VA’s Major Rule Change Affects Qualifying for Long-term Care Benefits
This year, the Department of Veterans Affairs (VA) finalized its long-threatened new rules making it more difficult to qualify for long-term care benefits. The VA offers aid and attendance to veterans or their spouses who are in nursing homes or assisted living facilities or who need help at home with everyday tasks like dressing or bathing.
The rules establish an asset limit, a look-back period, and asset transfer penalties for claimants applying for VA pension benefits, including the Aid and Attendance benefit, that require a showing of financial need. This new rules are similar to Medicaid in their requirements and similar types of planning are still available.
Currently, to be eligible for the Aid and Attendance benefit, a veteran (or the veteran’s surviving spouse) must meet certain income and asset limits that are dependent on his or her healthcare costs and life expectancy.
The new regulations set a net worth limit of $123,600, which is the current maximum amount of assets (in 2018) that a Medicaid applicant’s spouse is allowed to retain, and will be indexed to inflation in the same way that Social Security increases.
But, in the case of the VA, this net worth number will include both the applicant’s assets and income. The income for a veteran or a veteran’s spouse includes social security, pension, and certain other types of income. An applicant’s house (up to a two-acre lot) will not count as an asset even if the applicant is currently living in a nursing home or assisted living facility. Additionally, applicants will also be able to deduct medical expenses — including payments to nursing homes and assisted living facilities — from their income. This is a crucial point. You need to keep track of your medical expenses and money you’ve spent on care recently.
The regulations also establish a three-year look-back provision. This is a significant penalty period, but is still two years less than the Medicaid look-back period. Applicants will have to disclose all financial transactions within the three years prior to submission of the application. Applicants who transfer assets to put themselves below the net worth limit within three years of applying for benefits will now be subject to a penalty period, during which they are not eligible for VA benefits, that can last as long as five years. There are limited exceptions to the penalty period for fraudulent transfers and for transfers to a trust for a disabled child. Gifts count towards this penalty period. Taking your name off of bank accounts also counts as a gift or unqualified transfer of assets for VA and Medicaid purposes. Basically, if you think you have a new trick for getting rid of assets, the VA and Medicaid case workers have seen it before. To learn more, check out our detailed article on this subject or call 817-638-9016 to schedule an appointment
Under the new rules, the VA’s penalty period will be determined 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.
For example, assume the net worth limit is $123,600 and an applicant has a net worth of $115,000. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $145,000, which exceeds the net worth limit by $21,400. The penalty period will be calculated based on $21,400, the amount the applicant transferred that put his assets over the net worth limit (145,000-123,600).
The new rules went into effect on October 18, 2018. The VA will disregard asset transfers made before that date.
Veterans or their spouses who think they may be affected by the new rules should contact the attorneys at the Weaver Firm at 817.638.9016.