It’s Now Harder for Some Veterans and Surviving Spouses to Qualify for Long-Term Care Benefits

The Department of Veterans Affairs (VA) has finalized new rules that may make it more difficult to qualify for long-term care benefits. The rules establish an asset limit- a look-back period- and asset transfer penalties for claimants applying for VA non service-connected pension benefits that require a showing of financial need (commonly referred to as Aid and Attendance).

The VA offers pension benefits to low-income veterans (or their surviving spouses) who are in facilities (nursing homes- assisted living facilities- and- in some cases- independent living facilities) or who need help at home with everyday tasks like dressing or bathing.

Currently- to be eligible for Pension benefits a veteran (or the veteran’s surviving spouse) must meet certain income and asset limits. The asset limits aren’t specified- but $80-000 is an amount that has been widely used. However- unlike with the Medicaid program- there historically have been 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.

Not so anymore. The new regulations set a net worth limit of $123-600- which is the current maximum amount of assets (in 2018) that a Medicaid applicant’s spouse is allowed to retain. 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 (and 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 — including payments to assisted living facilities (and independent living facilities in some cases) from their income.

The regulations also establish a three-year look-back provision. Applicants will have to disclose all financial transactions they were involved in for three years before the application. 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. This penalty is a period of time during which the person who transferred assets is not eligible for VA benefits. There are exceptions to the penalty period for claimants who were the victims of fraudulent transfers and for transfers to a trust for a child who is unable to “self-support.”

Under the new rules- 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 $123-600 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 $21-400. The penalty period will be calculated based on $21-400- the amount the applicant transferred that put his assets over the net worth limit (145-000-123-600).

The new rules go into effect on October 18- 2018. The VA will disregard asset transfers made before that date.

Veterans or their spouses who think they may be affected by the new rules should contact their attorney immediately.

To read the new regulations, see Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits.