IS Letter to Speaker Hastert on 2006 Budget Reconciliation Bill

December 22, 2005

The Honorable J. Dennis Hastert
Speaker
The House of Representatives
Washington, DC 20510

Dear Speaker Hastert:

On behalf of Independent Sector, a nonprofit, nonpartisan coalition of over 500 charities, foundations, and corporate philanthropy programs, collectively representing tens of thousands of charitable groups in every state across the nation , I am writing to make you aware of our concerns regarding provisions in the 2006 budget reconciliation conference bill (S. 1932) that would change the rules governing the transfer of assets prior to application for Medicaid long-term care benefits.

The conference report would change a Medicaid “transfer of assets” provision that we believe would discourage many older Americans from making charitable contributions by penalizing those who make charitable contributions in good faith and then find themselves in need of long-term care within the next five years. The current Medicaid rules already protect against individuals who make substantial asset transfers to family members or to charity specifically for the purpose of qualifying for assistance from Medicaid, but the new provisions both extend the look-back period from three to five years and stipulate that the penalty period would begin at the time the individual seeks Medicaid benefits rather than the time of the donation.

The new provisions contained in sections 6011(a) and (b) within Title VI of the conference bill create significant and unfair penalties for individuals who make good faith donations to charities and then experience an unexpected decline in their health as long as five years later that causes them to need Medicaid long-term care assistance. Although Section 6011(d) provides a process for enrollees to seek hardship waivers under these new rules, the appeals process is an after-the-fact determination that is made precisely at the time an individual needs long-term care. Individuals denied services must file an appeal, which can take months to complete, and may require the services of an attorney. This would be exceedingly difficult for an individual in poor health, which may explain why many who are denied Medicaid services do not file appeals.

The uncertainty created by the proposed new penalties, and the associated time-consuming and challenging after-the-fact remedies, could significantly reduce charitable donations by older Americans. The Congressional Budget Office confirmed this unfortunate outcome in their cost estimate of these provisions. This is of enormous concern given the increasingly critical role that charitable nonprofits are required to play in responding to natural disasters and other challenges in communities across the country.

Although we are sensitive to the very serious budgetary concerns that Congress is working to address in this legislation, we believe the proposed changes will have an adverse impact on charitable giving by older Americans. As a result, we respectfully ask you and the Members of the House to eliminate this provision in the final conference agreement on reconciliation.

Thank you for your consideration of this important issue.

Sincerely,

Diana Aviv
President and CEO

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Independent Sector is a nonprofit, nonpartisan coalition of charities, foundations, and corporate philanthropy programs, collectively representing tens of thousands of charitable groups in every state across the nation. Its mission is to advance the common good by leading, strengthening, and mobilizing the nonprofit community.