On October 18, 2018, the Department of Veterans Affairs implemented substantial changes to their Pension Program (often called “Aid & Attendance”) which helps to offset the cost of personal care assistance for veterans and their surviving spouses.
The VA Pension Program is a cash benefit program. To qualify, the veteran must have served at least 90 days active duty with at least one day during a period of war, and not have been dishonorably discharged. For younger veterans, the service period is now 24 months.
The Pension is meant to offset the cost of in-home care, assisted living, memory care, or skilled nursing care. The applicant must prove they need and have received care when applying for the benefit.
The Pension has income-based, and asset-based financial eligibility requirements. The October, 2018 changes did not fundamentally change the income limitations. To qualify, the applicant can’t have more income than the monthly benefit received. However, unreimbursed out-of-pocket medical expenses can reduce or eliminate countable income. The new rules do broaden and clarify which expenses can be used to offset income.
The new rules establish a maximum Net Worth Limit, to be adjusted annually. For 2019, the Limit is $126,420. Countable resources are the value of everything the applicant owns, except exempt assets. The VA made significant changes to the exempt asset category. One residence is exempt, regardless of value and whether the applicant has ever lived there. Also, the VA now specifically stipulates that the residence can be rented-out and still retain its exempt character. The residence must now be 2 acres or less.
Automobiles for the veteran, their spouse, and household members are additional exempt assets. Household goods and personal effects are exempt; however, the VA rules now specifically provide that investment items (art, coin collections, etc.) are not exempt assets.
The most dramatic rule change is the creation of penalties for gifting assets. Gifts of “covered assets”, which are non-exempt, countable resources in excess of the Net Worth Limit, are now penalized. For example, if someone had $200,000 of cash & stocks, the “covered assets” would be $200,000 – $126,400 = $73,600 of covered assets. Transferring any of the $73,600.00 during the three-year look-back period would create a penalty of up to 34 months of ineligibility.
The last major change in the rules relates to IRAs. There is no longer a way to convert this countable resource into an exempt resource. Creating an immediate annuity will now create a penalty.
If you or a loved one may benefit from this program, contact a VA Accredited, Certified Elder Law Attorney to see if you qualify. Proactive planning can help you avoid the three-year look-back period and preserve more of your assets. ~
Editor’s Note: This article was submitted by John R. McNair, Certified Elder Law Attorney, Board Certified in Tax Law, Estate Planning and Probate. He may be contacted at 972-661-5114
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