PA 07-130—sSB 1451

Finance, Revenue and Bonding Committee

Human Services Committee

AN ACT ESTABLISHING THE CONNECTICUT HOMECARE OPTION PROGRAM FOR THE ELDERLY

SUMMARY: This act establishes a Connecticut Home Care Option Program for the Elderly and a Connecticut Home Care Trust Fund, administered by the state comptroller. The program and the fund must help people plan and save for the costs of certain elderly services that (1) are either not covered by a long-term health insurance policy or supplement services covered by such a policy or by Medicare and (2) will allow them to remain in their homes or live in a non-institutional setting as they age.

The act allows participants to establish individual savings accounts within the fund and allows an account's designated beneficiary to withdraw funds from it for qualified home care expenses. It exempts interest earned on fund accounts from the state income tax and makes any unspent funds remaining in an account when a beneficiary dies part of his or her estate.

The act specifies the comptroller's duties and authority over the program and the trust fund, establishes standards for investing the fund's assets and for offering the fund to investors, and creates a 19-member advisory committee for the program.

Finally, the act eliminates the 250-person limit on the number of participants in a state-funded pilot program that allows seniors to hire their own personal care assistance (PCA) attendants directly instead of going though a home health care agency.

EFFECTIVE DATE: October 1, 2007, except for the repeal of the PCA pilot program participation limit, which takes effect July 1, 2007. The income tax exemption applies to tax years starting on or after January 1, 2007.

QUALIFIED HOME CARE EXPENSES

The act allows home care program account beneficiaries to withdraw funds from an account to pay for “qualified home care expenses,” which are expenses for instrumental activities of daily living, such as chore, homemaker, or companion services; adult day care; preparing meals; home-delivered meals; or transportation. They must be either (1) services performed by a Connecticut-licensed home care services provider, a homemaker or companion service registered with the Department of Consumer Protection, or a personal care assistant, or (2) licensed transportation services. They must also be recommended by a physician. Before a beneficiary can withdraw money from an account, a physician must certify to the fund that the beneficiary needs the qualified services to live independently in his or her home or another non-institutional setting.

INCOME TAX EXEMPTION

The act exempts interest a designated beneficiary earns on a home care program account from the state income tax. It does so by allowing the beneficiary to deduct any such interest includable in his or her federal adjusted gross income (AGI) when calculating his or her Connecticut AGI for state income tax purposes.

COMPTROLLER'S AUTHORITY AND DUTIES

On behalf and for the purposes of the fund, the act allows the comptroller to:

1. receive and invest its money;

2. procure insurance for its assets and activities;

3. establish funds within the larger trust fund and maintain separate accounts for each beneficiary;

4. establish consistent terms for operating the trust, such as (a) ways of making contributions, (b) withdrawal, termination, and payment transfers (including to an eligible home care provider), (c) penalties for improper use of funds, (d) changing beneficiaries, and (e) administration charges or fees;

5. enter contractual agreements for services for the fund and pay for them with the fund's earnings;

6. apply for and receive public or private donations to enable the fund to achieve its objectives;

7. adopt regulations;

8. sue and be sued; and

9. take other necessary action to carry out the act's purposes or that is incidental to her duties under the act.

TRUST FUND INVESTMENTS

The act requires the comptroller to invest the fund in a reasonable way to achieve its objectives; exercise a prudent person's care and discretion; and consider such things as rate of return, risk, maturity, portfolio diversification, liquidity, projected disbursements and expenditures, and expected deposits and other gifts. The comptroller cannot require the fund to invest directly in Connecticut state or municipal bonds or other funds or investments (if any) she administers. She must keep fund assets continuously invested according to its objectives until they are (1) used by beneficiaries for qualified home care expenses, (2) used to pay the fund's operating expenses, or (3) returned to depositors and beneficiaries according to the participation agreement between the fund and its depositors.

FUND OFFERING AND SOLICITATION

Under the act, fund material intended for distribution to prospective investors does not have to be filed, and fund investments do not have to be registered, with the banking commissioner. But the comptroller must get written advice from counsel, the Securities and Exchange Commission, or both, that the trust and participation in it are not subject to federal securities laws.

The act promises that the state will not alter participants' rights until all the fund's obligations are discharged and contracts performed, unless the law makes adequate provision for their protection. It allows the trust to include this promise in its participation agreements and other contracts.

ADVISORY COMMITTEE

The act establishes a 19-member advisory committee for the program consisting of a provider of home care services for the elderly and a physician specializing in geriatrics, both appointed by the governor, and the following officials or their designees:

1. the state treasurer, state comptroller, and social services commissioner;

2. a Commission on Aging representative;

3. the director of the long-term care partnership policy program within the Office of Policy and Management; and

4. the chairpersons and ranking members of the Human Services; Aging; and Finance, Revenue and Bonding committees.

The committee must meet at least once a year. The comptroller convenes the meetings.

OLR Tracking: JSL: JK: PF: TS