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What does the Deficit Reduction Act mean for LTC

We’ve said it before and we’ll say it again – don’t rely on the government to take care of your long term care costs unless you have been in poverty for at least 5 years prior to needing long term care services. 

Signed into law in 2006 as Public Law 109-171, the Deficit Reduction Act (DRA) was created to help alleviate the federal budget deficit with hopes to save the federal government 2 Billion dollars. This bill has been challenged numerous times but each attempt has been dismissed and the bill continues to be enforced. This bill is important to learn about due to its impacts on persons needing long term care services through Medicaid. This Act determines who and when a person can qualify for Medicaid long term care assistance by closing the loopholes that many Americans have been using to protect their assets at onset of long term care needs. 

Many have used the transferring of funds when they are in need of care in order to look poverty-stricken on paper so that they may acquire Medicaid funding for long term care. This in turn has possibly taken away assistance from those who truly needed government funding as means to acquire long term care services. These types of asset protection strategies have been known to be used in geographical areas where the population is mainly retired which in turn contributed to the depletion of that location’s treasury. With many states nearing bankruptcy and little help from the government, this Act was created to give a law for the states to enforce how they see fit and generate money from their residents.

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