Dept. of Veterans Affairs Publishes Final Rule for Needs-Based Benefits: General Overview

On September 18, 2018, the Department of Veterans Affairs (“VA”) published its final rule for needs-based benefits, including the VA pension program that assists many of our clients with long-term care related expenses. The new rules, which will become effective on October 18, 2018, establish net worth, asset transfer, and medical expense deduction requirements, and further address various other issues raised in the over 850 comments received by the VA during the public comment period that ended March 24, 2015.

I will be addressing the changes over the course of several newsletters, and anticipate that our first seminar on the change will occur in October 2018.

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Benefits Affected

Throughout this process, the VA has made it clear that Congress intended the pension benefit to be a needs-based benefit, which they define as meaning that the claimant’s income, or both the claimant’s income and assets, is factored into entitlement consideration.  The final rule makes it clear that the rule only affects the pension benefits, and does not impact the following:

  • Service-connected disability compensation for a veteran (note – if a Veteran is receiving additional compensation for a dependent parent, then the parent’s income and assets for the additional compensation will be considered)
  • Dependent Indemnity Compensation (“DIC”) for surviving spouses or children
  • Death compensation for surviving parent, spouses, or children
  • Spanish-American War pension

The final rule does impact the following needs-based benefits:

  • Pension benefits, which are not service-connected, for veteran and surviving spouse
  • DIC for parents

The Proposed Rule

On January 23, 2015, the VA issued a Notice of Proposed Rulemaking which identified the following proposals:

  • A bright-line net worth limit for claimants, as determined by the community spouse resource allowance utilized by Medicaid
  • Define net worth for VA purposes as the sum of a claimant’s assets and annual income
  • Clarify calculation of claimant’s assets, with a concentrated focus on treatment of a primary residence
  • Establish a 36-month “look-back” period and a penalty period, not to exceed 10 years
  • Impose a penalty for any financial instrument or investment made for the purpose of qualifying for the pension benefit
  • Create a presumption that a transfer during a look-back period was for the purpose of decreasing net worth to establish pension eligibility, subject to a rebuttal by clear and convincing evidence for fraud, misrepresentation, or unfair business practice related to the sale or marketing of financial products
  • Prohibit recalculation of a penalty period unless the original calculation was erroneous or the VA received evidence, within 60 days of the decision, that assets were returned before the date of the claim or within 30 days after the date of the claim
  • Define and Identify medical expenses that the VA may deduct from countable income

For the most part, these rules, all of which will be explained more thoroughly in the upcoming newsletters, were adopted as originally proposed.

Effective Date

The VA will not review asset transfers that occurred before the effective date of the final rule and the VA will not apply the new medical expense deduction rules to current claimants unless they change facilities or in-home care providers. Furthermore, if a claimant is receiving a pension on the effective date of the final rule, then the claimant will continue to receive benefits although his or her net worth exceeds the net worth limit established under the final rule, unless the claimant otherwise loses the pension. A claimant with a pending application will not be denied benefits, provided the claimant’s net worth meets the new limit established under the final rule.

Hook Law Center has been alerting the public of the proposed rule for nearly three and a half years, and has encouraged individuals to take action. The window of opportunity is closing – if you are a current client working on a plan for VA pension, we recommend that you continue to work diligently with your attorney to finalize the plan before the end of this month.

Kit Kat

Ask Kit Kat – Animal-Assisted Therapy

Hook Law Center: Kit Kat, what’s the latest in animal-assisted therapy?

Kit Kat: Well, the big news is that it is no longer just limited to dogs. Not that dogs aren’t great, but Pet Partners, the US’ largest registry of therapy animals, has a database of 13,000 animals. 94% are dogs, but they also have 200 cats and 20 llamas, according to C. Annie Peters, the organization’s chief executive. Not every cat can qualify to become a therapy animal she says, because “they need to have a high tolerance for strangers and hugs to become a registered therapy cat. There are regular grooming and hygiene requirements, and they have to enjoy getting in a car.” One cat who did qualify is named Xeli, who works at Denver International Airport. Another  is the cat who visits sick kids at Primary Children’s Hospital in Salt Lake City. Nevertheless, cats as well as rabbits and miniature horses are being deployed in this growing field.

The benefits of animal-assisted therapy is now being scientifically studied in a number of places. There is a Human Animal Research Institute in Washington, also one at the University of Pennsylvania, Purdue University, University of California-Davis, to name a few. Research is focused on the benefits of animal-assisted therapy for those with autism, depression, and post-traumatic stress disorder. Dr. James A. Serpell of the U. of Pennsylvania says the hormone oxytocin is key to understanding the pet-human interaction. “The petting and physical contact side of things is critical in terms of oxytocin release. Physical contact with something warm and fuzzy and soft is also a good trigger.”

It’s good to know that we animals are not just ornaments, but really can help our humans cope with everyday stresses of life, especially in times of illness. According to Jennifer Toomer-Cook of Children’s Hospital in Salt Lake City, “When kids have pets at home, having a therapy animal normalizes their stay here. They help with pain management and fear, and they’re a diversion. Having a purring cat next to you creates calm.” (Jennifer A Kingson, “As Animal-Assisted Therapy Thrives, Enter the Cats,” The New York Times, Sept. 6, 2018)

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