The Department of Veterans Affairs (VA) has put in place new rules that make it more difficult to qualify for long-term care benefits. The rules, similar to those already in force for Medicaid, establish an asset limit, a look-back period, and asset transfer penalties for claimants applying for pension benefits that require a showing of financial need.
The main VA benefit for those needing long-term care is Aid and Attendance, which offers money to low-income veterans (or their spouses) who are in nursing homes or need help at home with everyday tasks.
Currently, to be eligible for Aid and Attendance, a veteran (or surviving spouse) must meet certain income and asset limits. The asset limits aren’t specified, but $80,000 is the amount usually used. However, unlike with the Medicaid program, you previously could transfer any assets over the VA’s limit before applying and the transfers would not affect eligibility.
That’s not so anymore. The new regulations set a net worth limit of $123,600, the current maximum amount of assets (in 2018) that a Medicaid applicant’s spouse is allowed to retain. But for the VA, this number will include both the applicant’s assets and income. It will be indexed to inflation in the same way that Social Security increases.
An applicant’s house (up to a two-acre lot) will not count as an asset even if the applicant is living in a nursing home. Applicants also will be able to deduct medical expenses — including payments to assisted living facilities — from their income.
The regulations establish a three-year look-back provision. Applicants will have to disclose all financial transactions they were involved in for three years before the application. Applicants who transferred assets to put themselves below the limit within three years of applying will be subject to a penalty period that can last as long as five years, during which they’re ineligible for VA benefits.
Under the new rules, the VA will determine a penalty period in months by dividing the amount transferred that would have put the applicant over the net worth limit by the maximum annual pension rate (MAPR) for a veteran with one dependent in need of Aid and Attendance.
The new rules took effect Oct. 18, 2018, and the VA will disregard asset transfers made before that date.
Contact one of TREEL’s seasoned attorneys so we can answer your questions about estate planning and discuss how it can help those receiving these benefits..