Wartime veterans or their surviving spouse with limited income may be eligible to receive the VA Aid and Attendance benefit to help pay for the assistance they may need in everyday activities or with long-term elder care, home care aides, skilled nursing, or adult daycare. The VA announced new rules going into effect on October 18, 2018, which changes qualification for the benefit. The two most significant changes are implementing a look-back period and a new approach in calculating net worth.
Look Back Period
The addition of a three-year look-back period for gifting may have the most negative impact on applicants. Beginning October 18, the VA will begin to look at asset transfers that the applicant made in the past 3 years. If a transfer was made for less than fair market value, the VA will consider it a gift and will impose a penalty.
Net Worth Criteria
Previously, the VA determined eligibility through a subjective approach. It would look at the applicant’s total countable assets, which could be no more than $30,000.00-$80,000.00, in conjunction with several other factors such as income and expected lifespan. The new rules take a more objective approach and look at an applicant’s net worth.
For VA purposes, net worth is determined by the combination of assets and income. Now, to be eligible for the program, the applicant’s net worth cannot exceed $123,600.00.
This is a positive change because it takes away the guesswork when determining eligibility. Acceptable ways in which net worth can decrease is through asset decrease, income decrease, or both.
Asset decrease can be done by spending money on things that are purchased for fair market value. Some examples include household goods, appliances, electronics, or other consumer goods and services. It would even be acceptable to spend money on traveling to see your grandchildren!
One way to accomplish income decrease is by deducting out-of-pocket (or “unreimbursed”) medical expenses from your total income calculation. The VA considers expenses to include activities of daily living such as shopping, food preparation, housekeeping, and laundering. Adaptive services, payments for service animal care, transportation expenses for medical purposes, health insurance premiums, and smoking cessation products are examples that can be deducted from your total income calculation, resulting in an income decrease.
At the 417 Business & Elder Law, we can help you understand your legal options and advise you along the path to a sound estate plan to include which government benefits you may qualify for. We will work with you and help you achieve peace of mind knowing your estate is protected.
This article was also published in the printed version of the Volume 13 Oct-Dec 2018 Newsletter (PDF).
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