Major Asset
Transfer Restrictions Dropped From Senate Bill
Last Updated: 10/24/2005
Topic: Medicaid
Republican members of the Senate Finance Committee have reached an agreement on Medicaid and other health care budget cuts that does not include an extension of the "lookback" period for asset transfers or a change in the start of the penalty period for transferred assets.
The transfer-of-asset proposals, which many elder law attorneys viewed as harmful to their clients, were among the recommendations of the Medicaid Commission which was established to advise Congress on how to cut $10 billion from Medicaid, as called for in the 2006 budget reconciliation bill approved earlier this year.
The agreement, released by Senate Finance Committee Chair Charles Grassley (R-Iowa), does attempt to close a number of "loopholes" in Medicaid transfer rules, changes that taken together would save Medicaid an estimated $305 million over five years. Among the changes:
The purchase of a life state would be included in the definition of "assets" unless the purchaser resides in the home for at least one year after the date of purchase.
Annuities purchased by a Medicaid applicant would be subject to transfer penalties unless they are irrevocable, non-assignable, actuarially sound and provide for equal payments. Also to avoid being classed as an improper transfer, the annuity must name the state as the remainder beneficiary for at least the total amount of Medicaid expenditures or the state must be named as beneficiary after the community spouse, providing the spouse does not dispose of any of the remainder for less than fair market value.
Annuities would be Included in the definition of assets that are subject to estate recovery unless the annuity was purchased from a business that regularly sells annuities.
Funds to purchase a promissory note, loan or mortgage would be included among assets unless the repayment terms are actuarially sound, provide for equal payments and prohibit the cancellation of the balance upon the death of the lender.
States would be barred from "rounding down" fractional periods of ineligibility when determining ineligibility periods resulting from asset transfers.
States would be permitted to treat multiple transfers of assets as a single transfer and begin any penalty period on the earliest date that would apply to such transfers.
The proposed bill would also require states to give more information about undue hardship exceptions, including notice and appeal rights, and it would exempt from estate recovery individuals enrolled in either an existing or future Long-Term Care Insurance Partnership plan.
Grassley's plan cuts Medicaid by $7.6 billion over five years but adds $3.3 billion, including $1.9 billion for Medicaid coverage for hurricane victims. About $5 billion of the Medicaid savings would come from changing the payment formula for pharmacies. The plan also would provide new savings of $5.76 billion in Medicare costs, although the bill does away with a scheduled 4.4 percent cut in Medicare payments to doctors and instead gives them a 1 percent raise for a year.
The Finance Committee must vote on the plan on Monday, Oct. 24. The plan is expected to become part of a $35 billion measure of spending cuts that will be debated in the full Senate next month. The House Energy and Commerce Committee takes up similar legislation later this month. The committee’s cuts are expected to predominantly come from Medicaid instead of Medicare.
Capitol Hill Watch Senate Conservatives, Moderates Still Divided on Medicare, Medicaid Cuts in Reconciliation Package
[Oct 24, 2005]
The Los Angeles Times on Monday examined support and opposition among Senate Finance Committee members for committee Chair Chuck Grassley's (R-Iowa) budget reconciliation package to cut $10 billion over five years from Medicaid and Medicare (Havemann/Simon, Los Angeles Times, 10/24). The plan includes $25.1 billion in proposed spending reductions and about $15 billion in spending increases for Medicaid and Medicare. It would provide a net savings of $4.26 billion in Medicaid costs and a new savings of $5.76 billion in Medicare costs (Kaiser Daily Health Policy Report, 10/21). Committee members are scheduled to vote on the package Tuesday, a move that "could be crucial to this year's effort to rein in federal spending," the Times reports. Some conservative Republicans "are reportedly upset that the [Hurricane] Katrina aid is too generous," according to the Times. Democrats are unified in opposition to the package, meaning that Grassley must win support from all finance committee Republicans (Los Angeles Times, 10/24).
