On January 23, 2015, the Federal Register released Document No. 2015-00297.  This document has caused quite a stir in the elder care industry, and has climbed to the top of the “hot-button issues” list.  If you’re not yet familiar with the document, you’re likely wondering what could possibly cause such widespread interest.  It’s an unexpected rule proposal by the Department of Veterans Affairs (“VA”) regarding net worth determinations, asset transfers, and income exclusions for Veterans pension benefit eligibility.

For those that may not have time to immediately sit down and read the 62-page document, the VA stated it was their intent to “respond to recent recommendations made by the Government Accountability Office (“GAO”), to maintain the integrity of VA’s needs-based benefit programs, and to clarify and address issues necessary for the consistent adjudication of pension and parents’ dependency and indemnity compensation claims.”

Summary of Major Provisions:

  • § 3.274: Establish a clear net worth limit
    • The net worth limit proposed is the standard maximum community spouse resource allowance (“CSRA”) used by Medicaid – $119,220 for 2015
    • The amount of a claimant’s net worth would be determined by combining annual income with assets
  • § 3.275: Describe how VA calculates assets, including the primary residence and resulting sale proceeds.
    • A dwelling will only be exempt if it does not exceed two acres – exceptions exist
  • § 3.276: Asset transfers and resulting penalty periods.
    • Proposal for a 36-month look-back period for uncompensated transfers
    • The transfer penalty would only be based on the amount transferred that would have caused the claimant to exceed the net worth limitation, not the entire transferred amount
    • An annuity purchase or transfer to trust will result in a penalty if (1) it reduces net worth, and (2) it would not be in the claimant’s financial interest were it not for the claimant’s attempt to qualify for pension
    • The penalty divisor will be the maximum aid and attendance pension rate
    • The maximum penalty period will be 10 years
    • The penalty period will begin the date that would have been the pension payment date
  • § 3.278: Define and clarify deductible medical expenses.
  • § 3.279: Central location for all statutory exclusions from income and assets.
  • § 3.503: Medicaid-covered nursing home care and surviving child beneficiaries.

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