Lacey: VA proposing sweeping changes to aid programs
On Jan. 25, the Veterans Administration introduced new regulations regarding the Aid and Attendance program.
In our office, we have assisted veterans and/or their spouses to access care which they would otherwise be unable to obtain with the help of the very important Aid and Attendance program. If these proposed regulations are implemented, these changes will not only hurt wartime veterans, specifically WWII and Korean War vets, but it will be more detrimental to the enormous claims backlog that already exists.
It is also interesting to note that Congress introduced two different bills between 2012 and 2014 imposing a 3-year look-back period. Neither bill passed. Yet the VA has taken upon itself to act on its own with these regulations.
The proposed changes in regulations would:
• Establish a 3-year look-back for gifts;
• Impose penalties for up to 10 years;
• Create a bright-line net worth standard of $119,220, which includes annual income;
• Deny any expenses related to independent living facilities as care costs; and
• Require veterans to sell their homestead property if the lot coverage exceeds 2 acres.
So how would this affect the veteran or their spouse? When the veteran and/or spouse apply to the VA for Aid and Attendance, they will be required to disclose any gifts that had been made in the last 3 years. This means that any money or asset transferred in which the veteran and/or spouse did not receive something of fair value in return.
If the veteran and/or spouse cannot meet this standard, then the VA will assume that the transfer was made for the purpose of meeting the VA eligibility standards and will then impose a penalty based upon the value of the gift. This penalty could be as long as 10 years!
This is where the regulations are extremely unfair! How do we calculate the penalty period? Well, that depends upon the claimants’ pension rate. Currently, the pension rates are as follows:
(1) Married veteran = $2,120
(2) Single veteran = $1,788
(3) Widow = $1,149
As an example, let’s take Jim and Diana. Jim is a veteran of the Vietnam War. Jim and Diana transferred $100,000 to their children. The penalty period will be:
(1) Married veteran = 47.17 months ($100,000 ÷ $2,120)
(2) Single veteran = 55.93 months ($100,000 ÷ $1,788)
(3) Widow = 87.03 months ($100,000 ÷ $1,149)
As you can see, the surviving widow of a veteran is penalized the most.
Also, because the “net worth” standard will include income, high-income earners will be allowed to have low to no savings for emergency items; whereas, very low income earners will be permitted to keep much more in savings.
Because of the strict ruling on how the VA plans to define “medical care,” veterans who have dementia, Alzheimer’s Disease or other degenerative diseases and live in independent living facilities because they no longer drive and need a safe environment in which to live, will not be eligible for the benefits because they may not get the hands-on care for bathing, dressing, eating, toileting or transferring (Activities of Daily Living).
Although they are unsafe to live at home due to their health care condition of cognitive decline, the VA refuses to consider any expenses of care for a facility as deductible from the claimant’s income unless the claimant needs assistance with no less than two activities of daily living.
To fight this from happening, everyone who cares about a veteran must respond. Public comments must be received no later than March 24 and can be sent through http://www.regulations.govor by mail or hand-deliver 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 must include that they are in response to “RIN 2900-AO73, Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits.”
Stephen J. Lacey, JD, LLM-Tax is a member in the law firm McClelland Jones LLC. Lacey concentrates his practice in estate planning, asset protection, Medicaid planning, probate.