by Larry S. Hartley
Veterans and their spouse should be aware that there are new rules that went into effect on October 18, 2018, regarding qualification for a type of Veterans’ assistance known as Improved Pension, with Aid and Attendance Benefits. Unfortunately, these new rules have put in place penalty periods for gifting assets before applying for benefits, where the Veterans Program previously did not impose penalties. The good news is that the new rules are more clear and some of the rules are more generous than those previously in place.
There are categories of assets that are exempt or not countable, and there are still techniques available to protect assets for Veterans and their families. However due to the new lookback rules and penalties pre-planning has become even more important.
In general, the Veteran and/or the spouse of a veteran is going to need to have less than around $123,000 in countable assets and must also take in to account one year worth of income counted added into the total with those countable assets. (The asset and income limits will go up each year depending on inflation.) This is a valuable benefit that could provide over $24,000 per year to a married qualifying veteran or over $13,800 per year to a widow or widower of a qualifying veteran.
Many wartime veterans and their surviving spouses are now spending significant amounts of money on their medical needs, and are also facing long-term care expenses or will need some type of long-term care in the near future. The Veterans Administration has funds that are available to help pay for Medical expenses and Long Term Care, but many families do not know that these benefits exist.
There are benefits known as Improved Pension with Aid and Attendance Benefits that can pay them for the medical needs of a veteran or surviving spouse who requires assistance in activities of daily living (dressing, undressing, eating, toileting, etc.), is blind, or is a patient in a nursing home. Assisted care in an assisted living facility also qualifies.
The Improved Pension benefit known as a Housebound Allowance is for those who need regular assistance but would not meet the more stringent requirements for Aid and Attendance, and wish to remain in their own home or the home of a family member. Care can be provided by family members or outside caregiver agencies.
The Basic Pension level is for veterans and surviving spouses who are 65 years old or older or who are 100% disabled, and who have limited income and assets.
What are the qualifications to receive benefits?
A veteran is not required to have service-related injuries to qualify for these pension benefits but must meet certain wartime service and discharge requirements. A surviving spouse must also meet marriage requirements to the qualified veteran. There are additional requirements that must be met for a disability claim if the claimant (the veteran or surviving spouse filing for benefits) is under 65 years old.
Previous to the changes in the rules when determining eligibility, the VA looked at a claimant’s total net worth, life expectancy, income, and medical expenses. A married veteran and spouse under the previous rules should have no more than $80,000 in “countable assets,” which includes retirement assets but does not include
Even for the new rules, Income for VA Purposes (called IVAP) must be less than the benefit for which the claimant is applying. IVAP is calculated by subtracting “countable medical expenses” (recurring out-of-pocket medical expenses that can be expected to continue through the claimant’s lifetime) from the claimant’s gross income from all sources. Be careful in contacting the VA to ask about these benefits. It has not been unusual for callers to receive incorrect information from a Veteran’s Administration worker. This I believe is because the VA workers deal with far more veterans who are asking about different programs other than the Improved Pension With Aid and Attendance benefits. The rules for disability compensation and retiree benefits are far different than the rules for this program.
With the new rules, there will be fewer opportunities to use annuities in the planning. Also, keep in mind that many annuities are NOT designed with VA benefits or Medicaid benefits in mind. Certain annuity techniques that were used previously will have to be modified or eliminated.
In addition, because the claimant may need to qualify for Medicaid in the future, it is very important that any restructuring or gifting of assets be done in ways that do not jeopardize or delay Medicaid benefits. Consult a board certified Elder Law Attorney for legal advice especially when it comes to the Medicaid rules in the state where the long term care will be provided.
Applying for Benefits
The VA often takes more than a year to make a decision, but once approved, benefits are paid retroactively to the month after the application is submitted. Having proper documentation (discharge papers, medical evidence, proof of medical expenses, death certificate, marriage certificate, financial information, and a properly completed application) at the time the application is submitted can allow the application to be approved more quickly. When a veteran is approved he or she can receive additional benefits such as no cost prescriptions or low-cost prescriptions through a VA medical center.
Because time is critical for these aging veterans and their surviving spouses, an application should be made as soon as possible after the veteran or the surviving spouse has become eligible. For more information, visit http://www.va.gov or in states such as North Carolina that provide local veterans service office, contact the local office for an appointment. However, plan ahead before going to the service office, because the Veterans service office will not help you plan ahead. They take you as you are when you walk in. For pre-planning see your VA accredited attorney before you go to the service office.
Larry S. Hartley is a Board Certified Specialist in Elder Law by the NC State Bar, Board of Legal Specialization. He is a Certified Elder Law Attorney (CELA) by the National Elder Law Foundation. He is a VA accredited attorney and is a United States Navy Veteran. To arrange an appointment contact the law firm of Strauss Attorneys, PLLC at 828-258-0994 to schedule an appointment. More information is available at www.StraussLaw.com. The firm has offices in Asheville NC and Hendersonville NC.