On January 23, 2015, the Department of Veteran Affairs proposed a Veteran’s Benefits Eligibility Rule Change – RIN 2900-AO73, Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits, a rule that would, among other things, impose a 3-year look back for transfers of assets, including gifts to persons, trusts or purchases of annuities, deny claims for up to 10 years due to transfer and exempt the value of the veteran’s primary residence only if it is on less than two acres of land… On October 18, 2018, these rules have gone into effect.
There have been no changes in Veterans Benefits Eligibility rules since 2018. The changes below are still in effect:
Background of Veteran Aid & Attendance Benefits Before 10/18/18 Law
The Veteran’s Aid and Attendance (A&A) Pension provides benefits for qualified veterans and their surviving spouses who require the regular attendance of another person to assist in eating, bathing, dressing, and undressing or taking care of the needs of personal hygiene (known as Activities of Daily Living). This could include home care or care in a facility.
There are several levels of qualification in very general terms:
- The veteran must have served in active duty for at least 90 days, one of which must have been during a defined wartime period,
- A physician must verify that the applicant requires assistance with two activities of daily living,
- The applicant and spouse must have less than approximately $80,000 of countable assets and the cost of the needed care exceeds the income.
If these terms are met, the A&A Pension can provide up to $1,830 per month to a veteran, $1,176 per month to a surviving spouse, $2,169 per month to a couple (as of 01/01/18).
The $80,000 asset limit does not include the applicant’s primary residence on a parcel of “reasonable” size. For example, in some surrounding towns, it is not unusual that planning and zoning and wetlands regulations require parcels to exceed two or three acres. Those parcels are considered “reasonable” given the circumstances and the value of the applicant’s home is not included when calculating the asset limitation. This allows many veterans to obtain the benefit of care while continuing to live in their homes.
In addition, the A&A benefit rules never included a “look back” for the transfer of assets. The “look-back” (which is a common phrase when discussing Medicaid eligibility) is the time period in which the entity that approves or denies the application for benefits would review the applicant’s transfers to determine if he or she made any gifts. Under Medicaid rules, the “look-back” is five years. As such, if an applicant makes any gifts for the 5-year period prior to applying to the State for long-term care services through Medicaid, he or she could be penalized or disqualified.
What Changed In Veterans Benefits Eligibility?
Unlike Medicaid benefits, the A&A benefit rules currently do not include a “look back” for the transfer of assets. The “look-back” (which is a common phrase when discussing Medicaid eligibility) is the time period in which the entity that approves or denies the application for benefits would review the applicant’s transfers to determine if he or she made any gifts.
Under Medicaid rules, the “look-back” is five years. As such, if an applicant makes any gifts for the 5-year period prior to applying to the State for long-term care services through Medicaid, he or she could be penalized or disqualified. Effective after 10/18/18, the VA look-back will be three years. And the penalty period for transferring an asset within the look-back period could be up to ten years!
WHY WOULD YOU NEED TO TRANSFER ASSETS?
“NET WORTH” CAPPED AT $123,600
A veteran or the surviving spouse of a veteran can only qualify for A&A if their “net worth” is less than $123,600. Net worth includes all of their assets (with the exception of their primary residence, provided it has less than 2 acres), PLUS their annual income, minus any unreimbursed medical expenses. Generally speaking in order to maximize the allowable stipend, the unreimbursed medical expenses have to exceed the income anyway, so that equation should be a wash. So ultimately, if the applicant has more than $123,600 in assets, they will not qualify, which is why some applicants may need to transfer assets prior to applying.
Attorney Wilson practices in the areas of estate planning, elder law, Medicaid planning, conservatorships, probate and trust administration, and real estate. Admitted to practice in the States of Connecticut and California, she is the Vice President of the CT Chapter of the National Academy of Elder Law Attorneys (NAELA), an active member of the Elder Law Section of the Connecticut Bar Association, accredited with the PLAN of CT for Pooled Trusts, with the Veteran’s Administration to assist clients with obtaining Aid & Attendance benefits for long-term care needs and with the Agency on Aging’s CareLink Network.