Legislature(2021 - 2022)BELTZ 105 (TSBldg)
03/23/2022 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB160 | |
| SB174 | |
| HB133 | |
| SB233 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 160 | TELECONFERENCED | |
| *+ | SB 234 | TELECONFERENCED | |
| + | HB 133 | TELECONFERENCED | |
| *+ | SB 233 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 174 | TELECONFERENCED | |
HB 133-AK ED SAVINGS PROGRAMS/ELIGIBILITY
2:02:15 PM
CHAIR COSTELLO announced the consideration of CS FOR HOUSE BILL
NO. 133(L&C) "An Act relating to the Alaska savings program for
eligible individuals; relating to education savings programs;
relating to the Education Trust of Alaska; relating to the
Alaska advance college tuition savings fund; relating to the
Alaska education savings program for children; and relating to
the Governor's Council on Disabilities and Special Education."
She stated that this is the first hearing and the intention is
to hear the introduction and take invited and public testimony.
2:02:40 PM
REPRESENTATIVE ZACK FIELDS, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 133, stated that the House Labor and
Commerce Committee worked collectively on the bill. He thanked
Representative Nelson whose staff Kim Skipper was working when
the original ABLE Act was introduced by Representative Dan
Saddler. He said that is relevant because HB 133 has conforming
changes to the federal law that passed after that original ABLE
Act passed.
REPRESENTATIVE FIELDS gave a presentation to explain the updates
HB 133 makes to the ABLE Act. He paraphrased slide 2 that read
as follows:
WHAT IS AN ABLE ACCOUNT?
• ABLE: "Achieving a Better Life Experience"
• Tax-free savings account for individuals with
qualifying disabilities
• Funds may be used to pay for items such as
disability expenses, education, housing,
transportation
• Distributions into accounts are not counted
against individual in determining eligibility for
Medicaid and needs-based assistance programs
REPRESENTATIVE FIELDS provided a brief history of the 2013
federal ABLE Act:
• Signed into federal law in December 2014 as part
of the Tax Extenders package.
• Established 529A (ABLE) savings account
exclusively for individuals with disabilities.
REPRESENTATIVE FIELDS reviewed the Alaska ABLE Act, paraphrasing
slide 5:
• Signed into law in July 2016.
• Authorized establishment of a state ABLE program
to be administered by Department of Revenue.
• Matched the 2013ABLEAct passed by Congress.
• Alaska joined the National ABLE Alliance, a group
of 17 states formed to share information, create
economies of scale and provide a hub for
financial inquiries.
• Since passage, 787 accounts have been created in
Alaska with more than $7,100,000.00 in assets.
2:05:11 PM
REPRESENTATIVE FIELDS reviewed the improvements Congress made to
the federal ABLE Act. He spoke to the bullet points on slides 7-
9, which read as follows:
ABLE TO WORK ACT
• Signed into law in 2017 as part of the Tax Cuts
and Jobs Act.
• Increased annual contributions levels.
• Incentivized employment by increasing the
contribution level for employed beneficiaries
from $15,000 to $27,060.
ABLE FINANCIAL PLANNING ACT
• Signed into law in 2017 as part of the Tax Cuts
and Jobs Act.
• Allowed college saving account funds (529
accounts) to roll over into ABLE accounts.
• Allowed individuals who incurred disabilities
after they established 529 college savings plan
to roll over savings into ABLE account.
ABLE AGE ADJUSTMENT ACT
• Will increase the age of eligibility from 26 to
reflect federal code-legislation is under way to
increase this age eligibility to 46.
• Will allow more participation in ABLE accounts.
2:05:46 PM
REPRESENTATIVE FIELDS noted that in the previous committee of
referral Senator Hughes suggested writing to the federal
delegation to voice support for raising the age of eligibility.
The argument is why shouldn't someone who becomes disabled after
age 26 be allowed to create an ABLE account. HB 133 will link to
the federal age threshold so it won't be necessary to amend the
statute in the future because it will track the federal enabling
law automatically.
REPRESENTATIVE FIELDS reviewed the updates proposed in HB 133:
HB 133 PROPOSED UPDATES
• Expands age eligibility limits.
