Critter Corner: What is Partnership Qualified Long-Term Care Insurance?

sakialley

  • A Partnership-qualified policy enables policyholders to protect one dollar of personal assets for every dollar the policy pays out in benefits.
  • The amount protected with a Partnership-qualified policy will be equal to the sum of all benefits paid under the Partnership-qualified policy when the applicant seeks to qualify for Medicaid.
  • The total amount of assets that a policyholder may protect as a result of a Partnership-qualified policy is above and beyond the basic allowances that a client and a client’s spouse may keep under the Medicaid program.

When shopping for a long-term care insurance policy, it is crucial to consider carefully the entire financial situation of both spouses and to consider the alternative of not purchasing long-term care insurance, but using other forms of Medicaid asset protection. Failure to do so can result in purchasing too little coverage, which can actually be worse than purchasing no coverage at all. LTC  insurance can be used as part of a Medicaid Asset Protection Plan when it is used to cover the potential need for long-term care during the five-year lookback period.  Using this approach, you could purchase five years of long-term care insurance and, at the same time, transfer all of your assets into a Medicaid Asset Protection Trust. At the expiration of the five-year lookback period, you can simply stop paying the long-term care insurance premiums and allow the policy to lapse, knowing that Medicaid will be available to cover nursing home costs. Alternatively, the policy can be kept in force to cover 5 years of home health care, with the idea that Medicaid can then be used to cover additional time in the nursing home if necessary. Please read more on our Partnership Qualified Long-Term Care Insurance FAQs. If you need to do long-term care planning for yourself or your loved ones, please make an appointment at the Farr Law Firm for a no-cost consultation. Purrs, Saki and Alley

Did I Read That Right? Rates for Long-Term Care Insurance Rose 9% This Year!

Q. My wife and I like to plan ahead. Unfortunately, both of her parents and three of her aunts died of Alzheimer’s, and we want to make sure we are prepared should one of us need long-term care in the future. We are aware of the astronomical costs of long-term care and are considering LTC insurance as a way to cover it. I have heard mixed opinions about LTC insurance. Recently, I saw one of your Facebook posts about a study in the New York Times stating LTC Insurance rose 9% this year, and rates are a lot higher for women. I must not be reading it right. In your opinion, should we still consider LTC Insurance as part of our planning, or is there a better way? 

A. Statistics show that more than 70% of people age 65 or older will need long-term care sometime in their future, so you are certainly wise to plan ahead. There’s definitely a benefit for some people in purchasing long-term care insurance. However, there are certain issues to consider before you buy, including the rising costs and how long-term care insurance interacts with Medicaid.

LTC costs are rising faster than inflation, and yes, you read it right — LTC insurance premiums rose this year an average of nearly 9%, according to a new industry report by the American Association for Long-Term Care Insurance (AALTCI).

Each January, AALTCI compares top-selling policies offered by major insurers to determine average rates. This year’s analysis included rates from 10 insurers. On average, for a healthy 55-year-old man, LTC insurance costs $2,075 per year for $164,000 in initial benefits, up from $1,765 last year, the report found. The average cost for a healthy, single woman of the same age is $2,411, up from $2,307. Couples generally get a discount if they buy a joint policy. A married couple, both age 60, would now pay $3,930 combined, up from $3,840, for $328,000 of initial coverage. Keep in mind that these amounts are far below the costs of long-term care, which costs $10,000- $12,000 a month in the metro DC area. At that rate, your benefits would be used up in a little more than a year.

The rates cited in the report are for new policies. Premiums for outstanding policies, particularly older ones, have been increasing as well, in part because people are living longer and insurers had underestimated the level of claims. Premiums typically will be lower if you buy when you are younger (in your 50s), rather than waiting until your 60s or 70s. Coverage not only becomes more expensive as you age but also becomes more difficult to qualify for at all, since health problems are more likely as you age.

