A Smidge Better…

Shortly before adjourning, Congress passed the “Tax Relief and Health Care Act of 2006” legislation that would fix some of the technical errors in the Deficit Reduction Act of 2005. President Bush is expected to sign the legislation into law.

California, in the meantime, still has not implemented the Deficit Reduction Act.

More analysis from groups like the Center on Budget and Policy Priorities to come, but here is a quick take.

Medicaid Citizenship Documentation

“Scrivener’s error(s)” created mass confusion and consternation among advocates and states tasked to implement the new rules. The original law said that every single one of 50 million Medicaid recipients would have needed to show proof of citizenship by providing a birth certificate or U.S. passport, resulting in the loss of benefits for up to 4.6 million low-income, U.S. born citizens, according to this CBPP paper.

The new law will not require citizenship documentation for the following citizens who are:

  • receiving Medicare
  • receiving Supplemental Security income
  • receiving Social Security Disability Insurance
  • in foster care
  • receive adoption assistance payments

Cost Sharing

Secondly, the new legislation clarifies that states may not increase premiums, co-pays or other cost sharing for Medicaid recipients at or below poverty level ($20,000 for a family of four). That means the copayment limit for this population will remain at $3, indexed to inflation.

The legislation also caps cost sharing at 5 percent of a family’s income — and is assessed on a monthly or quarterly basis.

Health Savings Accounts

A sore spot for those of us who dislike high-deductible plans — changes to Health Savings Accounts, those tax free shelters for medical expenses.

First, the new law allows people to transfer money from their flexible spending accounts and Health Reimbursement Accounts to their HSAs until 2012. It also permits a one-time transfer of money from their IRAs.

Additionally, the law used to limit contributions to HSAs to the amount of the health plan deductible. So if a person purchased a minimum qualified plan with a $1,050 deductible ($2,100 for families), they would only be permitted to contribute that amount. The new legislation increases that threshhold to $2,700 annually ($5,450 for families.)

Only about one-third of people with HSA-qualified plans actually put money into their accounts, but you can guess who this is helping.

Health Access California promotes quality, affordable health care for all Californians.
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