The Veterans Administration recently updated its rules for veterans to qualify for needs based pension benefits. My November blog post, “Know the Rules When Applying for VA Pension Benefits” included information which is now outdated. This post discussed Aid & Attendance and Housebound Benefits, supplemental benefits available to low income veterans and their survivors under the Veterans Administration (VA) pension program.
On September 18, 2018 the Veterans Administration issued new rules regarding veterans and their survivors’ eligibility for the needs based Aid & Attendance program. The new rules went into effect on October 18, 2018.
The previous rules were not well-defined, making it both difficult for Veterans and their advisors to plan, and simpler for high net worth claimants to qualify. The rules are now more straightforward.
For need based programs, the VA has established a maximum net worth in order to qualify, and implemented a 36-month look-back period for the transfer of assets.
Veterans cannot have assets totaling more than $123,600.
- This amount is also the maximum “Community Spouse Resource Allowance” allowed by Medicaid. It will increase when Social Security raises the cost of living allowance.
- Net worth includes the veterans and certain dependents’ monthly income. Monthly income is multiplied by 12 months and added to the applicant’s assets.
- Qualifying medical expenses can be deducted from income. The VA has clarified which medical expenses qualify.
- The claimant’s primary residence and two-acres are exempt from the net worth limit. If the veteran or the surviving dependents own more than two-acres of land, other rules apply.
- Vehicles used for personal transportation, personal items, household furnishings, and pre-paid burial plans are excluded from assets.
There is now a three year “look-back” period.
- There may be a penalty assessed when a claimant transfers assets during the 36 months immediately prior to submitting an application. The penalty is a specified amount of time, based on the transferred assets, a claimant must wait before receiving benefits. Asset transfers include making gifts, setting up trusts and purchasing certain financial products.
- The penalty period applies only to transfers of assets over the $123,600 asset limit. If a veteran’s net worth is less than $123,600 and he or she transfers some assets, there is no penalty. If the veteran’s assets total more than $123,600, he or she will be penalized for amounts transferred over the asset limit.
- There are exceptions to the new transfer penalty rule such as when the claimant sets up a trust for a disabled child, or was a victim of fraud or unfair business practices related to the sale of financial products.
- The penalty period cannot exceed five years.
This is a very general overview of the Veterans Administration’s changes to its Aid & Attendance program qualification rules. The VA has made many new points of clarification. If you or your loved one would like to explore or apply for VA pension benefits, I recommend consulting a Veterans Administration accredited claims preparer. For a searchable list of accredited preparers, which includes veterans’ service organization representatives, independent claims agents and attorneys, visit va.gov/ogc/apps/accreditation/index.asp.
This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice. Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.
A special thank you to Attorney Glenn Jarrett of Jarrett & Luitjens Estate & Elder Law in South Burlington, Vermont.