Republican Opposition Sen. Craig Thomas (R-Wyo.) is said to be "balking" over additional spending outlined in the package, CongressDaily reports. A Thomas spokesperson said he did not know how the senator will vote but indicated that Thomas has serious reservations. In addition, Sen. Jim Bunning (R-Ky.) reportedly wants the bill to include language barring specific types of intergovernmental transfers of Medicaid funds, which states sometimes use to increase federal contributions. A Bunning spokesperson said, "As it stands, he would vote against it. But we're working with the committee to try to get his concerns addressed." Finance committee moderates "insist" that language on intergovernmental transfers should not be included in the reconciliation package, CongressDaily reports. A spokesperson for Sen. Gordon Smith (R-Ore.), a committee moderate, said, "If you put language [on intergovernmental transfers] in the statute, CMS loses flexibility, states lose out and it ultimately harms beneficiaries" (Heil, CongressDaily, 10/21). Smith and Sen. Olympia Snowe (R-Maine), a fellow moderate, favor Grassley's package, according to the Times (Los Angeles Times, 10/24).
House Leaders 'Struggling' In related news, House leaders are "struggling" in their attempt to increase budget reconciliation savings from $35 billion to $50 billion, CQ Today reports. The targeted cuts include an additional $7 billion from the House Ways and Means Committee, which has some oversight of Medicare (Dennis/Higa, CQ Today, 10/21). Rep. Jeff Flake (R-Ariz.) said, "The leadership is saying they will only go to the floor if they know they have the votes. They don't have the votes" (Los Angeles Times, 10/24). Analysts from the Center on Budget and Policy Priorities on Friday in a conference call with reporters said the committee likely will look for cuts in programs other than Medicare. Robert Greenstein, executive director for CBPP, said, "There are clear indications that the House Republican leadership is reluctant to have any cuts in Medicare in reconciliation." A spokesperson for the committee on Friday said no final decisions had been made on which programs will be targeted (CQ HealthBeat, 10/21). "Even if both chambers can settle on their own totals [for cuts], they may have difficulty compromising on a package that is neither too robust for the Senate nor too anemic for the House," the Times reports (Los Angeles Times, 10/24).
Last Updated: 10/24/2005
Topic: Medicaid
Republican members of the Senate Finance Committee have reached an agreement on Medicaid and other health care budget cuts that does not include an extension of the "lookback" period for asset transfers or a change in the start of the penalty period for transferred assets.
The transfer-of-asset proposals, which many elder law attorneys viewed as harmful to their clients, were among the recommendations of the Medicaid Commission which was established to advise Congress on how to cut $10 billion from Medicaid, as called for in the 2006 budget reconciliation bill approved earlier this year.
The agreement, released by Senate Finance Committee Chair Charles Grassley (R-Iowa), does attempt to close a number of "loopholes" in Medicaid transfer rules, changes that taken together would save Medicaid an estimated $305 million over five years. Among the changes:
The purchase of a life state would be included in the definition of "assets" unless the purchaser resides in the home for at least one year after the date of purchase.
Annuities purchased by a Medicaid applicant would be subject to transfer penalties unless they are irrevocable, non-assignable, actuarially sound and provide for equal payments. Also to avoid being classed as an improper transfer, the annuity must name the state as the remainder beneficiary for at least the total amount of Medicaid expenditures or the state must be named as beneficiary after the community spouse, providing the spouse does not dispose of any of the remainder for less than fair market value.
Annuities would be Included in the definition of assets that are subject to estate recovery unless the annuity was purchased from a business that regularly sells annuities.
Funds to purchase a promissory note, loan or mortgage would be included among assets unless the repayment terms are actuarially sound, provide for equal payments and prohibit the cancellation of the balance upon the death of the lender.
States would be barred from "rounding down" fractional periods of ineligibility when determining ineligibility periods resulting from asset transfers.
States would be permitted to treat multiple transfers of assets as a single transfer and begin any penalty period on the earliest date that would apply to such transfers.
The proposed bill would also require states to give more information about undue hardship exceptions, including notice and appeal rights, and it would exempt from estate recovery individuals enrolled in either an existing or future Long-Term Care Insurance Partnership plan.
