Breaking News on VA Rule Changes

The Veterans Administration has announced rule changes that will impact many, including a three-year look-back window.

Department of Veterans Affairs Rule AO73

On January 23, 2015, the Department of Veterans Affairs proposed Rule AO73, regarding net worth, asset transfers, and income exclusions for needs-based benefits. The final wording of this rule has been posted and will take effect on October 18, 2018.

Regulations.gov offers the following summary of the new rule:
The Department of Veterans Affairs (VA) amends its regulations governing veterans' eligibility for VA pensions and other needs-based benefit programs. The amended regulations establish new requirements for evaluating net worth and asset transfers for pensions and identify which medical expenses may be deducted from countable income for VA's needs-based benefit programs. The amendments help to ensure the integrity of VA's needs-based benefit programs and the consistent adjudication (decision-making or judgment) of pension and parents' dependency and indemnity compensation claims. Lastly, the amendments effectuate statutory changes for pension beneficiaries who receive Medicaid-covered nursing home care, a statutory income exclusion for disabled veterans, and longstanding statutory income exclusions for all VA needs-based benefits.

A key element of the new rule, Regulations.gov clarifies that the VA proposed to amend its adjudication regulations governing its needs-based pension benefit for wartime veterans and for surviving spouses and children of wartime veterans, as well as its adjudication regulations governing its older pension programs and parents' dependency and indemnity compensation (DIC).

The new rule included the adoption of several proposed specific provisions:

First, VA adopted proposed changes to the pension benefit program with respect to the amount of net worth a claimant could have to qualify for pension (for purposes of this supplementary information, references to a claimant include a beneficiary). It adopted a bright-line net worth limit and defined as the limit the dollar amount of the maximum community spouse resource allowance (CSRA) for Medicaid purposes, at the time of publication of the final rule. It defined net worth for VA purposes as the sum of a claimant's assets and annual income.

Second, VA adopted a proposal to set forth the manner in which VA calculates a claimant's assets. It adopted a proposal to clarify VA's treatment of a claimant's residence for asset calculation purposes. It adopted a definition of “residential lot area” to mean the lot on which a residence sits that is similar in size to other residential lots in the vicinity, but not to exceed 2 acres (87,120 square feet), unless the additional acreage is not marketable.

Third, VA adopted a proposal to establish a 36-month “look-back” period and a penalty period not to exceed 10 years for those who transfer assets during this look-back period to qualify for pension. It established that a transfer for less than fair market value would include an asset transfer to, or purchase of, any financial instrument or investment that reduces net worth and would not be in the claimant's financial interest were it not for the claimant's attempt to qualify for pension.

Finally, VA adopted a proposal to define and identify medical expenses that VA may deduct from countable income for its needs-based benefits that utilize such deductions. It adopted definitions of “activities of daily living” (ADLs); “instrumental activities of daily living” (IADLs); “custodial care”; and “assisted living, adult day care, or similar facility.” It defined “custodial care” as regular assistance with two or more ADLs or supervision because an individual with a mental disorder is unsafe if left alone due to the mental disorder. The rule provides that, generally, medical expenses do not include either assistance with IADLs or meals and lodging in an independent living facility. The rule provides that an in-home care attendant's “hourly rate may not exceed the average hourly rate for home health aides published annually” in the Market Survey of Long-Term Care Costs published by the MetLife Mature Market Institute.

For full details of each of the aforementioned provisions, please use the following link to Regulations.gov:
https://www.regulations.gov/document?D=VA-2015-VBA-0003-0871

For further information, one can contact Timothy Bailey, Acting Assistant Director, Pension and Fiduciary Service, Veterans Benefits Administration, Department of Veterans Affairs, 21P1, 810 Vermont Ave. NW, Washington, DC 20420, (202) 632-8863. (This is not a toll-free number.)