Congress
is on the verge of enacting new laws that will further restrict
eligibility for Medicaid payment of long term care costs.
The idea is to restrain the growth in the Government’s
contribution to the cost of long-term care for frail older
middle-class Americans by making it harder to qualify for government
benefits and shifting costs to individuals and private insurers.
On December 21st, the United States Senate voted
51-50 to approve The Deficit Reduction
Bud
get Reconciliation Act of 2005 (“Deficit Reduction Act”).
All of the Senate Democrats, plus independent Senator Jeffords
(VT), and five Republicans—Sens. Smith (OR), DeWine (OH), Snowe
(ME), Collins (ME), and Chafee(RI)—voted against passing the bill.
Vice President Dick Cheney rushed home from a trip in the
Middle East
to cast the final vote to break a 50-50 tie.
Because of minor technical amendments, the bill
has to go back to the House before final enactment.
The bill is expected to become law sometime in January.
The bill, the Deficit Reduction Omnibus
Reconciliation Act of 2005 (“Deficit Reduction Act), cuts funding
for the poor, the sick, students, and seniors needing fuel assistance.
The cuts to these programs will help pay for more tax cuts. The merit
of additional tax cuts aside, many Senior Advocacy groups were
appalled by the Act’s provisions (see article below).
Section 6011 of the Act focuses on asset
transfers. Since few
individuals have insurance that covers long term care, seniors may
transfer assets to their spouse and other family members to protect
those assets from being lost to the cost of care.
The
Deficit Reduction Act, however, seeks to make asset transfers more
difficult through a multitude of new provisions, including:
- Lengthening
the Look-Back Period.
The general look-back period on transfers of
assets will be lengthened to 60 months for income and assets disposed
of by an individual or spouse after the Act’s date of enactment.
-
Change in Beginning Date for Period of Ineligibility
Transfers of assets to a non-exempt recipient
create a “penalty period” during which the transferor and spouse
are ineligible for Medicaid long-term care assistance. The Act
will change the way the penalty start date is calculated.
The penalty will start on the latter of:
(1) the
first day of a month during or before which assets have been
transferred for less than fair market value, or
(2) the date on which the individual is eligible
for medical assistance under the state plan and is receiving certain
long-term care services,
- Limit
on Home Equity
Currently, home equity is not considered to be
available to pay for a Medicaid applicant’s care.
Applicants are not required to borrow against their homes.
For the first time, the Deficit Reduction Act will place a
$500,000 ceiling on this home equity exemption.
-
Treatment of Annuities
The state would be designated as the remainder
beneficiary under annuities owned by a Medicaid long-term care
applicant and/or spouse.
-
Reduction of Community Spouse Protections
States, like
Pennsylvania
, would no longer be allowed to let low-income community spouses keep
additional financial resources to avoid later spousal impoverishment.
The Deficit Reduction Act contains numerous other
provisions. A few are reasonable approaches to closing “loopholes”
while others are more complicated and ambiguous provisions likely to
engender confusion and litigation.
All are intended to ensure that persons who are unfortunate
enough to encounter a long-term illness spend their income and assets
to pay for the cost of their care.
The change in the transfer penalty start date
seems to be particularly bad policy. Under the Deficit Reduction Act,
a senior who makes a relatively small gift to a family member or
church may be unable to pay if nursing home or home care is needed
three or four years later. Because
the Medicaid ineligibility penalty period on transfers will not begin
until a nursing home resident is out of funds, there will be a period
of time during which neither the nursing home resident nor Medicaid
can pay for needed care.
N
ursing homes will be especially hard hit.
As cash flow p
rob
lems mount quality of care will likely suffer. For this reason, the
Elderlawanswers website has dubbed the bill “The
N
ursing Home Bankruptcy Act of 2005.”
The penalty start date change is particularly
significant in
Pennsylvania
. Under Act 43 of 2005,
children are liable for the financial support of their indigent
parents.
N
ursing homes, stuck with residents who have no means to pay for care
and who do not qualify for Medicaid due to the Deficit Reduction Act,
will likely be forced to seek reimbursement from the children of the
indigent residents. Litigation
between nursing homes and the children of residents is likely to
flourish.
N
ursing homes will sue children who will counter-sue for sub-standard
care.
Due to a technical amendment made by Democrats,
the bill that the Senate passed was modified from the House version.
