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Social Security Legislative Bulletin


Number: 109-14
Date: February 13, 2006

President Signs S. 1932
The Deficit Reduction Act of 2005

On February 8, 2006, the President signed S. 1932, the Deficit Reduction Act of 2005. The Act has been designated Public Law 109-171. On February 1, 2006, the House of Representatives passed the conference report by a vote of 216-214. The Senate previously passed the conference report by a vote of 51-50 on December 21, 2005.

The new law includes two Supplemental Security Income (SSI) provisions.

Review of State Agency Blindness and Disability Determinations

  • Requires the Commissioner to conduct reviews of a specific percentage of SSI initial disability and blindness cases of individuals aged 18 and older that are allowed by State disability determination service agencies (DDS). The provision is phased in as follows--for fiscal year 2006, the Commissioner is required to review 20 percent of DDS allowances; in fiscal year 2007, the requirement is 40 percent; and, for fiscal years 2008 and thereafter, 50 percent of all DDS allowances are required to be reviewed.
  • Effective February 8, 2006.
  • Payment of Certain Lump Sum Benefits in Installments under the Supplemental Security Income Program
  • Requires that past-due monthly SSI benefits that exceed three times the maximum monthly benefit (Federal benefit rate plus State supplementary payment amount, if any) payable to the individual be paid in up to three installment payments, 6 months apart. Also, limits the amount of the first two installment payments to three times the maximum monthly benefit. All remaining benefits due are to be paid in the third installment 6 months later. As under current law, the amounts of the installment payments may be increased in certain cases, such as those in which the individual has outstanding debt relating to food, clothing, or shelter, or has necessary medical needs
  • Would be effective 3 months after February 8, 2006.
  • The bill contains an amendment to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L 108-173) affecting Medicare Part B premiums for higher-income individuals.

Accelerated Implementation of Income-Related Reduction in Part B Premium Subsidy

  • Accelerates the phased-in increase in Part B premiums for higher-income individuals from 5 years to 3 years, with the provision fully phased in by 2009. Under this provision, the phase-in percentage is 33 percent in 2007, 67 percent in 2008, and 100 percent in 2009. (Under prior law, the phase-in percentage would have increased by 20 percentage points a year—i.e., 20 percent in 2007, 40 percent in 2008, 60 percent in 2009, 80 percent in 2010, and 100 percent in 2011.)
  • Effective February 8, 2006.
  • The bill also includes several Medicaid provisions of interest to SSA.

Restoration of Medicaid Eligibility for Certain SSI Beneficiaries

  • Begins Medicaid coverage for children who are eligible for SSI effective the month the SSI application is filed or the first month of SSI eligibility, whichever is later. (Under prior law, Medicaid eligibility for such children begins the month following the month of the SSI application or first eligibility.)
  • Effective 1 year after February 8, 2006.
  • Lengthening Look-Back Period; Change in Beginning Date for Period of Ineligibility
  • Increases the Medicaid “look-back” period for transfer of assets for less than full market value from the current 36 months to 60 months. Also specifies that the date that the penalty for transfer of assets at less than full market value would begin with (1) the date of the transfer or, (2) the date of first possible eligibility for Medicaid (but for the transfer penalty), whichever is later.
  • Provides for a hardship waiver of the penalty in cases in which its application would deprive an individual of medical care that would endanger his or her health or life, or would deprive the individual of food, clothing, and shelter. Also, requires States to provide individuals with notice of the availability of hardship waivers, a timely process for making hardship determinations, and a process under which determinations could be appealed.
  • Effective for transfers made on and after February 8, 2006.
  • Enforceability of Continuing Care Retirement Communities (CCRC) and Life Care Community Admission Contracts
  • Provides that continuing care retirement and life care communities may require residents to spend resources declared on their entrance fee contracts for their care before applying for Medicaid.
  • Treats entrance fees as resources for Medicaid purposes to the extent that the individual has the ability to use the entrance fee or the contract stipulates the entrance fee must be used to provide for care should other resources prove insufficient.
  • Effective February 8, 2006.
  • Preserving And Improving Access To Health Care Provisions in the Family Opportunity Act
  • Allows parents to work and earn above-poverty wages while maintaining health care for their disabled children by providing Medicaid “buy-in” for disabled children whose family income or resources are at or below 300 percent of the poverty level ($60,000 for a family of four in 2006).
  • Effective January 1, 2007.
  • Reform of Medicaid Asset Transfer Rules and Loopholes

Strengthens current Medicaid law concerning transfer of assets to limit the circumstances under which persons may intentionally shelter assets in order to qualify for Medicaid by:

  • Requiring States to apply partial month penalties;
  • Requiring States to accumulate transfers in computing the period of ineligibility;
  • Requiring that certain notes and loans are considered countable; and,
  • Limiting transfers to purchase life estates.
  • Requires States to provide a notice of the undue hardship waiver process to any individual applying for Medicaid who would be subject to a penalty period so they may request a waiver of the penalty period. Also requires States to provide for a timely process for determining whether an undue hardship exists.

Effective January 1, 2007.