April 2019 - K.T. Williams Law

On October 18, 2018, the Department of Veterans Affairs (VA) changed its old pension rules. The changes affect Veterans and Veteran’s families, including Aid and Attendance Benefits. The changes are quite comprehensive and impact net worth, asset transfers, penalty periods, medical expenses, and income deductions.

NET WORTH LIMITS

The new limit on net worth will equal the maximum community spouse resource allowance (CSRA) for Medicaid purposes. This number started at $123,600 in 2018 and increased to $127,061 in 2019.

Annual income is added to a claimant’s assets to come up with a total net worth number. A Veteran’s assets include the assets of the Veteran and the Veteran’s spouse. Assets are defined as “fair market value of all property that an individual owns, including all real and personal property”, unless otherwise excluded under other parts of the rule. Mortgages and liens reduce the value.

EXCLUDED “ASSETS”

The primary residence, whether lived in or not, remains excluded from the definition of assets, and if sold, the proceeds will not count if used to purchase another residence within the same calendar year as the sale. Personal mortgages on the primary residence will not reduce the value for the net worth calculation because the residence is excluded anyway. If the residential lot area exceeds 2 acres, then the value of the additional land in excess of 2 acres will be included in the asset calculation. Personal effects such as appliances and automobiles are excluded.

CALCULATING NET WORTH

An example provided in the VA rules states that if the claimant’s assets total $117,000 and annual income is $9,000, the net worth is $126,000. This amount exceeds the net worth limit ($123,600). Unless the net worth is decreased, the claimant wouldn’t qualify.

DECREASING NET WORTH

There are three ways net worth may decrease: (1) the assets decrease; (2) annual income decreases; or (3) both decrease. Assets decrease when they are spent and something of equivalent value is received in return, usually a service or excluded asset.

ASSET TRANSFERS AND PENALTY PERIODS

A “covered asset” is an asset that “was part of the claimant’s net worth, was transferred for less than fair market value, and if not transferred, would have caused or partially caused the claimant’s net worth to exceed the net worth limit…”. Therefore, only the amount transferred in excess of the net worth limit ($123,600) will be subject to a penalty. With regard to transfers to a trust, annuity or other financial instrument or investment, “uncompensated value” means the amount transferred.

LOOKBACK PERIOD

The lookback period for all transfers is 36 months immediately preceding the date the VA receives an original pension claim or a new pension claim after a period of non-entitlement. This definition does not include any transfers prior to October 18, 2018. VA will disregard asset transfers made before October 18, 2018.

ALLOWED TRANSFERS TO TRUST

A claimant may transfer assets to a trust established for the claimant’s disabled child if the child is incapable of self-support AND there is no circumstance where the trust assets can benefit the claimant.

CALCULATION OF THE PENALTY PERIOD

There is a 5-year limit on the penalty period. The penalty begins the first day of the month following the transfer. Entitlement to pension will begin the last day of the last penalty period month, with payment to begin the following month.

MEDICAL EXPENSES THAT MAY BE DEDUCTED FROM INCOME

Medical expenses for VA purposes are those that are “medically necessary; that improve a disabled individual’s functioning; or that prevent, slow, or ease an individual’s functional decline.”

1. Health care provider payments.
2. Medications, medical supplies, medical equipment, medical food, vitamins and supplements. Prescriptions and non-prescription medications.
3. Adaptive equipment. Along with adaptive services, payments for service animals are included under this section, including veterinary care.
4. Transportation expenses, as long as the transportation is for medical purposes.
5. Health insurance premiums. Payments for long-term care insurance premiums are included, as well as health insurance and Medicare premiums for parts B and D.
6. Smoking cessation products.
7. Institutional forms of care and in-home care. Hospital charges, nursing home charges, medical foster home charges and inpatient treatment centers are allowable expenses, including the cost of meals and lodging. Payment for in-home care to assist with ADLs (activities of daily living) and IADLs (instrumental activities of daily living) will be considered valid medical expenses as long as health care or custodial care is provided.

