The VA issued a final regulatory change for the Aid & Attendance benefit that goes into effect on October 18th. Included are some helpful changes to the way the VA calculates Net Worth and Medical Expenses. Also included are some more challenging changes such as the new 36-month look-back period and Transfer Penalty. We explain some of these new regulations below.
The Net Worth limit is $123,600 for all people applying for Aid & Attendance benefits. This number is also the maximum Net Worth Limit that Medicaid designates for a community spouse. It is adjusted each year with inflation. For the VA, Net Worth includes annual income and total assets. The VA excludes your primary residence (and up to 2 acres of land that it sits on) and personal property including your vehicle from the calculation of total assets.
Annual Income is calculated as all income received by the household less any medical expenses. The calculation of Annual Income cannot be less than $0. Medical expenses include prescriptions including vitamins/supplements/medical food, health insurance premiums, Durable Medical Equipment, transportation for medical purposes, health care, and potentially Custodial Care in a healthcare facility (if you require Aid & Attendance or your medical provider certifies that you need a protected environment). A Healthcare Facility is a facility where a disabled individual receives healthcare or custodial care that is staffed 24/7 with care providers.
Health care includes assistance with Activities of Daily Living: bathing, dressing, eating, toileting, transferring, or ambulating. The new rules also include Instrumental Activities of Daily Living such as shopping, food preparation, housekeeping, laundering, managing finances, medication management, transportation for non-medical purposes, or using the phone, if you require Aid & Attendance or your medical provider certifies that you need a protected environment.
The biggest change is the VA instituting a transfer penalty and a 36-month look-back period. The look-back period goes into effect on October 18th and does not apply to any transfers made prior to October 18, 2018. For uncompensated transfers of assets that would have made your net worth over the limit made after October 18, 2018 the VA will assess a penalty that will begin the month after the transfer. You will not be eligible to receive any money from the Aid & Attendance benefit during the penalty period. The length of the penalty is determined by dividing the value of assets that were transferred that would have made net worth over the Net Worth Limit by the Penalty Divisor. This year, the divisor is $2,170. It is adjusted each year for inflation.
Uncompensated transfers include funding Trusts and Annuities. There is no penalty if your Net Worth decreases because you spent assets on items or services for which fair market value is received. The VA makes an exception for Special Needs Trusts created for the Veteran’s child that the VA has rated incapable of self-support.