Here are the salient points of the new VA pension regulation:
The regulation takes effect on October 18, 2018, amending 38 CFR Part 3, which covers net worth, asset transfers and income exclusions for needs-based benefits. The new regulation institutes a three (3) year look-back on asset transferred for less than market value. There may be opportunities to reduce net worth with certain authorized expenditures.
There is no retroactive period. Therefore, it is imperative that any planned transfers to individuals or irrevocable trusts for future eligibility for VA pension benefits be completed before October 18th.
Net worth calculations have changed. Presently, the VA is using a bright line net worth value (resource allowance) of $80,000. Under the new regulation, the net worth limit is $123,600. The asset limit includes all assets, exempting the primary residence and personal belongings like cars. Similar to Medicaid, there are statutory exclusions. However, the asset test now includes gross income, minus permissible unreimbursed medical expenses.
So… what are considered “medical expenses”? The final rules expanded the definition of Activities of Daily Living (ADLS) to add “ambulating within the home or living area”. ADLSs include “independent living activities, such as shopping, food preparation, housekeeping, laundering, managing finances, handling medications, using the telephone, and transportation for non-medical purposes.” Further expenses include the following:
- Health care provider payments
- Medications, medical supplies, medical equipment, medical food, vitamins and supplements
- Adaptive equipment
- Transportation expenses
- Health insurance premiums
- Smoking cessation products
Finally, calculating penalty periods. The VA has decided to use a penalty calculation divisor equal to the Maximum Annual Pension Rate now paid to a veteran aide and attendance with one dependent. This amounts to $2,169.00 per month. As an example of how the penalty period will be calculated: The net worth limit is $123,600.00. A claimant’s assets total $113,000.00 and his annual income is zero. However, the claimant transferred $30,000.00 by giving it to a friend. The VA will calculate the length of the penalty period by dividing the excess of $123,600.00, when combining the claimant’s asset total: $113,000.00 Plus the gifted money of $30,000, with the maximum monthly rate of $2,169.00. Therefore – $19,400.00 / $2,169.00 = 8.94 months of no Aid and Attendance benefits.
In conclusion, transfer what needs to be transferred prior to October 18th. If that point has passed then meet with a skilled elder law attorney, knowledgeable about VA law, to provide guidance through the complexities of VA Planning benefits in light of the new changes.