• Allows greater flexibility in using funds to pay
for education expenses.
• Allows 529 program accounts to roll into an ABLE
account.
• Aligns with federal regulations regarding program
savings accounts.
CHAIR COSTELLO asked the members if there were any questions.
2:07:46 PM
SENATOR MICCICHE summarized this state statute will
automatically update when the federal law changes.
REPRESENTATIVE FIELDS agreed.
2:08:24 PM
GRACE KUBIT, Staff, Representative Zack Fields, Alaska State
Legislature, Juneau, Alaska, read the sectional analysis for HB
133.
[Original punctuation provided with small formatting changes.]
Section 1 Establishes AS 06.65.020(b).
Directs the Department of Health and Social Services
to consult with the Governor's Council on Disabilities
and Special Education when overseeing the Alaska
Savings Program.
Section 2 Amends AS 06.65.100.
Expands the age of eligibility for a program account
from age 26 to match that in the federal authorizing
law. This effectively removes an age cap that
prevented those who became disabled after 26 years of
age from being eligible.
Section 3 Amends AS 06.65.160(a).
Expands the rules allowing a person to make a
contribution for a designated beneficiary to match the
guidelines in AS 14.40.802(f)(3).
Section 4 Amends AS 06.65.160(c).
Expands the rules regarding who is eligible to make a
program account contribution to match the guidelines
in AS 14.40.802(f)(3).
Section 5 Amends AS 06.65.200(a).
Specifies that rollover may occur between a program
account to another account as long as the new account
is authorized by federal law.
Section 6 Amends AS 09.38.015(a)(8).
Replaces "higher education" savings account with
"education savings account".
Section 7 Amends AS 14.10.170(a).
Replaces "postsecondary education" with "education"
when referring to an education savings account and
renames the "Alaska Higher Education Savings Trust" to
the "Education Trust of Alaska".
2:10:14 PM
Section 8 Amends AS 14.40.802(a).
Renames the "Alaska Higher Education Savings Trust" to
the "Education Trust of Alaska" and replaces
"postsecondary education" with "education" when
referring to education savings accounts. Removes the
allowance that education savings accounts can be used
to pay for room and board when using funds for
education costs as this language is included already
included federal law.
Section 9 Establishes AS 14.40.802(f)(3).
Allows a participant of an account to change the
beneficiary of their account to any individual, not
just a family member. Allows participants to transfer
all or a portion of their account as a contribution to
another account if it does not exceed federal limits
when added to any other contributions and is for the
beneficiary of that new account or for a family member
who is an eligible individual as well.
Section 10 Amends AS 14.40.802(g).
Makes transfers between accounts limitable or deniable
if the transfer does not meet the guidelines
established in AS 14.40.802(f)(3).
Section 11 Amends AS 14.40.802(j).
Removes the restriction that when a beneficiary
designates a successor participant to their account
the change cannot take effect until after the death or
mental incapacity of the beneficiary.
Section 12 Amends AS 14.40.802(n)(2).
Redefines "beneficiary" to match what is defined under
federal law.
2:11:59 PM
Section 13 Amends AS 14.40.802(n)(7).
Replaces "qualified higher education expenses" with
"qualified education expenses" and redefines the
phrase to mean qualified higher education expenses as
defined in federal law.
Section 14 Amends AS 14.40.802(n)(8).
Redefines "trust" to reflect the name change of
"Alaska Higher Education Savings Trust" to the
"Education Trust of Alaska".
Section 15 Amends AS 14.40.809(b).
Renames the "Alaska Higher Education Savings Trust" to
the "Education Trust of Alaska".
Section 16 Amends AS 40.25.120(a).
Renames the "Alaska Higher Education Savings Trust" to
the "Education Trust of Alaska".
Section 17 Amends AS 47.10.093(b).
Removes the distinction of higher education when
referring to the Alaska education savings program.
Section 18 Amends AS 47.12.310(b).
Removes the distinction of higher education when
referring to the Alaska education savings program.
Section 19 Amends AS 47.14.400(a).
Removes the distinction of higher education when
referring to an education investment program and
replaces "University of Alaska college savings plan"
with "education savings plan".
2:13:21 PM
Section 20 Amends AS 47.14.400(b).
