Maximum Assets

One of the most common questions we get is “How much can my parent have in assets?”

On 10/18/2018 the VA changed the method of asset calculation in two major ways:

1)  The maximum amount of assets a claimant, whether single or married, is allowed to have is equal to the Community Spouse Resource Allowance defined by Medicaid – which is $130,773 for 2021.

2)  A 3 year look back period for the transfer of assets. When assets are transferred or gifted during the 3-year look back period, and the asset would have caused assets to be excessive, a penalty period, not to exceed 5 years, will be calculated based on the portion of the transferred assets that would have made net worth excessive.

Transfers prior to 10/18/2018 are not included.

Gifting Purchasing Annuities or Creating a Trust to reduce assets – If the claimant does not have access to the principal after the transfer or purchase, the VA will determine how much of the purchase of transfer should be used in calculating the penalty period. For purposes of this example, the net worth limit is $130,773. A claimant’s annual income is zero and her total assets are $159,094, which exceeds the net worth limit. If the claimant had transferred $30,000 by purchasing an annuity or transferring it to a trust. The claimant’s assets used in calculating the penalty period is $30,000 (referred to as “covered asset” by the VA) because this is the amount by which the claimant’s net worth would have exceeded the limit due to the purchase or transfer alone.

Penalty Period Calculation for Transferring Asset in excess of $130,773 within the Look Back Period –The penalty period will be calculated by dividing the covered asset by the Maximum Annual Pension Rate of a veteran in need of aid and attendance with one dependent, which is $2,295 for 2021. Using the example above, the penalty period would be $30,000 divided by $2,295 for a penalty period of 13.23 months.

Not all transfers cause a penalty – if the claimant had $100,000 and transferred $90,000 there is no penalty as the claimant was under the $130,773 maximum asset amount with or without the transfer.

Note that the VA has stated they will not be looking for transfers prior to 10/18/2018.

You can find out when we recommend filing by scheduling an appointment with one of the intake consultants at ERBC.