Major Asset Transfer Restrictions Dropped From Senate Bill

Republican members of the Senate Finance Committee were reported to have reached an agreement on Medicaid and other health care budget cuts that does not include proposed drastic changes in Medicaid asset transfer rules.

The transfer-of-asset proposals, which many elder law attorneys view as harmful to their clients, were among the recommendations of the Medicaid Commission, 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 commission proposed a severe tightening of penalties for the elderly who transfer assets and then apply for Medicaid coverage of nursing home care. The proposed rules would extend the "lookback" period for all transfers from three to five years and change the start of the penalty period for transferred assets from the date of transfer to the date of Medicaid application. However, the proposals are likely to surface again when the House Energy and Commerce Committee takes up the House's version of the budget bill next week. The House Republican leadership has pledged to cut $15 million more from mandatory programs than the budget agreement specified. The budget resolution agreement also requires $70 billion in tax cuts.

The Finance Committee's agreement, released by 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. The changes include how life estates and annuities may be treated by Medicaid authorities.

Grassley's 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.

To read the Finance Committee Chairman's Mark of the bill, go to:

To read long and short summaries of the Chairman's Mark, go to:

For an Associated Press article on the bill, go to: