Changes Made to VA Pension Plans
During the Fall of 2018, the Department of Veterans Affairs has published new rules regarding needs-based, non-service related benefits for veterans and their spouses. These new rules have been in place since October of this year. These benefits provide monthly monetary assistance and means-tested pensions to needy veterans whom have been discharged honorably from service with at least 90 days of active military duty and one day of wartime duty.
Information Relayed through the National Elder Law Foundation
The new rules establish a bright-line net worth limit for pension entitlement. This is a drastic change to the prior eligibility criteria, which considered multiple factors, sometimes resulting in inconsistent outcomes among similarly situated claimants.
The net worth limit now counts the assets and annual income of the claimant according to the standard maximum Community Spouse Resource Allowance (CSRA) promulgated by Congress for Medicaid eligibility. The current CSRA rules allow $123,600 in countable assets. When calculating net worth, the VA will also consider the income and assets of others living in the primary residence, such as an adult child. Additionally, the VA considers the assets of a veteran’s spouse, even if they don’t live together. The VA also considers the veteran’s tangible personal property in calculating net worth, except to the extent such property is suitable and consistent with a reasonable mode of life, such as a vehicle and appliances.
Under the new rules, the VA now excludes from the countable assets of the claimant’s net worth calculation, the claimant’s primary residence including a residential lot of 2 acres. Marketable acreage in excess of 2 acres will be included in the asset calculation. However, the lot size may be larger than 2 acres if the excess acreage owned by the claimant is unmarketable. For example, if the property is only slightly larger than the 2-acre limit, or if the additional property is not easily accessible, or if there are zoning limitations, then the excess acreage may not be counted.
Additionally, the VA rules now impose a 36-month look-back period. This means any assets transferred within the 36-month time frame for less than fair market value, will be subject to a VA-imposed penalty period. Moreover, the purchase of annuities or transfers to trusts will be considered a transfer for less than fair market value unless the claimant retains control, then the annuity or trust will be included in the claimant’s net worth.