The major changes to VA’s pension rules will impact Veterans and their families for years to come. If special care isn’t taken to comply with the new requirements, the benefits will be in jeopardy. Contact us for sound legal guidance to understand what should be done to qualify for these important benefits.

National Health Care Decisions Day is April 16th, a day set aside to recognize the importance of advance health care planning for you and your loved ones. None of us should underestimate how much peace we can give those around us by simply making our wishes known. Health care professionals, estate planning attorneys, and caregivers recognize the importance of advance health care planning. For us, advance health care planning is part of our daily lives. We work with individuals and families on their Advance Health Care Directives, such as Living Will, Health Care Power of Attorney or Medical Power of Attorney, or Designation of Health Care Surrogate. Although routine for us, advance health care planning is uncharted territory for others. This article explains how you can be ready for National Health Care Decisions Day, and it answers many questions about advance health care decisions.

What are Advance Health Care Directives?

Advance Health Care Directives (AHCDs) are written instructions we give family, friends, and our doctors. These instructions tell them how we feel about the health care decisions that might come up when we can’t make decisions for ourselves.

AHCDs take many forms, and they go by a variety of names. A Living Will is an example. Another example is a Health Care Power of Attorney or Medical Power of Attorney. Perhaps, you’ve heard of a Designation of Health Care Surrogate. These are all AHCDs.

AHCDs do not take the place of our own decision making. Rather, they express our decisions. If we’re unable to make decisions at any time after completing our directives, our directives are reviewed to see what we want.

What Questions are Covered in Advance Health Care Directives?

AHCDs tell others what kind of health care we want to receive if we become unable to speak for ourselves. They also allow us to identify who we want making decisions for us. Our health care decision maker is called a Health Care Surrogate (HCS). This person will communicate directly with our physicians and nurses about our condition, treatment, and prognosis. Then, they will work together to decide what we would. Our AHCDs are the written guide that they will follow.

There is another important step, and we can’t overstate how important it is. We must tell our Health Care Surrogate and our family how we feel about our health care. The written AHCDs provide important details and directions to them, but we should also talk to them about it. Our conversations will help them better understand how we feel. This will give them the confidence they need to make the correct decisions.

What Do We Need To Consider?

As we look ahead to completing our own AHCDs, we should consider some of the health care decisions that may come up. And we should consider who we want to make them for us. Let us start with our Health Care Surrogate. This is who will make health care decisions for us when we can’t make them for ourselves. This should be someone you trust. And this should be someone who can handle the weight of the decisions they may have to make. Often, spouses or our children are chosen to be our HCS. However, they may not be the best choice. I have seen instances where siblings, friends, or co-workers have been chosen as HCS. After you’ve chosen your HCS, tell them about your choice, then tell them how you feel about the health care decisions they may have to make.

Next, consider if you want life support. And consider if there are some circumstances when you want life support and if there are some circumstances when you don’t want life support. Also, consider if you want feeding tubes and if there are some circumstances when you don’t want feeding tubes.

Perhaps, we don’t like the idea of life support or feeding tubes. But maybe we want those things if they will allow us to recover and lead a quality life. In those instances, whether talking about life support or feeding tubes, it is important to communicate our wishes to our HCS so that the surrogate can correctly carry them out.

Why Do It Now?

AHCDs are easy to complete, and there is no better time than the present to complete them. If we change our mind, changing our AHCDs is simple. Also, completing our AHCDs gives us time to openly tell our HCS, our family, and other loved ones how we feel about the topics covered in AHCDs. Finally, if we visit a physician, have a hospital stay, or get a checkup, it is inevitable that we will be asked if we have a Living Will. Won’t we feel better if we’re able to say “yes” to that question rather than sheepishly saying “no”. Contact us to help you with your Living Wills and other Health Care Directives.

VA PENSION RULES AFFECTING VETERANS AND THEIR FAMILIES: AID AND ATTENDANCE BENEFITS

April 16 – National Health Care Decisions Day! Are you ready?

K.T. Williams Law PLLC

Office Hours

Follow us on Facebook