Number: 109-11
Date: December 23, 2005

S. 1932
The Deficit Reduction Act of 2005

On December 19, 2005, the House of Representatives passed the conference report on S. 1932, the Deficit Reduction Act of 2005, by a vote of 212-206. On December 21, 2005, the Senate passed the conference report by a vote of 51-50. Because the Senate made a minor change in the conference report, it will have to be returned to the House for its approval. While House passage is all but certain, the vote will not occur until after the House reconvenes in January. Once the House acts, it is expected that the President will sign the bill.

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

Review of State Agency Blindness and Disability Determinations

  • Would require the Commissioner 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 three times the maximum monthly benefit (Federal benefit rate plus State supplementary payment amount, if any) payable to the individual be paid in up to three installment payments, 6 months apart. Also, would limit the amount of the first two installment payments to three times the maximum monthly benefit. All remaining benefits due would be paid in the third installment 6 months later. As under current law, the amounts of the installment payments may be increased in certain cases, such as those in which the individual has outstanding debt relating to food, clothing, or shelter, or has necessary medical needs.

  • Would be effective 3 months after the date of enactment.

The bill contains an amendment to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L 108-173) affecting Medicare Part B premiums for higher-income individuals.

Accelerated Implementation of Income-Related Reduction in Part B Premium Subsidy

  • Would accelerate the phased-in increase in Part B premiums for higher-income individuals from 5 years to 3 years, with the provision fully phased in by 2009 rather than 2011. Under this provision, the phase-in percentage would be 33 percent in 2007, 67 percent in 2008, and 100 percent in 2009. (Under current law, the phase-in percentage would have increased by 20 percentage points a year—i.e., 20 percent in 2007, 40 percent in 2008, 60 percent in 2009, etc.)

  • Would be effective upon enactment.

The bill also includes several Medicaid provisions of interest to SSA.

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.

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, a timely process for making hardship determinations, and a process under which determinations could be appealed.

  • 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.

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).

  • Would be effective January 1, 2007.

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 certain notes and loans are considered countable; 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.