Veterans administration invites public comment on proposal to limit benefits for elderly
Speak up for March 24 Deadline!
On January 23, 2015, the VA quietly issued proposed changes to Title 38 of the Code of Federal Regulations Part 3. These changes will adversely impact eligibility for the VA’s “Improved Pension” benefit, one that provides tax-free income to our honorably discharged, aging, wartime veterans, or their surviving spouses, in partial reimbursement for their high cost of medical care and help with the challenges of daily life as a senior.
To qualify for the Improved Pension, commonly called “Aid and Attendance,” or “A&A,” the claimant’s assets must be below certain limits. In its own “Regulatory Impact Analysis,” the VA’s Pension and Fiduciary Service estimates that approximately one percent of A&A applicants transfer some assets before filing their claims, which is currently a lawful act. The VA assumes these transfers are done to preserve inheritance, rather than the many other very real and frequent reasons, such as: efforts to preserve assets for future quality care of the first spouse to have health issues; to avoid current impoverishment of the healthier spouse and ensure quality care in the future when the second spouse also falls ill; to be able to freely choose a place of residence and live as independently as possible; to be able to privately pay as long as possible to avoid having to ever seek Medicaid assistance; to accomplish five-year Medicaid planning; to find savings alternatives to stock market risk or low interest CDs; to convert assets into a dependable monthly income stream for budgeting purposes; and to accomplish legal disability and estate planning.
In response to this one percent “problem,” the VA has proposed sweeping changes to apply to 100 percent of applicants for the A&A program, allowing only until March 24 for the public to react with comments. (Interestingly, although the VA has issued seven press releases to date since the January 23 proposal, none of them has announced this proposed rule or the comment period deadline.) Information on how to send your comments is provided at the end of this release.
The following are some of the many clauses of the proposed rule. Readers may especially want to comment to the VA and their congressmen on the provisions noted in red typestyle.
- First, what’s missing from the proposed rule? An effective date! When Congress considered and rejected a three-year look-back for VA benefits eligibility on two occasions in the past, Congress provided that the changes would be effective one year after the president signed the bills. The VA should also clearly state advance notice of an effective date.
- What else is missing? A traditional assurance in the American legal system, namely a grandfather clause! Current A&A recipients, who can be re-evaluated by the VA (especially if their Social Security gets a COLA raise), and applicants who file before the effective date of any new rule, should have their claims evaluated under the law or rules that were in effect at the time of filing, not evaluated or re-evaluated retroactively under new law. To do otherwise is inconsistent with our system of law making and opens the doors to inconsistent decisions among the various VA regional offices as well as abuse by case- workers. Pension recipients who have already moved into assisted living or other facilities in reliance on the benefit should not lose it based on new standards. While we are at it, shouldn’t we “grandfather the great-grandfathers” — our WWII vets who were counting on this benefit that has been in effect for decades and who want to privately pay for their own care as long as possible instead of going on Medicaid? They are no longer eligible to buy long term care insurance and don’t have wages or a way to accumulate more savings “for their old age.” Why not grandfather applicants by their “time of war” served? WWII veterans are typically in their 90s and are dying by the hundreds every day across our country. Their benefits claims are disappearing by attrition.
Now, what ARE the proposed changes?
- Proposed § 3.274 – establishes a new net worth limit of $119,220 this year (Medicaid’s maximum CSRA) to be increased periodically in the same increment as any Social Security increases, but “net worth” now includes BOTH assets PLUS one year of income. Thus, high income earners will be able to rely on less of their personal savings while low income earners will be able to keep more personal savings. An applicant’s income is already taken into consideration in the “income test” for the VA Pension. Why would income also be counted as an asset, other than to disqualify more applicants?