Before the bill can become law, both chambers must pass identical
bills, which are then signed by the President. Since the chambers now
have slightly different bills, the House of Representatives must again
pass the bill. The House is not formally scheduled to reconvene until
January 31st - a late date which was set to give Tom Delay
extra time to resolve his legal problems.
However, this date could be moved up.
There is still a small chance that the bill will
not be re-approved by the
house, but this seems unlikely. The old rules still apply until the
Deficit Reduction Act is enacted (passed by both Houses in identical
form and signed by the President).
As noted above, it is most likely that this will occur sometime
between early January and early February, although the exact date is
unclear. This gives
consumers who wish to make transfers a brief additional opportunity to
do so.
Unfortunately, the Deficit Reduction Act does
nothing to address our country’s growing long-term care crisis.
N
one of its provisions, alone or in combination, will do much to cut
government spending or provide older Americans with affordable ways to
pay for long-term care. The Act seems to be yet another example of
Congress passing laws that don't seem to make good public policy sense
and that diminish the ability of seniors to live a modest and safe
life. As described by
Georgetown University Dean Judith Feder:
“Policy “solutions” that focus
only on making Medicaid “meaner” or limiting public obligations
for long-term care financing do our nation a disservice. Although
individuals and families will always bear significant care-giving and
financial responsibility, equitably meeting long-term care needs of
people of all ages and incomes—throughout the nation—inevitably
requires new federal policy and a significant investment of federal
funds. . . .
Indeed, the whole focus on reducing
public spending and promoting private insurance ignores the public
responsibility to address for all Americans what should be our
fundamental policy choice: do we want to live in a society in which we
assure affordable access to long-term care for people who need it or
in a society in which we leave people in need to manage as best they
can on their own?
There is little question that to address
both current and future long-term care needs requires not a decreased
but an increased commitment of public resources—and, to be adequate
and effective in all states—federal resources. Expanded public
financing for long-term care could take a variety of forms and by no
means need eliminate private contributions. One option, modeled on
Social Security, would be to provide everyone access to a “basic”
or “limited” long-term care benefit, supplemented by private
insurance purchases for the better-off and enhanced public protection
for the low income population. Another option would be establishment
of a public “floor” of asset protection—a national program
assuring everyone access to affordable quality long-term care—at
home as well as in the nursing home—without having to give up all
their life savings as Medicaid requires today. The asset floor could
be set to allow people who worked hard all their lives to keep their
homes and modest assets, while allowing the better off to purchase
private long-term care insurance to protect greater assets. Either
public/private combination could not only better protect people in
need; it could also provide substantial relief to states to focus on
health insurance, education and other pressing needs—relief that
governors have explicitly requested by calling on the federal
government to bear the costs of Medicare/Medicaid “dual eligibles”.
Because Medicaid serves the neediest population and, in the current
budgetary environment is at risk, my highest priority for expenditure
of the next federal dollar would be responding to this call (along
with supporting more home care and better quality care) with more
federal dollars to Medicaid.”
Judith Feder, Ph.D. Professor and
Dean Georgetown Public Policy Institute
Georgetown
University
Testimony before the Committee on
Finance
,
U.S.
Senate on Medicaid Waste, Fraud and Abuse: Threatening the Health
Care Safety Net,
June 29, 2005
.
Regrettably both of our Pennsylvania Senators
voted for passage of the Deficit Reduction Act.
Senator Arlen Specter was quoted as saying "It's a bill to
hold one's nose and let it go through.” (
Washington
Post,
December 20, 2005
). Senator Rick Santorum,
on the other hand, expressed pride at his part in the law’s passage.
"The bottom line is, we stood firm and we made tough
choices," said Sen. Rick Santorum (R-Pa.), praising what he
called "a very important and proud day." (
Washington
Post,
December 22, 2005
).
Attorney Marshall can be contacted at webmail@paelderlaw.com
or at 1-800-401-4552
Medicaid:
What
Steps Should Seniors Take
N
ow?
Written By: Attorney Jeffrey A. Marshall, CELA*
In light
of the apparently imminent enactment of the Deficit Reduction Act,
here are some planning steps seniors might want to consider.
1.
If you are considering transferring assets to your children or
to an asset protection trust, you should complete those transfers as
soon as possible.
2.
If you are healthy and can afford the cost, consider purchasing
long-term care insurance.
