STAND. COM. REP. NO.2714

Honolulu, Hawaii

, 2002

RE: S.B. No. 2416

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2416, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII LONG-TERM CARE FINANCING ACT,"

begs leave to report as follows:

The purpose of this measure is to create a mandatory income tax assessment system to finance long—term care services for most residents of Hawaii.

Specifically, this bill imposes a monthly long-term care tax of $10, to be collected by the Department of Taxation from each person who is aged twenty-five to ninety-eight and is a regular employee or self-employed, and deposited into the Hawaii long-term care benefits fund. After December 31, 2003, the tax is to be increased to $10.50, $11.03, $11.58, $12.16, and $12.77 a month in the taxable years 2004 through 2008, respectively. Thereafter, the amount may be increased upon request of the Board of Trustees, who is to administer the program, to the Legislature. The bill specifies the duties of the board, including annual reports to the Legislature.

The tax is to be withheld by the employer or paid directly to the Department of Taxation by the self-employed. Individuals who are fully vested (ten years) receive full benefit payments. Those partially vested receive proportional benefits. Payments begin in July 1, 2005, thirty days after approval of the written certification from a physician or advanced practice registered nurse assigned by the Board of Trustees that the person needs one or more long-term care services. Services that qualify as long-term care services are enumerated in the bill.

The Auditor is required to audit the Hawaii long-term care benefits fund annually for the first three years and every three years thereafter. The bill requires the Board of Trustees to prepare an annual actuarial report and opinion and prescribes the contents of the actuarial report.

To be eligible, a vested individual must need help with two or more activities of daily living or have Alzheimer's disease or dementia. The benefit payment is $70 a day up to a cumulative three hundred sixty-five days. Payments are primary to Medicaid and private insurance payments but are not made when a person is receiving Medicare benefits for long-term care.

The Hawaii long-term care benefits fund is required to reimburse the general fund the amount of any appropriations for start-up costs, after five years from July 1, 2002. The bill appropriates a blank amount for fiscal year 2002-2003 for such start-up costs, to be expended by the Department of Taxation.

Upon further consideration, your Committee has amended this bill to make the following technical nonsubstantive amendments:

(1) Replacing the word "latter" with "later" in the phrase "the later years of life" on page 3, line 2;

(2) Adding the phrase "Hawaii long-term care financing" before the word "program" in the first sentence in section 235-C(a) on page 7, line 3;

(3) Replacing the word "ensuring" with "ensuing" in the phrase "the next ensuing ten fiscal years" in section 235-I(b)(2) on page 14, line 12;

(4) Deleting the word "state" before the phrase "director of finance" in the first sentence in section 235-K(b) on page 17, line 14;

(5) Inserting the words "The trustees shall" before the word "submit" in the first sentence in section 235-K(c) on page 19, line 14, and deleting the phrase ", but not limited to," on page 19, line 16;

(6) Inserting the words "The trustees shall" before the word "maintain" in the first sentence in section 235-K(d) on page 20, line 5;

(7) Deleting the word "state" before the phrase "insurance commissioner" in the last sentence in section 235-K(e) on page 20, line 12;

(8) Capitalizing the word "acts" in section 3 of the bill on page 21, line 8; and

(9) Changing all references to "sections 235-A to 235-J" throughout the bill to "sections 235-A to 235-K" to properly include section 235-K relating to the board's fiduciary and other duties.

Your Committee notes that the concept of providing long-term care for most of Hawaii residents is laudable but is moving this bill with a defective date in hopes that the concerns of your Committee will be addressed at a later date.

Your Committee provided funds for the executive office on aging to hire a consultant to do an actuarial study for the long-term care program. Your Committee needs more information on the actuarial calculations, analysis, and basis for setting the tax rate and future tax rates contained in the measure. The slightest inaccuracy may jeopardize the program. Thus, your Committee needs more time to carefully review the study.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2416, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2416, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair