Friday, January 23, 2015

VA Pension Rule are Changing

The VA today released proposed changes to the rules affecting pension benefits for veterans.  They are in the notice and comment period now and that window will be open for sixty days.

Some interesting highlights from the proposed rules:

1)     The VA is recommending that the transfer of assets done by a veteran (or beneficiary) have a three year lookback period, similar to Medicaid’s five year rule.  To qualify for pension benefits a veteran must have an extremely low income and a low net worth in assets.  Veterans could transfer away their assets to irrevocable trusts and then immediately turn around and apply for the pension benefit.  If the vet met the income requirements, they would be entitled to the pension benefit.  Unlike the Medicaid program, there was no mechanism by which the VA could “lookback” and see if a veteran had transferred their assets away to qualify for the benefit and then penalize the veteran for that transfer.  With these proposed rules, the VA may now look at all transfers of assets for the past three years.

2)     There will be a penalty period imposed on veterans who violate this new transfer rule.  This change “would establish a presumption, rebuttable by clear and convincing evidence, that transferring an asset during the look-back period was for the purpose of reducing net worth to establish entitlement to pension. As a result, the asset would be considered a covered asset.”  Veterans who transfer a covered asset would be subject to this penalty, which would be a maximum of ten years before the veteran could be entitled to the benefit.

3)     The VA is suggesting “stablishing a bright-line net worth limit and re-defining net worth as the sum of assets and annual income.” In the current regulations, there is no magic number for the maximum “net worth” of assets that is the cutoff for veterans being able to qualify for pension benefits. The net worth limit proposed would be equal to the “standard maximum community spouse resource allowance (CSRA) prescribed by Congress for Medicaid.”  This amount in 2014 was $117,240.

4)     There are also provisions that would define “activities of daily living” and “ deductible medical expenses,” which currently have no clear definition in the VA’s regs and M21-1MR.

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