The Veterans Administration has established new rules that affect eligibility for the VA Aid and Attendance program, which provides money for long term care services to qualifying veterans. These new rules went into effect on October 18, 2018 and create a revised asset limit and a method to impose a penalty period for an applicant who has given away assets during a 36 month period prior to applying for benefits.
The new asset limit is the Medicaid Community Spouse Resource allowance which is a number that changes every year. As of now, that limit is $127,061. There is a difference from Medicaid in how VA calculates that limit, because it includes not only a veteran’s bank accounts, stocks, bonds, IRA’s and other investments, but also his annual income. So if a veteran has $100,000 in assets, and $30,000 in social security and pension income, the VA will add those numbers and count his net worth as $130,000, which exceeds the asset limit, making him ineligible. Just as with Medicaid, personal property does not count. The personal residence also does not count, and that is true even if the veteran has moved to a nursing home. It is also a change from the previous VA rules which did not count the proceeds of the home sale.
The penalty period for gifts has the same objective as Medicaid rules, but has significant differences. First, it looks back three years from the date the VA receives the application, not five, to see if transfers were made. If transfers were made, the penalty calculation is on the amount that exceeds the net worth limit. That means that if the net worth limit is $127,061, and that amount or less was transferred, there will not be a penalty. If the net worth limit is $127,061, and $177,061 was transferred, then the penalty amount is $50,000. That amount, and not the full value of the transfer, will then be divided by $2,230 which is the 2019 maximum monthly VA pension benefit for a veteran with one dependent. So if the monthly rate is $2,230, that divides into $50,000, 22.4 times and there would be a 22.4 month penalty. Unlike Medicaid, there is also a cap on the penalty period of five years.
In addition, the VA penalty begins at the time of the last asset transfer, and not at the time a person would otherwise be eligible, as it is for Medicaid in a nursing home. As a practical matter that is a huge difference, because the penalty period may have already expired by the time the application is made.
Decisions To Make About Medicaid
In deciding whether VA Aid and Attendance is more advantageous than Medicaid, a veteran and his family must take into account not only potential penalty periods if there were gifts made in the last 3 years for VA, or the last 5 years for Medicaid, but the potential total amount of home care that can be provided. Aid and Attendance is capped at $2,230 per month for a married veteran. Medicaid, on the other hand, can pay up to $5,945 per month toward care. No one is guaranteed the Medicaid maximum because the amount to be paid will be determined by the Department of Social Services based on the assessment it does of the applicant’s needs. In general it is possible that Medicaid could pay more than VA, and it can pay for either spouse. VA only pays for the veteran and not the spouse, unless the veteran dies, in which case the widow of the veteran could be eligible for Aid and Attendance if the criteria for widows or widowers was met.
Another difference is that VA does not pay the company giving care. It sends a check to the veteran or the veteran’s widow each month. Medicaid does not send a check to the applicant, but directly pays the company providing the care.