If you are a Medicare beneficiary, it is time to review your Medicare prescription drug plan options. The Medicare Part D open enrollment period begins November 15, 2006, and ends December 31, 2006. During this period you can sign up for a prescription drug plan if you don’t have one or you can switch to a different plan if you are unhappy with your current plan. Even if you are happy with your current plan, you should make sure that it isn’t changing significantly. In addition, there may be new plans available that have lower premiums or offer more drug options.

Companies began marketing their 2007 drug plans at the beginning of October. If you are already signed up with a plan, you don’t take any action; you will remain in the same drug plan. However, you need to be sure your plan will still meet your needs in 2007. Plans can change the covered drugs, premiums, and appeals process, among other things. The Medicare.gov Web site has a personalized search feature that allows you to see what will be covered next year and to compare plans.

When reviewing your plan, factors to consider include the cost of the premium, what drugs are covered, what pharmacies are covered, and whether any drug exceptions will continue to be honored. For more information on what to look for, you can find checklists at MedicareAdvocacy.org and at ElderLawAnswers.com. You can also click here for a Drug Plan Comparison Worksheet that allows beneficiaries to note important information about each plan, compare the plans side by side, and identify the one that best meets their needs.

Whether Medicare premiums are going up or staying the same next year depends on who you ask. The Center for Medicare and Medicaid Services (CMS) estimated that average monthly premiums would stay the same next year at $24 a month. The CMS estimate was based on premiums for stand alone drug plans and Medicare Advantage (managed care/HMO) plans. However, according to an article in the Washington Post, Rep. Henry Waxman (D-Calif.) claims that if you look at just the Medicare stand alone plans, average monthly premiums are going up 13.2 percent to $29 a month.

By a vote of 216-214, the U.S. House of Representatives has passed budget legislation that will impose punitive new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. The Deficit Reduction Act of 2005 now goes to President Bush for his promised signature.

Several Republican moderates who had supported the bill when it was voted on in December changed their votes after learning details of the legislation and under intense pressure from groups like AARP, but in the end the vote switches were not enough to defeat a bill that the Congressional Budget Office says will reduce or bar benefits for millions of Medicaid recipients. The measure is estimated to save $39 billion over five years.

Rep. Frank LoBiondo (R-NJ) cast the deciding vote, breaking a 214-214 tie. All House Democrats and 13 Republicans voted against the bill. Republicans who voted yes in December but no in the final vote included Reps. Jim Gerlach (PA), Jim Ramstad (MN), Rob Simmons (CT) and John Sweeney (NY). (Click here to see the full vote.)

Democrats attacked the measure as an assault on Medicaid patients and other vulnerable groups, and said it was a prime example of the powerful influence of lobbyists for corporate interests like drug manufacturers and health insurers, who got much of what they wanted in closed-door negotiations with Republican lawmakers.

“This is a product of special interest lobbying and the stench of special interests hangs over the chamber,” said Rep. John Dingell (D-MI).

The Impact on the Elderly

The legislation will extend Medicaid’s “lookback” period for all asset 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 when the individual transferring the assets enters a nursing home and would otherwise be eligible for Medicaid coverage. In other words, the penalty period does not begin until the nursing home resident is out of funds, meaning she cannot afford to pay the nursing home.

Because the change in the penalty period start date will likely leave nursing homes on the hook for the care of residents waiting out extended penalty periods, ElderLawAnswers has dubbed the bill “The Nursing Home Bankruptcy Act of 2005.” Nursing homes will likely be flooded with residents who need care but have no way to pay for it. In states that have so-called “filial responsibility laws,” the nursing homes may seek reimbursement from the residents’ children.

The bill also will make any individual with home equity above $500,000 ineligible for Medicaid nursing home care, although states may raise this threshold as high as $750,000.

The legislation also:

Establishes new rules for the treatment of annuities, including a requirement that the state be named as the remainder beneficiary.

Allows Continuing Care Retirement Communities (CCRCs) to require residents to spend down their declared resources before applying for medical assistance.

Sets forth rules under which an individual’s CCRC entrance fee is considered an available resource.

Requires all states to apply the so-called “income-first” rule to community spouses who appeal for an increased resource allowance based on their need for more funds invested to meet their minimum income requirements.

Extends long-term care partnership programs to any state.

Authorizes states to include home and community-based services as an optional Medicaid benefit. (Previously, states had to obtain a waiver to provide such services.)

In addition, the legislation incorporates provisions in the original budget bill passed by the Senate closing certain asset transfer “loopholes,” among them:

The purchase of a life estate will be included in the definition of “assets” 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 included among 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.

While the federal law applies to all transfers made on or after the date of enactment (which looks like it will be today, February 8, when President Bush is scheduled to sign the law), it also gives the states time to come into compliance. This gives many people in most states a little time to plan. 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.

If you have been hesitating about seeing an attorney about long-term care planning, hesitate no longer. If you have considered protecting some assets for yourself and/or for your loved ones in case you later require long-term care, the best time to act is right now.

As you may know, Congress is on the brink of enacting a law that would impose punitive new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. (For the legislative details, click here.)

Among other provisions, the proposed new law would extend Medicaid’s “lookback” period for all asset transfers from three to five years and make those with valuable houses ineligible for Medicaid long-term care coverage. But the most significant change is that it would also shift the start of the penalty period for transferred assets from the date of transfer, as is the case now, to the date when the individual would qualify for Medicaid coverage of nursing home care if not for the transfer. In other words, the penalty period would not begin until the nursing home resident was out of funds, meaning there would be no money to pay the nursing home for however long the penalty period lasts. Innocent gifts to grandchildren could, years later, result in extended periods without any long-term care coverage of any kind. (For more on the implications of these changes, click here. For an explanation of Medicaid’s current asset transfer rules, click here.)

What does this mean for you? If you have considered protecting some assets for your loved ones in case you later require long-term care, you should contact a qualified elder law attorney now. Until the new proposals become law — which according to our best estimate will be after the House reconvenes on January 31, 2006 — the current rules apply. Transfers made before the law is enacted will not be subject to the new penalty period rules and other new provisions.

These provisions, along with others in the bill that cut programs for the poor and elderly for the first time in a decade, will be enacted only if the House of Representatives votes for them a second time. The House narrowly passed the bill the first time around in the early hours of the morning with some members not present and with only four hours to review a complex, 774-page package of provisions. Many representatives may not have realized what they were voting for. People who are concerned about the impact of this bill, S. 1932, on them or their loved ones may want to make their concerns known to their congressional representative. For contact information for your congressperson, click here.