According to the VA, these changes will ensure that only those with a genuine need receive these benefits.
There were four major changes to the qualifications for these benefits:
- Establishment of a clear net-worth limit for income and assets
- Establishment of a 36-month look-back period to review asset transfers at less than fair market value that may reduce net worth
- Establishment of up to a five-year penalty period to be calculated based on the portion of the covered assets that would have made net worth excessive, and
- Updates to medical expense definitions for consistency with VA internal guidelines.
Establishment Of A Clear Net-Worth Limit
Previously, the VA used a complicated formula to compute net worth. The new regulations create an arbitrary amount. VA says this will make computation easier, faster, and fairer.
Under the new regulations, the net worth limit for 2019 is $123,600. This limit will be increased by the same percentage as the annual social security COLA increase, if there is one. A primary residence does not count as part of net worth, also a mortgage does not count as a liability.
Establishment Of A 36-Month Look-Back Period
This rule should keep people from hiding money in order to qualify for benefits. Some bad actors would sell stocks or other assets at a loss in order to qualify for pension benefits, others would "gift" money to a friend or family member in order to bring their net worth down to the qualifying limits.
The new rule requires VA to look at an applicant's finances for the 36 months prior to the application for pension to determine if there are any financial irregularities.
Establishment Of Up To A Five-Year Penalty Period
This rule is related to the 36-month look-back period.
If an applicant transfers money to a non-qualified source as determined above, the VA will withhold the pension based on the amount of money transferred. So, if an applicant transferred $12,000 to an uncle in order to qualify for pension and their monthly pension amount is $2,000, the VA will withhold 6 months of pension ($2,000 x 6=$12,000). This new rule allows the VA to withhold pension for up to 5 years in such cases.
Updates To Medical Expense Definitions
Medical costs have long been used in computing net-worth for pension benefits, however there has been much argument as to what really constitutes a "medical cost".
Previously, the VA didn't include some medical care such as custodial care, assistance with getting around in one's home, and in-home supervision. While this type of care isn't "medical" by definition, it is related to an underlying medical condition, therefore the VA has added it as a cost.
These new rules add these and other types of types of care as qualifying expenses.
Veteran's pension is a monthly payment to certain veterans with income below levels. The veteran must have served at least one day during a wartime period and be:
- 65 years or older, or
- permanently and totally disabled, or
- in a nursing home, or
- receiving social security disability, or
- receiving supplemental security income
Survivor's pension, also known as the "death pension", is paid monthly payment to low-income, un-remarried surviving spouses and certain children of deceased wartime veterans.
Parents’ Dependency and Indemnity Compensation (DIC)
Parents' DIC is a tax-free income-based monthly benefit for the parents, or parent, of a military service member or veteran who has died from:
- A disease or injury incurred or aggravated while on active duty or active duty for training, OR
- An injury incurred or aggravated in line of duty while on inactive duty for training, OR
- A service-connected disability.
“The amended regulations bring consistency to the pension process and ensure benefits are available for Veterans and survivors with financial need,” said VA Secretary Robert Wilkie. “They will help maintain the integrity of and provide clarity to our needs-based pension program.”
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