VA Final Rule on Needs-Based Benefits

As an advocate in the community, Elder Law P.A. aims to keep you informed as to any new laws or guidelines that may affect you.

Effective October 18, 2018 the U.S. Department of Veterans Affairs instituted new guidelines as it relates to war-time veterans or their surviving spouses who are applying for Needs-Based Benefits. As defined by the VA, “needs-based benefits” refers to a VA benefit in which the claimant’s income is an entitlement factor or both a claimant’s income and assets are entitlement factors. “Need” refers to financial need and does not refer to a claimant’s level of disability. The VA considers the following as “needs-based”: Pension for veterans and survivors under current pension laws (formerly known as Improved Pension), section 306 pension for veterans and survivors, old-law pension for veterans and survivors, and parents’ DIC.

Under the new rule, the VA has made several changes as it pertains to a claimant’s assets and net worth. The VA defines net worth  as the sum of a claimant’s or beneficiary’s assets and annual income. The VA will use the total of the claimant’s annual income and assets to determine if the individual qualifies. The net worth limit effective October 18, 2018 is $123,600. This limit will increase according to the same standards as the Social Security increase, whenever there is a cost-of-living adjustment.

The VA has also implemented a 36 month “look-back” period regarding asset transfers. Any application received by the VA after October 18, 2018 will be subject to the Look-back period of 36 months. This means that the VA will review any asset transfers made in the last 36 months to determine if the assets that were transferred are considered a covered asset amount. A covered asset amount refers to an asset that (1) was part of the claimant’s net worth, (2) was transferred for less than fair market and (3) if not transferred, would have caused or partially caused the claimant’s net worth to exceed the net worth limit. The VA will not review asset transfers made prior to October 18, 2018. If an asset transfer is determined to be a covered asset, the VA will assess a penalty period not to exceed five years. During the penalty period, the applicant will not be eligible for benefits.

The countable net worth can decrease when: (1) assets decrease, (2) annual income decreases or (3) both assets and income decrease. Assets can decrease when assets are properly spent down on goods or services are purchased for fair market value, unless the goods are part of the net worth. Income can decrease when a claimant’s unreimbursed medical expenses are deducted from income. Examples of deductible medical expenses include, but are not limited to: care by a licensed health care provider, medications, medical supplies, medical equipment, transportation expenses, health insurance premiums, etc.

For the complete ruling provided by the Federal Register, please click here.

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