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New VA Rules Drastically Change VA Planning

On September 18, 2018, the Department of Veterans Affairs (VA) amended the rules regarding eligibility for VA pension.  These new rules will change VA planning drastically, including the following:

First, there is now a look-back period of 36 months when applying for needs-based pension benefits for wartime Veterans or for the surviving spouses and dependent children of wartime Veterans. Any asset that was transferred for less than fair market value during the 36-month period immediately preceding the pension application will result in a penalty period, not to exceed five years. 

Second, there is now a bright-line rule regarding the net worth of a Veteran. This amount is currently set at $123,600.00, which is also the maximum Community Spouse Resource Allowance amount allowed by Medicaid. This number will increase annually with the increase in Social Security benefits.  If the Veteran or other claimant has a net worth over the threshold and thus does not qualify for benefits, he or she can spend-down assets by purchasing goods or services for fair market value. 

Finally, a homestead owned by the Veteran is not included in the net worth calculation. However, there is a two-acre limit imposed on the homestead.  If the claimant’s homestead is over two acres, then other rules apply and the value of the property in excess of two acres may be included in the net worth calculation. 

These changes have broken from the historical rules of no look-back period and no set asset limit.  The complete set of new rules, including the above, will go into effect on October 18, 2018.