3.
Because of the extension of the look-back period to five years,
and the change in the way transfer penalties are calculated, seniors
may wish to consider making transfers at least five years before
needing financial help with long-term care costs.
4.
For the first time, the complete exemption of your home is
under attack. Expect this
to be the start of a trend. The
Deficit Reduction Act sets a $500,000 equity limit, but this may soon
be lowered. The
Governor’s Association has proposed that the exemption be limited to
$50,000 of home equity. Seniors
may wish to consider transferring ownership interests in their home in
order to protect this most valuable asset.
5.
Talk to your lawyer about whether you need to update your
estate planning documents.
6.
Because of the complexity of the Deficit Reduction Act
provisions, and their novelty, you should seek the highest quality
expert legal representation when reviewing your options.
This is no time to be penny-wise and dollar foolish.
Make sure your lawyer is experienced and knowledgeable in
Medicaid as well as estate planning.
At the very least, seek the assistance of a certified
elder law attorney. The
wrong guidance can cost you dearly.
Attorney Marshall can be contacted
at webmail@paelderlaw.com
or at 1-800-401-4552
Advocacy
Groups and
N
ews Media Decry
Bud
get Legislation
While
Senator Santorum may be proud of the Senate’s passage of the Deficit
Reduction Omnibus
Bud
get Reconciliation Act, a number of advocates for Seniors and
Newspaper
Ed
itorials saw little to recommend in the legislation.
Here is a sampling of comments.
AARP
Reaction to 2006
Bud
get Reconciliation
N
ews
Release
December 21, 2005
AARP
CEO, William D. Novelli, made the following statement today in
response to the 2006 budget reconciliation:
This
is a sad day in history for the 109th Congress and all American
families. Instead of standing up for those who are most vulnerable,
today Congress voted to protect the interests of the pharmaceutical
and managed care industries.
Throughout
this entire debate AARP acknowledged the need to improve Medicaid. We
tried hard to ensure a responsible policy that achieved the goals of
preventing abuse, but still protected those who innocently helped
grandchildren and or gave to charities. It is shameful that the final
budget contains measures that penalize innocent people, threaten their
ability to keep their homes, and shows a preference for protecting the
powerful at the expense of millions of Americans.
This
budget represents bad policy and AARP will now work to explain the
full impact of this vote to its more than 36 million members.
The
Alzheimer's Association Statement on Passage of the
Bud
get Reconciliation Bill
(HR 4241/ S 1932)
December 21, 2005
The
Alzheimer’s Association is extremely disappointed in budget
legislation passed by the Senate this week that may deny Medicaid
benefits to deserving older and disabled Americans, who have no place
else to turn for their long term care needs. The legislation makes
seniors the victims in this attempt to reform federal health care
programs. This bill could have a devastating impact on millions of
Americans with Alzheimer’s disease, who will be forced to turn to
Medicaid because they have depleted their own resources on costly
care. Currently, more than 850,000 Americans with Alzheimer’s
disease rely on Medicaid for help.
The legislation’s Medicaid changes include three provisions that are
particularly burdensome to those with Alzheimer’s and other forms of
dementia. One increases the number of years that a person’s finances
are subjected to government audit. A second would penalize elderly
Medicaid applicants after they’ve already depleted their resources
and are in need of costly care. And, the third denies Medicaid
assistance to anyone who happens to own a house that has increased in
value beyond an arbitrary amount set by the government.
These changes may put nursing homes in the position of kicking out
residents who are declared ineligible after they have been admitted.
It also may prevent people from getting into nursing care facilities
in the first place or from receiving necessary care at home and in the
community. For many, Medicaid is a last resort. The changes the Senate
passed, while directed to a few affluent Americans who would hide
assets in order to qualify for government support, could in reality
eliminate any chance for many vulnerable, modest income people who are
suffering from Alzheimer’s disease of ever receiving the care and
support they need.
To ensure these new legislative changes don’t victimize elderly
Americans who need and deserve assistance from the Medicaid program,
we call on Congress to create a special monitoring program within the
federal government that will collect vital information on who is being
denied access to help. We also call on the government to work on a
meaningful and dramatic reform of our nation’s health and long term
care system especially as it affects older Americans and people with
chronic illnesses like Alzheimer’s disease. Medicare and Medicaid
will falter and fail if we as a nation don’t face the looming crisis
of an aging baby boom generation and the growing burden of chronic
disease. The
United States
needs to initiate a dialog focusing on a national long-term health
care policy, not driven by budget deficits, but by sound policy.
