Starting Oct. 18, the VA will review not just current assets, but records from the previous three years when deciding a veteran’s asset-based eligibility for VA Pension benefits — commonly called Aid and Attendance (A&A) benefits. However, transfers of assets completed before Oct. 18 will not be counted against veterans or their surviving spouses.
A&A helps veterans and their surviving spouses pay for in-home care, assisted living-, memory- or nursing care as well as medical supplies and medicines. These pension benefits are available to service members (who are older than 65) or their surviving spouses. Additionally, the service member must have been honorably discharged after at least 90 days of service with at least one of those days during a wartime period.
A&A applicants must meet limited asset requirements, which will now be a little more complicated to calculate. On the bright side, the VA raised the net worth limit to $123,600, which is the maximum Medicaid Community Spouse Resource Allowance for 2018 and is indexed for inflation. Previously, the net worth limit was not firm, but was generally around $80,000 for a married veteran.
Net worth includes assets in bank accounts, stocks, bonds and commercial or secondary property holdings. But starting this month, it will also include one year’s Income for VA Purposes (IVAP), including disbursements from annuities or trusts. To calculate IVAP veterans and surviving spouses can deduct certain unreimbursed monthly care expenses, including skilled nursing, in-home care (even if provided by a non-spouse relative), assisted living costs, and long-term care and health insurance premiums.
Net worth does not generally include the veteran’s primary residence or vehicle. However, the new rules stipulate that the residence exemption only applies to homes on two acres or less, unless the additional acreage is unmarketable because of zoning or access restrictions, for example.
A family farm could be treated the same as a luxury estate. Also, if a veteran sold his home (because he was living in a nursing home) the sale could disqualify him from receiving A&A benefits. To avoid this outcome, an estate planning attorney can show you pre-planning tools that can protect your assets and your benefits.
If a veteran or surviving spouse applies for A&A benefits and gifted or transferred assets into certain trusts or annuities in the preceding three years, a penalty period will apply. The penalty period is calculated by dividing the value of the gift by the Maximum Monthly Pension Benefit, currently $2,169.
In light of the recent changes, veterans who may need nursing or home-health services should examine their finances at least three years before they are eligible for A&A. Nationwide, the median cost of long-term care currently ranges from $3,750 a month for assisted living to $8,121 monthly for a private room in a nursing home. These costs could easily wipe out your life savings.
As part of the new regulations, the VA is strictly enforcing its requirement that veterans only work with accredited attorneys or agents. A VA-accredited attorney can help veterans and surviving spouses navigate the VA pension process and evaluate how the pension may affect the rest of the veteran’s estate plan including Medicaid and Medicare benefits, income tax, inheritance tax and other financial factors.
The rising costs of long-term care are a burden our veterans should not have to bear alone. If you need help figuring out how to manage these costs, consult with a trusted, VA-approved elder law attorney about your options.