Tracy Stewart Group Representative for the State Board of Administration

Transcription

1 Tracy Stewart Group Representative for the State Board of Administration

2 Group Detail Study group creation in SB1660 last year Charge: evaluate the establishment of a prepaid service plan for children with disabilities modeled after the Florida Prepaid College program The study group shall evaluate and develop findings and recommendations regarding the following: (a)the services for which a voucher could be used. (b)the financial requirements for such a system. (c)the qualifications of service providers. (d)the steps necessary to qualify prepaid service plan. Report by January 29, 2010

3 Members House Representative: Kelly Skidmore Senate Representative: Durell Peaden APD Director: Jim DeBeaugrine Vocational Rehabilitation Director: Bill Palmer SBA Executive Director Designee: Tracy Stewart Commissioner of Education Designee: Bambi Lockman Arc of Florida Executive Director: Deborah Linton Arc of Florida Family Board Member: Michele Poole Family Care Council Florida Chair: Betty Kay Clements Family Care Council Parent Representative: Patty Houghland

4 Plan Design: Vouchers? The idea of vouchers doesn t fit well for health care services in the same way it does for college Florida legislature has a large degree of control over public university and college pricing. Universities and colleges are long term, growing concerns. More difficult to set/predict healthcare pricing far in future Would providers agree to setting a price now? Would they be around in 20 years to honor contract pricing? Biggest obstacle: getting providers to agree now to a set price for providing services years later. Without contractual pricing, the state bears all health care pricing risk behind a guarantee.

5 Plan Design: Investment Protection We took a cue from how Florida Prepaid College handles out of state and private college enrollments: they transfer the value of the plan: the price of Florida public tuition. Although the price of services will not be guaranteed, the participants would be guaranteed the same plan value as children going to college. The plan would help both groups save for the future expenses necessary for them to lead productive lives to their full capacity. This method allows a large and variable menu of eligible services that spans healthcare, education, workforce training, etc. Families decide what services to purchase and make decisions on how much to spend on each type.

6 Plan Design: Benefit While this plan won t offer a set of services at a set price (vouchers), it will offer the ability to guarantee that families can purchase and provide a level of services for their child at an equal value as the guarantee families of college going students receive. The state already provides a low cost, professionallymanaged program with a guarantee for college expenses, tied to tuition rates. This plan would guarantee the same low cost and professional management of investments for health and education expenses for persons with disabilities.

7 Two Ways to Save Like the structure of Florida Prepaid College, the group favors creating two types of savings plans: A prepaid contract plan with a guarantee of benefits equal to the current cost of Florida public college tuition An investment plan with no guarantee, where investors choose from a small menu of mutual fund like offerings Families can choose to invest in either or both plans. They can choose the plan type that suits their needs best.

8 Prepaid Contract Plans A set amount is paid to purchase the plan, and a set amount is later repaid to the purchaser. The contract price depends on actuarial assumptions about the future costs of tuition, same as Florida Prepaid College. The value of the plan later depends on the actual cost of Florida public university and college tuition. The contract price and payout of the plan are the same for disabilities as for college. The plan payout is guaranteed by the state of Florida.

9 Investment Plan Less used by families within Prepaid College, but also a beneficial savings tool. No guarantee. Like mutual funds, investment may lose value. The account value will depend on the investment choices made and their performance. Several options to choose from: money market, fixed income, US equities, balanced option, age based option. Provides the ability to amplify the amount saved.

10 Tax Implications Under Florida Prepaid College, a disabilities plan has no federal protection like Section 529 to shield the plan s gains from taxation. Tax deferred status is possible but needs to be sorted out with IRS and tax experts. Tax exempt distributions are not likely possible at this time. Federal intervention is necessary for tax exempt distributions.

11 A Federal Proposal ABLE accounts ABLE account passage at the federal level would make Florida s Disabilities Savings Plans much more attractive. $500,000 limits. Tax free yearly contributions up to $2,000 with income limits of up to $60,000 for joint returns. Tax deferred growth and tax exempt distributions for funds that are used for qualified expenses. Expenses: education, housing, transportation, employment support, health, life necessities, assistive technologies. Similar to certain special needs trust types, account assets will reimburse Medicaid at beneficiary death.

12 Eligibility Coverage Eligible developmental disabilities are those defined in F.S (9) and only for the purposes of the Florida Prepaid Developmental Disabilities Savings Plan the term developmental disability shall also mean a severe, chronic disability that: 1. is attributable to a mental or physical impairment or a combination of those impairments; 2. occurs before the individual reaches age 18; 3. is likely to continue indefinitely; 4. results in substantial functional limitations in three or more of the following areas of major life activity: (i) self care, (ii) receptive and expressive language, (iii) learning, (iv) mobility, (v) self direction, (vi) capacity for independent living, and (vii) economic self sufficiency; and 5. reflects the individual s need for a combination and sequence of special, interdisciplinary, or generic services, individualized supports, or other forms of assistance that are of lifelong or extended duration and are individually planned and coordinated. Before the age of ten, an infant or child with developmental delays may be considered developmentally disabled if his or her disabilities are likely to meet the above criteria without intervention.

13 Thanks for your attention. Questions and comments are welcomed.