Deficit Reduction Act
Dear Colleague:
As you are probably aware, Michigan is now implementing the many changes of the Deficit Reduction Act. Beginning July 1, 2007, the Department of Human Services is applying the new law when processing Medicaid applications.
To highlight these changes:
1. The "look-back" period as to all transfers or changes in assets is now five (5) years.
2. The ability to do "serial divesting" has been eliminated. All transfers made during the look-back period are now combined. This results in a larger penalty period. The state no longer rounds down when determining this period which results in days, weeks, or months of penalty.
3. The penalty period for any transfer made now begins when the applicant is in a nursing home and would otherwise be eligible for Medicaid.
4. The "non-countable" value of the homestead and contiguous property is now capped at $500,000.
5. There is no longer a rental exclusion for property that is being rented and the income exceeds six (6%) percent of the equity in the home.
6. The use of an annuity, and the need to name the state as a beneficiary, is not currently being implemented. It is anticipated this will be implemented by October 1, 2007.
As this new law is implemented, once again we are seeing discrepancies among the counties. It is important for potential Medicaid applicants to address and plan for the affect of this new law as to the long term care of a loved one.
Smith Bovill, P.C. counsels clients on elder law and Medicaid planning issues regularly as part of its estate planning, probate, and trust administration practice. This letter, as well as all prior letters, are posted on our website at www.smithbovill.com. Please check our website for any updates to this newsletter and additional information regarding elder law. This letter, and the information on our website, is intended for informational purposes only. As a result of the constantly changing laws in the Medicaid area, the information provided may change. We would be pleased to discuss this, or any other Medicaid or elder law issues, in more detail.
SMITH BOVILL, P.C.
SHARON A. BURGESS
