Aid and Attendance is an enhanced pension available to veterans and surviving spouses to assist with the cost of medical expenses and long-term care. The benefit varies between $1,149 and $2,120 per month, depending on whether the applicant is the veteran, a veteran with a dependant, or a surviving spouse.
On January 23rd, the Veterans Affairs Department issued proposed regulations to change the eligibility criteria for Aid and Attendance.
Some of the changes are as follows:
1. Asset Limit: The proposed regulation establishes an asset limit equivalent to Medicaid’s maximum community spouse resource allowance, which is $119,220, in 2015, plus one primary residence. A primary residence is only excluded to the extent that it is under two acres.
The new asset limit is actually helpful to applicants because it establishes a clear limit as opposed to the current rule, which does not. However, limiting the exclusion of a primary residence to two acres poses a problem because increased acreage is not necessarily equivalent to an increase in fair market value and it penalizes veterans in more rural areas.
In addition, the proposed regulations provide that proceeds from the sale of a home will not be countable if used to purchase another home within the calendar year. Using the calendar year is odd because it favors someone who sells their home in February over someone who sold it in November.
2. Penalty for Transferring Assets: The proposed regulations impose a three-year “lookback” period for transferring assets. In other words, if an applicant transfers assets within three years of applying for Aid and Attendance, the applicant will be ineligible for a period of time. The ineligibility period is calculated by taking the value of the asset transferred and dividing it by the maximum annual pension rate for the applicant. The ineligibility period can be up to ten years and begins the month after the last transfer was made.
This is a major change because currently there is no penalty imposed for transferring assets. This is a problem for our clients because very often they transfer assets to create eligibility for Aid and Attendance to help them supplement the cost of their care, but the Aid and Attendance benefit by itself is insufficient. So family members use the transferred assets to make up the difference.
In addition, since veterans and surviving spouses of veterans receive different levels of pension under the program, a different penalty period would be created on the same transfer depending on whether you are a veteran or a surviving spouse of a veteran. See the example below:
Married Veteran transfers $25,000: penalty period = 11 months ($25,000/$2,100)
Surviving Spouse transfers $25,000: penalty period = 21 months ($25,000/$1,149)
3. Limited Permissible Transfers: The proposed regulations only authorize transfers to a child who became disabled before age 18. What about children who became disabled later in life as a result of a brain injury? The permissible transfers in the regulations for Aid and Attendance should follow the same rules as the Social Security Administration for Supplemental Security Income and Medicaid so there is uniformity.
4. Curing Transfers: A “cure” is when a transfer can be returned to eliminate the transfer and, therefore, the penalty period. The proposed regulations do provide that transfers can be “cured” but, do not permit a partial cure. In addition, the proposed change only allows a “cure” within 30 days of filing the application, while the applications are often not even reviewed for months. In essence, by the time an applicant is notified that there is a transfer that is being penalized, the 30 days will have come and gone.
5. Limits Hourly Rate for Home Health Aides: The proposed regulation limits the hourly rate for countable medical expenses for home health aides to $21 per hour.
This may be reasonable in some parts of the country, but in Massachusetts the hourly cost is generally higher than this.
6. Irrevocable Trusts, Revocable Trusts and Annuities: The proposed regulations would treat all transfers to any trust (revocable or irrevocable) as a transfer for less than fair market value and impose a penalty. In addition, the changes treat the purchase of any type of annuity as a transfer for less than fair market value.
It makes no sense to penalize transfers to revocable trusts since applicants still have full control of and access to such funds. The purchase of an immediate annuity should not be treated as a transfer for less than fair market value since this is simply a form of investment. The income should be counted toward an applicant’s countable income for eligibility purposes.
If you are a veteran or an attorney who represents veterans, reach out to your Senator and Congressman to oppose these changes. You can find out who your Senator and Congressman are by clicking here. You may also submit comments to the VA by clicking here by March 24th. All comments must be addressed before the final ruling can be issued.