If you are considering long-term care insurance, you should look at the pros and cons, and weigh your options. The following are some important facts you should take into consideration before purchasing a long-term care policy:

Revocable Transfer on Death Deeds in Virginia — the Good, the Bad, and the Uncertainty.

Elizabeth was taking her daily exercise walk with her friend, Francine, and the topic of “What will happen to my home when I die?” came up. One of Elizabeth’s friends’ parents recently passed away and the family was going through the nightmare of probate, and she didn’t want that to happen to her own family. Francine mentioned that she was doing research recently and found information about something called a transfer-on-death (TOD) deed. She mentioned how a TOD deed is now recognized in Virginia and it allows you to name a beneficiary who will obtain title to the property when you pass away, without having to go through probate. It sounded perfect to Elizabeth. However, when she conducted research on it, she realized that there may be more cons than pros.

Transfer-on-death (TOD) deeds are codified under Virginia Code § 64.2-624, which states that “an individual may transfer property to one or more beneficiaries effective at the transferor’s death by a transfer on death deed.” The statute also states that this type of deed is revocable, even if the deed or another instrument contains a contrary provision. This means that if you name a beneficiary but later change your mind, you can name a new beneficiary or cancel the deed.

Using a transfer-on-death deed is a lot like using a payable-on-death (POD) designation for a bank account. You name one or more beneficiaries now, who then inherit the property at your death, ideally without the need for probate court proceedings. It sounds good at first, but Elizabeth in our example is right to have her doubts about a TOD deed. The pros and cons below will help you see for yourself:

Pros

  • A TOD deed does not create a present interest in the named beneficiary. This means, if you name a beneficiary in this type of deed, you have not completed a gift for gift tax purposes.
  • If the owner changes his or her mind about the beneficiary, he or she can change the designation at any time before death;
  • Because the beneficiary has no interest in the property until the owner dies, the beneficiary’s creditors cannot reach the property;
  • A probate proceeding may cost more in time, money, and aggravation than the fees associated with a TOD deed.

Cons

  • TOD Deeds do not always avoid probate. For example, if any of the named beneficiaries predeceases the property owner, then unintended consequences will result. Likewise, if a named beneficiary becomes disabled prior to the death of the owner, a disabled beneficiary could be knocked off of public benefits, such as SSI and Medicaid. A trust, on the other hand, can eliminate all of these possibilities and negative consequences.
  • A person may try to establish a TOD deed without consulting an estate planning lawyer and may make legal mistakes. Again, what if an owner names one beneficiary but neglects to provide for the possibility that the beneficiary predeceases the owner? To avoid unintended consequences like this or other mistakes, a TOD deed should not be used as a substitute for comprehensive estate planning done with an experienced elder law attorney.
  • TOD Deeds should not be used unless all children get along, because no one is person in charge under a TOD deed, unlike estate planning documents where you designate someone. For example, when four children agree to sell the real estate and the fifth child does not, the family may end up in court – with attorney fees that far exceed the costs of probate.
  • If multiple owners make a TOD deed, then the last one surviving can revoke the deed or change the beneficiaries against the wishes of the other deceased owners.
  • If a TOD Deed names any minor beneficiaries to receive the property upon an owner’s death, a guardianship proceeding could be required. The court would appoint a legal guardian to administer and manage the property interest of each minor beneficiary until he or she attained the age of eighteen. In order to avoid this additional burden and cost, clients often choose other alternatives to the TOD Deed, such as a Revocable Living Trust.
  • TOD deeds need to be recorded immediately in the county where the real estate is located. A TOD deed is void if it is not recorded before the death of the owner.
  • In a blended family, the surviving spouse would still retain the ability to revoke or execute a new TOD Deed, and may name only his or her surviving children.
  • If someone challenges the effectiveness of a TOD deed based on an argument that the owner lacked capacity when he or she executed the deed, a court proceeding may be needed to resolve the issue.
  • A TOD deed is not a good choice if the beneficiary needs to sell the property and receive the proceeds soon after the owner’s death, because doing so may not be possible until 12 months after the owner’s death.

