Professional Assistance without Financial Product Sales

Major impacts of the final rule are:

  1. Maximum $130,773 – the maximum assets a VA pension claimant (whether married or single) can have will be the Federal – which is $130,773
  2. Asset Calculation – The claimant’s Assets are defined as the sum of a claimant’s assets and annual income. Assets continue to exclude the claimant’s primary residence, car and personal effects but, the addition of “annual income” is a new wrinkle – basically claimant who, after deducting allowable medical expenses such as their care facility fees from their income, are in a positive income position, will add their positive annual income to their assets for comparison to the $130,773 maximum asset limit.
  3. Grandfather Clause for Asset Transfer – The Final rule has an error in it, which we called to the attention of the Acting Assistant Director, Pension and Fiduciary Service this morning – the rule states the VA will not ‘‘look back’’ to transfers before 10/18/2018 but the example in the Rule is for a transfer in August 2018 and September of 2018. Hopefully the example is incorrect and needs to be modified to say 2019 or the VA needs to be clear that they are not looking at asset transfers for applications filed prior to 10/18/2018, which is how the VA generally implements rules – stay tuned.
  4. Look Back Period – 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. Note that 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.
  5. 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 calculate 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.
  6. 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.
  7. Restriction on Primary Home Lot – The lot on which a residence sits that does not exceed 2 acres is excluded from Countable Assets, unless the additional acreage is not marketable. In other words, if your home is on a 4 acre lot and 1 acre is marketable, the fair market value of the marketable one acre, less mortgage and encumbrances, will be included in the asset calculation.

Previously the fact that all claims with more than $80,000 had to have an additional level of review was used by some practitioners to make claimants believe they could not have more than $80,000. Under the new regulations, it is clear – claimants cannot have assets in excess of the Federal maximum Community Spouse Resource Allowance defined by Medicaid. Elder Resource Benefits Consulting believes having a clear net worth limit promotes consistency and uniformity in the VA’s claim decisions and is hopeful these changes will reduce the time to award.

As always, Elder Resource Benefits Consulting does not sell or refer to those who sell financial products.

Veterans’ Benefits In the Media

UPDATED October 19, 2016
The VA has accepted all of our arguments about Independent Living and the need for those who cannot live safely at home to be allowed to access the benefit even though they may not need assistance with the listed ADLs – for example, a claimant who overdoses or underdoses on medications or wanders will now be able to deduct assisted living and independent when determining income for VA Purposes – please see our press release!
UPDATED as of July 1, 2016 


We were informed that the new regulations would NOT be published in the 1st quarter of 2017.  

We would like to thank the over 200 current and previous clients of ERBC who took the time to submit comments and to contact their US Congressman, Senators and State Governors and on the VA proposed regulation AO73.  Although it is not finalized, we have preliminary information that indicates your voices were heard and you have made a difference.

On January 23, 2015 the VA posted for comment

AO73 – Proposed Rule – Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits

This proposed rule would implement a 3 year look back, similar to the Medicaid five year look back for transferring assets.  While we are not opposed to the 3 year look back IF the VA can implement it without an increase in time to payout of the award, the proposed rule does not stop with a 3 year look back.  It looks as if the 3 year look back will be implemented in the first half of 2017.
In addition, the rule proposes the following harmful changes which will make it harder for veterans to qualify and will kick veterans who currently receive Pension off the program:
1) Change the current regulations around Independent Living so that wartime veterans who do not have the funds to live in assisted living and have created “a la carte” care plans, which may involve family members and outside care services, would no longer be able to claim their care facility as a deduction.  It looks as if Independent Living expenses will CONTINUE to be allowed as a recurring Medical Expense deduction using the rules currently in place or rules similar to those in place. In addition, the tightening of the activities of daily living requirements in October of 2012, which made it harder for those in the early stages of dementia to receive the Pension benefit appear to have been relaxed to allow those with dementia who are no longer able to live alone to access the benefit more reasonably.
2)  Remove the Life Expectancy part of the Net Worth calculation in an attempt to limit the VA benefit payout to 2 years to the majority of wartime veterans, no matter how young the applicant is.  It is still unclear what the end result of this proposed change to reduce allowable Net Worth and our challenge to it will be.
3) Continue to penalize veterans and their dependents who have invested in IRAs
It is still unclear what the end result of our challenging the treatment of IRAs will be.
4) is silent on a grandfather clause.  It is still unclear what the end result of our challenging the lack of a grandfather clause will be.
Below are the Press Release issued by VA accredited agent Patty Servaes and the comments she has made to date on the proposal.  We will post her additional comments as they are submitted to the VA.
Please make your voice heard by letting the VA know they should
  • Leave the Independent Living rules alone
  • Retain Life Expectancy in the Net Worth calculation
  • Remove the IRA penalty
  • Is this the Intent of Congress?

Below  are the press releases distributed to those in the media that follow Veteran issues the short version gives an over view of some of the more harmful aspects of the proposed rule, while the longer version goes into more detail.  For specifics on each portion I am concerned about, please see the specific comments that have been posted to date.

See other comments by Patty Servaes in The New York Times & The Dallas Morning News . Her comments on the recent Forbes article was called out. Please add your voice to – otherwise, in the name of stopping asset transfers, this benefit will be severely diminished for the veterans and surviving spouses who truly need it.

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Elder Resource Benefits Consulting
365 Boston Post Road #390
Sudbury, MA 01776

For representation before the VA, ERBC refers to Servaes Consulting Group, LLC so you can be assisted by a VA Accredited Agent

Neither Elder Resource Benefits Consulting nor the Servaes Consulting Group, LLC is affiliated with the Department of Veterans Affairs or any other government agency.
Elder Resource Benefits Consulting and the Servaes Consulting Group, LLC are not Veterans Services Organizations.

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