HB 262-SENIOR BENEFITS PROG. ELIGIBILITY  3:52:36 PM CHAIR SEATON announced that the final order of business would be HOUSE BILL NO. 262, "An Act relating to eligibility requirements of the Alaska senior benefits payment program; and providing for an effective date." 3:52:49 PM REPRESENTATIVE VAZQUEZ moved to adopt the proposed committee substitute (CS) for HB 262, labeled 29-GH2770\W, Glover, 2/2/16, as the working draft. There being no objection, Version W was in front of the committee. CHAIR SEATON noted that there were three levels of senior benefits referenced in the proposed bill. He asked if the numbers were available. SEAN O'BRIEN, Director, Director's Office, Division of Public Assistance, Department of Health and Social Services (DHSS), offered his belief that those numbers were available. 3:54:13 PM MONICA MITCHELL, Chief, Policy & Program Development, Division of Public Assistance, Department of Health and Social Services (DHSS), stated that, although she did not have the exact numbers, at the highest income level there were about 5300 recipients, at the mid income level there were about 4000 recipients, and at the lowest income level there were about 2000 recipients. In response to Chair Seaton, she explained the senior benefits program and its three income levels. She reported that the senior benefits program was a cash benefit program for individuals over 65 years of age. She stated that the different payment levels were based on income up to a specific percentage of the federal poverty level. She detailed that individuals with incomes up to 75 percent of the federal poverty level receive the highest monthly benefit amount, $250; between 75 percent and 100 percent of the federal poverty level receive a monthly benefit amount of $175; between 100 percent and 175 percent of the federal poverty level receive a monthly benefit amount of $125. CHAIR SEATON acknowledged that benefits were being cut in many programs, and he questioned whether the monthly cash payments to individuals with income of 175 percent of the federal poverty level should be reconsidered. He noted that the House Finance Committee should review this, but he "wanted to open up that policy discussion for us to have here since in all of the other committees that we're in, we're talking about raising taxes..." He stated that, as this was revenue sharing to individuals beyond the Permanent Fund Dividend, it should be open for discussion. REPRESENTATIVE VAZQUEZ stated that the total number in the program statewide was only 11,300 individuals. She said that this was "more of a safety net" and that the income limits were very low. She reported that to qualify for the highest amount of monthly benefit, $250, an individual's annual income could not exceed $11,040, about $920 each month. She went on to report that, for a married couple to qualify for the highest monthly benefit, income could not exceed $14,940, about $1,245 each month. She emphasized that this amount of money "doesn't go far." Moving on to the monthly benefit of $175, an individual could not have an annual income of more than $14,720, or $1,227 each month; whereas, a married couple could not have an annual income to exceed $19,920, or $1,660 each month, which she declared was "doing marginally as far as income in light of the cost of living in Alaska." She relayed that for the monthly benefit amount of $125, an individual could not have an income which exceeded $25,760, or $2,146 each month; whereas a married couple could not have an income which exceeded $34,860, or about $2905 per month. She emphasized that it was necessary to understand each level of income. CHAIR SEATON pointed out that the question was not for the lower end of the scale, as those were "poverty and need." He relayed that there was a question whether the state could afford a subsidy for a couple earning $35,000 each year. He asked if there was also an asset test along with the income test. MS. MITCHELL replied that there was not an asset test. She pointed out that these regulations for senior benefits allowed for an adjustment based on the appropriation, and that the current regulation package allowed for a cut to the highest benefit level first, and then to subsequent benefit levels, if not enough money had been appropriated for the program. CHAIR SEATON reflected that the discussion was on policy, whereas the adjustment was for a budgetary constraint. He asked if this adjustment for budgetary constraint was good policy or whether it was better to address the upper level of benefits. He pointed out that a lack of asset limitation allowed an individual to own a home and other things, yet the individual would be subsidized with a benefit if the direct income was below a certain level. He declared that it was necessary to have a discussion for what levels the state could afford. REPRESENTATIVE TARR expressed her personal opinion that these were modest benefits, even at the lowest level of payment. She reported that her constituents were considered moderate to low income, and the average rent in the low income neighborhoods was $1,200 to $1,500 per month. She pointed out that this meant more than half of a monthly income was spent for rent, with utilities above this. She observed that most of these subsidized individuals were on a fixed income and in retirement, so there was not a lot of opportunity to supplement their income. She suggested a gradual change to these benefits to allow for any adjustments to living arrangements. She reminded the committee that there had been a strong response against change during the last year, "in large part because people just didn't feel like they had time to make any adjustment." She requested some transitional time period, noting that a loss of housing which forced an individual into institutional housing would have a have an even greater cost to the state. REPRESENTATIVE WOOL acknowledged some of the difficulties with asset qualifications, pointing