BIG NEWS! EFFECTIVE OCTOBER 18, 2018 *Now updated as of 12/01/2018

On Tuesday, September 18, 2018 the VA released new regulations applicable to the VA pension benefit, also known as “improved pension,” or “aid and attendance.” The regulation takes effect October 18, 2018.

The regulations provide new rules regarding how much net worth a VA benefit applicant may retain and still qualify for benefits. The new regulations also provide new Medicaid-like transfer penalties (sanctions). This report is an overview of some of the most important aspects of the changes that will go into effect on October 18, 2018.

Net Worth Limit – the new rule establishes a bright-line net worth limit of $127,061.00, which is relief from the old ambiguous rules that allowed caseworkers to set a case by case net worth limit depending on a claimant’s age, health, or marital status. However, the net worth calculation takes into account the sum of the claimant’s assets and annual income. The annual income figure that is added to net worth can be reduced by medical expenses.

Primary Residence – the claimant’s primary residence will continue to be excluded as an asset for VA Pension purposes. However, the new rules impose a 2 acre limit “unless the additional acreage is not marketable.”

Spend-down of Assets – under the new rule a claimant, or someone acting on their behalf, may decrease assets without penalty by spending them on an item or service for which fair market value is received.

Look-back and Penalty Periods – under the new rules the VA has created a 36-month look-back period. This means they will look to see if a claimant has transferred assets within the last 3 years which, but for the transfer, would have left them over-resourced to qualify for VA pension benefits. Along with the look-back period, VA has enacted a Penalty Period of up to 5 years for the transfer of a “covered asset” within the 36-month look-back period preceding the date the VA receives a claim for Pension. A penalty will be assessed by dividing the “Maximum Annual Pension Rate” (MAPR) for a veteran with one dependent by the amount of “covered assets” transferred. In 2018, the MAPR is $2,230.00 as of Dec. 1. Fortunately, the new rule also provides guidance on curing and reducing penalty periods.

Covered Assets – the VA now defines a “covered asset” as an asset that was part of a claimant’s net worth, was transferred for less than fair market value; and, if not transferred, would have caused or partially caused the claimant’s net worth to exceed the net worth limit.

Trusts and Annuities – Trusts and annuities are specifically identified in the new rule as instruments and investments that VA considers transfers for less than fair market value. However, a Trust or Annuity where the claimant retains the ability to liquidate the entire balance of the asset for the claimant’s own benefit will not be considered transfers for less than fair market value. This change renders many of the annuities which were previously used in VA pension planning useless and ineffective. This change does provide some much needed clarity on how the VA views planning with Trusts which will allow the use of new strategies to help our clients obtain VA Pension eligibility in the future.

Medical Expenses – the new rule does not change how VA calculates a claimant’s income for VA purposes (IVAP) but it does define what it considers to be medical expenses. Medical expenses for VA purposes are now defined as unreimbursed payments for items or services that fit one of the following:

  1. are medically necessary
  2. improve a disabled individual’s functioning
  3. prevent, slow, or ease an individual’s functional decline

Some examples of medical expenses under the new rule include payments to a health care provider as defined in the rule, payments for prescriptions and non-prescription medication, and payments for adaptive services to include certain payments for service animals. This rule change provides definitive guidance for what VA will accept as medical expenses used to reduce a claimant’s income for VA purposes.

Activities of Daily Living and Instrumental Activities of Daily Living – The new rule also defines activities of daily livings (ADLs) as basic self-care activities and consist of bathing or showering, dressing, eating, toileting, transferring (moving from one position to another, such as getting in and out of bed), and ambulating within the living area. Instrumental activities of daily living (IADLs) are defined as independent living activities, such as shopping, food preparation, housekeeping, laundering, managing finances, handling medications, using the telephone, and transportation for non-medical purposes. This rule change provides definitive and helpful guidance on what VA considers ADLs and IADLs.

Custodial Care – the new rule defines custodial care as regular assistance with two or more ADLs; or regular supervision because an individual with a physical, mental, developmental, or cognitive disorder requires care or assistance on a regular basis to protect the individual from hazards or dangers incident to his or her daily environment.

The attorneys at Quinn Estate & Elder Law, LLC are accredited through the VA to assist you in prosecuting your claim for benefits. Please contact us to schedule a free consultation to discuss whether these benefits will help to accomplish your goals. Call us at 636-428-3344.