As you can see, TOD deeds are no substitute for a well drafted living trust. Planning techniques, including the Revocable Living Trusts and the Living Trust Plus, afford greater protection for you and your family when titling your property. For example, if you place your property into a properly drafted Revocable Living Trust, then you could add protections that would deal with disability, divorce, creditors, and catastrophic illness protection for your beneficiaries. Before leaping into a situation, we urge you to consider all of your options and let us help you select the right strategy for your family.

Below are two options to explore:

Revocable Living Trusts

A Revocable Living Trust can function as a Will, but it also offers other benefits that you should consider. An RLT avoids probate, enables your heirs to receive your property more quickly, ensures your trusted family members (and not the court) oversee your estate distribution, maintains your privacy, and does not require an annual fee. Read more about Revocable Living Trusts here.

Understanding Living Trust Plus™ (LTP)

The Living Trust Plus™ (LTP) functions much like a Revocable Living Trust and maintains much of the flexibility of a Revocable Living Trust, but protects one’s assets from the expenses and complexities of probate PLUS lawsuits PLUS nursing home expenses while the creator of the trust is alive. The LTP protects the trust creator’s assets from lawsuits, medical expenses, and — most importantly for the 99.8% of Americans who are NOT among the ultra-wealthy — from the devastating costs of nursing home care.

For most Americans over age 65, an LTP is the preferable form of estate planning because it includes asset protection for the person planning, and not just for that person’s children or other descendants. For purposes of Medicaid eligibility, this type of trust is the only type of self-settled asset protection trust that allows a settlor to retain an interest in the trust while also protecting the assets from being counted by state Medicaid agencies.

If you’re a client or potential client who would like more information about Living Trust PlusTM, please view our informational video. In addition, please register for one of our upcoming Living Trust Plus™ informational seminars. Our seminars teach attendees how to protect their assets from the expenses of probate and long-term care, how to obtain valuable Medicaid and Veterans benefits to pay for long-term care, how to protect assets from lawsuits, divorce, and long-term care creditors, and more. Reserve your spot today or call our office at 703-691-1888 in Fairfax, 540-479-1435 in Fredericksburg, 301- 519-8041 in Rockville, MD, or 202-587-2797 in Washington, DC to make an appointment for a no-cost consultation.

Critter Corner: Meditation has Many Benefits for Seniors

Critter Corner: Meditation has Many Benefits for Seniors

Dear Commander Bun Bun,

My neighbor, Shirley, … [Read More…]

Government Raises the Bar on Nursing Home Ratings

Nursing Home Compare Website

Q. My father has dementia and will need skilled nursing care in the near future. There are so many nursing homes in this area to consider, and I have heard differing opinions from friends and family. How can we really know which one is best, and how can we afford it?

A. When seniors and their families plan ahead, they can make multiple visits to facilities to find the one that best meets their needs, and arm yourself with my Nursing Home Evaluation Tool. However, if you have no choice and need a nursing home for a loved one right away, there are other tools you can use to assist in your search, including the federal government’s online tool, Nursing Home Compare.

Nursing Home Compare is a great starting point for consumers, as it offers star ratings for all nursing homes that participate in Medicare (for short-term rehabilitation) or Medicaid (for long-term care). The ratings are based on the facility’s performance on health inspections, staffing hours for nurses and nursing assistants, and quality measures, such as the prevalence of pressure ulcers and falls among residents.

In recent news, the federal government is increasing its scrutiny and raising the bar on an array of quality measures, requiring nursing homes to do more to get high scores on Nursing Home Compare. In the past, the grades — in the form of one- to five-star ratings — relied heavily on self-reported data, allowing a majority of homes to score high ratings. (55% of the nation’s nursing homes had overall scores of either four or five stars on Nursing Home Compare in January.) The system has come under recent criticism because some highly rated nursing homes have had numerous problems and face fines and other enforcement actions, which led to these modifications being made.

What measures will be more scrutinized in the new quality rating system?

