In January, the Department of Veterans Affairs proposed new regulations regarding when and how a veteran is entitled to the VA pension. The proposed regulations have sparked considerable controversy and outrage over the potential penalties involved with making gifts and eligibility for the pension program.
VA Pension Program
The Department of Veterans Affairs established the VA pension as a way to help veterans and their families once a person has retired from the military. It provides tax-free, supplemental income through the pension program. Additional benefits through the pension program called "Aid and Attendance Benefits" are also offered to veterans who are unable to perform daily living activities, such as bathing, eating, dressing, and so forth. One of the main purposes of the Aid and Attendance benefits is to help veterans offset the high costs of nursing home care.
The Aid and Attendance benefits are part of a needs-based program, but currently the Department of Veterans Affairs does not have any penalties for veterans who divest their current assets in order to apply for these benefits. The proposed regulations would make a change to this particular area.
New Proposed Regulations
The proposed regulations would establish requirement income limits based on pre-application net worth of the veterans in addition to look at any asset transfers or gifts of assets used to qualify for Aid and Attendance benefits in the VA pension program. Right now, there is no net worth limit on these additional benefits, but the proposed legislation would place a clear net worth limit at $119,220.
This is the current maximum community spouse resource allowance for Medicaid in 2015, and it includes annual income as well as assets. The limit would increase with inflation at the same rate as cost-of-living increases for Social Security beneficiaries. The new regulations would also define how the VA pension plan defines and calculates an asset. Under the new rules, the VA would exempt the primary residence as an asset but only property up to two acres.
Gifts and Transfers
Finally, the new regulations would impose a look back period on gifts or asset transfers before application for Aid and Attendance benefits. The look back period proposed would be three years, or 36 months, and a penalty period of ten years for veterans who dispose of their assets below fair market value in an attempt to qualify for benefits. In addition, transferring assets to a trust or converting the assets into a single annuity would fall under the umbrella of transferring below market value. Gifts of money or assets to family members would also be a punishable offense if it is proven that a veteran did so in order to qualify for additional benefits.
The new rules presuppose that any transfers made within the three year look back period are done to quality for pension benefits, unless clear and convincing evidence proves otherwise. The penalty would be calculated based on the value of the assets transferred during the look back window in the amount over the net worth limit.
from Usa Insurance News http://ift.tt/1DckFEd
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