VA pension benefits, also known as Aid and Attendance, are an important resource for wartime veterans and their surviving spouses who have high home care and assisted living costs. For example, in Michigan, assisted living can cost about $2,500.00 to $6,000.00 per month. Married veterans could receive up to $2,170 per month in Aid and Attendance that could help pay for that expensive assisted living care. Widows of wartime veterans could receive $1,176.
Unfortunately, the Department of Veterans Affairs (VA), the federal government agency that administer the Aid and Attendance program, has decided to limit the number of wartime veterans and surviving spouses who can receive this benefit by making it more difficult to qualify for it.
Like the Medicaid program, which can help pay for long-term care nursing home costs, there are asset and income rules in place in order to obtain Aid and Attendance. The VA has decided that they do not like elderly wartime veterans and their spouses restructuring their savings in order obtain this benefit to help pay for their care so, on September 18, the VA published new rules that will make it more difficult to qualify for this important benefit. For example, any gifts made in the past 36 months, either to a family member or to an irrevocable trust, would be penalized. Likewise, an investment in an annuity would also be penalized. This means a Veteran or surviving spouse could be prohibited from qualifying for VA pension benefits for up to 5 years, depending on the amount of the gift or transfer.
There are other requirements to the new rules, but the above are the most impactful to any wartime Veteran or surviving spouse wishing to pursue these benefits and receive a monthly cash benefit to help with care costs.
As an elder law attorney who helps seniors and their families to prevent the devastating effect of long term care, this is disappointing, especially in light of the fact Congress recently passed a law that is very favorable to the wealthy in that the amount that can be inherited by heirs free of the estate of estate tax was raised from $5,490,000 to $11,200,000. Perhaps the powers that be decided to offset this tax cut by changing the VA rules to reduce the amount of wartime veterans and their widows who receive the Aid and Attendance benefit by making it harder to qualify for it, even though the amount that could be received only ranged from $1,176 to $2,170 per month. Wealthy married couples can leave $22,400,000 free of estate tax under the new estate tax law and they have to complete a lot less paperwork to make that happen then does a veteran applying for Aid and Attendance to help pay for their long-term care. I understand that many wealthy people worked hard, were smart with their money, and it's natural to want to pay no or little estate taxes. Still, I wonder how many of these wealthy heirs who will be able to inherit more free of estate tax were in the service during World War II, Korea, or Vietnam?
The good news is, anyone wishing to qualify can still take advantage of the current rules where there is no penalty for making gifts or transferring funds to an irrevocable trust. But they have to act quickly. The new rules go into effect on October 18, 2018, and we must have all planning done by that date.