The Department of Veterans Affairs (“VA”) Aid and Attendance pension benefit is available to veterans, the surviving spouse of a veteran or both a veteran and spouse. This valuable benefit has helped scores of veterans/spouses afford necessary care in the community. However, proposed regulations will have a drastic effect on a veteran and/or spouse’s ability to access this pension benefit.
By way of background, the veteran must meet certain qualifications, as follows:
- The veteran must have been in service for at least 90 days, one of which was during wartime.
- The veteran or the veteran and his/her spouse cannot have more than $80,000 in assets (including retirement accounts). There is currently no penalty for asset transfers.
- The veteran must need assistance with activities of daily living.
The current monthly benefit amounts are:
- Veteran — up to $1,789
- Surviving spouse — up to $1,149
- Veteran and spouse — up to $2,121
The veteran/spouse is entitled to a certain monthly pension benefit amount based on income versus monthly medical expenses (which current-ly includes the total cost of assisted living).
Take for example, Mr. Johnson. Mr. Johnson is an 83-year-old veteran who lives in an assisted living community. He has a $50,000 checking account, a$30,000 IRA and investments of$139,220. His total assets equal $219,220. Mr. Johnson receives monthly income in the amount of$3,000 but the assisted living costs$5,500 per month. He transfers his investment account of $139,220 to his son bringing his total assets to$80,000. He applies for and receives the full monthly Aid and Attendance benefit of $1,789 per month. Plans such as this have allowed many veterans and spouses to afford assisted living and avoid institutionalization. Unfortunately, that may be about to change.
Via Proposed Rule A073, the VA is seeking to amend the regulations governing Aid and Attendance benefits. The proposed regulations will severely limit a veteran and/or spouse’s ability to access this pension benefit. The following are the most notable of the proposed amendments: Net worth (Proposed § 3.274)
Currently, the net worth limit is$80,000, although this is presently an unwritten rule. The proposed regulations would make the net worth limit$119,220, the same as the Medicaid Community Spouse Resource Allowance (“CSRA”). Unlike the Medicaid rules, however, the veteran/spouse’s annual income will be added to their net worth.
Asset transfers and penalty periods (Proposed § 3.276)
The proposed regulations provide that any asset belonging to the claimant in excess of the allowable resource limit, if transferred for less than fair market value, will cause a penalty period. This includes transfers to a trust and purchase of an annuity or any other instrument that reduces net worth.
The amendments propose a look back period of 36 months. Any amount transferred during the 36-month look-back will be divided by the monthly pension amount, to which the claimant would have been entitled. The result of that calculation will be the penalty period or the amount of time the claimant will not be eligible to receive the Aid and Attendance pension. The proposed changes limit any penalty imposed to 10 years.
Let’s consider Mr. Johnson again. You will recall that Mr. Johnson transferred his investment account to his son. Under the proposed regulations, Mr. Johnson would only transfer$100,000, leaving him with $119,200 (the proposed resource limit). Mr. Johnson will be subject to a penalty period based on the amount of assets transferred during the 36 months prior to the date of application divided by the pension benefit to which he would have been entitled. Assuming Mr. Johnson was entitled to the maximum pension benefit of $1,789, Mr. Johnson’s asset transfer of $100,000 to his son will result in a penalty period of 55.9 months, or 4.7 years during which time Mr. Johnson will not be eli-gible to receive the Aid and Attendance benefit.
According to the National Center for Assisted Living, the average stay in an assisted living facility is approximately three years. In many if not most cases, veterans and/or their spouses will never realize the Aid and Attendance pension benefit.
Medical Expenses (Proposed § 3.278)
Currently, the cost of assisted living and the cost of in-home attendants are deducted in full from monthly income when calculating income eligibility for Aid and Attendance benefits. The proposed regulations would provide that generally, payments to facilities such as independent living facilities are not “medical expenses,” nor are payments for assistance with Instrumental Activities of Daily Living (“IADLs”). However, there would be some exceptions for disabled individuals. The proposed amendment would place a limit on the hourly payment rate that the VA may deduct for in-home attendants.
Primary Residence (Proposed § 3.275)
The primary residence will continue to be excluded as a countable asset unless and until the property is sold. Once the property is sold, the proceeds will be added to the veteran/spouse’s net worth unless the funds are used to purchase another property. The proposed regulations provide that the residential lot area cannot exceed two acres unless the additional acreage is not marketable.
If these proposed regulations are passed into law, it will be critical for Veterans and their spouses to plan ahead for eligibility, similar to current planning for Medicaid eligibility. As with Medicaid planning, if assets are transferred prior to the look-back period, the veteran and/or the surviving spouse will be eligible for benefits when the medical need arises in the future.
The Aid and Attendance benefit has made it financially possible for veterans and/or surviving spouses of veterans to move into assisted living or remain there after their funds have dwindled. It is critically important that access to appropriate housing and care for elderly veterans and surviving spouses of veterans remains in place, not to mention the moral obligation to take care of those who have fought for this country.
Note: Melissa Negrin-Wiener, Esq., is a partner in the Elder Law firm Cona Elder Law where she manages the Government Benefits Eligibility Department.