In late 2018, the Department of Veterans Affairs implemented new eligibility rules for applicants submitting pension claims for aid and attendance. Wartime veterans and surviving spouses of wartime veterans with substantial medical expenses who meet the eligibility requirements may be awarded tax-free monthly pension.
Before the new rules were put in place, the VA used a “formula” for eligibility based on the claimant’s age, life expectancy, income, assets, and unreimbursed medical expenses to determine if the claimant was “in need.” Because of these many factors, it was often times difficult to say if a claimant was undoubtedly eligible. This led to inconsistent eligibility determinations.
There is now a clear-cut net worth limit for claimants, which is (approx) $123,600.00. This amount is also the maximum Community Spouse Resource Allowance allowed by Medi-Cal and Medicaid. A claimant and their spouse may retain up to $123,600.00 in assets and annual income combined. If the claimant is single, he or she may also retain $123,600.00. A claimant’s home is exempt from the net worth calculation, provided that the homestead does not exceed two acres. A claimant’s countable income for VA purposes can be lowered or even reduced to $0.00 if the claimant incurs substantial monthly medical expenses, such as assisted living costs or in-home care costs.
The VA also imposed a 36-month lookback period on transfers or gifts. This lookback period is the 36 months preceding the date an application is submitted, which will result in a penalty period not to exceed five years. Asset transfers will not be penalized prior to October 18, 2018. Also, no penalty will be imposed if the claimant’s net worth would have been below the limit already. There are also other provisions of the rules that apply to annuities and other financial investments.
The rules are complicated, and it is important that the claimant understand the rules before submitting an application for VA benefits to help with care costs.