out that assets did not guarantee expendable income. He expressed support for the lack of an asset test. CHAIR SEATON stated that, without an asset test, there was a very broad group of people who qualify for benefits. He noted that people could have homes and "a lot of stuff," but an income that did not exceed the benefit limits. He opined that they might not be spending much, either. He questioned whether the higher income definition for poverty was too high, and he emphasized that no one was talking about eliminating the program entirely. He expressed his own discomfort for having a program which could then be underfunded, although he was glad that the regulation stated that payment at the highest income levels would be stopped first. He shared that, although he did not plan to introduce an amendment, he wanted to have this discussion regarding benefits to higher income individuals given the current budget deficit. He noted that it was unclear of an individual's real needs without an asset test, although he acknowledged that the cost to administer the program would then become more expensive than the cost of the program. REPRESENTATIVE WOOL asked if dividends and reverse mortgages would be considered income. MS. MITCHELL replied that a reverse mortgage was considered a conversion of an asset, and would not be considered income. In response to Representative Wool, she said that a regular monthly payment would be considered income. REPRESENTATIVE FOSTER opined that the profit from the sale of a home was income, but a reverse mortgage was not income. MS. MITCHELL explained that the house was considered an asset, and the cash from the sale was also an asset, as it was not a regular monthly income. CHAIR SEATON pointed out that these assets were not counted, yet the income could be low enough to qualify for the benefit. He noted that it was necessary to review the system to determine whether it was accomplishing the intended goals without having any unintended consequences. REPRESENTATIVE VAZQUEZ asked about the cost to implement an asset test to the highest income tier, and expressed her agreement that this could cost more than the payment. MS. MITCHELL explained that, in order to implement the asset test, it would be necessary to change the application and reprogram the legacy system, and, although she did not have an exact dollar amount, it would have a big financial impact. REPRESENTATIVE VAZQUEZ acknowledged that it was also necessary to train staff and send notifications to present recipients, noting that this was all part of the cost when determining the feasibility. She pointed out that there was not an asset test for other programs, including Denali Kid Care or Medicaid expansion enrollees, and that this same argument could be made for those programs. REPRESENTATIVE WOOL asked to confirm that the minimum age for these benefits was 65 years, and how often was it necessary to enroll for the program. MS. MITCHELL replied that there was a yearly review process. REPRESENTATIVE TARR asked if it was possible for "some kind of spot check" to attain a sample snap shot for information, which was not very expensive. She pointed out that an asset test was required for an elderly person with a need for Medicaid services. She acknowledged that there had been similar criticism for the Alaska Longevity Bonus program as it did not have any income guidelines. MS. MITCHELL offered that there could be a cross match for individuals who were also eligible for other programs that did have an asset test for benefits. In response to Chair Seaton, she explained that an individual with senior benefits who also received food stamps and/or adult public assistance would have been required to have an asset test to qualify for either of those programs. CHAIR SEATON asked to see this information if it was not too onerous to collect, as it offered a potential mechanism for reviewing the programs. He stated that it was necessary to effectively target resources for what they were intended. He noted that a review of wealth across the state pointed to concentration among those over 65 years of age, that this group was the wealthiest population in the state. REPRESENTATIVE TARR asked if the program could be adjusted to be parallel with social security benefits. MS. MITCHELL agreed that there was an age requirement in the statutes for senior benefits, and this could be amended to reference the federal statute for social security. REPRESENTATIVE TARR asked if there was an age breakdown of the current recipients to this program. MS. MITCHELL reported that the average age of the recipients was 75 years, and the maximum age was 104 years. CHAIR SEATON asked for any other helpful information that was readily available. MS. MITCHELL said that she did not have any other information that had not already been discussed. CHAIR SEATON reported that this proposed bill was trying to tighten up the eligibility standards for this program to include a requirement to be a citizen of the United States, or a qualified alien. He offered his belief that the program needed some refinements. He said that the proposed bill would be held over until the cross check information could be obtained from DHSS for further discussion. He stated that his intention was to move the bill out of committee at the next opportunity. REPRESENTATIVE VAZQUEZ asked if it made sense to likewise tighten the qualification criteria to a program like the heating assistance program. MS. MITCHELL asked for clarification. REPRESENTATIVE VAZQUEZ asked if this program should be made similar to the criteria for a general fund program, similar to the heating assistance program. MR. O'BRIEN clarified that, as the heating assistance program was a federal and state program, there was a distinction between the funding and the qualifications. 4:24:33 PM CHAIR SEATON opened public testimony. After ascertaining no one wished to testify, closed public testimony. [HB 262 was held over.]