A Long Term Care Benefits ~ Important Update

Three years ago, the Veterans Administration issued proposed regulations that were to significantly reduce the number of veterans eligible to receive enhanced pension benefits if they needed long term care. The proposed regulations instituted a lookback period and penalties for transfers within 36 months of filing for application for these enhanced pension benefits. There was a lot of pushback from advocacy groups since many felt that by putting their life on the line for their country, there should be no means-testing for benefits.

The previous rules allowed penalty-free transfers of assets prior to applying for assistance and several other tools that were more generous than state Medicaid programs. There was no lookback period had the veteran met certain income and asset limits. The asset limits were not specified, but $80,000 was the amount usually used. There were no penalties if an applicant divests him- or herself of assets before applying. That is, before now you could transfer assets over the VA’s limit before applying for benefits and the transfers would not affect eligibility.

Learn about the changes. The new regulations, effective October 18, 2018, set a net worth limit of $123,600. But in the case of the VA, this number will include both the applicant’s assets and income. It will be indexed to inflation in the same way that Social Security increases. An applicant’s house (up to a two-acre lot) will not count as an asset even if the applicant is currently living in a nursing home. Applicants will also be able to deduct medical expenses from their income, now including payments to assisted living facilities, due to the new rules.

The regulations also establish a three-year look-back provision for asset transfers. Applicants will be required to disclose all financial transactions within the three years before the application and show that these transactions were for the benefit of the veteran of spouse. Applicants who transferred assets to put themselves below the net worth limit within three years of applying for benefits will be subject to a penalty period that can last as long as five years. There are exceptions to the penalty period for fraudulent transfers and for transfers to a trust for a child who is unable to “self-support.”

With these changes in place, in 2021, the VA will determine a penalty period in months by dividing the amount transferred that would have put the applicant over the net worth limit by the maximum annual pension rate (MAPR) for a veteran with one dependent in need of aid and attendance. For example, assume the net worth limit is $130,772.22 and an applicant has a net worth of $115,000. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $145,000, which exceeds the net worth limit by $14,227.87. The penalty period will be calculated based on $14,227.87, the amount the applicant transferred that put his assets over the net worth limit ($145,000-$130,772.22).

The Veterans’ Administration offers a Special Pension with Aid and Attendance (A&A) benefit. This Special Pension (part of the VA Improved Pension program) allows for Veterans and surviving spouses who require the regular attendance of another person to assist in eating, bathing, dressing, or taking care of the needs of nature to receive additional monetary benefits. It also includes individuals who are blind or a patient in a nursing home because of mental or physical incapacity. Assisted care in an assisted living facility also qualifies. This is a “pension benefit” and is not dependent upon service-related injuries for compensation. Many Veterans who are in need of assistance qualify for this pension. Aid and Attendance can help pay for care in the home or assisted living facility.

The maximum for the Aid and Attendance Benefits in 2021:
  • Single Veteran: $1,936 Monthly
  • Married Veteran: $2,295 Monthly
  • Surviving Spouse of a Veteran: $1,244 Monthly
  • Net Worth Threshold for VA Benefits: $130,772.22

The Aid and Attendance Benefit is considered to be the third tier of a VA program called Improved Pension. The other two tiers are Basic and Housebound. Each tier has its own level of benefits and qualifications.

If you are not receiving VA disability compensation or pension payments already you may wish to apply for VA benefits.  If you do not have special eligibility factors, e.g., receiving the Medal of Honor, you will have to provide information about your income as part of the health care enrollment process. This is called an income assessment or financial assessment (formerly known as a means test). The VA is required by law to collect this information. The information regarding your income will determine if you are eligible for VA health care and whether you will have to pay copays for certain types of medications or care.

Find out more information about VA Benefits by clicking here to watch the video, “Heather Scurti from Slutsky Elder Law Interviews Scott Ferguson from Veterans Benefit Assistance.”

If you are a Veteran and you and your loved one would like to discuss how we can assist with long-term care planning, contact our office today at (610)940-0650 for a consultation.

 

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