The U.S Department of Veterans Affairs (VA) announced its final rule on September 18, 2018 of its intention to amend regulations surrounding veterans’ eligibility for VA pension and other needs-based benefit programs, effective on October 18, 2018.
The final ruling contains critical information for veterans in our community, and may make accessing veterans benefits even more challenging than it already is. We have highlighted the major changes outlined by the VA to help ensure that veterans and their families remain eligible to continue receiving these much needed benefits.
New Rules for Veterans Benefits
Effective October 18, 2018:
- The VA will continue to independently advise whether an individual veteran is required to consume some part of their estate, for the purpose of personal maintenance, prior to receiving pension. Pension can later be discontinued if it is later reasonable for an individual to fund their own personal care through consuming part of their estate (38 U.S.C § 1522, 1543);
- The VA will now impose a “look-back period” of three years that penalizes a veteran or surviving spouse from receiving pension benefits if it is found that a voluntary transfer of assets has been made for less than fair market value in the form of “gift giving,” purchase of financial instrument or investment, or placed into a non-exempt trust in an attempt to reduce net worth that exceeded $123,600;
- If assets are found to be incapable of being liquidated (e.g. some annuities and trusts), the penalty period may not be incurred for transfers unless an individual’s net worth would have exceeded the allowance of $123,600 if the transfer had not occurred.
- Pension penalties (periods of non-coverage) shall be calculated by dividing the amount of total transferred covered assets by the most current monthly pension rate for an A&A veteran plus one dependent ($2,169 in 2017), rounded to the nearest whole number. The result is the number of months that an individual will be ineligible for pension coverage;
- There shall be no penalty for transfer of covered assets prior to October 18, 2018;
- Net worth now includes all countable assets plus annual gross income. The maximum value of assets an individual veteran can now possess and still be eligible for benefits is capped at $123,600 for 2018, the same as the current Community Spouse Resource Allowance (CRSA). This amount will be adjusted annually for inflation;
- Residence exemptions for VA purpose is now limited to lot sizes of two acres or less. Residential lots which exceed two acres may still be excluded from an individual veteran’s net worth if the additional property is deemed unmarketable by an independent third party; otherwise, any additional property over the two acre limit will be included as an asset;
- “Ambulating within the home or living area” is now classified as an Activity of Daily Living (ADL);
- “Custodial Care” is now defined as regular:
- Assistance with two or more ADLs; or
- Supervision of an individual with a physical, mental, developmental or cognitive disorder requiring special care or assistance to protect the individual from everyday hazards or dangers.
- “Assisted Living, adult day care, and similar facilities” is now defined as “Care facilities other than nursing homes,” and focuses on the health, custodial, or A&A care that an individual receives within the facility, as well as their need to be in that facility (and any medical expenses incurred), rather than the facility name itself.
Contact an Experienced Veterans’ Benefits Lawyer
Because these major changes in how the VA handles pension distribution are imminent, it is now more important than ever to ensure that your pension eligibility is not negatively affected by these changes. Fortunately, because the VA will not “look-back” to transfers made before the October 18, 2018 date, there may still be time to distribute your assets as necessary to maintain eligibility.
Whether you have questions about your pension eligibility or are curious to learn more about financial planning for your veterans’ benefits in general, SSR Law Office is proud to help those who have served our country in the past. If you believe your pension eligibility may be negatively affected by these changes, contact us immediately to discuss your options and ensure that you remain covered under the newly proposed changes.