LTC Consultants - Training specialists for long-term care insurance

February 2, 2006

Budget Bill Passes House 216-214 on February 1st !!

You did it – all your calls and emails really made a difference! By a vote of 216-214, the U.S. House of Representatives passed the Deficit Reduction Act budget legislation that will act as a catalyst to long-term care insurance sales – something we desperately needed! The legislation now goes to President Bush for his signature, and he is fully expected to sign it.

According to Elder Law Answers, "the federal law applies to all transfers made on or after February 1, but it also gives the states time to come into compliance. The deadline for states to enact their own laws varies from state to state, but generally is the first day of the first calendar quarter beginning after the end of the next full legislative session."

This bill is extremely important to the long-term care insurance industry because it curtails Medicaid planning abuse, and authorizes LTC Partnerships nationwide.

Here are the major changes for Medicaid:

Extend the lookback period for all asset transfers from three to five years

Change the start of the penalty period to the date of eligibility, not the date of transfer

Any individual with home equity above $500,000 would be ineligible but the states can raise the threshold as high as $750,000

The state would have to be named as beneficiary on annuities

Any money that is still available from the entrance fee to a CCRC would have to be spent down before applying for Medicaid

Require the "income-first" rule on the allocation of monthly income for the community spouse

A life estate will be counted as an asset unless the purchaser resides in the home for at least one year after the date of purchase

Funds to purchase a promissory note, loan or mortgage will be counted as 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 will be barred from “rounding down” fractional periods of ineligibility when determining ineligibility periods resulting from asset transfers.

States will 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.

One major fear is that nursing homes will get stuck with patients who have transferred their assets, since the penalty period will start on the date of eligibility. There will probably be some of this in the short-term, but in the long run, nursing homes will get paid MORE as more patients have LTC insurance and can afford the private-pay rate vs. the lower Medicaid rate. In states that have so-called "filial responsibility laws," the nursing homes may seek reimbursement from the residents' children. Go to The National Center for Policy Analysis at http://www.ncpa.org/pub/ba/ba521/ for a recent article that says over half the states have such a law on the books. This will never be enforced, you say? Pennsylvania re-enacted its provision in 2005 so that is at least one state that has it top of mind.

Now that this federal legislation has passed, I think you will see many more states acting aggressively about Medicaid planning, which all of a sudden makes long-term care insurance look mighty attractive.

Also, this bill contains the authorization to extend the LTCI Partnership to all states – a huge boon to the LTCI industry. Go to Vol. 1 of my newsletter, The LTCI Harvest, at www.ltciharvest.com and check out "State News" for an article about the states that have passed enabling legislation so they can be ready to start implementing Partnership plans as soon as the President signs the budget bill and it’s finally approved.

Now do something unusual – contact your representative and THANK HIM OR HER for preserving Medicaid for the poor and making it easier for LTCI to step up as the private sector’s solution to the REAL health care crisis in America by curtailing Medicaid planning and reinstating the Partnership plans on a national scale.

To email: Go to www.house.gov/writerep/

To call: Go to http://clerk.house.gov/members/index.html for the telephone number.

Thanks to Elder Law Answers (www.elderlawanswers.com) and Steve Moses with the Center for LTC Reform (www.centerltc.com) for the above information. In particular, Steve Moses and David Rosenfeld (david.rosenfeld@mail.house.gov) both deserve our unlimited appreciation for the tireless hours they have spent on "the Hill" in 2005 and 2006 to get this legislation to where it is today.

For the full text in HTML, go to http://thomas.loc.gov and type "S 1932" in the Search Bill Text box. Then click on the fourth version of the bill (S. 1932 EAS).

Phyllis Shelton, President
LTC Consultants
www.ltcconsultants.com




February 2, 2006 Budget Bill Passes House 216-214 on February 1st !! You did it – all your calls and emails really made a difference! By a vote of 216-214, the U.S. House of Representatives passed the Deficit Reduction Act budget legislation that will act as a catalyst to long-term care insurance sales – something we desperately needed! The legislation now goes to President Bush for his signature, and he is fully expected to sign it. According to Elder Law Answers, "the federal law applies to all transfers made on or after February 1, but it also gives the states time to come into compliance. The deadline for states to enact their own laws varies from state to state, but generally is the first day of the first calendar quarter beginning after the end of the next full legislative session." This bill is extremely important to the long-term care insurance industry because it curtails Medicaid planning abuse, and authorizes LTC Partnerships nationwide. Here are the major changes for Medicaid: Extend the lookback period for all asset transfers from three to five years Change the start of the penalty period to the date of eligibility, not the date of transfer Any individual with home equity above $500,000 would be ineligible but the states can raise the threshold as high as $750,000 The state would have to be named as beneficiary on annuities Any money that is still available from the entrance fee to a CCRC would have to be spent down before applying for Medicaid Require the "income-first" rule on the allocation of monthly income for the community spouse A life estate will be counted as an asset unless the purchaser resides in the home for at least one year after the date of purchase Funds to purchase a promissory note, loan or mortgage will be counted as 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 will be barred from “rounding down” fractional periods of ineligibility when determining ineligibility periods resulting from asset transfers. States will 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. One major fear is that nursing homes will get stuck with patients who have transferred their assets, since the penalty period will start on the date of eligibility. There will probably be some of this in the short-term, but in the long run, nursing homes will get paid MORE as more patients have LTC insurance and can afford the private-pay rate vs. the lower Medicaid rate. In states that have so-called "filial responsibility laws," the nursing homes may seek reimbursement from the residents' children. Go to The National Center for Policy Analysis at http://www.ncpa.org/pub/ba/ba521/ for a recent article that says over half the states have such a law on the books. This will never be enforced, you say? Pennsylvania re-enacted its provision in 2005 so that is at least one state that has it top of mind. Now that this federal legislation has passed, I think you will see many more states acting aggressively about Medicaid planning, which all of a sudden makes long-term care insurance look mighty attractive. Also, this bill contains the authorization to extend the LTCI Partnership to all states – a huge boon to the LTCI industry. Go to Vol. 1 of my newsletter, The LTCI Harvest, at www.ltciharvest.com and check out "State News" for an article about the states that have passed enabling legislation so they can be ready to start implementing Partnership plans as soon as the President signs the budget bill and it’s finally approved. Now do something unusual – contact your representative and THANK HIM OR HER for preserving Medicaid for the poor and making it easier for LTCI to step up as the private sector’s solution to the REAL health care crisis in America by curtailing Medicaid planning and reinstating the Partnership plans on a national scale. To email: Go to www.house.gov/writerep/ To call: Go to http://clerk.house.gov/members/index.html for the telephone number. Thanks to Elder Law Answers (www.elderlawanswers.com) and Steve Moses with the Center for LTC Reform (www.centerltc.com) for the above information. In particular, Steve Moses and David Rosenfeld (david.rosenfeld@mail.house.gov) both deserve our unlimited appreciation for the tireless hours they have spent on "the Hill" in 2005 and 2006 to get this legislation to where it is today. For the full text in HTML, go to http://thomas.loc.gov and type "S 1932" in the Search Bill Text box. Then click on the fourth version of the bill (S. 1932 EAS). Phyllis Shelton, President LTC Consultants www.ltcconsultants.com





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