The U.S. Department of Veteran Affairs (VA) proposed new regulations in 2015 regarding net worth, asset transfers, and income exclusions for needs-based VA benefits. These regulations have been finalized and are effective as of October 18, 2018.
A couple of the most significant changes are highlighted below:
- New bright-line evaluation of net worth;
- New 36-month look-back period for asset transfers.
It’s important to understand how these changes can affect veterans and their spouses.
New Bright-Line Evaluation of Net Worth for VA Benefits
Although the new regulations borrow some concepts from Medicaid, they are not exactly the same or applied in the same way. For example, the net worth limit is tied to Medicaid’s maximum community spouse resource allowance (“CSRA”) which was intended to prevent the impoverishment of a non-institutionalized spouse of a Medicaid-covered individual. However, this amount not only includes a veteran’s assets, but also annual income of the veteran and his or her spouse, if married. The CSRA limit is the same amount whether a veteran is married or not. In 2018, the CSRA is $123,600, and will be adjusted for inflation at the same rate as Social Security cost of living adjustments are made.
Under the previous regulations and the new regulations, a veteran’s home is not counted as part of net worth. However, the new regulations limit what constitutes the veteran’s home to the house and two-acres. Additional acreage beyond two acres will be counted towards the net worth limit unless the additional acreage is determined to be unmarketable.
New Look-Back Period for Transfer of Assets
Another concept adopted from the Medicaid rules is the new look-back period for the transfer of assets. However, the look-back period is only 36 months, compared to 60 months for Medicaid. Transfers prior to October 18, 2018, the effective date of the final regulations, are not subject to the look-back period. Similarly, to Medicaid, a penalty period will be imposed for the value of transfers that would have put a veteran over the new worth limit made after October 18, 2018. Unlike Medicaid, the penalty period begins the month after the transfer is made.
One positive exception to the look-back period is for transfers to a trust for a disabled child if the child was determined to be disabled prior to age-18. The look-back period also does not apply to transfer of assets under the CSRA amount, whereby the veteran would have been eligible regardless of whether the transfer had been made, and of non-countable assets like the home.
These are just of few of the changes under the new VA regulations. It’s a good idea to have professional legal guidance when planning your benefits to ensure that new regulations are taken into account.
You can read the final rule in its entirety at regulations.gov.