SB 238-MEDICAID FOR MEDICAL & INTERMEDIATE CARE  CO-CHAIR HERRON announced that the next order of business would be SENATE BILL NO. 238, "An Act amending the eligibility threshold for medical assistance for persons in a medical or intermediate care facility." 3:29:07 PM SENATOR BETTYE DAVIS, Alaska State Legislature, mentioned that the members should all be able to identify with this bill. 3:29:36 PM TOM OBERMEYER, Staff to Senator Davis, Alaska State Legislature, read from the sponsor statement: [original punctuation provided] [Included in the committee packets.] This bill amends and restores the Medicaid income eligibility threshold for individuals who reside in a medical or intermediate care facility from a specified monthly income limit to 300% of the Social Security income benefit rate. This threshold is also used for people who receive home and community-based waiver services. In 2003 the Legislature froze the Medicaid long-term services income eligibility limit for persons in medical or intermediate care facilities at $1,656 per month which was 300% Supplemental Security Income (SSI) at that time. This change created an income ceiling for waiver eligibility, effectively freezing the eligibility limit for the last seven years, rather than allowing the limit to adjust annually in tandem with the SSI, the income equivalent of which in 2009 was $2,022. The result was that small Social Security cost of living adjustments have disqualified many needy disabled people from the program. Alternatives for preserving eligibility, particularly for those requiring lifetime or long-term care, include creation of a Medicaid qualifying income trust, also known as a Miller Trust. Trusts, however, have procedural drawbacks, including numerous responsibilities and restrictions, limited access to income, assistance of an attorney, and a trustee to manage trust assets. As background, the Supplemental Security Income (SSI) program is a federal needs-based disability program for low income adults over age 65, blind, or disabled. For an adult, the SSI disability requirement is based on the ability to work. An adult is considered disabled if the person cannot do the work that he/she performed before the disability occurred or cannot do alternate work because of a severe physical or mental condition. For a child to be eligible, he/she must suffer from serious physical and/or mental problems. For both adults and children, the disability must last, or be expected to last for at least a year. Medicaid services are critical to the well-being of Alaska's most vulnerable citizens. Supporting SB 238 will ensure that eligible Alaskans can continue to receive nursing home care and in-home services. It also will save the Legislature from amending statutes every year or two as the Federal Poverty Level guidelines and Supplemental Security Income levels increase with the cost of living. 3:32:44 PM CO-CHAIR HERRON asked if research had reflected the justification for establishing the ceiling in 2003. 3:33:14 PM MR. OBERMEYER explained that there had been a fiscal problem at that time, and that both this and Denali KidCare were shifted to fixed dollar amounts. He opined that the value of these fixed amounts had been diluted as the cost of living had increased. He pointed out that this affected Alaska's most vulnerable citizens. 3:33:59 PM CO-CHAIR HERRON asked why this would have happened. 3:34:22 PM MR. OBERMEYER said that he did not know. 3:34:31 PM SENATOR DAVIS, in response to Co-Chair Herron, explained that the administration at that time had cut budgets, and that this had not since been adjusted. 3:34:58 PM REPRESENTATIVE T. WILSON asked how this could have a zero fiscal note. 3:35:15 PM SENATOR DAVIS replied that there was not a cost to the state. 3:35:27 PM REPRESENTATIVE CISSNA pointed out that the people most affected by SB 238 more often relied on emergency room visits, which were more costly to the state. 3:35:47 PM MR. OBERMEYER agreed, and he added that many of the affected seniors would not receive any services. He pointed out the savings to the state from assistance in home care services. 3:36:23 PM REPRESENTATIVE CISSNA requested an analysis of the cost benefits for these programs. 3:36:53 PM KEN OZMENT stated his support of SB 238. He relayed that he had been denied Medicaid a few years prior. He was able to procure a supplemental health insurance policy. He pointed out the difficulties to those on a fixed income. 3:38:33 PM HOLLY HANDLER, Attorney, directed attention to the small cost of living increases at the end of December, 2008, which would have terminated 50 - 60 people in Juneau from Medicaid. She said that the necessary legal steps to these individuals for establishing a Medicaid qualifying income [Miller] trust were very difficult. She opined that a very critical aspect was the requirement that, in order to establish this trust, the Medicaid recipient must release the power over their finances to a separate trustee. She advocated support for SB 238, which would allow income eligibility to be based on social security limits, instead of the current fixed amount. 3:42:25 PM MS. HANDLER, in response to Co-Chair Herron, said that the Office of Public Advocacy dealt with issues of elder fraud and exploitation. REPRESENTATIVE T. WILSON asked about Medicaid eligibility with a Miller Trust. 3:43:07 PM MS. HANDLER explained that the Miller Trust allowed for a special trust account which would distribute the Medicaid income to the recipient, but that upon death, the remaining money in the Miller Trust was returned to the state. 3:43:36 PM VANCE SANDERS, Attorney, relayed that he was also the President of Alaska Legal Services, which worked closely with seniors and other disabled people. He noted that many people throughout Alaska would be affected by SB 238, as the fixed income ceiling had limited eligibility. He opined that the fixed income had been introduced without an understanding of how the systems worked together. He explained that as social security limits increased, this increase to income affected the fixed eligibility income levels. He explained the difficulties with an irrevocable trust, which included the necessity for a trustee, provisions to allow for change of living environment, and registration with the court. He reported that only death or a court order could terminate the trust. He reflected on the difficulty of finding qualified, knowledgeable trustees. He urged support for SB 238. 