If you know an aging veteran, you should probably share this article with them. Change is in the wind regarding veteran’s benefits. Being prepared for that change will become very important in the coming years. We don’t know when the next round of changes will take place. What we do know is that The VA has been making noise about them since January 23 of 2015.
The considered changes all relate to a tax free pension benefit referred to as Aid & Attendance. It helps pay Long Term Care costs for Veterans, their spouses and surviving spouses. The changes being proposed would make it harder to qualify for benefits. The details get very technical, but the basics can be understood.
If you’re planning to apply for benefits, it will help you to consult a qualified legal professional. Those who are experienced in this area will walk you through the process, address the specifics related to your situation and keep you from getting a big headache.
The fundamentals of qualifying
The fundamental aspects of qualification relate to a veteran’s service, their assets and the costs associated with their care. The full landscape of the specifics gets complicated. Reading through the rules and regulations is sure to induce a headache for the untrained. We can, however, share a few basics here.
On the service side, certain minimum requirements must be met with respect to a veteran’s service. Eligibility is based on war time service. 90 days active duty military service is required, with one day during declared war time period.
On the financial side, eligibility is based on need for care with at least 2 activities of daily living. And monthly income against monthly cost of care is considered, along with net worth (assets) based on age at time of application.
What is expected to change?
The legal community is preparing for a change in three aspects of the eligibility requirements for Aid & Attendance.
Look-back: We expect a 3-year “look-back” to be instituted. What that means is that your financial picture will be examined, not just at the point of application, but for three years prior to your date of application.
Net worth: It won’t just be your income that’s considered, but your overall net worth.
Cost of care evaluation: This is a little more tricky to explain. Think about long term care as having two basic cost components; Costs related to the community and the living space and costs related to personal care. At the time of this writing (June of 2016) both of those components are considered to be expenses in the consideration for eligibility. The expected changes will often eliminate the community related costs.
Here’s an example: If you move into an independent care facility but also require additional care with at least 2 activities of daily living, the personal care will be considered to be an expense, but the cost of living in the retirement community will be considered a lifestyle choice. If, however, you move into an assisted living or skilled nursing community, all of those costs will be considered to be eligible for assistance. It should also be noted that the proposal suggests that hourly rates for home health care will be limited to $21 per hour.
How can a veteran’s family prepare?
Planning ahead is critical. Applying early is not an option, as you must have an actual need in order to complete the paperwork. Early planning relates to making decisions that will prepare you to qualify if and when the need arises. It’s about maximizing the availability of your resources for your own use, while positioning yourself to qualify for benefits without being penalized.
There’s no simple formula. The exact solution for each individual has to be tailored to their situation. For the sake of simplicity we’ll say that there are two fundamental components of preparation; the financial side and the legal side. In short, there are certain types of irrevocable trusts and certain types of annuities that can be established to help you accomplish your goals. For this purpose, the irrevocable trust needs to be established in someone else’s name. Obviously it has to be someone highly trustworthy.
Because they can be configured in a variety of ways, it is impractical to go through the details. Take that as your queue to become proactive. Seek the help of a qualified investment adviser and a VA accredited attorney.