After VA Pension is Awarded Don’t Go It Alone

I have had countless VA Pensions awarded under the non-service connected disability pension rules (Aid & Attendance).  However there are many things that a client and family can do to mess up the pension award and cause a charge back by the VA of all pension payments.  I can all but guarantee that other professionals that you may work with are not attune to the complex rules of the VA.  

If you are selling a home, please contact me for direction.  The easy way is probably not the correct way of handling a home sale.  If you are distributing money from an irrevocable trust, there are formalities that must be adhered to for VA, medi-Cal and tax reasons.  Please call me.   

Any action that you take may have an impact on the continuing of the pension.  So please call.  Don’t be penny wise and pound-foolish.

VA CUTS Red Tape and Eliminates EVR

The “EVR” is the annual Eligibility Verification Report required to be completed each year and approved by the VA to continue eligibility for VA benefits. A new policy was just implemented eliminating the EVR requirement. But don’t think that the VA will not still check up on eligibility. The VA will continue to work with the IRS and Social Security Administration to verify continued eligibility.

“The IRS is taking new steps to provide critical data to help speed up the benefits process for the Nation’s Veteran and Veterans Affairs”, states Beth Tucker, IRS Deputy Commissioner for Operations Support.

The VA stated that they will receive a letter from the VA explaining the changes and should provide instructions to continue to submit their unreimbursed medical expenses. So, there may be still some reporting requirement, but should not as onerous at it was in the past.

The VA Clarifies Requirements for Aid and Attendance When in Independent

The VA rules and regulations are oftentimes unclear and ambiguous. So it is helpful when there is clarification from the horse’s mouth as to how to handle  certain situations. On October 26, 2012, the Department of Veterans Affairs issues a letter to the pension management centers to clarify the medical necessity requirement for those veterans living in independent living.

Independent living communities (ILs) are generally the large facilities with common eating areas, separate apartments, and availability of additional services to manage one’s Activities of Daily Living (ADLs). The residents are “independent” but can be cared for with more acute needs.

In the past, ILs were treated like assisted living but now there is some clear lines of demarcation that must be observed to qualify for the aid and attendance pension.

This is also very important for those already receiving the pension as each year the Eligibility Verification Report (EVR) must be submitted and this submission may cause ineligibility. Please contact the person that filed your claim to assure continued eligibility with regard to this new policy from the VA.

As now defined by the VA, custodial care assists individuals with ADLs which are “basic self-care and includes bathing or showering, dressing, eating, getting in and out of bed or a chair, and using the toilet.” The VA considers a facility to provide custodial care if it assists with at least 2 ADLs. Management of a person’s medications was previously used as an ADL but this has now been eliminated from consideration.

The bottom line is that the cost of a room and board at an IL will be considered a medical expense if the facility provides custodial care to the individual, OR the individual’s physician states in writing that in order for the claimant to reside in the facility he/she must have a separate contract for custodial care with a third party covering the required assistance with at least 2 ADLs. In the absence of one of the two options, the cost of the room and board will not be considered.

Anyone desiring a copy of the October 26, 2012 letter can contact me via email and I will forward a copy.

Transfer Penalties on the Horizon

On June 6, 2012, the U.S. Senate held a hearing on VA “aid and attendance” benefits.  For a variety of reasons, the suggestion was to create a look back period and penalty for transferring assets with the intent to then qualify for benefits.  

California has a penalty for transferring assets to qualify for Medi-Cal benefits but proper and well-accepted planning techniques can minimize and oftentimes eliminate these penalties.  But if the VA imposes a penalty, it could be a game changer.   

On June 6, 2012 a bill was introduced to provide the following: 

A lookback period of 36 months, beginning on the date of application; (2) A period of ineligibility for gifts, or transfers of assets made during the lookback period for less than fair market value, including transfers to trusts, or purchases of annuities or other financial products; (3) A method of calculating the length of the ineligibility period resulting from a transfer of assets for less than fair market value made during the lookback period, as follows: the value of the transferred assets divided by the value by the monthly pension amount the applicant would have received but for the gift equals the number of months of ineligibility resulting from the gift; and, (4) The ability to fully cure a gift. 

In California this would force clients to plan much earlier than before to get past the lookback period prior to needing to access benefits.  The transfer penalty for a pre Medi-Cal transfer starts when the transfer is made.  The VA penalty period would start when you apply!  This creates a much longer period of ineligibility that must be managed in the estate plan. 

The good news is that there are a variety of options in this regard that still give clients control and flexibility yet plans well in advance for the long-term care risk.

For more information, please contact me

Veterans Living “In Sin” Makes Dollars and Cents

In my practice I have seen over 50% of single seniors remarry. However, sometimes the law is such that there are drastic penalties for marriage that one needs to be aware of. 

My practice focuses on accessing government benefits to assist families with costs of long term care.  If you are a veteran and live in assisted living, or live at home but are receiving care, you could be receiving a veteran’s benefit of $1703 per month (tax free I might add).  If the veteran has a “Sweety” that is also a veteran, or a surviving spouse of a deceased veteran, and is receiving some care at home, or also lives in assisted living, by marrying, the benefits will drop!  For example, a single veteran could be receiving $1703 and the surviving spouse of a deceased veteran from a prior marriage could be receiving $1,094.  So the total VA benefit for the two of them would be $2,797 if they merely lived together.  If they marry however, the spouse loses his or her benefit since they are no longer a surviving spouse (the new veteran spouse is still living) and the total for the two of them would drop to $2,019, for a loss of over $750/month. 

If there are two veterans that are considering marriage, each could be receiving $1,703 for a combined total of $3,406.  But if they marry, that amount would drop to $2,631, for a loss of almost $800/month. 

Similarly in Medi-Cal planning, a spouse has certain limits that he or she can have if their spouse were to enter a nursing home.  If the assets were separate property when they decided to go into the relationship with each other, then by marrying, it is much tougher to protect the assets of the Well Spouse (the one not in the nursing home). 

Marriage is a personal and sacred union and often religious or moral considerations are more important.  All I am doing is pointing out some of the economics without regard to the personal decisions that are made. 

For more information, please contact me.