Urgent Bulletin: New Regulations for VA Pension and Other Needs Based Benefits Effective October 18, 2018

  • The VA is implementing a 36 month look-back with a penalty period not to exceed five (5) years for those applicants who transfer assets during this look-back period. Such transfers may include the purchase of a financial instrument or investment that reduces new worth, to include trusts and annuities. Transfers that happen prior the effective date of October 18, 2018 are not subject to penalty.
  • Transfer of assets to an annuity or a trust wherein the applicant does not retain control are not countable as assets however, the transfer is penalized and any stream of income is countable income.
  • Countable Net Worth for eligibility purposes has been defined as all of the countable assets plus the annual gross income. Although this sounds horrible, it will only affect those whose income exceeds the unreimbursed medical expenses.
  • The primary residence remains an exempt asset (unless sold), however, the residential lot area cannot exceed two acres.
  • The penalty period is based on a single penalty divisor for all claimants and is about one-quarter of the divisor under Medicaid (approx. $2,000), resulting in much longer penalty periods. The penalty period begins on the first day of the month following the last asset transfer. The portion of assets that would have made the net worth exceed the allowable level are subject to penalty.

Now, more than ever, it is critical that applicants work with an elder law attorney that is VA Accredited to assess their specific situation and ensure that any strategies are carefully thought out not only with respect to the latest VA regulations, but Medicaid planning regulations as well.

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