  • Health Inspections – More than 180,000 onsite reviews are currently used in the health inspection scoring nationally. The health inspection rating will now contain information from the last 3 years of onsite inspections, including both standard surveys and any complaint surveys. Information will be gathered by trained, objective inspectors who will go onsite to the nursing home and follow a specific process to determine the extent to which a nursing home has met Medicaid and Medicare’s minimum quality requirements.
  • Staffing – The staffing rating has information about the number of hours of care provided on average to each resident each day by nursing staff.  This rating will now consider differences in the levels of residents’ care need in each nursing home.  In the new system, a nursing home with residents who had more severe needs would be expected to have more nursing staff than a nursing home where the resident needs were not as high.
  • Quality Measures (QMs) – More than 12 million assessments of the conditions of nursing home residents are currently used in the Five-Star rating system. The quality measure rating has information on 11 different physical and clinical measures for nursing home residents. The rating will now include information about nursing homes’ use of antipsychotic medications in both long-stay and short-stay residents, as well as the percentages of residents who develop bedsores or are injured in falls.

The changes follow others announced in October that require additional verification of self-reported staffing levels and other attempts to confirm quality data submitted by the homes. With the changes being enforced, many homes could drop a star or more from their current levels, even though nothing may have changed, officials from the Centers for Medicare and Medicaid Services said.

According to CMS, no rating system can address all of the important considerations that go into a decision about which nursing home may be best for a particular person. It is important to take into account the extent to which specialty care is provided (such as specialized rehabilitation or dementia care) and how easy it will be for family members to visit the nursing home resident. CMS suggests that consumers should use the Nursing Home Compare Web site together with other sources of information for the nursing homes (including a visit to the nursing home) and State or local organizations (such as local advocacy groups and the State Ombudsman program).

How else can you tell if a nursing home is a good fit? As CMS states, ratings are helpful, but do not tell the full story. Before committing to a nursing home for your father, be sure to take a tour during regular business hours, have a meal, pay attention to smells, sounds, and temperature, and observe whether residents are engaging in activities or sitting around listlessly. For more suggestions, please read our recent blog post entitled “Finding the Right Nursing Home.”

Medicaid Asset Protection

Nursing homes in Northern Virginia cost $10,000-12,000 a month, so affordability is a tremendous concern. To protect your family’s hard-earned assets from these catastrophic costs, the best time for your father to create his long-term care strategy is NOW. It is never too late to plan in connection with nursing home long-term care, also called Lifecare Planning and Medicaid Asset Protection Planning. Please call us at 703-691-1888 in Fairfax, 540-479-1435 in Fredericksburg, 301- 519-8041 in Rockville, MD, or 202-587-2797 in Washington, DC to make an appointment for a no-cost consultation.

Can Someone Recover from Autism?

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When Tyler was one, his parents began to notice certain behaviors that seemed atypical. He didn’t make eye contact or wave hello or goodbye, and he often seemed to be in his own world. As a toddler, he began lining up his toys, having tantrums, and walking on his toes. When he was a bit older, his parents took him to a developmental pediatrician, and received a diagnosis of Autism Spectrum Disorder (ASD).

When his mother heard his diagnosis, she was devastated at first, and began experiencing denial and depression. All the hopes and dreams she had for her son seemed impossible to her now. Once she gained acceptance, she read a lot and talked to other parents going through similar situations. Everyone emphasized early intervention to treat the symptoms, so she signed her son up for occupational therapy, play therapy, speech therapy, and Applied Behavioral Analysis (ABA).

The cost was enormous, as insurance didn’t cover a lot of the therapies. But in the months and years that followed, Tyler showed remarkable improvement. By the time he finished kindergarten, he was chatty and amiable, though he remained socially awkward. He would talk about subjects that were of interest to him incessantly to anyone who would, or wouldn’t, listen.Through the years, at IEP meetings and via email, Tyler’s teachers kept his parents abreast of his progress and challenges, and his therapists worked with him on his areas of need.

