New VA Rules for Care Benefit Become Effective Oct. 18
Written by Jacque Mingle
October 18 is an important deadline for veterans and their spouses. That’s because the Department of Veterans Affairs is implementing new rules that in some ways make it more difficult to qualify for the benefit known as Aid & Attendance. The benefit, which provides up to $2,169 per month for a veteran or up to $1,178 for a veteran’s widow/widower, is available if a veteran or surviving spouse has limited financial resources and is in need of care.
The new rules establish a specific asset limit and penalties for making transfers during a “look-back” period, and the limits kick in on October 18. As the regulation states: “VA pension is a needs-based benefit and is not intended to preserve the estates of individuals who have the means to support themselves.”
Currently, to be eligible for Aid & Attendance, a veteran (or his or her surviving spouse) must meet certain requirements:
1) Age and Need. Be older than 65 and actually be in need of care from another person for activities such as bathing, eating, toileting, and getting dressed; be bedridden due to disability; or be living in a nursing home due to a disability.
2) Service. Have served at least 90 days of active duty, with at least one day during wartime, and discharged from the military other than dishonorably.
3) Income and assets. There are limits, but they are not specific, especially when compared to similar limits for Medicaid nursing programs. Both income and assets are reviewed. For income, medical costs can be deducted; for assets, items such as a home and car are exempt. Currently, if you are over the limit (generally thought to be $80,000), you can make gifts or transfer assets for less than full value and qualify, no questions asked. This is again very different from Medicaid nursing programs, and it is this category that is changing.
The VA requirements are much more lenient than for Medicaid (called ALTCS in Arizona), which has firm, or “bright line,” asset and income limits, and a five-year look-back period for asset transfers. Although the details can get complicated, generally, single ALTCS applicants can have no more than $2,000 in countable assets and no more than about $2,000 in monthly income, and if they give away assets in the five years prior to becoming eligible for benefits, a penalty will be assessed for those gifts. Healthy spouses of married applicants can retain additional assets.
Under the new guidelines, the VA is implementing something similar, but the details are very different. The VA is setting a total net worth limit of $123,600.00, which is the same amount of assets the healthy spouse of a Medicaid applicant is permitted to keep. For VA benefits, this number, which will adjust for inflation, includes assets and income.
For assets, as with Medicaid, some things are not counted (or are “exempt”), including an applicant’s house and personal property (like cars). For “income” it isn’t gross income, like Medicaid; certain medical expenses still will be deducted to arrive at the income figure. Those deductions are more lenient than the prior VA rules. For instance, fees for independent living (as opposed to assisted living or a nursing home facility), in some circumstances, can be deducted, and some things will be deductible that now are not (such as prescriptions, and vitamins and supplements if prescribed by a doctor). Further, in some cases, family members may be paid caregivers, and they can be paid for such activities as shopping, meal preparation, housekeeping, managing medications, and helping with finances.
The VA’s look-back period also is more lenient than Medicaid’s. It is three years instead of five. No transfers will be counted that occur before October 18, 2018. So veterans who apply on October 20, will have to disclose only a few days of transfers; those applying after October 18, 2021, and beyond will have to disclose the full three-year period. Transfers made that put the applicant under the total net worth limit will be assessed a penalty, but there’s a maximum penalty of five years. During the penalty period, the veteran will not be eligible for benefits. Some transfers will not create a penalty, including those involving fraud and those that benefit a disabled child. But some techniques for reducing resources, such as the purchase of annuities and creation of irrevocable trusts, will be counted as transfers.
The penalty is determined by dividing the amount of the disqualifying transfer by the maximum annual pension rate for a veteran with one dependent ($26,036 in 2018). For example, assume a veteran has $150,000 of assets and transfers $35,000 to a child. At the time of the application, he has $115,000, but the $35,000 is counted, so, for eligibility purposes, he had $150,000. The net worth limit is $123,600, so the penalty is calculated on $26,400 ($150,000 minus $123,600) for a penalty period of 12 months.
Again, transfers made prior to October 18, 2018, will be disregarded. So, if you or a loved one might be eligible for this benefit but countable assets and income might exceed $123,600, consider your options as soon as possible.