Veterans Aid and Attendance – New Rules to Qualify for Benefits
The Veterans Affairs (VA) Office recently published new forms for pension claims that all Veterans and their families should be made aware of.
First, there are substantial new documentation requirements. These new requirements are likely due to more and more Veterans are becoming aware of their rights to benefits. Here at Concierge Care Alliance we make it our mission to provide thoughtful analysis and solutions to changes in policy and procedures affecting senior Veterans.
The new rules address Net Income and Net Asset Limitations (“Aid and Attendance”) claims.
Here’s what’s new: Forms for Veterans Pension (21P527EZ), Survivors Pension (21P-534EZ) and Income and Asset Statement in Support of Claim for Pension or Parents Dependency and Indemnity Compensation (21P-0969).
Here’s the difference: The forms are much longer, and more information is required. For instance, the VA Adjudication Procedures Manual says that when you transfer assets over $123,600 before October 18, 2018, they will be disregarded; however, they must still be reported on the application. It also appears that the VA is standing firmly that outright past gifts or transfers that are made by the claimant are currently being considered part of the asset base, regardless of written confirmation that it was a pure transfer of the gift. They are rationalizing that the funds will be available for the claimant’s use despite the simple transfer! From this, you can deduce that any trust and/or annuities created prior to October 18thwill be outside of the new VA rules. They will ignore the transfer; however, still consider the asset available to the claimant and consequently, evaluate it as an asset.
Documentation: The VA has not previously required copies of retirement account, bank statements, or investment accounts. They will now require evidence of income and assets for all claims.
Medical Expenses: The VA has added additional pages that must be signed and completed by the care provider. The new pages (12 and 13) do not properly reflect the new law, either. An example is that the definition of “supervision” is now limited to mental deficits only, when in fact, the law and manual both provide that supervision extends to mental, physical and developmental deficits. They have not provided an area for explanation on the claim form either, so it’s unclear what documentation will be accepted to rectify this problem.
Implementation and enforcement: This is also confusing, since we have learned that the old forms may be grandfathered for twelve months, but this does not jive with the new law! Speculation is that new claims will only be accepted on the new claim forms.
End Result: Don’t try this at home. Most people will not be able to complete these forms without assistance.
Because of the complexity of these new forms, we have learned that productivity is expected to decline by about 25% to 50%; so, from an already sluggish 60-80 days, to a snail pace of 180 days! Unfortunately, this time frame excludes the high likelihood of the VA asking for clarification on submitted forms.
Veterans – Not allowed to use Annuities to reduce net worth
Second, the above information applies only to VA net worth rules effective October 18, 2018. For Veterans who have spoken with a financial advisor offering annuities as a solution, please understand that this is not correct information.
Funds placed into an annuity by a claimant are counted as part of the claimant’s estate with regard to the net worth determination by the VA.
The new law is as follows:
38 C.F.R. 3.276 (a) (5) Transfers for less than Fair Market Value
Transfer for less than fair market value means—
(i) Selling, conveying, gifting, or exchanging an asset for an amount less than the fair market value of the asset;
(ii) A voluntary asset transfer to, or purchase of, any financial instrument or investment that reduces net worth by transferring the asset to, or purchasing, the instrument or investment unless the claimant establishes that he or she has the ability to liquidate the entire balance of the asset for the claimant’s own benefit. If the claimant establishes that the asset can be liquidated, the asset is included as net worth. Examples of such [prohibited] instruments or investments include—
(A) Annuities. Annuity means a financial instrument that provides income over a defined period of time for an initial payment of principal.
(B) Trusts. Trust means a legal instrument by which an individual (the grantor) transfers property to an individual or an entity (the trustee), who manages the property according to the terms of the trust, whether for the grantor’s own benefit or for the benefit of another individual.
Description: A claimant by not gift, transfer, or purchase a financial instrument for less than the Fair Market Value of the transaction, or if the transaction creates false eligibility. For instance: A veteran is eligible for VA benefits except for assets in excess of $123,600. The veteran has total assets of $200,000. Of this amount, $90,000 is held in a retirement account. A financial advisor recommends transferring the $90,000 into an annuity for income and to reduce assets, thereby allowing the claimant to qualify for VA benefits. If the annuity provides no access to principal, then the transfer is unacceptable because it was made for less than the Fair Market Value. If the principal of the annuity is available, the annuity is still considered an asset.
End result: It doesn’t matter what type of annuity, the assets transferred are still countable assets.
Where to find help!
Concierge Care Advisors can assist you on how best to complete these new claim forms and to get your VA benefits as soon as possible. Please contact us for help today.