- Proposed § 3.275 – still exempts a primary residence, but only up to two acres with limited exceptions that may require an appeal (rather than a lot size reasonable for one’s region of the country). (In some areas, lot splits may have to be larger than that, legally, in order to get well and septic permits. Yes, that situation might be won on appeal as an exception, but why require an aged vet to go through a very lengthy appeal process, especially when if he does not live until the time of its conclusion, he gets no award? Consider also that merely living in a farmhouse could exclude you from the VA Pension to be used for in-home care.) Under the proposed rule, if the residence is sold, the sale proceeds are counted toward net worth unless they are used to purchase another residence within the same calendar year (rather than within the next 12-month period, putting an unfair burden on those who sell in October-December).
- Proposed § 3.276 – establishes a new 36-month lookback period for asset transfers. (This will cause a hardship for seniors or their helpers trying to find 36 months of statements on every account, thus discouraging applications. It will also increase the VA caseworker’s work and the claims backlog, and open the door to even more inconsistent decisions based on interpretation.) The proposed rule mandates that pre-application asset transfers are subject to the VA’s presumption, absent clear and convincing evidence showing otherwise, that asset transfers made during the 36-month lookback period were made to establish pension entitlement (even if they were made while the applicant was healthy and were made out of devotion to church or charity, or generosity to a child in need, or for a grandchild’s wedding or education). There are no hardship provisions. Transfers to trusts (even standard revocable trusts commonly used for probate avoidance and disability planning) or the conversion of assets into a SPIA (single premium immediate annuity) are specifically defined as transfers of assets for less than fair market value (even though assets in a revocable trust are fully reachable by the trust’s maker, so while they should be counted toward net worth, they should not be penalized as a “for less than fair market value,” and money in a SPIA is systematically returned in full to the owner — again, not for less than fair market value). The proposed changes include a penalty period of up to 10 years (which could be the remaining lifetime of the elderly applicant).
- Proposed § 3.276e1– in applying the penalty formula in the proposed rule, surviving spouses of vets will be penalized almost twice as long as veterans for transferring the same amount of assets. For our mostly male WWII and Korean War vets, in reality this will have a harsher effect on widows (elderly females), who often have less income and savings, and who often took care of the vet during his final illness as long as possible, reducing the need for governmental aid.
- Proposed § 3.276e5 – provides that an applicant can cure the penalty for transfers if the transferred assets are returned to the applicant. However the proposed time limit for the return would end before the VA has even decided the claimant’s application and notified the claimant of the decision and penalty! The cure time limit should coincide with the time limit for providing evidence of cure, namely 60 days AFTER the VA’s decision and notification to an applicant that he or she needs to cure. The rule should also provide for partial cures.
- Proposed § 3.278 – limits the hourly rate for home health care services to the $21 per hour rate listed as the national average in a three-year-old study (rather than using more recent figures or taking the region of the country into consideration). It also defines and clarifies what the VA considers to be a deductible medical expense and defines Activities of Daily Living (ADLs), Instrumental ADLs (IADLs), and Custodial Care. The changes generally preclude payments made to Independent Living Facilities, in effect, as not being medical expenses despite the VA’s prior “Fast Letter” on this topic. This is a devastating blow to our aging who do not yet need to have full hands-on care, but who need to transition to a place with ready help due to their being at risk to falls, their inability to drive to obtain groceries or cook balanced meals, their need for socialization, or their need for a safe, protected environment as a result of mobility issues (Parkinson’s, severe arthritis, fractures) or cognitive issues (early stages of Alzheimer’s, dementia).
Public comments to the proposed changes must be submitted no later than March 24 through http://www.regulations.gov (the VA’s preferred method, but it can be difficult to navigate); or by fax to 202-273-9026; or by mail to: Director, Regulation Policy and Management (02REG) Department of Veterans Affairs, 810 Vermont Ave. NW, Room 1068, Washington, DC 20420.
Comments must include that they are in response to “RIN 2900-AO73, Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits.” Experts in the field stress that comments that just agree or disagree may not have much impact. Reasons and examples should be supplied to demonstrate the effect on seniors.
Please also express your views to Congress!! An easy way to find Congressional contact info and email addresses is to just type your zip code into the directory at http://www.congressmerge.com/onlinedb//.
Please make your voice heard on behalf of our elderly and future-elderly vets BY MARCH 24.
Debbie J. Papay, Attorney