VA is Proposing a 3 Year Look Back Together with a Penalty of Up To 10 Years | Massachusetts Elder Law Attorney
On January 23, 2015, the VA took the initiative in proposing new regulations that would hit wartime veterans and their spouses with a penalty of up to 10 years for making gifts, if they wish to qualify for the VA’s Aid and Attendance program.
As readers of this blog know, the Aid and Attendance program is a non-service connected pension can provide as much as $2,120 per month in tax free income to help pay the cost of long term care. This program is means tested with an asset limit of about $80,000. Currently, there is no look back period like Medicaid has, so that transfers for less than fair value to individuals or trusts do not result in a waiting or penalty period for benefits.
Federal legislators have introduced two bills since 2012 seeking to impose a 3 year look back. Neither bill has managed to pass both houses of Congress yet though. The VA however, is sick of waiting and is trying to take matters into its own hands. They have proposed a penalty of up to 10 years that would result from uncompensated transfers. The penalty itself would be calculated by dividing the amount of the transfer by the claimant’s pension rate.
Other changes include a net worth standard of $119,220 including annual income. In other words, an applicant would need to have no more than $119,220 in assets and annual income combined in order to qualify. The higher the applicant’s income, the lower the amount of assets they can keep.
Under the proposal, expenses related to independent living facilities would not count as care costs. This would mean that veterans with dementia, or other degenerative diseases who can no longer safely live in their own homes but who don’t yet need assistance with the activities of daily living will not be able to include the cost of that facility in an effort to qualify for the VA benefit. Daily living activities are things like such as bathing, dressing, eating, toileting and transferring. Finally, the applicant’s home will remain an exempt asset towards the net worth limitation only if the lot on which it sits is less than 2 acres.
These changes will dramatically reduce the ability of many veterans to qualify for this important benefit. The new regulations have been submitted for public comment. To fight these changes, everyone who cares about veterans must respond no later than March 24, 2015. You can send your comments through http://www.regulations.gov or by mail to Director, Regulation Policy and Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. NW., Room 1068, Washington, DC 20420 or by fax to (202) 273-9026. Comments should include that they are in response to “RIN 2900-AO73, Net Worth, Asset Transfers and Income Exclusions for Needs-Based Benefits”.
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We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.