In a final
rule issued on September 18, 2018, the Department of Veterans
Affairs (“VA”) amended its regulations governing VA pension benefits effective
October 18, 2018. This rule has been
over three years in the making as the VA first proposed these changes in January
2015. There is now a three-year lookback
period with penalties for asset transfers, and there are new requirements for
calculating net worth and deductible medical expenses.
Wartime veterans and their spouses
can qualify for financial help in paying for the cost of care in their home, a
personal care home or a nursing facility.
The benefit is an Improved Pension that is commonly called “Aid &
Attendance.”
Aid & Attendance
Aid & Attendance is an additional
monthly cash payment of up to $2,169.00 (2018 amount) available to a veteran or
the spouse of a deceased veteran, if it is shown that the claimant meets one of
the following conditions: 1) requires
the aid of another person to perform certain activities of daily living (ADLs)
like bathing, feeding, dressing and toileting; 2) is bedridden because of a
disability; 3) is a patient in a nursing home due to a mental or physical
incapacity or 4) has eyesight limited to a corrected 5/200 visual acuity or
less in both eyes or concentric contraction of the visual field to 5 degrees or
less. For more detail, go to the Veterans
Affairs website. The ADL of
“ambulating within the home or living area” has been added and confirmation
that assistance with two ADLs is required.
Service During a Wartime Period
The Veteran must have served at least
one day during a wartime period. The
dates that meet this wartime period
are found on the Veterans Affairs website:
World War II (December 7, 1941 - December 31, 1946); Korean conflict
(June 27, 1950 – January 31, 1955); Vietnam era (February 28, 1961 - May 7,
1975 for Veterans who served in the Republic of Vietnam during that period;
otherwise August 5, 1964 - May 7, 1975) and Gulf War (August 2, 1990 - through
a future date to be set by law or Presidential Proclamation).
The veteran must have been discharged
from the military other than dishonorably and served at least 90 days, with one
day during active wartime. There is no
requirement that the veteran was on the battlefield; he or she could have been doing
paperwork at a desk. The veteran will
need his or her discharge papers, the DD-214, to prove dates of service and
type of discharge.
Net worth limitation
Prior to October 18, 2018, there was
a vague $80,000.00 countable asset limitation.
Under the new law, the veteran has a $123,600.00 net worth limit; said
sum including annual household income that is in excess of projected unreimbursed
medical expenses when the medical expenses are reasonably predictable. Assets that are not counted include a
residence and the lot on which it sits that is similar in size to the other
residential lots in the vicinity up to two acres (unless the additional acreage
is not marketable), “personal effects suitable to and consistent with a
reasonable mode of life, such as appliances and family transportation
vehicles.”
The new net worth limit is tied to
the Medical Assistance (“Medicaid”) Community Spouse Resource Allowance (“CSRA”)
and will increase with future Medicaid increases. Although Medicaid is a different program than
the VA pension, Congress adopted that number to prevent impoverishment of the
non-institutionalized spouse of an individual receiving Medicaid. VA drew a parallel that they did not wish any
net worth limitation that would subject wartime veterans and their survivors to
impoverishment.
Net worth or countable asset
determinations will no longer take into account life expectancy, rate of
depletion of assets and other factors.
The reasoning behind this change is that those factors have resulted in
inconsistent, and sometimes unfair, decisions.
Income
The Aid & Attendance benefit is
reduced by the countable income received by the veteran and his or her household.
But the veteran’s income is calculated after deducting unreimbursed medical
expenses. This means a veteran with high unreimbursed medical expenses may
qualify for the maximum Aid & Attendance benefit. In addition, some types
of payments (some compensation or reimbursement payments) are not counted.
Deductible medical expenses
VA defines medical expenses as those
that are “medically necessary; that improve a disabled individual’s
functioning; or that prevent, slow, or ease an individual’s functional
decline.” Included are health care
provider payments, medications, adaptive equipment, health insurance premiums,
transportation expenses and institutional forms of care and in-home care. Medical expenses do not include meals,
general health maintenance, cosmetic procedures, lodging or assistance with
IADLs (instrumental activities of daily living).
Lookback period, penalty and cure
The new rules impose a 36 month (three-year)
lookback for gifts and transfers for less than fair market value. Any transfers after October 18, 2018
will be subject to a penalty period not to exceed 5 years. The penalty begins on the first day of the
month that follows the last asset transfer.
The divisor is the “MAPR [Maximum Annual Pension Rate] in effect on the
date of the pension claim at the aid and attendance level for a veteran with
one dependent” which is currently $2,169.00.
It appears that if the claimant made a $100,000.00 gift or uncompensated
transfer within the three years prior to the claim for the pension, the penalty
would be calculated by dividing $50,000.00 by $2,169.00 resulting in a period
of ineligibility of approximately 23 months.
Some transfers to trusts and purchases
of annuities that would not be in the claimant’s best interest were it not for
the attempt to qualify for the Aid & Attendance benefit are treated as
gifts subject to a period of ineligibility.
There is a presumption that an asset transfer within the lookback period
was for the purpose to decrease net worth to entitle the claimant to the
pension. Claimant has the burden of proof to rebut this presumption by clear
and convincing evidence, a high standard.
There are some exceptions. If, for example, upon retirement a claimant
was mandated to make a transfer to an immediate annuity, the amount transferred
to the annuity will not count as a covered asset; however the annuity
distributions will count as income.
If a penalty period decision notice
is issued, the claimant has 60 days following the decision notice to cure or
partially cure a transfer and has 90 days following the decision notice to
notify VA of the cure.
There are many nuances and questions
from this new rule that will need to be figured out. At the time of the writing of this article,
local county Veteran’s Affairs Coordinators have not received implementation
guidelines, so it remains to be seen how certain things will be interpreted.
*Tammy A. Weber is a Certified Elder
Law Attorney and the Managing Principal of the law firm of Marshall, Parker
& Weber, LLC with offices in Williamsport, Wilkes-Barre, Jersey Shore and
Scranton. For more information visit www.paelderlaw.com or call
1-800-401-4552.