CHANGES TO MEDICARE & MEDICAID - 2006

The Congressional budget resolution for fiscal year 2006 made numerous changes to the Medicare and Medicaid programs. Changes included reduction in Medicaid outlays by allowing states to reduce benefits and impose additional cost-sharing requirements and premiums on certain enrollees, reducing payments for prescription drugs, and tightening the rules relating to asset transfers prior to eligibility for Medicaid long-term care services.

In addition, it increased the penalties on individuals who transfer assets for less than fair market value in order to qualify for nursing home care and by making individuals with substantial home equity ineligible for nursing home benefits. For example, previously the value of an individual's home was not included when determining eligibility for Medicaid. However, the new law would make individuals with more than $500,000 in home equity ineligible for nursing home benefits. Worse, states would be able to raise that limit to $750,000.