We have written before about a much under-used veterans benefit available to help veterans and their spouses pay for assisted living care and home care. Veterans Aid and Attendance (A&A) is available to any veteran who has served at least 90 days during a “wartime” period (wide definition there) and has high medical or care expenses (which includes cost of assisted living).
On Oct. 18, the rules regarding eligibility for A&A changed drastically.
There is now a 36-month “look-back period” similar to the period used to determine nursing home Medicaid eligibility. Any asset that was transferred for less than fair market value during the 36-month period immediately preceding the A&A application will result in a penalty.
Before Oct. 18, one could, theoretically, give away a million dollars on Monday and qualify for A&A on Tuesday. That is no longer allowed.
There are a few exceptions to the new transfer rules, including transfers to a trust established for a child who is incapable of self-support.
Regarding annuities, if the annuity can be liquidated, it is counted as an asset. If the annuity was purchased during the look-back period, then a penalty will be imposed. A claimant will not be subject to a penalty period if the transfer was the result of fraud, misrepresentation, or unfair business practices.
The amount of assets the A&A applicant can keep has been raised significantly to $123,600 (excluding the home, which can be kept – see below). This number will increase annually with the increase in Social Security benefits.
If the assets exceed $123,600, the veteran can spend-down assets by purchasing goods or services for fair market value. Like the rules for Medicaid eligibility, it is the “gifting” aspect of transfers that can get someone in trouble.
There are still many legal loopholes to use, but giving away assets is not one of them.
A home is not included in the asset calculation. However, there is a two-acre limit imposed on the homestead. If the claimant’s homestead is more than two acres, then other rules apply and the value of the property in excess of two acres may be included in the calculation.
The value of “personal effects suitable to and consistent with a reasonable mode of life” is not included in the asset calculation. This would include vehicles and household goods.
The annual income of the claimant and certain dependents is included in the calculation of net worth. However, reasonable and predictable unreimbursed medical expenses can be deducted from income. Assisted living expenses are considered medical expenses.
These two changes have broken from the historical rules of no look-back period and no set asset limit. So, any assets transferred before Oct. 18 will NOT be subject to the 36-month look-back period, nor will the asset limit be applicable.
For assistance and a consultation, call an elder law attorney familiar with this important veteran benefit.
Brian T. Treacy is an elder law and estate planning attorney with an office in Bluffton. hiltonheadelderlaw.com