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By Swogger Bruce & Millar, Sep 19 2018 06:41PM

The reprieve is over. In 2015, the Department of Veterans Affairs proposed rules that would revamp its pension program which is commonly referred to as aid and attendance. The proposed rules would deny the pension benefits to veterans who transferred assets for less than fair market value like gifting, purchasing an annuity, or establishing an irrevocable trust. However, the proposed rules were never published in the Federal Register or implemented. Yesterday, September 18, 2018, the rules were published and will be applied starting October 18, 2018.

The new rules will impose a three-year look-back period that is similar to Medicaid’s five-year look-back period. Any transfer for less than fair market value made within the three-year period will penalize a veteran by preventing him from receiving pension benefits for up to ten years. The VA will take any assets transferred to meet pension eligibility requirements and divide that amount by the veteran’s maximum pension rate; the result will be the penalty period. While they share some similarities, the VA rules are significantly different than Medicaid’s penalty rules.

It does not appear that the changes are grandfathered, so, current applications that were submitted under the old rules could begin to be denied. You should also note that the ability to correct transfers for less than fair market value is much more limited than under the Medicaid rules. One of the changes that will affect my clients is that a veteran’s excluded homestead is only allowed two acres of land. Most of my clients, especially farmers, will have much more acerage than the limit. The excess land will cause planning complications.

It will take some time for the new rules to filter down to the VA manuals that determine application processing, but, there are a few things that are relatively clear: (1) annuities will no longer work for VA pension planning, and (2) gifting will not work for emergency planning, and (3) irrevocable trusts will not work for emergency planning. The VA rules provide incentive to plan as early as possible.

Please contact us if you are interested in a full discussion about the rule changes.

By Swogger Bruce & Millar, Jan 31 2018 02:08PM

Medicare does not provide indefinite coverage for long-term care. Medicare coverage is only for rehabilitation and can be ended when a patient stops making progress. In any case, Medicare coverage is limited to 100 days. So, the survey findings that nearly 40% of Americans expect to rely on Medicare are troubling.

Nearly 80% of Americans would prefer to receive care in their home, and nearly 70% of their children would like their parents to receive care in their home. There are few government benefits that will help pay for in-home care. The Michigan MI Choice Waiver program can help pay for in-home care, but the coverage is limited by funding issues. PACE programs also attempt to keep people in their homes. However, the program is not widespread. The good news is that PACE will be opening in Northern Michigan in 2019. Veterans pensions, known as aid and attendance or housebound, are the last significant source of government payments for in-home care. All these programs have asset and income limitations.

Despite the limited government benefits, 33% of older Americans have not made any plans to cover care. 72% of Americans support family leave programs to care for a loved one, and the majority support policies to help finance long-term care.

We suggest consulting an elder law attorney and financial professional to learn about your planning options and potential benefits. The link to the full report is provided below.


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