13 Feb VA PROPOSES SWEEPING CHANGES TO PENSION RULES
The Veteran’s Administration has proposed new rules for eligibility for VA pensions and the Aid and Attendance benefit which are often used by wartime Veterans or their surviving spouses to help pay for the cost of care such as assisted living facilities and nursing homes. The benefit often ranges from $1,149 (widow) to over $2,837/month (both spouses being Veterans). The proposed rules include a 36-month “look-back” period presuming transfers were done purposefully to get the benefits, a penalty period for transfers of assets within the look back period for less than fair market value and establishment of a maximum asset limit, among others.
The proposed asset limit is based upon Medicaid’s Community Spouse Resource Allowance for that year (which generally increases each year). The present amount would be $119,220.00 for year 2015. However, unlike Medicaid, the income of the applicant (and dependents) is determined as part of the resource allowance (the maximum being $119,220) – although unreimbursed medical expenses could be deducted from the income (so a higher resource amount could be kept since less income would be subtracted from the asset limit).
Also, the primary residence of the applicant is excluded from the calculation of the assets as long as the home is on two acres of land or less. However, if the property is sold it would count as a resource after one year and if a new home is not purchased which is a reason estate planners often do special types of trusts since the proceeds would pass into the name of the trust instead of the VA recipient.
The proposed penalty would apply to transfers during the three-year look back for less than fair market value. Two planning methods commonly used when seeking eligibility for VA benefits, annuities and trusts, will be considered transfers for less than fair market value and result in a penalty period. The penalty period is calculated in terms of months rather than days and would be calculated by dividing the uncompensated transfer amount by the applicable maximum annual pension rate. The maximum penalty period would be set at 10 years.
Payments to senior independent living facilities would neither be considered medical expenses nor would payments for assistance that help with activities of daily living such as housekeeping, food preparation, transportation and laundry. A limit on the hourly rate of payment to in-home attendants that may be deducted is also being proposed. That limit is the “average hourly rate for home health aides, which is published annually by the MetLife Mature Market Institute in its “Market Survey of Long-Term Care Costs” (MetLife Survey).”