Dear _____,

     Effective October 18, 2018, the Department of Veterans Affairs (VA) has new rules regarding the eligibility of applicants applying for pension. These benefits are available to wartime Veterans and surviving spouses of wartime Veterans who are disabled and/or have additional medical needs. There are also financial limitations, which are discussed in more detail below.

Why Did the VA Change the Rules?

Before these new rules were made, the VA offered little guidance on how they determined if an applicant was “in need.”  There were vague definitions and limited explanations of who would qualify for these benefits, which led to confusion among applicants and inconsistent determinations of eligibility.  Now that the VA has issued clear and bright-line rules, attorneys can better advise their clients and their families, and the integrity and consistency of the pension program is upheld.  

Summary of the New Rules

In addition to the minimum active duty, wartime service, and age or disability requirements for these programs, the VA has new rules to determine if an applicant is “in need.”  

There is now a bright-line rule regarding the net worth of an applicant.  This amount is currently set at $123,600.00, and will increase annually. When calculating the net worth amount, assets are combined with annual income (assets + annual gross income = net worth). Out-of-pocket medical expenses can reduce income, and can help applicants qualify for the highest benefit.

The home of an applicant is generally not included in this calculation. If the Veteran or other claimant has a net worth over the threshold and thus does not qualify for benefits, there are legal strategies available to get the calculation within the allowed range, including making qualified purchases and accounting for certain medical expenses.    

In addition, there is now a look-back period of 36 months when applying for needs-based pension. Any asset that was transferred for less than fair market value during the 36-month period immediately preceding the pension benefits application will result in a penalty period, not to exceed five years.  Of course, there are exceptions to this rule, and there are ways to cure or avoid the penalty.  

There are other provisions of the new rules that apply to annuities and other financial instruments. Before investing in an annuity or other asset that produces income, be sure to contact our office to discuss the possible ramifications of that investment on VA pension benefits.

These new rules provide more certainty when applying to the VA for needs-based benefits.  Give us a call at 704-998-5800 if you would like to talk further about the changes, or to explore whether you or a loved one may qualify.