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Mr. Miller has many years of experience in designing and implementing a comprehensive variety of Trusts, Wills, and other estate planning documents, as well as settling estates in the most expedient and appropriate method. Further, he counsels and assists clients on becoming eligible for VA benefits and Medi-Cal.

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Mr. Miller has been active in the area of VA Pension and Medi-Cal for well over a decade. He uses various specialized types of Trusts as well as non-trust strategies to gain eligibility for his clients and save the family money.

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Mr. Miller has been settling estates (both simple and complex) for well over 40 years. The starting point is always to create a strategy to settle the estate in the most efficient manner possible with a minimum of taxes. Often times the strategy created allows the family to bypass Probate Court proceedings.

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Changes on the Way for Veterans Benefits?


By merv,

  Filed under: Elder Law, Veteran's Benefits

Introduction
Problem
Current Law
Net Worth Test
Income Test
Net Worth Strategies
New Law Changes
Income Strategies
Annuities
Effective Date
Conclusion

Introduction: The Veterans Aid & Attendance Non Service Connected Disability Benefit can be a god-send to families trying to afford the costs of assisted living or in home care. Most of the cases that we see show the family spending about $1000-2000 more than they have coming in. Not a particularly good situation. The benefit can pay over $24,000 per year in tax free benefits, depending on the facts of the case.

Problem: Due to recent media attention focused on perceived abuses to approaches to becoming eligible, a bill was introduced in Congress last year to make changes. That bill never made it out of committee and, therefore, died at the end of the Congressional session. A new bill was introduced this year (S 748). It is in committee now.

Current Law: Under current law (and this would not be changed by the new law), eligibility rests on two financial tests: (1) a net worth test and (2) an income vs. medical expense test.

Net Worth Test: The net worth test is a complex formula but in most cases the cut off is generally somewhere in the $30-40,000 range. The home is exempt.

Income Test: The income test requires that income after medical expenses be less than a certain amount in order for the VA to pay anything. For most of the families that we see, at the time of writing this article, that cut off amount is roughly $2100 for veterans and $1100 for surviving spouses. For each dollar that one is below that cut off, the VA generally will pay one dollar of benefit up to the maximum allowed. If there is more going out in medical expenses then there is coming in, then the VA will pay the maximum amount. Generally, 100% of in home care costs and room and board at an assisted living facility are considered a medical expense. The $1000-2000 of benefit generally makes a world of difference in the family’s financial picture.

Net Worth Strategies: For those who are not currently eligible due to net worth, many strategies are available to obtain eligibility. And therein lies Congress’ concern. If a family has too much net worth, under present law, assets can be transferred to the children without any penalty. Often this is done through the use of a QVap Trust. If not done correctly, this might create a problem for later Medi-Cal eligibility (Medicaid in other states), but it is not a factor for the VA benefit under the current rules.

New Law Changes: The new law would create a 36 month look back period to determine if any gifts were made. If gifts were made, a period of ineligibility would result based on a specified formula. This period of ineligibility, depending on the circumstances, would run against both the veteran and, after his demise, the surviving spouse.

Income Strategies: There are also many strategies available for those who are not currently eligible due to the income test. One strategy involves employing a child as a caretaker or care coordinator. The child might be acting as the caretaker anyway. If done correctly, this can create eligibility and allow the family to acquire an extra $2000 in VA income. The proposed law would not affect this strategy.

Annuities: Annuities are currently another approach that is often used, sometimes with very poor results. Probably because of the overreaching of at least some insurance agents in this arena, the proposed law creates various impediments to using annuities.

Effective Date: The proposed new law would be effective one year after its enactment. It would apply to any new claims as well as any redetermination of benefits.

Conclusion: As always, readers are encouraged to seek competent legal advice when considering strategies to obtain veterans benefits or other public benefits such as Medi-Cal.

7/31/2013

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About Living Trusts

About Living Trusts is hosted by the Law Offices of Merwyn J. Miller, as your online resource center to help you explore these key issues, and others, regarding your estate.

Merwyn J. Miller, J.D.

  • Board Certified Specialist in Estate Planning, Trust & Probate Law
  • Co-Author of legal text book and of “Don’t Go Broke in a Nursing Home
  • Teacher of law courses at public and private colleges
  • Continuing Education Instructor for attorneys
  • Columnist for largest regional newspaper in San Diego County and professional journals for 15 years, Contributing author to the book “In Your Service: The Veteran’s Friend”
  • Masters Degree in Financial Services - Estate Planning
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