On January 23, 2015, the Department of Veterans Affairs (VA) issued proposed regulations related to the administration of its needs-based pension program. The proposed new rules impose many new detrimental restrictions on wartime Veterans and their families. The proposed new rules include the following changes:
VA Proposal: A three-year look-back on gifts and other transfers with a 10-year maximum penalty period. When determining a Veteran’s net worth for purposes of pension eligibility, VA proposes a three year look-back period for transfers of assets for less than fair market value. Veterans and their spouses, who are determined to have transferred assets in contravention of the rule, would be subject to a penalty period up to 10 years. VA does not have the authority to establish the look-back period or transfer penalty, and the look-back period will result in substantial delays for Veterans who are eligible for these benefits.
VA Proposal: The method of calculating the penalty period disadvantages some applicants more than others. VA proposes to calculate the penalty period by dividing the total amount transferred for less than fair market value (FMV) by the monthly maximum pension a beneficiary could receive. In order to exclude a gift or transfer made for less than FMV from the penalty calculation, VA would require clear and convincing evidence that the transfer occurred due to fraud, misrepresentation, or unfair practice related to the sale or marketing of financial products or services for purposes of establishing entitlement to VA pension. The transfer penalty disproportionately penalizes widows who are often the elderly wives of World War II and Korean War Veterans.
VA Proposal: VA imposes new limits to in-home health care and independent-living facilities expenses. VA proposes to limit the allowable deduction for in-home health care to the average hourly private-pay rate for home health aides as published by the MetLife Mature Market Institute, which was $21 an hour in 2012. Further, generally only assistance with activities of daily living or health care services will be deductible as in-home health care. VA also proposes to prohibit the deduction of expenses incurred at an independent living facility (ILF) where they are not providing health care services or custodial care. Custodial care is defined as regular assistance with two or more activities of daily living or assistance for a veteran who is unable to be left alone due to a mental disorder. These proposals will limit Veterans’ ability to receive quality care in lower cost settings, such as in-home care and independent living facilities.
VA Proposal: A two-acre lot limit for personal residences. Previously, a Veteran’s personal residence and a reasonable lot area would be excluded for purposes of calculating net worth. In its proposed rule, VA proposes to limit the land exemption to two acres. This bright-line rule disadvantages Veterans who live in rural areas.
You can defend Veterans and their families and advocate against these rules by:
- Contacting your representatives on Capitol Hill;
- Submitting your comments to VA;
- Informing Veterans, their families, and local Veterans organizations of the proposed rule changes.
Thank you for your support on this important issue. For additional information, readers can visit the webpage prepared by the National Academy of Elder Law Attorney (NAELA) dedicated to this issue, here: Protecting the Veterans Pension..
NAELA was founded on the belief that it could do well by doing good. Through its advocacy efforts, NAELA has a voice in shaping national and federal public policies that affect members’ practices and the well-being of their clients.
UPDATED ON MARCH 17, 2015: Additional Problems with the Proposed Changes to the VA Regulations:
The proposed rules change will clearly make the home an exempt asset; this is an improvement. Unfortunately, this does not address two glaring problems that the proposed rules would create.
At present, when an applicant for VA Pension purchases an annuity, all the income from the annuity is considered countable income for VA purposes. This changes under the proposed rules as follows. Under the proposed rules, someone could move into an assisted living facility, and then apply for VA pension benefits. After applying for the VA Pension, the applicant could sell their home and use the proceeds to purchase an immediate income annuity, which produces a flow of income which could be used to help pay for care. Under the proposed rules, the VA will count only the taxable portion of the annuity as income. This is called the “exclusion ratio.” Only the interest portion would be included in the VA net worth test for the applicant. This is a necessary and welcome change in the VA pension program.
However, all too often a claimant cannot afford to move into an assisted living facility until the home is sold. Under the proposed rules, if the claimant purchased the same immediate income annuity with the same proceeds from the home before filing for VA Pension, this would incur a penalty of up to 10 years. The difference between the results in these two situations is both arbitrary and capricious.
The other problem occurs when an applicant transfers his/her home into a trust. Trusts are used for a variety of reasons, such as asset protection; here an irrevocable trust is often used. A revocable trust is also used to avoid the high cost of probate.
Under the proposed rules, the home is an exempt asset. Yet, assets transferred to a trust within three (3) years of the date of application for VA benefits would be considered a transfer of asset without receiving fair market value, resulting in a penalty of up to 10 years. But why? Why is a house considered exempt if it’s not transferred to a trust, but considered a transfer of asset subject to a penalty if transferred to a trust?
Both of these are examples of the inconsistency, arbitrariness and capriciousness of the proposed rules change.
For additional information concerning VA compensation and pension benefits, visit:
- Affordable Care Act
- Alzheimer's Disease
- Attorney Ethics
- Attorneys Fees
- Beneficiary Designations
- Blog Roundup and Highlights
- Blogs and Blogging
- Care Facilities
- Collaborative Family Law
- Consumer Fraud
- Developmental Disabilities
- Discrimination Laws
- Doctrine of Probable Intent
- Domestic Violence
- Elder Abuse
- Elder Law
- Elective Share
- End-of-Life Decisions
- Estate Administration
- Estate Litigation
- Estate Planning
- Family Law
- Financial Exploitation of the Elderly
- Future of the Legal Profession
- Geriatric Care Managers
- Governmental or Public Benefit Programs
- Health Issues
- Housing for the Elderly and Disabled
- In Remembrance
- Insolvent Estates
- Institutional Liens
- Interesting New Cases
- Law Firm News
- Law Firm Videos
- Law Practice Management / Development
- Lawyers and Lawyering
- Legal Capacity or Competancy
- Legal Malpractice
- Legal Rights of the Disabled
- Medicaid Appeals
- Medicaid Applications
- Medicaid Planning
- Care Contracts
- Estate Recovery
- Family Part Non-Dissolution Support Orders
- Life Estates
- Loan repayments
- Promissory Notes
- Qualified Income Trusts
- Spousal Refusal
- Transfers For Reasons Other Than To Qualify For Medicaid
- Transfers to "Caregiver" Child(ren)
- Transfers to Disabled Adult Children
- Undue Hardship Provision
- Multiple-Party Deposit Account Act
- New Cases
- New Laws
- News Briefs
- Non-Probate Assets
- Nursing Facility Litigation
- Personal Achievements and Awards
- Personal Injury Lawsuits
- Punitive Damages
- Retirement Benefits
- Reverse Mortgages
- Section 8 Housing
- Settlement of Litigation
- Social Media
- Special Education
- Special Needs Planning
- Surrogate Decision-Making
- Top Ten
- Veterans Benefits
- Web Sites and the Internet
- Writing Intended To Be A Will
Vanarelli & Li, LLC on Social Media