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Deficit Reduction Act of 2005 Koldin Law Center E-Mail Newsletter The Deficit Reduction Act of 2005 was signed into law by President Bush on February 8, 2006. The new transfer penalty rules for Medicaid eligibility along with other changes are now in effect and apply to all transfers made on or after February 8, 2006. As noted in prior Koldin E-Newsletters, the new transfer rules require a 5 year lookback before your assets are protected from Medicaid. Under this new Law, estate planning in advance of an illness becomes even more critical. If you are already ill, your options are now more limited, but there are steps that still can be taken to protect some of your assets. If you are ill, your options should be reviewed as soon as possible. Another major change in the law under the Deficit Reduction Act of 2005 is that the exemption on the Family Home is now capped at $500,000 with the option of each State to raise this limit to $750,000. In the past, the Family Home was always protected for the healthy spouse. Now, if the home is worth more than the limit, it will no longer be protected. Now that Congress has eliminated the total exemption on the home, there is always a risk that future budget cuts will lead to a lowering of this $500,000 limit. Protecting your home from any future budget cutting laws is another important reason to plan in advance. The |
