The US Department of Veterans Affairs (the VA) published a new final rule on September 18, 2018. The new rule radically alters eligibility requirements for need-based VA pensions. This article summarizes and explains new need-based VA pension eligibility requirements that take effect on October 18, 2018.
Affected Veterans & Family Members
The revised pension requirements will affect qualifying veterans, spouses, surviving spouses, and parents of veterans, all of whom this article addresses with references to “veterans.” The need-based VA pensions include financial assistance for homebound veterans and veterans needing aid and attendance of another person.
Pre-October 2018 Need-Based VA Pension Eligibility Requirements
The VA provides basic information about need-based VA pension eligibility requirements on its website at https://www.benefits.va.gov/PENSION/index.asp. Eligible veterans under the new and existing rules must have served at least 90 days of active duty, including at least 1 day of wartime service (the VA website has a web link to a list of periods of wartime). Veterans serving after September 7, 1980, must generally have served at least 24 months or the full period of enlistment or commission. Veterans must also have income and wealth levels below income and “net worth” standards, and they must fall within 1 of these categories:
- Age 65 or older with limited or no income
- Totally and permanently disabled
- A patient in a nursing home receiving skilled nursing care
- Receiving Social Security Disability Insurance
- Receiving Supplemental Security Income (SSI)
The VA stated in its rule change announcement, “the way that net worth decisions are made now is often inconsistent and arbitrary.” (Federal Register / Vol. 83, No. 181, page 47248). Additionally, the VA rules unintentionally encouraged veterans to transfer assets to family members in order to reduce their wealth levels and meet the net worth requirements. Unfortunately, the health of veterans that meet the health needs requirements often declines until veterans required nursing home care, and their gifts to qualify for need-based VA pensions disqualify them for Medicaid benefits (see article on this subject that https://www.hawkinslaw.com/attention-veterans-avoid-va-pensionmedicaid-eligibility-traps/).
Need-Based VA Pension Eligibility Requirements Beginning October 18, 2018
Most basic need-based VA pension requirements, including active duty service requirements, will remain in effect after the October 2018 rule change. Major eligibility rule changes include:
- Net Worth Limit = $123,600:
- includes Social Security and other annual income
- excludes the applicant’s primary residence and up to 2 acres
- excludes unmarketable property
- allows deductions for certain deductible expenses
- Transfer Penalty – eligibility disqualification for making gifts and certain other asset transfers:
- excludes gifts and transfers made before the 3-year look-back period
- transfer penalties do not last longer than 5 years
- certain gifts and transfers do not trigger transfer penalties
Concerns about the New Rule
Critics worry that the new VA pension requirements will not deal compassionately with veterans. Issues affecting veterans facing special health and cost-of-living problems raise particular concerns. The new standardized net worth limit provide clarity, but the clarity may eliminate compassionate flexibility.
The VA’s rule change publication includes this general policy statement about transfer penalties:
VA pension is a needs-based benefit and is not intended to preserve the estates of individuals who have the means to support themselves.
Accordingly, a claimant may not create pension entitlement by transferring covered assets. VA will review the terms and conditions of asset transfers made during the 36-month look-back period to determine whether the transfer constituted transfer of a covered asset.
However, VA will disregard asset transfers made before October 18, 2018.47272 Federal Register / Vol. 83, No. 181 / Tuesday, September 18, 2018 / Rules and Regulations available online at: https://www.gpo.gov/fdsys/pkg/FR-2018-09-18/pdf/2018-19895.pdf
Unscrupulous annuity promoters have advised many veterans in recent years to create irrevocable trusts, purchased annuities, and transfer assets to family members. Elder law attorneys have advised veterans against those strategies to avoid Medicaid transfer penalties. The VA says in its publication of the new rule that it will extend grace to veterans for transfers made “as the result of fraud, misrepresentation, or unfair business practice related to the sale or marketing of financial products or services for purposes of establishing entitlement to VA pension.”
About the Authors
Jeff R. Hawkins and Jennifer J. Hawkins have practiced in the areas of trusts, estates, and elder law for over 25 years. Both lawyers are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association. Find more information about these and other topics at www.HawkinsLaw.com. © Copyright 2018 Hawkins Law PC. All rights reserved.
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