No. 109-9
Date: November 28, 2005

H.R. 4241 and S. 1932 The Deficit Reduction Act of 2005

On November 18, 2005, the House of Representatives passed H.R. 4241, the Deficit Reduction Act of 2005, by a vote of 217-215.  It then replaced all the language in the Senate-passed S. 1932 with the language in H.R. 4241 and passed S. 1932 by unanimous consent.  S. 1932 had passed the Senate on November 3, 2005, by a vote of 52-47.  (Descriptions of the Senate-passed provisions follow descriptions of the House-passed provisions.)  S. 1932 was sent back to the Senate for its action on the House amendment to the bill.  It is likely that the Senate will request a conference.

The House-passed bill includes the following two Supplemental Security Income (SSI) provisions.

Review of State Agency Blindness and Disability Determinations

  • Would require the Commissioner of Social Security to conduct reviews of a specific percentage of SSI initial disability and blindness cases of individuals  aged 18 and older that were allowed by State disability determination service agencies (DDS).  The provision would be phased in as follows--for fiscal year 2006, the Commissioner would be required to review 20 percent of DDS allowances; in fiscal year 2007, the requirement would be 40 percent; and, for fiscal years 2008 and thereafter, 50 percent of all DDS allowances would be reviewed.
  • Would be effective upon enactment.

Payment of Certain Lump Sum Benefits in Installments under the Supplemental Security Income Program

  • Would require that past-due monthly SSI benefits that exceed 3 times the maximum monthly benefit (Federal benefit rate plus State supplementary payment amount, if any) payable to the individual be paid in up to 3 installment payments, 6 months apart.  Also, limits the amount of the first 2 installment payments to 3 times the maximum monthly benefit except in cases in which the individual has outstanding debt relating to food, clothing, shelter, or necessary medical needs.  (Except for changing “12” to “3,” the current law installment payment provision would remain unchanged.)
  • Would be effective 3 months after the date of enactment.

The House-passed S. 1932 also includes several Medicaid provisions of interest to SSA.

Lengthening Look-Back Period; Change in Beginning Date for Period of Ineligibility

  • Would increase the Medicaid “look-back” period for transfer of assets for less than full market value from the current 36 months to 60 months.  Also would specify that the date that the penalty for transfer of assets at less than full market value would begin with (1) the date of the transfer or, (2) the date of first possible eligibility for Medicaid (but for the transfer penalty), whichever is later.
  • Would provide for a hardship waiver of the penalty in cases in which its application would deprive an individual of medical care that would endanger his or her health or life, or would deprive the individual of food, clothing, and shelter.  Also, would require States to provide individuals with notice of the availability of hardship waivers and a timely process for making hardship determinations.
  • Would be effective for transfers made on and after enactment.

Enforceability of Continuing Care Retirement Communities (CCRC) and Life Care Community Admission Contracts

  • Would provide that continuing care retirement and life care communities may require residents to spend resources declared on their entrance fee contracts for their care before applying for Medicaid.
  • Would treat entrance fees as resources for Medicaid purposes to the extent that the individual has the ability to use the entrance fee or the contract stipulates the entrance fee must be used to provide for care should other resources prove insufficient.
  • Would be effective upon enactment.

The Senate-passed S. 1932 did not include any SSI proposals, but did include the following Medicaid-related provision of interest.

Restoration of Medicaid Eligibility for Certain SSI Beneficiaries

  • Would begin Medicaid coverage for children who are eligible for SSI effective the month the SSI application is filed or the first month of SSI eligibility, whichever is later.  (Under current law, Medicaid eligibility for such children begins the month following the month of the SSI application or first eligibility.)
  • Would be effective 1 year after the date of enactment.

Preserving And Improving Access To Health Care Provisions in the Family Opportunity Act

  • Would allow parents to work and earn above-poverty wages while maintaining health care for their disabled children by providing:
    • Medicaid “buy-in” for disabled children whose family income or resources are at or below 300 percent of the poverty level ($58,050 for a family of 4 in 2005);
    • Funds for demonstration projects in 10 States to provide services to Medicaid enrolled children with psychiatric disabilities at home, instead of in an institution; and,
    • Funds for information and outreach centers to serve families with disabled children.
  • Would be effective January 1, 2008.

Reform of Medicaid Asset Transfer Rules and Loopholes

  • Would strengthen current Medicaid law concerning transfer of assets to limit the circumstances under which persons may intentionally shelter assets in order to qualify for Medicaid by:
    • Requiring States to apply partial month penalties;
    • Requiring States to accumulate transfers in computing the period of ineligibility;
    • Requiring that annuities are treated the same as trusts under current law;
    • Requiring that certain notes and loans are considered countable;
    • Requiring private annuities be based on actuarial life expectancy; and,
    • Limiting transfers to purchase life estates.
  • Would require States to provide a notice of the undue hardship waiver process to any individual applying for Medicaid who would be subject to a penalty period so they may request a waiver of the penalty period.  Also requires States to provide for a timely process for determining whether an undue hardship exists.
  • Would be effective the calendar quarter that begins after the date of enactment.