The Legislative History of Medicaid

scales of justice
September 10, 2020 Medicaid Planning

The Medicaid program has been around for a while, but it’s gone through several updates since it was first signed into law. Let’s take a journey through those legislative changes to see how we got the Medicaid program we have today, specifically as it pertains to long-term care.

Social Security Act of 1965

When Congress passed the Social Security Act of 1965, the Medicaid program was officially born. It became a joint federal-state program for which the federal government would establish baseline standards for the state programs, provide funding, and create guidelines for the states to implement. The program was designed to provide medical assistance to those with limited means, including low-income families, single parents, the elderly, and blind and disabled individuals.

Omnibus Budget Reconciliation Act of 1981

Although minor changes were made to the Medicaid program over the next 15 years, the Omnibus Budget Reconciliation Act of 1981 (OBRA ’81) was a significant turning point. OBRA ’81 was meant to control program expenditures as part of an effort to restore the nation’s economy. As such, college student benefits, the minimum benefit, and disability benefits were key targets under OBRA ’81.

Medicare Catastrophic Coverage Act of 1988

The next major change to Medicaid came with the Medicare Catastrophic Coverage Act of 1988 (MCCA). The MCCA was meant to improve benefits for the elderly and disabled and reduce the financial risk and strain associated with long-term care. Most notably, the MCCA added spousal impoverishment standards to the Medicaid program, such as the Community Spouse Resource Allowance and Monthly Maintenance Needs Allowance.

Read More: Spousal Impoverishment Rules for Medicaid

Omnibus Budget Reconciliation Act of 1993

In addition to changes to Medicare, the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) also included updates to the Medicaid program. OBRA ’93 expanded the lookback period from 30 months under the MCCA to 36 months and established the duration of the penalty period. It also established specific rules for trusts and mandated estate recovery for Medicaid costs paid on behalf of the recipient for a nursing home stay and other long-term care services.

Deficit Reduction Act of 2005

The Deficit Reduction Act of 2005 (DRA) made the most recent set of sweeping changes to the Medicaid program and is the basis of the Medicaid program we use today. It expanded the lookback period from 36 months to 60 months, changed the start date of the penalty period, and added evidence of citizenship requirements. The DRA also made significant changes to how annuities are treated for Medicaid eligibility purposes. In order to be compliant, the annuity must be irrevocable, non-assignable, and actuarially sound. It must provide equal payments, and the state must be named as beneficiary.

Read More: What is a Medicaid Compliant Annuity?

Affordable Care Act

The latest change to Medicaid came with the Affordable Care Act (ACA), which expanded Medicaid availability to all Americans younger than 65 whose income is at or below 133% of the federal poverty guidelines. The ACA also modified the income calculation for most applicants and required states to submit annual enrollment reports.

Now that we’ve gone through the legislative history of Medicaid, it’s important to understand that slight changes are made to each state’s Medicaid program on a regular basis. That’s why it’s crucial to stay up to date. Fortunately, when you work with an elder law attorney, they’ll do the legwork for you.

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