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