Beware of the Deficit Reduction Act

There are four major changes wrought by the Deficit Reduction Act of 2005, which are effective as of Feb 8, 2006: 1. increased look-back period, 2. new commencement date for penalty periods, 3. changes to the homestead exemption, and 4. revised rules regarding treatment of annuities. The increased l...

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Bibliographic Details
Published inAccounting Technology p. 9
Main Author Cona, Jennifer B
Format Trade Publication Article
LanguageEnglish
Published Boston SourceMedia dba Arizent 01.04.2007
Subjects
Beneficiaries
Changes
Children & youth
Children with disabilities
Documentation
Donations
Eligibility
Estate planning
Families & family life
Federal legislation
Home equity loans
Homeowners
Houses
Lines of credit
Long term care insurance
Medicaid
Mortgage companies
Nursing homes
Reverse mortgages
Stroke
United States > US
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Summary:There are four major changes wrought by the Deficit Reduction Act of 2005, which are effective as of Feb 8, 2006: 1. increased look-back period, 2. new commencement date for penalty periods, 3. changes to the homestead exemption, and 4. revised rules regarding treatment of annuities. The increased look-back period will be phased in overtime in such a way that Feb 8, 2006 will always be captured. As such, documentation requirements will remain at three years until Feb 8, 2009. The penalty period will not commence until the individual is "otherwise eligible" for Medicaid benefits but for the asset transfer. Under the new laws, a person who has equity in a home exceeding $500,000 will be automatically ineligible for Medicaid benefits. The purchase of an annuity will now be treated as an uncompensated transfer of assets subject to a penalty period unless the state is named the remainder beneficiary of the annuity.
ISSN:1068-6452