Beware of the Deficit Reduction Act

There are four major changes wrought by the Deficit Reduction Act of 2005, which are effective as of February 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 DRA in...

Full description

Saved in:
Bibliographic Details
Published inAccounting Today p. 9
Main Author Cona, Jennifer B
Format Trade Publication Article
LanguageEnglish
Published New York SourceMedia dba Arizent 01.04.2007
Subjects
Annuities
Children & youth
Children with disabilities
Documentation
Donations
Families & family life
Federal legislation
Fines & penalties
Home equity loans
Homesteading
Houses
Lines of credit
Long term care insurance
Medicaid
Mortgage companies
Nursing homes
Reverse mortgages
Stroke
Tax exemptions
United States > US
Online AccessGet full text

Cover

More Information
Summary:There are four major changes wrought by the Deficit Reduction Act of 2005, which are effective as of February 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 DRA increases the look-back period to five years, which means individuals and families must plan 5 years before a health care crisis. The DRA delays the commencement date for a penalty period based on uncompensated asset transfers. Under the new laws, a person who has equity in a home exceeding $500,000 will be automatically ineligible for Medicaid benefits. Individual states have the ability to raise the threshold limit to $750,000. 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:1044-5714