Deficit Reduction Act
What is the Deficit Reduction Act of 2005?The Deficit Reduction Act of 2005 was passed into law in 2006 by the United States Congress. The Deficit Reduction Act was set to save close to over $40 billion in a course of five years from spending programs that are compulsory by measures such as causing the spending of programs such as Medicaid or Medicare. Other programs such as the student loan program made changes in their formulary. TANF or the Temporary Assistance for Needy Families program was reauthorized through the Deficit Reduction Act. Another thing that was touched by the Deficit Reduction Act was the Digital Transition and Public Safety Act of 2005. Read below where Experts have answered many questions about the Deficit Reduction Act.
How does the Deficit Reduction Act affect gifts?In the United States a gift is not considered to be taxable income, so the individual who receives the gift does not have to pay taxes on it. The individual who gives the gift is able to gift up to a lifetime maximum of one million dollars. When doing this the individual able to gift up to twelve thousand dollars yearly to a person without any gift tax being incurred. The way that the Deficit Reduction Act affects gifts is if the gift is given by individual who is planning on applying for Medicaid to pay for living in a nursing home in a certain number of years. This number of years is known as the look back period, which was 3 years, but after the Deficit Reduction Act was passed the look back period was changed to 5 years.
The Deficit Reduction Act increased the look back period to 5 years, what does this mean?The increase of the look back period by the Deficit Reduction Act from 3 years to 5 years means that the transferring of assets from an individual going into nursing home care to another individual must meet certain requirements for the individual who assets are being dispersed to be eligible for Medicaid nursing home benefits. If an individual was to sell their assets for less than the fair market value of the assets it is considered to be disposal of resources. The penalty for the disposal of resources is one month of being disqualified from Medicaid medical assist of nursing home care for every $4300 gotten rid of. Due to the Deficit Reduction Act the new look back period will start February 8, 2005, which means that the new look back period will start with transactions made on or after this date.
Are there any individuals who the increase of the look back period, by the Deficit Reduction Act, does not effect?There are some people that the increase of the look back period by the Deficit Reduction Act, does not affect because the look back period did not have any affect at its original length of 3 years. The following is a list of individuals that a home may be transferred to without incurring any Medicaid penalties: the spouse to the individual going into the nursing home; any certifiable disabled or blind child; a child under the age of twenty-one; a child that has been the caretaker that has also lived in the home for a minimum of 2 years prior to the transferring individual be institutionalized. If the home is transferred to one of these individuals, regardless of the increase by the Deficit Reduction Act, there will be no penalties enforced marking the individual ineligible for Medicaid nursing home benefits.
The Deficit Reduction Act of 2005 was passed by the United States Congress in 2006. It was set to save close to forty billion by cutting the spending of programs such as Medicare and Medicaid. The Deficit Reduction Act directly affected the Medicaid program by increasing the look back period from three years to five years. Any questions regarding the Deficit Reduction Act may be directed to the Experts.