Whether because of the therapy or maturation or something else, many of Tyler’s symptoms were no longer evident by third grade. Tyler’s doctor concluded that the last vestiges of his autism were gone; and he no longer met the criteria, even in its mildest form.

ASD is considered a lifelong developmental disorder, but its diagnosis is based on behavioral symptoms, including social difficulties, fixated interests, obsessive or repetitive actions, and intense or dulled reactions to sensory stimulation. Though the symptoms of ASD frequently become less severe by adulthood, the consensus has always been that its core symptoms remain. Most doctors have long dismissed as wishful thinking the idea that someone can recover from ASD; however as you can see in our example and the research presented below, it is possible for some.

The idea that autistic people could recover first took hold in 1987, after O. Ivar Lovaas published a study in which he provided 19 autistic preschoolers with more than 40 hours a week of one-on-one ABA therapy, and an equal number of children with 10 or fewer hours a week. Lovaas claimed that nearly half the children receiving the more frequent treatment recovered, while none in the control group did. Subsequent studies did not reproduce Lovaas’s findings, however, researchers did find that early, intensive behavioral therapy could improve language, cognition and social functioning at least somewhat in most children with ASD, and a lot in some.

This past year, another set of researchers at Weill Cornell Medical College published a study that tracked 85 children from their ASD diagnosis (at age 2) for nearly two decades and found that about 9% of them no longer met the criteria for the disorder. The findings showed that children in the study who successfully overcame autism had an ability to learn, based on their IQ. For instance, those who had a nonverbal I.Q. of less than 70 at age 2 all remained autistic. But among those with a nonverbal I.Q. of at least 70, one-quarter eventually became non-autistic, even though their symptoms at diagnosis were as severe as those of children with a comparable I.Q., who remained autistic.

Although the research is promising, most children with ASD don’t fully recover, as some are too severe or have too many symptoms. However, autistic children with better motor skills, better receptive language skills, and more willingness to imitate others tend to progress more swiftly, even if they don’t stop being autistic. Parental involvement — acting as a child’s advocate, pushing for services, working with the child at home — seems to correlate with more improvements in symptoms. Financial resources, no doubt, help too.

Many parents believe that needs-based programs such as Supplemental Security Income (SSI) and Medicaid will be enough to take care of their family members with special needs when they are gone. This is a common misconception. SSI is the federal needs-based program that many special needs children and adults may be eligible for if they meet certain income limits. Many special needs children and adults may also get Medicaid to pay for hospital stays, doctor bills, prescription drugs, and other health costs. However, once the assets of a person with special needs exceeds $2,000, he or she is no longer eligible for SSI or Medicaid. There are also severe and very strict limits on how much income a person can make and still remain eligible for SSI.

Parents of those with special needs, including ASD, are tasked with planning for their children throughout their lifetimes, as many of them will outlive their parents but might not be able to support themselves and live independently. As a parent or guardian, you want to ensure that your child with special needs will remain financially secure even when you are no longer there to provide support. A Special Needs Trust is a vehicle that provides assets from which a disabled person can maintain his or her quality of life, while still remaining eligible for needs-based programs that will cover basic health and living expenses.

More than $13 billion a year is spent to care for individuals with ASD and other special needs. For the average affected family, this translates to $30K per year. Fortunately, there are many ways to plan for the long-term care of a disabled child. If you have a loved one who will likely need care for life, it’s important to provide legal protections for him or her. The Law Firm of Evan H. Farr, P.C. can guide you through this process. Please make an appointment for a no-cost consultation by calling us at 703-691-1888 in Fairfax, 540-479-1435 in Fredericksburg, 301-519-8041 in Rockville, MD, or 202-587-2797 in Washington, DC.

Critter Corner: Can You Claim a Pet as a Dependent?

Dear Baxter,

My dog, Rover, is like a child to me.  He is cute, loveable, and playful, and like a human child, relies on me for support. Vet bills, food, cleanup, and repairs caused by damage, have cost a lot of money this past year. Am I allowed to claim him as a dependent on my tax return?

