STAND. COM. REP. NO.928-02

Honolulu, Hawaii

, 2002

RE: S.B. No. 2416

S.D. 2

H.D. 1




Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committee on Health, to which was referred S.B. No. 2416, S.D. 2, entitled:


begs leave to report as follows:

The purpose of this bill is to make long-term care services available for most of Hawaii's citizens by:

(1) Establishing the Hawaii Long-Term Care Financing Program (Program), under which a long-term care income tax would be assessed to provide an affordable system of long-term care;

(2) Establishing a Board of Trustees (Board) to administer the Program, other than the assessment, levy, and collection of the long-term care income tax;

(2) Requiring $10 per month to be withheld by employers as a long-term care income tax, subject to a five percent annual increase for the first five years of the Program, with possible increases thereafter;

(3) Establishing the Hawaii Long-Term Care Benefits Fund for long-term care income tax collection deposits; and

(4) Appropriating funds to implement the collection of the long-term care income tax, which shall be repaid in five years, beginning July 1, 2002.

Your Committee circulated a proposed H.D. 1 at the public hearing, which amends the bill by:

(1) Using an income-based tax assessment based on an annual adjusted gross income of at least $10,000 and requires that the individual file a resident tax return;

(2) Broadening the scope of the "long-term care services" definition;

(3) Requiring the Department of Taxation (DOTAX) to submit an annual list of contributors to the Program; and

(4) Allowing the contracted administrator to supply and maintain computer systems holding subscriber records.

The Department of Commerce and Consumer Affairs, Department of Human Services, Executive Office on Aging, Hawaii State Commission on the Status of Women, Hawaii Catholic Conference, Hawaii Alliance for Retired Americans, Kokua Council, Coalition for Affordable Long Term Care, Healthcare Association of Hawaii, and several concerned individuals testified in support of the proposed H.D. 1. The Policy Board for Elder Affairs supported the intent of the proposed H.D. 1.

The Chamber of Commerce of Hawaii, Hawaii Reserves, Inc., Legislative Information Services of Hawaii, and several concerned individuals testified in opposition of the proposed H.D. 1. DOTAX, the Office of Information Practices, ILWU Local 142, and the Tax Foundation of Hawaii submitted comments.

Hawaii's population is aging rapidly, at a rate faster than the rest of the nation. Long-term care has become a necessity. However, individuals need to be educated on its importance. A small percentage of the population has long-term care insurance coverage.

Your Committee believes that a mandatory assessment for long-term care coverage will enable every citizen of Hawaii to benefit from some financial relief should the need for long-term care arise. At the same time, your Committee understands that further research is needed.

After further consideration, your Committee amended this bill by deleting its substance, inserting the contents of the proposed H.D. 1, and:

(1) Restructuring the bill by creating the Program in a new chapter in the Hawaii Revised Statutes;

(2) Increasing the number of Board members from five to seven;

(3) Specifying that the Board seek public input during the planning process and also conduct a public educational program to inform individuals on the importance of long-term care;

(4) Instead of stipulating the details of the $10 long-term care income tax, premium increases, benefit payment specifications, and vesting requirements, requiring the Board to consider these factors in developing a income tax based funding mechanism for the Program;

(5) Making the Board responsible the planning, development, and implementation of the Program, subject to the Legislature's approval; and

(6) Making technical, nonsubstantive amendments for purposes of clarity and style.

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

Respectfully submitted on behalf of the members of the Committee on Health,