Grassley's plan cuts Medicaid by $7.6 billion over five years but adds $3.3 billion, including $1.9 billion for Medicaid coverage for hurricane victims. About $5 billion of the Medicaid savings would come from changing the payment formula for pharmacies. The plan also would provide new savings of $5.76 billion in Medicare costs, although the bill does away with a scheduled 4.4 percent cut in Medicare payments to doctors and instead gives them a 1 percent raise for a year.
The Finance Committee must vote on the plan on Monday, Oct. 24. The plan is expected to become part of a $35 billion measure of spending cuts that will be debated in the full Senate next month. The House Energy and Commerce Committee takes up similar legislation later this month. The committee’s cuts are expected to predominantly come from Medicaid instead of Medicare.
Capitol Hill Watch Senate Conservatives, Moderates Still Divided on Medicare, Medicaid Cuts in Reconciliation Package
[Oct 24, 2005]
The Los Angeles Times on Monday examined support and opposition among Senate Finance Committee members for committee Chair Chuck Grassley's (R-Iowa) budget reconciliation package to cut $10 billion over five years from Medicaid and Medicare (Havemann/Simon, Los Angeles Times, 10/24). The plan includes $25.1 billion in proposed spending reductions and about $15 billion in spending increases for Medicaid and Medicare. It would provide a net savings of $4.26 billion in Medicaid costs and a new savings of $5.76 billion in Medicare costs (Kaiser Daily Health Policy Report, 10/21). Committee members are scheduled to vote on the package Tuesday, a move that "could be crucial to this year's effort to rein in federal spending," the Times reports. Some conservative Republicans "are reportedly upset that the [Hurricane] Katrina aid is too generous," according to the Times. Democrats are unified in opposition to the package, meaning that Grassley must win support from all finance committee Republicans (Los Angeles Times, 10/24).
Republican Opposition Sen. Craig Thomas (R-Wyo.) is said to be "balking" over additional spending outlined in the package, CongressDaily reports. A Thomas spokesperson said he did not know how the senator will vote but indicated that Thomas has serious reservations. In addition, Sen. Jim Bunning (R-Ky.) reportedly wants the bill to include language barring specific types of intergovernmental transfers of Medicaid funds, which states sometimes use to increase federal contributions. A Bunning spokesperson said, "As it stands, he would vote against it. But we're working with the committee to try to get his concerns addressed." Finance committee moderates "insist" that language on intergovernmental transfers should not be included in the reconciliation package, CongressDaily reports. A spokesperson for Sen. Gordon Smith (R-Ore.), a committee moderate, said, "If you put language [on intergovernmental transfers] in the statute, CMS loses flexibility, states lose out and it ultimately harms beneficiaries" (Heil, CongressDaily, 10/21). Smith and Sen. Olympia Snowe (R-Maine), a fellow moderate, favor Grassley's package, according to the Times (Los Angeles Times, 10/24).
House Leaders 'Struggling' In related news, House leaders are "struggling" in their attempt to increase budget reconciliation savings from $35 billion to $50 billion, CQ Today reports. The targeted cuts include an additional $7 billion from the House Ways and Means Committee, which has some oversight of Medicare (Dennis/Higa, CQ Today, 10/21). Rep. Jeff Flake (R-Ariz.) said, "The leadership is saying they will only go to the floor if they know they have the votes. They don't have the votes" (Los Angeles Times, 10/24). Analysts from the Center on Budget and Policy Priorities on Friday in a conference call with reporters said the committee likely will look for cuts in programs other than Medicare. Robert Greenstein, executive director for CBPP, said, "There are clear indications that the House Republican leadership is reluctant to have any cuts in Medicare in reconciliation." A spokesperson for the committee on Friday said no final decisions had been made on which programs will be targeted (CQ HealthBeat, 10/21). "Even if both chambers can settle on their own totals [for cuts], they may have difficulty compromising on a package that is neither too robust for the Senate nor too anemic for the House," the Times reports (Los Angeles Times, 10/24).
