VA Publishes Look-Back Rule for Pension Benefits

Oct 1, 2018 | Estate Planning

Many veterans in our community rely on VA pension benefits to help cover the cost of assisted living and other long-term care expenses. On September 18, 2018, the Department of Veterans Affairs (VA) published a final rule dealing with net worth, asset transfers and income exclusions for VA pension.  Here are some highlights from the final rule:

  • Effective date is October 18, 2018.
  • Imposes a 36-month look-back period for asset transfers.
  • Penalty period for asset transfers limited to 5 years.
  • Penalty divisor for both veterans and spouses is the maximum annual pension rate (MAPR) with aid and attendance allowance and one dependent divided by 12.
  • The look-back rule is not retroactive.  VA will not “look back” to a time before the effective date.
  • Establishes a net worth limit equal to the community spouse resource allowance (CSRA) for Medicaid purposes, which is currently $123,600.
  • “Net worth” is defined to include assets plus annual income.
  •  Primary residence remains exempt but lot area limited to 2 acres.
  • Assets converted into an annuity will incur a transfer penalty.
  • Previously there was no statutory definition for the “medical expenses” that may be deducted for VA purposes.  The final rule includes a definition for deductible medical expenses.

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