VA Pension Benefits are cash payments available to some wartime Veterans and their surviving spouses who are disabled and/or have additional medical needs. The Department of Veterans Affairs (VA) recently set forth new eligibility requirements for applying. Those new rules went into effect October 18, 2018. Although the rule changes penalize veterans by making eligibility and the concomitant estate planning more difficult, we are nonetheless taking an optimistic approach. We intend to make lemonade out of the lemons our veterans have been served.
VA Pension benefits are “needs-based” benefits. Before these new rules were made, the VA offered little guidance on how they determined whether an applicant was “in need” of the benefits. There were vague definitions and limited explanations of who would qualify. Thish led to confusion among applicants and inconsistent determinations of eligibility. However, one good thing that has come out of the change is that there are now clear rules for eligibility. Thus, elder law VA accredited attorneys can better advise their clients and their families. This upholds the integrity and consistency of the pension program.
In addition to the minimum active duty, wartime service, and age or disability requirements, there is now a bright-line rule regarding the net worth of an applicant. This amount is currently set at $123,600.00 (for 2018). The amount will increase annually. When calculating the net worth amount, assets are combined with annual income. (The applicant’s home is usually not included in this calculation.) Out-of-pocket medical expenses can reduce income, thus helping applicants qualify for the highest level of benefit. Nonetheless, if the claimant’s net worth exceeds this threshold, an elder law lawyer can often utilize certain legal strategies to get the calculation within the allowed range.
Another issue with the new rules is that any asset that was transferred for less than fair market value during the 36-month period immediately preceding the application will result in a penalty of ineligibility of up to five years. Of course, there are exceptions to this rule, and elder law attorneys, accredited by the VA, can often employ strategies to legally cure or avoid the penalty.
As the rules were aimed at stopping pension poachers (financial advisors and others going around attempting to sell annuities to veterans to try to qualify them for pension benefits), there are other provisions of the new rules that apply to annuities and other financial instruments. Accordingly, before investing in an annuity or other asset that produces income, be sure to contact our office to discuss the possible ramifications of that investment on VA pension benefits.
Although the new rules make it more difficult for many wartime veterans to qualify for the benefits they deserve, the rules do provide more certainty. Give us a call if you would like to talk further about the changes, or to explore whether you or a loved one may qualify. We are here to serve those who have served.
Add Goff, VA Accredited Elder Law Attorney
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