Comments to VA’s Proposed Rule Change are due on March 24

Th VA Improved Pension with Aid and Attendance supplement is an important part of the puzzle when determining how to cover the cost of long-term care. That is why those of us who help seniors and their families find, get and pay for the care they need  are concerned about the VA’s proposed rules (RIN 2900-AO73) , which will restrict eligibility to veterans who make some transfers, in a way that is not rational, or even consistent with other public benefits programs.

Areas that are of particular concern to me, and other members of the Life Care Planning Law Firms’ Association, include:

1. The proposed regulations would impose penalty periods for asset transfers. The penalty divisor used to calculate the benefit is based on the maximum benefit the Claimant would have been entitled to receive, but for the transfer. This creates a dramatic disparity between wartime veterans and the surviving spouses of those veterans because the maximum benefit (and therefore the divisor) is approximately twice as much for the veteran as it is for the surviving spouse. As a result, a $100,000 transfer would result in a penalty period that is twice as long for the surviving spouse, the vast majority of whom are women. We are certain this was not the VA’s intent.

2. The proposed regulations impose a two-acre restriction on the lot size for the claimant’s exempt residence. This restriction would negatively affect veterans living in rural areas where lots tend to be larger, as compared to their counterparts in urban areas. This would require rural disabled veterans to either move, or incur legal fees to restructure their land ownership. There is no clear rationale for this land size restriction and this component of the rules would have a negative effect on rural veterans which has no connection to even the stated purpose of the rule.

3. The proposed rules make no exception for a transfer to a special needs trust, regardless of whether it was drafted and funded in a manner that complies with 42 U.S.C Section 1396 (d)(4)(A), and the various rules implementing that statute regarding eligibility for SSI and Medicaid benefits. No justification is given for creating rules that are inconsistent with those of other federal agencies to accomplish a similar objective.

4.  The proposed rules attempt to create a “brightline” standard for the net worth calculation by tying it to Medicaid’s Community Spouse Resource Allowance. However, in the VA’s net worth calculation, they include the veteran’s estimated lifetime income as part of the calculation.   Medicaid does not. Thus, this proposed standard is in reality much lower than the Medicaid Community Spouse Resource Allowance and will vary dramatically from veteran to veteran. Again, no justification is given for creating rules that are inconsistent with those of other federal and/or state agencies to accomplish a similar objective.

5.  The proposed regulations include language that seems to indicate that the VA benefits should have a look back period similar to Medicaid because they are essentially the same type of program. In addition to the fact that the proposed regulations would create confusion because they do not mirror the Medicaid regulations in a manner that would assist Veterans with their planning, there are additional differences between the two programs which make these regulations, if enacted, even more burdensome for veterans and their surviving spouses. In particular, Once an individual qualifies for Medicaid benefits, the program fully covers the entire cost of that person’s long-term care bills in excess of that person’s income. However, since the VA benefit has a maximum amount, the benefit is often insufficient to pay the full cost of care (especially for surviving spouses). Therefore, additional resources are needed to keep the veteran from becoming impoverished.

6.  Finally, Congress considered imposing a lookback period in SB944, but this proposal was rejected when that bill was enacted into law. If the VA is now claiming that Congressional approval is not required, why did they initially seek to include this provision in the proposed law?

The VA must consider, and respond, to all comments it receives. If you would like to comment, go to

https://www.federalregister.gov/articles/2015/01/23/2015-00297/net-worth-asset-transfers-and-income-exclusions-for-needs-based-benefits

 

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