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Medicaid and The Deficit Reduction Act Of 2005

Brooklyn Medicaid Planning Attorneys

Based in New York City with offices in Brooklyn, the Medicaid planning attorneys at Polizzotto & Polizzotto, LLC, represent clients throughout New York and New Jersey who want to do Medicaid planning and protect their assets.

In February 2006, the Deficit Reduction Act of 2005 was signed into law by President Bush. The DRA affects your ability to obtain Medicaid benefits and protect your assets. Now more than ever, prudent planning is a necessity to preserve the greatest amount of your estate for your family and provide the nursing home care you may require.

Lengthening The Look-Back Period

The Deficit Reduction Act lengthens the look-back period to five years from three years.

Change In Beginning Date Of Period Of Ineligibility

Previously, a penalty period for institutional (nursing home) care began the month after a transfer was made. The DRA changed this so the penalty does not begin to run until a person is institutionalized and otherwise eligible for Medicaid (by exhausting other funds). This means any transfer in the past five years would disqualify for a period of time for nursing home care.

There are still transfer exemptions and hardship provisions.


To not be counted as a resource, annuities must be irrevocable and nonassignable, be actuarially sound, and have equal payments with no deferral or balloon payments. The state would have to be named as a remainder beneficiary, although it could be secondary after a spouse or a minor or disabled child.

Home Equity

Equity in a home would count as a resource if is over $858,000 (2018 limit). An individual could take a reverse mortgage or home equity loan to reduce the total equity.


For a loan or mortgage not to be treated as a transfer of assets, the repayment must be actuarially sound, and it cannot be canceled upon death of the lender.

For information on how the new laws affect your ability to obtain Medicaid or information on how our New York City Medicaid planning lawyers can assist you with your Medicaid planning, contact Polizzotto & Polizzotto to schedule a confidential consultation.