Reverse Mortgages and the Deficit Reduction Act of 2005
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A law signed earlier this month by President Bush - the Deficit Reduction Act of 2005 - could have big implications for seniors, baby boomers and the future of reverse mortgages. Two provisions of the law are pertinent here:
1. The new law makes it more difficult to give away assets and thereby qualify for government paid nursing-home care. According to the Wall Street Journal (2/22/06), eligibility for Medicaid-paid nursing home care “could be hurt by gifts made over the prior five years, up from three years under the old rules.”
2. Another provision of the bill restricts individuals with more than $500,000 in home equity from qualifying for Medicaid.
Together these provisions will likely create added pressure to expand use reverse mortgages as a means of financing long-term care, long-term care insurance and home healthcare services. According to a recent statement from the National Reverse Mortgage Lenders Association (NRMLA):
With these new restrictions in place, some states are taking a closer look at how reverse mortgages may be able to help homeowners pay for necessary home healthcare services. It’s still too early to know what impact, if any, these new developments will have on the reverse mortgage industry.
Article Series - LTC
- Reverse Mortgages and Long Term Care (LTC)
- Met Life Predicts Surge in Reverse Mortgages
- Reverse Mortgages and the Deficit Reduction Act of 2005
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