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One year ago, President Bush signed the Deficit Reduction Act (DRA).  The DRA  made changes to the Medicaid law that will have a devastating impact on many middle class families in southern Illinois.  Two changes stand out as having the greatest impact on the greatest number of persons:

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“Put Granny On The Street” Law

"Put Granny On The Street" Law


            One year ago, President Bush signed the Deficit Reduction Act (DRA).  The DRA  made changes to the Medicaid law that will have a devastating impact on many middle class families in southern Illinois.  Two changes stand out as having the greatest impact on the greatest number of persons:


1.         It increased the "look back" period for gifts or transfers of money, home or other assets from 3 years to 5 years, and


2.         Changed the penalty start date from the date of a gift or transfer to the date the Medicaid applicant is receiving nursing home level of care and has spent down her or his assets to $2,000.00.


            Six law suits were filed in various federal courts which raised constitutional challenges to the new law, alleging that it was not legally enacted.  One law suit was filed by Democratic members of Congress.


            One year ago, Democrats were in a minority.  Now that Democrats are in the majority, they have put aside the question of whether the law was legally enacted.  Instead, they are waiting for the outcome of the six lawsuits.


            It is widely acknowledged that the bill signed into law by the President never passed the U.S. House of Representatives due to a clerical error. The Constitution requires that a bill must pass both houses of Congress and be signed by the President in identical forms to become law.


            When the bill was signed last February, congressional Democrats said that the measure was not a law within the meaning of the Constitution and called for it to be brought before Congress for another vote. In February 2006, Rep. Henry Waxman (D-CA), then the ranking minority member of the House Committee on Government Reform, wrote a strongly worded letter to House minority leader Nancy Pelosi (D-CA) calling for a revote of the DRA.  But with support for the DRA fading fast even among its own members, the Republican leadership ignored such requests, calling the matter "a technical problem."


            Now that control of Congress has shifted, however, the Democratic leadership is unwilling to act.  A spokesperson for Rep. Waxman, who is now chairman of the Committee on Government Reform, said that the House Democratic leadership will wait for the legal challenges to work their way through the federal courts.


            Knowledgeable sources believe the unwillingness of the Democrats to act is due to the fact that they are now in charge of fiscal and tax policy, and the challenges to balancing the budget is now in their camp.


            So far, federal district courts have rejected five challenges to the DRA's legitimacy.  While these five cases have been appealed, a sixth challenge filed in federal district court for the Southern District of Alabama is still pending.


            In a surprising development, the clerk of the House of Representatives produced a study in May 2006 that appears to prove that the DRA never passed the House.  According to the clerk's document, a discrepancy between the House and Senate versions of the DRA apparently emerged when the Senate enacted a version of the bill allowing Medicare to pay beneficiaries for oxygen care for 13 months, but the House passed a version allowing for a 36-month payment -- an estimated $2 billion difference. A Senate clerk later discovered the error and changed the language to what the Senate originally approved. The Speaker of the House and President Pro Tem of the Senate then certified the bill as passed and sent it to the President for his signature  -  in apparent violation of the constitutional requirement that before a bill can be enacted into law by the President, it must pass both the House and Senate in identical form.


            The attorney who filed the lawsuit in Alabama, Jim Zeigler, said "One version of the bill passed the Senate and a different version passed the House. The President signed the Senate version on February 8, 2006. It is being treated as the law of the land, but it has never passed the House. This is constitutional law 101. Eighth-graders in civics class learn that the same bill must pass both houses and be signed by the President or it is not a law."


            Zeigler's case is awaiting a decision by U.S. District Judge Ginny Grenade on a motion to dismiss filed by the U.S. Department of Justice.


            Zeigler says that the bill, as written, will have real consequences for the elderly. When a nursing home resident drops below $2,000 in savings and could qualify for Medicaid coverage, a period of Medicaid ineligibility is then assessed based on any transfers that took place in the past five years. At that point there will be no source of funds to pay for nursing home care while the Medicaid applicant waits out the penalty period.


            "Families are going to be shocked when their [loved] one is ineligible for nursing home coverage because four years and eleven months ago she helped out grandchildren with college tuition, or helped relatives in a financial jam, or faithfully tithed to her church, or gave to hurricane relief," Zeigler said.


            Zeigler has characterized the DRA as the "Put Granny on the Street" Law.


            While it is easy to understand that Zeigler is correct, experienced elder law attorneys are unwilling to base their advice to their clients on the improbability that the courts will declare the law invalid.  Thus, most elder law attorneys are advising their clients to not delay if they want to protect themselves, their home, and other assets.


            Richard Habiger is an elder law attorney.  You may contact him at 618-549-4529  or