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PRESS RELEASE
January 26, 2006

Congress Prepares to Vote to Deny Benefits
To Thousands of Nursing Home Residents


San Francisco — On February 1, 2006, the U.S. House of Representatives is scheduled to vote once again on the Deficit Reduction Act (DRA), which includes numerous provisions aimed at denying Medicaid benefits to current and prospective nursing home residents.

Since both the House and Senate narrowly passed the bill before the holiday break, it would be law by now if a procedural maneuver by Senate Democrats had not forced another House vote. If this bill passes and is signed by the President, hundreds of thousands of nursing home residents throughout the country will be denied needed Medicaid benefits for nursing home care. Some of the onerous provisions include:

  • Five Year Look Back: Increasing the look-back period for transfer of assets from three years to five years to see if anyone has given anything away in those five years before they apply for Medicaid. The result will be thousands of Medicaid applicants being denied eligibility for transfers made years before they even pondered the possibility of going into a nursing home. Your grandmother could have given her grandchild $5,000 four years ago for graduation, but will be denied Medicaid four years later because of that gift.

  • Outright denial of Medicaid to anyone with more that $500,000 equity in a home, unless there is a spouse or a dependent child living there. Given the housing values of homes in California, thousands of prospective Medi-Cal applicants will be automatically denied benefits for nursing home care. The DRA is already expected to cost California $1.7 billion in lost federal revenues.

  • Increasing Nursing Home Evictions: Under state and federal laws, a nursing home cannot evict a resident who qualifies for Medicaid. However, they can evict a resident for non-payment. Residents whose applications are delayed or denied will be easily evicted, even if they had already exhausted their life savings paying privately for their care.

  • Encouraging Elder Fiduciary Abuse: The bill encourages elder fiduciary abuse by forcing people to take out equity loans or reverse mortgages to pay for care. While there are a few reverse annuity mortgage organizations that are reputable, applicants must live in their homes in order to qualify. RAMS are not available for those who are going into nursing homes. Thus, seniors and the disabled will be faced with sleazy mortgage lenders who will offer money for unconscionable rates that the seniors will never be able to pay. They will have their homes foreclosed and no place to go.

  • Proving "Hardship": The sponsors purport to soften the blow to those denied benefits by including provisions that allow denied applicants to prove that a "hardship" would exist and allowing nursing homes to apply for exemptions. However, these are not "exemptions" - these are administrative law proceedings. It is doubtful that nursing homes are going to spend their funds representing poor people when it is easier and more cost-effective to simply evict them. In order to prove hardship, those denied Medicaid will have to be able to understand their rights, file for a hearing in a timely manner and have legal representation at fair hearings. This is not likely to happen for the majority of elder and disabled applicants, who have already spent their assets and can't afford legal representation.

According to Pat McGinnis, Executive Director of California Advocates for Nursing Home Reform, "The Deficit Reduction Act is a Potemkin village - pretending to offer relief, while the real intent is to save money by making sure that thousands of people are denied benefits and by discouraging others from applying in the first place."

Click here for the latest version of the Deficit Reduction Act of 2005 and the list of California House members who voted for the bill.