AK saves as dependents go missing

Questions remain about where the money went in the first place

Posted: Thursday, February 22, 2007

Thousands of people have lost valuable state employment benefits recently, but they're not complaining. That may be because they didn't exist in the first place.

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More than 3,000 listed dependents of current or retired state employees have been cut off from payments worth thousands of dollars a year, state officials say.

Many of those appear ineligible, said Melanie Millhorn, deputy commissioner of the Alaska Department of Administration.

After the division required the more than 30,000 dependents receiving state health care benefits to be verified, the number of claimed dependents declined by almost 10 percent.

More than 2,100 claimed dependents of retirees vanished, while more than 1,200 claimed as dependents by active workers disappeared.

That is likely to result in a future savings of $14.5 million annually, said Millhorn. It also raises the issue of whether "dependents," or others, took money improperly.

The issue came to light when state officials began to look for ways of dealing with growing deficits. They required those seeking dependents' benefits to verify the existence of their children or spouses by providing copies of marriage or birth certificates.

An early skeptic was Sen. Tom Wagoner, R-Kenai.

"I thought it was just a futile exercise," he said. "Number one, it's kind of a pain in the butt. Number two, a marriage license doesn't show you are still married."

Wagoner sent in his marriage certificate, confirming his marriage of 40 years.

After finding out how many people were claiming benefits for dependents they couldn't verify, Wagoner now wonders whether the state should try to recover any improper payments.

"I would hope they would," he said.

Some medical claims run $80,000 to $100,000, he said, and the state should not be paying those claims for people who do not deserve them.

State officials were unable to provide information about who was supposed to be receiving the benefits, or whether they were reported as children or spouses.

Millhorn said the state will continue to verify dependents in the future to make sure costs don't rise.

But she said there are no current plans to recover money that may have been improperly paid in the past.

"I was quite frankly very surprised at the magnitude," said Sen. Bert Stedman, R-Sitka, and a co-chairman of the Senate Finance Committee.

Stedman has been a leader in legislative efforts to deal with looming deficits in state Public Employee Retirement System and Teacher Retirement system programs.

He said the cost-savings efforts will help with the problem.

Millhorn said the state had not done an estimate of what the retirement system would save during the 25 years over which the retirement deficits are calculated.

However, more than $10 million of the annual savings came from reductions in claimed retiree dependents.

• Pat Forgey can be reached at patrick.forgey@juneauempire.com.

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