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Prior Law

Divest all assets but a minimum level ($2,000). Countable assets include savings accounts and investments, but exclude the home, one car, life insurance with a face value of less than $1,500 and certain other items.

Three year look-back period for assets transferred for less than fair market value.

Deficit Reduction Act

Divest all assets but a minimum level ($2,000). Countable assets now also include some previously exempt financial instruments (such as certain annuities, promissory notes and mortgages). Also set maximum home equity at $500,000.

Five year look-back period for assets transferred for less than fair market value.

Impact

Reduction of assets that can be maintained by individuals applying for Medicaid long-term care services.

Increased penalties and look-back periods for individuals who transfer assets for less than fair market value.