3:47:01 PM AMY ONEY, Assisted Living, stated her support for SB 238. She directed attention to the fiscal note, and opined that there would be a cost savings from passage of SB 238, as the current system was very costly to monitor and administer. 3:49:14 PM MARIANNE MILLS, President, AgeNet, Alaska's Association of Senior Service Provider Agencies, pointed out that SB 238 would allow elder Alaskans access to cost effective home and community based services. She explained the two requirements for eligibility to the home and community based waiver program: financial need and medical necessity for nursing home level of care. She reflected that the annual cost of living increase to social security benefits would often make a person ineligible for the Medicaid waiver program. She pointed out that SB 238 would change the income eligibility relative to the cost of living increases. She reported that this would allow older Alaskans to remain longer in their own homes. She stated her support for SB 238. 3:51:47 PM MARIE DARLIN, AARP Capital City Task Force, stated support for SB 238 as it would correct the current problems. She pointed out the cost increases in the seven years since the change. 3:53:17 PM SHERRY METTLER offered her support of SB 238. She stated her belief that the Miller Trust was extremely complicated. 3:55:54 PM DENISE DANIELLO, Executive Director, Alaska Commission on Aging, Department of Health and Social Services, said that the commission became aware of this situation in December, 2008, when the cost of living allowance was increased, and eligibility for services was then threatened. She opined that every cost of living increase would jeopardize more individual eligibilities. She pointed out that managing personal finances was a matter of personal dignity, and that when the Miller Trust removed this control and gave it to a trustee, it became a humiliating process for the senior. 3:58:55 PM REPRESENTATIVE SEATON asked if the one time federal payment of $250 would affect eligibility. 4:00:00 PM JON SHERWOOD, Medicaid Special Projects, Office of the Commissioner, Department of Health and Social Services, discussed the impact of the bill. He stated that it would raise the income standard for eligibility of people in nursing homes or recipients of the home and community based waivers. He did not anticipate that raising the eligibility limit would increase the number of nursing home or waiver recipients. He explained the cost of care calculation which called for a contribution of income toward the cost of care. This was income that was in excess of personal needs and other allowed deductions, and was a separate calculation done after the eligibility determination. He opined that the cost of care calculation would not change. He clarified that the Miller Trust was still available for those people who had income in excess of the maximum allowable income, 300 percent of SSI. He said that those people with income between the current fixed amount and the proposed 300 percent of SSI would not need to have a Miller Trust. 4:03:11 PM CO-CHAIR KELLER asked to clarify that the zero fiscal note was because of the Miller Trust. 4:03:31 PM MR. SHERWOOD agreed. He directed attention to the large cost of living increase in 2009, and noted that everyone was able to retain Medicaid eligibility. He allowed that it was difficult to set up a Miller Trust, especially on short notice. 4:04:06 PM CO-CHAIR KELLER asked if the Miller Trust was a federal trust. He inquired about any criteria or qualifications for the trustees. 4:04:32 PM MR. SHERWOOD said that there was a state statute regarding compliance with the federal statute for Miller Trusts. He explained that federal law dictated that states which operate Medicaid programs have to recognize these trusts for determining Medicaid eligibility. He reported that income entering the trust was disregarded during the eligibility determination, but was included in the cost of care calculation. He pointed out that under ordinary circumstances most income trusts for people with disabilities did not accrue much money, as the cost of care calculation "cleans them out every month, if they are administered correctly." 4:06:00 PM CO-CHAIR HERRON asked if the new federal health reform law contained any eligibility criteria. 4:06:30 PM MR. SHERWOOD replied that he was still analyzing its effect on Medicaid eligibility. He reported that the newly added categories would use different income calculations than were traditionally used for Medicaid populations. He noted that there were exceptions to the existing Medicaid populations. He shared that an analysis to the impact was still necessary. 4:07:19 PM REPRESENTATIVE T. WILSON asked if the seniors would have more money without the trusts. MR. SHERWOOD said that was not the case. He explained that after the eligibility determination there was a cost of care calculation to determine the individual contribution. He reiterated that the cost of care calculation was irrelevant to the trust. He listed the cost of care to include prescriptions not covered by Medicaid or Medicare, a personal needs allowance, and non-covered dependent medical expenses. 4:08:35 PM CO-CHAIR HERRON closed public testimony. 4:08:45 PM REPRESENTATIVE SEATON shared that he had watched the burden on recipients increase since the shift to the fixed dollar amount. He noted that the intent had been to save money, but that time had shown that it did not. He expressed support for SB 238. 4:09:59 PM CO-CHAIR KELLER stated his support for maintaining the dignity of the seniors. He reiterated that it may become necessary to revisit this issue in the future when the federal health care reform bill was better analyzed. 4:10:39 PM REPRESENTATIVE T. WILSON moved to report SB 238 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SB 238 was reported from the House Health and Social Services Standing Committee.