Thanks!

Doug E. Dadd
—-
Dear Doug,

Unfortunately, although the IRS doesn’t specifically spell it out, it is implied that dependents — at least for taxation purposes — must be a human. It’s ruff, if you ask me!

The rationale behind this requirement is that human children have the potential to grow into adult taxpaying humans, whereas dogs and other pets do not. The way the IRS sees it is — dogs do not pay taxes, so why should the government provide tax incentives to the owners? Don’t despair. Although you cannot deduct your pet-related expenses, these are some pet-related deductions you can take:

  • Guard Dogs: If you use a guard dog to guard your business premises, you can deduct the cost as a business expense. It should be a certified guard dog, and be a member of a traditional guard dog breed such as a Rottweiler, German Shepherd, or Doberman Pinscher.
  • Service Animals: Seeing-eye dogs used by the blind and other service dogs used by the disabled are a deductible medical expense. You must register the dog with an agency declaring that it is a service animal. If you do so, you can deduct as an itemized medical deduction expenses such as pet food, training, medication, and vet bills. See IRS Publication 502 for more details.
  • Moving Expenses: You can deduct the costs of moving your pet.  See IRS Publication 521 for more details.
  • Dog Breeders: A person in the business of breeding and selling dogs may deduct all his or her business-related expenses, just like any other business.
  • Farm Dogs: A farmer or shepherd who uses a dog to herd or guard cattle, sheep, pigs, or other farm animals can deduct the cost of keeping the dog as a business expense.
  • Donations to Dog Charities: If you donate money or property to a tax-exempt dog shelter or other tax-exempt charity that helps dogs, you may deduct the amount as a charitable deduction if you itemize your deductions. If you donate property, you can deduct the fair market value of the item — for example, if you donate dog food, you can deduct the price of the food. However, you may not deduct: an adoption fee or adoption donation you make to adopt a dog.
  • Estate Expenses: Fees to maintain a pet while an estate is being settled may be deductible if the animal has monetary value, such as a purebred dog.  Expenses for security of estate property such as a guard dog may also qualify for deductions.

Many of us who think of our pets as family members want to ensure that they are cared for after we become incapable of doing so. One way to fulfill this responsibility is to set up a pet trust, which is a legally sanctioned arrangement that provides for the care and maintenance of your pet(s) in the event of your disability or death. For more details, read the Pet Trust FAQ on our Website. To set up a pet trust, or if you need to do planning for yourself or your loved ones, please make an appointment at the Farr Law Firm for a no-cost consultation.

Hope this is helpful!

Arf Arf,
Baxter

 

Ask the Expert: Can You Deduct a Toupee from Taxes?

Critter Corner: Can You Claim a Pet as a Dependent?

Dear Baxter,

My dog, Rover, is like a child to … [Read More…]

Help Someone Else and You Might Go to Jail

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Ray is a loving father and a good friend who enjoys helping others. He helped his son build a deck, assisted his friend in finding a home, and even does his daughter’s taxes on Turbo Tax each year. However, when it comes to estate planning, incapacity planning, and/or Medicaid planning, Ray realized he could not do his own planning or offer his assistance to others. Why?

Although he has good intentions, Ray is not a lawyer. And those who practice law without a license can cause great harm to the person they are trying to help and their families. In addition, those who practice law without a license – as well as the person who uses the non-lawyer – will be subject to criminal penalties.

In Virginia, it is illegal to prepare or help to prepare any legal documents for another person. In fact, unauthorized practice of law is a Class 1 misdemeanor and can subject you to jail time for up to a year plus a fine of up to $2,500. The following is taken from the Virginia State Bar Professional Guidelines, Unauthorized Practice Rules (UPR), when it comes to estate planning: “A non-lawyer shall not, with or without compensation, prepare or draft, or cause his own lawyer to prepare or draft, for another, legal instruments of any character, including the filling out of a form for any will or trust.” (Read exceptions.)

