Last fall, the Veterans Administration (VA) made changes to applying for pension benefits. To help you better understand how these changes affect veterans and their families, we’ve summarized information in the following article.
If you need help with your VA pension application, we offer a free 30 minute phone meeting with Travis Weaver, an attorney focused on elder law. Call 817-638-9016 today to schedule your free phone appointment to help you decide if legal planning may be of assistance in maximizing your VA pension benefits.
Calculating Net Worth
When reviewing an application for VA pension benefits, caseworkers in the past have been given a great deal of leeway. Determinations were based on the claimant’s life expectancy and rate of asset depletion as estimated by the caseworker.
The VA has now set a bright-line net worth limit of $123,600. This amount is the maximum community spouse resource allowance (the CSRA) used to determine Medicaid eligibility. As such, it is subject to routine cost-of-living increases.
The new rule should increase the approval rate for claimants seeking VA pension benefits. Under the previous approach, caseworkers often denied benefits to needy veterans. The specific guideline removes a problem with the approval process.
Assets and VA Pension Benefits
The VA also looks at a claimant’s assets when determining eligibility for benefits. The new rule is similar to the old rule in that certain assets are excluded from the asset calculation: the primary residence and personal property.
However, changes were made to the primary residence exclusion:
- The residential lot area is limited to two acres, unless any additional acreage is unmarketable.
- Mortgages and other encumbrances will not be used during asset calculation, since the property itself is excluded.
- The proceeds from the sale of the primary residence must be used to buy another primary residence during the same calendar year.
In terms of asset calculation, the new rule didn’t bring any big surprises or new headaches. The same cannot be said for the changes involving asset transfers.
Asset Transfers and Penalties
Applicants occasionally attempt to reduce their net worth by transferring or spending down their assets shortly before filing a claim. The VA has frowned on this practice but has not enforced regulations prohibiting it.
However, the VA now employs a “look-back” period, which is the thirty-six-month period prior to the date the claim was filed Covered assets transferred within the look-back period may trigger a transfer penalty of up to five years.
The term “covered asset” is now defined as property that:
- Was included in the claimant’s net worth;
- Was transferred for less than the asset’s fair market value; and
- Would have caused the claimant’s net worth to exceed the VA’s limit if claimant had retained it.
Penalties may be assessed for transfers made to irrevocable trusts and annuities unless the claimant is able to access and liquidate the funds. However, an exception was written into the rule to exclude transfers that resulted from “fraud, misrepresentation or unfair business practices” as long as the claimant has reported the incident to law enforcement.
When filing for VA pension benefits, calculate any potential penalty periods before filing a claim. In some cases, waiting until the expiration of the look-back period can minimize the penalty period.
Reducing Income under the New Rule
A claimant’s net worth is the total of assets and annual income. Reasonably predictable non-reimbursed medical expenses may be used to bring a claimant’s income within eligibility limits.
Under the new rule, the VA broadened the scope of allowable medical services to include items and services that “prevent, slow, or ease an individual’s decline.” [section 3.278(c)]. In addition, claimants may include the cost of an independent living facility as a non-reimbursed medical expense.
The increased deduction for reasonable predictable non-reimbursed medical expenses signifies an important change that may pave the way for better care.
Learn More about the Current VA Pension Benefit Rules
Changes to VA rules have radically affected the way some claimants qualify for VA pension benefits. As we mentioned earlier, if you need help with your VA pension application, we offer a free 30 minute phone meeting with Travis Weaver, an attorney focused on elder law to help determine if legal advice may be of benefit. Call 817-638-9016 today to schedule your free phone appointment and learn more about legal planning to help qualify for maximum VA benefits. Our offices are conveniently located Rhome, Flower Mound, and Bartonville.