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Alert – Veterans Administration New Regulations Propose 3 Year Look Back

            On January 23, 2015, the VA took the initiative in proposing new regulations that would penalize wartime veterans and their spouses up to 10 years for making gifts, if they wish to qualify for the VA’s Aid and Attendance program.

             As many readers of this blog know, this non-service connected pension can provide as much as $2120 per month in tax free income to help pay the cost of long term care.  This program is means tested with an asset limit of about $80,000.  Currently, there is no look back as there is for Medicaid so that transfers for less than fair value to individuals or trusts do not result in a waiting or penalty period for benefits.

             Federal legislators introduced two bills since 2012 seeking to impose a 3 year look back but neither bill has yet passed both houses of Congress. The VA has instead tried to take matters into its own hands.  A penalty of up to 10 years would result from uncompensated transfers. The penalty would be calculated by dividing the amount of the transfer by the claimant’s pension rate.  A married veteran, therefore, would receive a penalty roughly half of what a widowed spouse of a veteran would receive.

             Other changes include a net worth standard of $119,220 including annual income.  In other words, an applicant would need to have no more than that amount in assets and annual income to qualify.  The higher the income the less in assets the applicant can keep.

             Expenses related to independent living facilities would not count as care costs.  This would mean that veterans with dementia, or other degenerative diseases who can no longer safely live in their own homes but who don’t yet need assistance with the activities of daily living such as bathing, dressing, eating, toileting or transferring, will not be able to include the cost of that facility in an effort to qualify for the VA benefit.  Finally, the home will remain an exempt asset towards the net worth limitation only if the lot on which it sits is less than 2 acres.

             These changes will dramatically reduce the ability of many veterans to qualify for this important benefit.  The new regulations have been submitted for public comment.  To fight these changes, everyone who cares about veterans must respond no later than March 24, 2015.  You can send your comments through or by mail to Director, Regulation Policy and Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. NW., Room 1068, Washington, DC 20420 or by fax to (202) 273-9026.  Comments should include that they are in response to “RIN 2900-AO73, Net Worth, Asset Transfers and Income Exclusions for Needs-Based Benefits”.