The Alzheimer’s Association is ready to work with Congress to
develop a national long-term care policy, which must include as one
component a national commitment to preventing diseases, such as
Alzheimer’s, that are creating the enormous financial and emotional
burdens confronting Americans today. Research indicates that delaying
the onset of Alzheimer’s will, in five years, save the Medicaid
program five times more than what the Senate cut out of budget this
week. Making strategic investments in
America
’s future is sound policy.
The Alzheimer’s Association, the world leader in Alzheimer research
and support, is the first and largest voluntary health organization
dedicated to finding prevention methods, treatments and an eventual
cure for Alzheimer’s. For 25 years, the donor-supported,
not-for-profit Alzheimer’s Association has provided reliable
information and care consultation; created supportive services for
families; increased funding for dementia research; and influenced
public policy changes.
Contact
Alzheimer’s Association
Media line: 1.312.335.4078
The
Washington
Post Editorial on the Passage of
the Budget Bill
http://www.washingtonpost.com/wp-dyn/content/article/2005/12/20/AR2005122001376_pf.html
A
Bad Finish
Wednesday,
December 21, 2005
; A30
Maybe
there’s been an uglier end to a congressional session than the
closing days of the first year of the 109th Congress. But for
undemocratic maneuvers, skewed priorities and capitulation to powerful
lobbies, this week sets a particularly low bar for congressional
behavior. Vice President Cheney has rushed back from an overseas trip
to cast what could be a tie-breaking Senate vote to pass the budget
package. Here's hoping a last-minute change of heart will kill this
deal and make his trip for naught.
"An
exercise in budget discipline," acting House Majority Leader Roy
Blunt (R-Mo.) called the agreement to save close to $40 billion in
mandatory spending over the next five years. An exercise in
self-delusion and the power of special interests is more like it.
Start with the pretense that this Congress has buckled down to tackle
the deficit. It hasn't. The $40 billion in budget cuts -- much of
which doesn't consist of cuts at all but of money raised by things
such as selling off the broadcast spectrum -- is, if Republican
leaders get their way, to be followed by an even greater amount in tax
cuts next year. So the 109th Congress will have added to the deficit,
not trimmed it. Lawmakers got around their self-imposed spending caps
by labeling expenses such as flu preparedness as emergency spending.
Some discipline.
Moreover,
the cuts themselves underscore the absence of congressional will to
inflict real pain -- especially on those who write campaign checks.
Gone in the final version were provisions that made cuts at the
expense of insurance companies and drugmakers. When Ohio House
Republicans threatened to walk over Medicare cuts that would hurt a
home-state manufacturer of medical oxygen tanks, those were stripped
out as well, The Post's Jonathan Weisman reported. Remaining, though
smaller than originally envisioned, were cuts in Medicaid and child
support enforcement. In the Senate, where the vote balance is
precarious, Norm Coleman (R-Minn.) seems to have agreed to switch his
original vote and support the measure after White House deputy chief
of staff Karl Rove helped sweeten the deal by reversing a cut in sugar
subsidies, according to Congress Daily. While Pennsylvania Republican
Arlen Specter described the agreement as one "to hold one's nose
and let it go through," we're hoping he concludes the odor is too
strong.
As
unattractive as the substantive choices lawmakers made were the
procedures they resorted to. Drug companies were given special
protection against lawsuits for flu vaccines -- a provision put in the
defense spending bill after members of the conference committee signed
what was supposed to be the final agreement. Whether or not this
provision is a good idea, it's not one that should be crammed into a
take-it-or-leave-it, must-pass measure without a single member of
Congress having a separate chance to consider its wisdom. Lawmakers
engaged in a similarly undemocratic dodge when they stripped the
provision on drilling in the Arctic
N
ational Wildlife Refuge from the budget package -- it wouldn't have
passed the House otherwise -- and tacked it onto the defense measure.
N
o lawmaker heading home for the holidays should feel that there's much
to celebrate in this frenzy of backroom dealmaking and dishonest
posturing.
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*Attorneys
Marshall and Parker are certified
as Elder Law Attorneys by the National Elder Law Foundation under
authorization from the Pennsylvania Supreme Court.