In some other states, the penalties are even more severe. For example, in Florida, practicing law without a license is a third degree felony, with penalties including five years in prison. On January 15, 2015, in a case that focused on Medicaid planning, the Florida Supreme Court ruled (Fla., No. SC14-211) that non-lawyers are engaging in the unauthorized practice of law if they do any of the following:

  • Draft a personal service contract;
  • Determine the need for, prepare, and execute a Qualified Income Trust, including gathering the information necessary to complete the trust;
  • Render legal advice regarding the implementation of Florida law to obtain Medicaid benefits, including advising an individual on the appropriate legal strategies available for spending down and restructuring assets.

The rationale behind the Florida ruling included testimony that described the type of harm caused by non-lawyer Medicaid planners, which can include denial of Medicaid eligibility, exploitation, and catastrophic or severe tax liability.

Hiring a non-lawyer or asking a friend or family member to handle Medicaid planning, Veterans planning, estate planning (e.g, preparing or downloading a Will or trust template) or incapacity planning (e.g., preparing or downloading a Power of Attorney or Advance Medical Directive for you to sign) may seem innocent and may save you money in the short run, but it will almost always prove to be a costly and painful mistake for you and is a criminal activity for the other person.

Likewise, although it’s not a crime to do these things for yourself, to avoid catastrophic results, estate planning, incapacity planning, Medicaid planning, and Veterans planning documents are not something you should do yourself, just as you should not perform surgery on yourself.

If you have a friend or loved one who hasn’t had the chance to meet with an Estate Planning Attorney this year, or if you or a loved one needs long-term care, please make an appointment for a no-cost consultation by calling us at 703-691-1888 in Fairfax, 540-479-1435 in Fredericksburg, 301-519-8041 in Rockville, or 202-587-2797 in Washington, DC.

 

 

VA Proposes Major Changes to Aid and Attendance Program

The Department of Veterans Affairs (VA) is proposing significant changes to needs-based benefit programs, including an asset limit, a look-back period, asset transfer penalties, and deductible medical expenses, as follows:

  • Look-bank Period/Penalty Period: The new rules would establish a 36-month look-back period and a penalty period of up to 10 years for those who dispose of assets to qualify for a VA pension. The penalty period would be calculated based on the total assets transferred during the look-back period to the extent they would have exceeded a new net worth limit that the rules also establish.
  • Net Worth Limit: The proposed net worth limit would be equal to Medicaid’s maximum community spouse resource allowance (CSRA) prevailing at the time the final rule is published (In 2015 this amount is $119,220) and would be indexed for inflation as the CSRA is – by adjusting it at the same time and by the same percentage as cost-of-living increases provided to Social Security beneficiaries. The VA would not consider a claimant’s primary residence as an asset. However, if the residence is sold, proceeds from the sale would be assets unless used to purchase another residence within the calendar year of the sale. The same net worth limit would apply when a surviving spouse is seeking pension benefits.
  • Deductible Medical Expenses: The law would provide that VA may deduct a claimant’s out-of-pocket medical expenses from the claimant’s countable income to decrease the claimant’s income, thereby increasing the claimant’s benefit entitlement rate.

Read the proposed rules in 80 Federal Register 3840-3864 (23 Jan 2015).

It is a good time to apply for veteran’s benefits, such as Veteran’s Aid and Attendance, before the laws change. Here at the Farr Law Firm, we work with veterans and their spouses to evaluate whether they qualify for the Veterans Aid and Attendance Benefit and/or Medicaid, and we deal with all the paperwork. As an Accredited Attorney with the U.S. Dept. of Veterans Affairs, I understand both the Veterans Aid and Attendance Benefit and the Medicaid program and the interaction between both benefit programs. Please call us in Fairfax at 703-691-1888, in Fredericksburg at 540-479-1435, in Rockville, MD at 301-519-8041, or in Washington, DC at 202-587-2797 to make an appointment for a no-cost consultation.

P.S. Another benefit of being a veteran is a 15% discount off all services at the Farr Law Firm. We hope to see your family soon!

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