide services for implementation, join a cooperative effort with other states to provide services for the program that could include investment and record-keeping services. Allows state to join with other states to allow an Alaska resident to participate in a program in another state under federal authorizing law and for an outside state to participate in a program in this state. If contracting with another state, AS 36.30 (Procurement Code) will not apply. Sec. 06.65.060: Investment oversight: Allows the department to oversee and approve selection of investment managers and advisors for the program, and to oversee all investment disclosures and regulatory filings related to program investments Sec. 06.65.070: Financial contractor obligations: outlines duties/obligations of the selected financial contractor(s) Sec. 06.65.080: Additional audits: Allows the department to order an audit of the contractor's financial operation and position in addition to annual audit if the department has reason to be concerned Sec. 06.65.090: Contract termination; non- renewal. Gives department authority to not renew a financial contract. If so it would take custody of the program accounts and transfer them to another financial contractor that offers similar program accounts Sec. 06.65.100: Eligible individuals. Describes who is eligible to participate in the program. Sec. 06.65.110: Representative of eligible  individuals. Describes who may act as a representative of the eligible individual who is a minor or lacks decision-making capacity Sec. 06.65.120: Program account ownership. States that the owner of the program account is the designated beneficiary. Sec. 06.65.130: Number of program accounts. Allows only one program account per designated beneficiary under federal authorizing law. Sec. 06.65.140: Program account application: Outlines department procedures for program account applications and information to be collected in that process Sec. 06.65.150: Program account establishment  fee. Allows financial contractor to charge a non- refundable to establish program account. That fee to be determined in the contract with the financial contractor. Sec. 06.65.160: Program account contributions. Outlines how a person can make a contribution, the limit authorized by federal law, allows department to reject or withdraw a contribution that exceeds that annual limit or maximum limit established by authorizing law or if designated beneficiary is not eligible, and that financial contractor must report contributions to the IRS. Sec. 06.65.170: Limited investment direction. Limits to two the number of times a program account investment can be changed. Sec. 06.65.180: Change of designated beneficiary. Allows a designated beneficiary or representative to change beneficiary of an account to another eligible individual in the family. Sec. 06.65.190: Distribution for qualified  expenses. States that withdrawals from the program accounts may only be used for qualified expenses for the designated beneficiary. Sec. 06.65.200: Rollover distribution. Subject to federal law governing rollovers, a distribution from a program account can be made to the same designated beneficiary or another eligible individual in the family, and the timeframe for that to be done. Sec. 06.65.210: Statements. Requires that statements re: program accounts be issued 4 times a year at times established by the department and that the program contractor provide related information at the department's request. Sec. 06.65.220: Preparation and filing. In addition to other reports a financial contractor shall prepare and file statements required under state and federal law and other agencies. Sec. 06.65.230: Separate accounting. Requires a financial contractor to provide separate accounting for each program account. Sec. 06.65.240: Annual fee. Allows a financial contractor may charge an annual fee for maintenance of a program account. Sec. 06.65.250: Use as security. Prohibits a program account from being used as security for a loan Sec. 06.65.260: No state obligation. Declares that the program does not create an obligation of the state, department, or any agency to guarantee the return of principal or pay interest on the principal in a program account Sec. 06.65.270: Confidentiality. Specifies that program account information is confidential Sec. 06.65.280: Exchange of information. Allows the Department to exchange information with the Department of Health and Social Services and other state agencies to determine whether an individual is eligible Sec. 06.65.290: Treatment under means test  programs. Specifies the program account amounts must be disregarded in determining eligibility for means-tested programs Sec. 06.65.300: Deposit from permanent fund  dividend. Allows deposits to program accounts from the permanent fund dividend Sec. 06.65.310: Program expense fund. Establishes program expense fund and describes it purpose and operation Sec. 06.65.320: Medicaid claims: Allows that the state may file a claim against the program account of a beneficiary who dies. Sec. 06.65.330: Governing law. Establishes federal law as governing to the extent of any conflict with state law Sec. 06.65.340: Regulations. Requires the department to adopt implementing regulations Sec. 06.65.350: Annual report. Requires the department to evaluate the program each year and file an annual report on or before the start of each legislative session beginning in 2018 Sec. 06.65.390: Definitions.  Sec. 3: AS 36.30.850(b): Adds ABLE program account oversight as a responsibility of the Commissioner of Revenue Sec 4: AS 40.25.120(a) is amended to create an exception to public inspection for names, addresses, and other program account identifying information Co-Chair MacKinnon queried the location of the Section 4 within the bill. [Section 4 was located on Page 11.] 2:45:39 PM AT EASE 2:46:29 PM RECONVENED 2:46:58 PM Ms. Skipper continued to discuss the Sectional Analysis: Sec. 5: AS 45.55.990(32): Excludes program accounts from the definition of "security" Sec. 6: AS 47.07.055: Allows the state to file a claim against the designated beneficiary's program account after the individual dies Sec. 7: Transition Requires the Department to file its first report on the program on or before the first day of the Second Regular Session of Thirtieth Alaska State Legislature (2018) Sec. 8: Transition Allows the Department to adopt regulations, but not before the effective date of the provisions authorizing the Alaska ABLE savings program Sec. 9: Effective Date Section 8 takes effect immediately 2:48:02 PM Co-Chair MacKinnon CLOSED public testimony. 2:48:24 PM STUART SPIELMAN, AUTISM SPEAKS, WASHINGTON DC (via teleconference), testified in support of the legislation. He stated that 40 states had enacted similar legislation. Co-Chair MacKinnon wondered whether DHSS had any comments or concerns pertaining to the bill. 2:49:20 PM MARGARET BRODIE, DIRECTOR, DIVISION OF HEALTH CARE SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, ANCHORAGE (via teleconference), testified that there was a potential benefit to the department because over time the amount that the department would spend for disabled individuals could decrease. 2:50:08 PM Co-Chair MacKinnon asked whether the administration supported the bill. Ms. Brodie replied that the administration supported the legislation. 2:50:26 PM KRISTEN VANDAGRIFF, ALASKA GOVERNORS COUNCIL ON DISABILITIES AND SPECIAL EDUCATION, ANCHORAGE (via teleconference), spoke in support of the bill. She said that the bill would be a great tool for individuals and their families to be more independent and self-sufficient, and to be able to join the workforce. CSHB 188(FIN) was HEARD and HELD in committee for further consideration. 2:51:12 PM AT EASE 2:53:10 PM RECONVENED