Removes the distinction of higher education when
referring to an education investment program.
Section 21 Amends AS 47.14.400(c).
Replaces "college savings plan" with "education
savings plan" and replaces "University of Alaska
College savings plan" with "education savings plan".
Section 22 Amends AS 47.14.400(e)(3).
Replaces "higher education savings program" with
"education savings program" and "college savings
account" with "education savings plan".
Section 23 Establishes AS 47.14.400(e)(5).
Defines "education savings plan" to mean an education
savings program.
Section 24 Repeals AS 47.14.400(e)(2).
CHAIR COSTELLO observed that most of the Act takes effect July
1, 2022, but Section 7 takes effect immediately.
2:14:44 PM
REPRESENTATIVE FIELDS replied he believes so and added that most
of the sections are conforming changes to rename the Alaska
Higher Education Savings Trust to the Education Trust of Alaska.
CHAIR COSTELLO asked if there was a reason for renaming the
trust.
REPRESENTATIVE FIELDS replied it's a conforming change; the UA
System renamed the trust in 2019.
CHAIR COSTELLO turned to invited testimony.
2:15:50 PM
CATHY TAYLOR, Board Member, Alaska Behavioral Health, Kenai,
Alaska, testified by invitation in support of HB 133. She stated
that she is the mother of two sons who receive disability
benefits. Her background is in finance and the ABLE program has
been one of the best resources she has found to help disabled
persons manage their financial resources and become more
independent. It builds self-confidence, she said.
MS. TAYLOR stated that the increase in the annual contributions
from $15,000 to $20,060 allows people with disabilities to put
away as much money as they can when they are able to work
without jeopardizing their disability benefits. She described
the ability to roll over college funds as a valuable
enhancement. It will help people whose education is interrupted
because of their disability. Prior to this they would lose the
opportunity. Increasing the age of eligibility is another
valuable enhancement. As the sponsor mentioned, disability
doesn't just strike before age 27 so it makes sense to extend
these benefits to a larger range of people. It is also
beneficial to be able to use these funds for more than a typical
university program. A four-year program isn't what everybody
wants or needs, so being able to participate in a certificate or
vocational program is very beneficial and will increase
employment opportunities.
2:20:23 PM
MS. TAYLOR said the ABLE program has been very beneficial to her
family, but because she didn't learn about it until just a few
years ago she would like to see an education component attached
to ensure that agencies that work with the disabled have this
information so they can help people set up these accounts.
2:21:19 PM
DAN SADDLER, former Representative, Eagle River, Alaska,
testified by invitation in support of HB 133. He reminded the
committee that he sponsored the original legislation in 2016
that authorized ABLE accounts in Alaska. He shared that he
supported ABLE as a legislator and a parent. His son Danny has
autism and at age 23 is transitioning into adult life. He needs
special behavioral support, special equipment for his physical
needs, supplementary educational services, employment support
services, and healthy recreational outlets. He said these are
qualified disability expenses that will help him achieve a
better life experience. He highlighted how important it is that
deposits into an ABLE account would not disqualify his son from
Medicaid or Supplemental Social Security (SSI) benefits, because
both are critical in meeting his life needs.
REPRESENTATIVE SADDLER opined that that ABLE accounts clearly
have been successful in Alaska. A report in the bill packets
indicates that there are 787 ABLE accounts in Alaska, and the
private contributions to those accounts totals $7 million. He
posited that this has kept many individuals from seeking support
from the state. He mentioned the other conforming changes and
described HB 133 as legislation that makes the existing law
better. He also thanked the Alaska Mental Health Trust that put
$100,000 into designing ABLE accounts and the Governor's Council
on Disabilities and Education for its tireless efforts to get
ABLE accounts established.
He concluded his comments with the observation that legislators
often are faced with how to allocate limited public assets among
limitless needs. The value of HB 133 is that it empowers private
citizens to use their own money to take better care of loved
ones without cost or burden to the state.
CHAIR COSTELLO expressed appreciation for his testimony.
2:25:52 PM
CHAIR COSTELLO opened public testimony on HB 133; finding none,
she closed public testimony.
CHAIR COSTELLO held HB 133 in committee for further
consideration.