New VA Benefit Rules - Medicaid Planning

ALERT - VA Benefit Rules You need to Know!

Did you miss our live CLE Course?

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CLE Course: New VA Benefit Planning Rules: What’s Next?

The 1-hour CLE Course, originally held on 10/2/18, is now available as an online course. To view the pre-recorded webinar click on the link below.

The course qualifies for 1-hour of CLE (where applicable) and counts towards VA accreditation CLE requirements).

Online Course

For years the VA has teased putting a transfer penalty in place, similar to Medicaid. They just never seemed to be able to pull the trigger until now. This week the VA published in the Federal Register myriad new rules that will impact the VA Improved Pension (“VAIP”), more commonly known as the Aid & Attendance benefit.

From a planning perspective, the most punitive of these rules would seem to be the implementation of a transfer penalty when a prospective applicant for benefits reduces their net worth by giving away assets. Until the implementation of this rule, the VA had no penalty for artificially bringing one’s net worth below the limit. This would allow for transferring assets to children or irrevocable trusts to achieve benefit eligibility.

Under the new rules, the VA has established a 3-year lookback similar to the look back established for Medicaid as a result of OBRA ‘93. If any assets were transferred during that timeframe, there will be a penalty which, also like Medicaid, will result in a period of ineligibility for Aid & Attendance.

Another planning tool for reducing net worth has been the use of immediate annuities to convert IRAs into an exempt resource treated only as an income stream. In a move more punitive than Medicaid, which allows for certain compliant immediate annuities, the VA has moved to create transfer penalties for annuities as well.

The most punitive rule, in this author’s estimation, is not the implementation of a penalty on transferring assets, but the new requirement that qualifying medical expenses used to determine the Income for VA Purposes (“IVAP”) must come from licensed care providers. Most states to do not require licensure of non-medical custodial care providers. Additionally, many veterans eligible for the VA Aid & Attendance benefit use family caregivers under private caregiver agreements.

Implementation of this rule is not retroactive, so there are still planning opportunities ahead in the next few weeks for those trying to grandfather transfers in without a penalty. A one-hour CLE course has been developed to discuss a summary of the new changes, the changing planning environment, and planning opportunities before the implementation of the new rule takes effect. Discussed in this one-hour CLE course are the following: