Jan Neal Law Firm LLC

Alabama Elder and Special Needs Law


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New VA Pension Benefit Rules To Be Implemented 10/18/18

The Department of Veterans Affairs (VA) has finalized rules that were originally proposed in 2015 that will make it more difficult to qualify for VA pension benefits known as Aid and Attendance and Housebound Benefits. These new rules will change how much an applicant can own and how much an applicant can give away and qualify for benefits by establishing an asset limit, a look-back period, and asset transfer penalties for claimants applying for VA pension benefits that require a showing of financial need.

The VA offers Aid and Attendance as cash payments to low-income veterans (or their spouses) who are in nursing homes or who need help at home with everyday tasks like dressing or bathing.

Currently, to be eligible for Aid and Attendance, a veteran (or the veteran’s surviving spouse) must meet certain income and asset limits. The asset limits aren’t specified, but $80,000 is the amount an applicant is usually allowed to keep. However, unlike with the Medicaid program, there historically have been no penalties if an applicant gives away assets at any time before applying. That is, before now you could transfer assets over $80,000 before applying for benefits, and the transfers would not affect eligibility.

Not so anymore. The new regulations will resemble, to some extent, the existing Medicaid regulations in that the new VA rules set a net worth limit of $123,600, and applicants will be penalized for giving away property within three years of application. This net worth limit of $123,600 will include both the applicant’s countable (non-excluded) assets and his or her income, and net worth will be indexed to inflation in the same way that Social Security increases.

The net worth limit is calculated after first deducting property that will be excluded.  Excluded property includes an applicant’s house (up to a two-acre lot and additional acreage if it is not marketable), and it will not count as an asset even if the applicant is currently living in a nursing home.  Other exclusions from net worth include payment for medical care from their income, including the payments to assisted living facilities.

The regulations also establish a three-year look-back provision. Applicants will have to disclose all financial transactions they were involved in for three years before the application (similar to the Medicaid five year look-back). Applicants who transferred assets to put themselves below the net worth limit within three years of applying for benefits will be subject to a penalty period that can last as long as five years. This penalty is a period of time during which the person who transferred assets will not be eligible for VA benefits. There are exceptions to the penalty period for fraudulent transfers and for transfers to a trust for a child who is unable to provide “self-support.”

Under the new rules, the VA will determine a penalty period in months by dividing the amount transferred that would have put the applicant over the net worth limit by the maximum annual pension rate (MAPR) for a veteran with one dependent in need of aid and attendance. In 2018 that amount is $2169.67.

For example, assume the net worth limit is $123,600 and an applicant has a net worth of $115,000. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $145,000, which exceeds the net worth limit by $21,400. The penalty period will be calculated based on $21,400, the amount the applicant transferred that put his assets over the net worth limit (145,000-123,600).  The transfer subject to penalty would be divided by the 2018 MAPR of $2169.67, resulting in a 9.86 month penalty ($21,400 divided by $2169.67 = 9.86).  The penalty begins to run on the first day of the month following the month of transfer.

The new rules go into effect on October 18, 2018. The VA will disregard asset transfers made before that date.

The new regulations may be read at https://www.federalregister.gov/documents/2018/09/18/2018-19895/net-worth-asset-transfers-and-income-exclusions-for-needs-based-benefits


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Elder Law Training at OLLI

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On October 10, 2016, Jan taught the first of a two part presentation on Elder Law at  Osher Lifelong Learning Institute (OLLI) at Auburn University entitled Elder Law:  Enhancing the Lives of Seniors Through Education, Planning For What Comes Next.  The second session will be taught on Monday, October 17, 2016, at 2:30 p.m. at The Clarion in Auburn, Alabama.  

Topics covered in this training include:  Older Americans Act Legal Assistance; Important Documents Needed for Proper Planning; Authority Issues; Long-term Care Levels of Care and Payment Options; Medicaid for Long-term Care; Special Needs Planning; Probate; Administration of Estates; Planning for Last Remains and Funerals.

A 39 page Keynote presentation covering these topics is provided to course participants.

Anyone interested in this and the many other learning opportunities available through OLLI can learn more by visiting the OLLI website.


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Elder Law at OLLI

Jan is teaching a two part course on Elder Law at Osher Lifelong Learning Institute at Auburn University (OLLI at Auburn).  See page 11 of the OLLI Spring 2016 catalog for the course description.  The first session is Wednesday, March 30, 2016, from 10:15 a.m. – 11:45 a.m., and the second will be on Wednesday, April 6, 2016, from 10:15 a.m. – 11:45 a.m.  Topics to be covered include Older Americans Act Legal Assistance, Authority Issues and Advance Directive Options, Long-Term Care Planning, Long-Term Care Payment Options Including Medicaid, Special Needs Planning, Probate, Administration of Estates and Funeral Planning.  If you aren’t a member of OLLI, check out all the benefits and learning opportunities here.

Materials for the training can be downloaded at elder-law-training-for-olli-at-auburn-033016-60244085 and will be posted at this site soon.


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Changes Likely To Come To VA Pension Eligibility Standards

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In January the Department of Veterans Affairs (VA) announced changes to agency regulations for calculating eligibility for Special Monthly Pensions (such as New and Improved Pension, Aid and Attendance and Housebound Benefits). When the rule is adopted it will result in sweeping changes in how the VA calculates eligibility for pensions, and it will result in penalties for transferring assets out of the veteran’s name within three years of application. Through this change, the VA will look more like Medicaid.

Special Monthly Pensions are for veterans who served for 90 days or more during active wartime who were honorably discharged. They may qualify for benefits if their health care expenses leave them without adequate resources to live. Surviving spousal benefits are also available when the veteran is deceased.

Income and Asset (Net Worth) tests are performed to determine eligibility, and there is currently no penalty for transferring assets.

Currently to calculate Income, qualifying medical expenses are deducted from the veteran’s (or spouse’s) income to calculate adjusted income. In 2015 a veteran with no dependents applying for A&A who does not have $1789 per month in adjusted income may be eligible for an amount to bring his or her income up to $1789 (referred to as Maximum Annual Pension Rate or MAPR). The monthly MAPR for a veteran applying for A&A with one dependent is $2120. There are different minimum eligibility standards for different categories of benefits (such as New and Improved Pension, A&A, Housebound Benefits and veteran alone or with dependents, widows, surviving children, etc.), but that is the general scheme. Income minus qualifying medical expenses = adjusted income which is subtracted from the MAPR to determine the amount the veteran or spouse is eligible to draw.

Currently to calculate Assets (Net Worth) the VA has allowed the applicant to have $80,000 or less to qualify with the residence and automobile excluded.

So remember, the VA already looks at Income and Assets (Net Worth), and you have to meet both tests to qualify for a Special Monthly Pension.

The Proposed Rule

Under the proposed rule Income and Assets (Net Worth) will still be considered, but there will be more some changes in what counts and how it counts.

Transfer Penalty:

 Applicants who give away their property within three years of applying for benefits will be penalized. In other words, there will be a three year look back, and transfers can result in a penalty lasting as long as ten years, meaning that the veteran cannot draw benefits for the length of the penalty. To calculate the penalty the amount transferred within three years of application will be divided by the monthly MAPR in effect at the time of the application to arrive at the number of months of penalty. The penalty begins to run at the time of the transfer.

The New Income Calculation: Gross income will continue to consist of payments from any source except for casualty losses and capital gains from the sale of an asset. Medical expenses will continue to be deducted from gross income to calculate adjusted income. The applicant’s adjusted income must fall below the MAPR to qualify for a pension.

The New Asset (Net Worth) Calculation: Allowable net worth will line up with Medicaid’s community spouse protected amount of $119,220. This amount is calculated by adding all the resources not excluded plus annual adjusted income for the year.

To determine net worth the VA does exclude the principal residence and a “reasonable amount of land” around the house, capped at two acres. As under current rules, the automobile and household items do not count so long as they, too, are “reasonable.” Basic living expenses such as food, clothing and shelter can be deducted from the year’s income that is included in the calculation for Net Worth level.

There is one more possible adjustment required to arrive at the final Net Worth. Remember those proceeds from casualty losses and capital gains from the previous year that did not count as income? In calculating the Assets (Net Worth), those amounts may be added to this year’s assets to arrive at countable Net Worth.

Contact your County VA Office to apply for a Special Monthly Pension or to obtain more information about eligibility.

Veteran Pension Rates (MAPR) are published yearly.