Online resource center to help you explore these key issues, and others, regarding your estate.

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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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By merv,

  Filed under: Veteran's Benefits

Existing Rules
VA Pension Program
The New Proposed Rules
Look Back Period
Penalty Period
Net Worth Limit
Effective Date

Dear Mr. Miller:

Introduction: My 91 year old Dad is running out of money and needs help to pay his bills. His finances were fine and then he had a stroke. That required a lot of extra care and he is now in an Assisted Living Facility (ALF). At over $6000 per month with all the extra services that $100,000 bank account is beginning to shrink.

I have heard that the Veterans Administration has a program called Aid and Attendance that can help with his care bills. But I was told that he would have to give all of his money away to qualify. Then I heard from someone else that if he did that he would be ineligible for 10 years.

What’s the deal?

Caring Daughter

Dear Caring:

Existing Rules: If this were a month ago I would have answered this question far differently than I will today. In the past, the VA had absolutely no rule penalizing gifts of assets even immediately before filing for the benefit. They still don’t BUT…..

VA Pension Program: Let’s start with the basics. The VA has a pension program (often referred to as the Aid and Attendance Program) that can pay over $2100 per month if the Vet is married and in need of assistance with his daily living or just needs a protective environment. If not married or not in need of assistance then the monthly amount is somewhat less. Here’s a summary of the rates. There are requirements for eligibility having to do with Military service, income, and net worth.

Gifting: The Existing Rules as of the writing of this article (Feb 14, 2015). If the net worth of the prospective applicant is over a somewhat fuzzy limit but often considered to be $30-$45,000, then the applicant could simply give the excess away to his/her children. Often, and depending on the amount involved, we would use a special type of trust (QVap Trust) instead since several advantages could be obtained with the trust method.

Medi-Cal: How and when the gifts were made were pretty much irrelevant for the VA benefit. However, it was very relevant for qualifying for Medi-Cal (also referred to as Medicaid) purposes. And since health often declines, one sometimes moves from an ALF to a Skilled Nursing Facility (SNF). Once the person is in a SNF, the bad news is that the costs usually double or triple. The good news is that Medi-Cal is often available for SNFs.

I have always harped at my clients, that what you do for VA qualification can have a dramatic impact on your later Medi-Cal eligibility. The reason for that statement was that Medi-Cal did (and does) have a look back period. If any gifts are made during this period then it can create a penalty period. If a Medi-Cal penalty period applies, then the applicant will receive no Medi-Cal benefits during that period. That all being said, there are many methods of working around the Medi-Cal penalty.

So putting VA and Medi-Cal planning in one bucket usually required us to look at making gifts in such a manner that the penalty period for Medi-Cal was reduced to a very small duration.

The New Proposed Rules: On January 23, 2015, the VA published proposed rules. The rules, in a number of respects, borrow heavily from the Medi-Cal rules. These proposals deal with a number of matters and are quite lengthy. Two of the proposals are important to your question.

Look Back Period: First, the proposal seeks to establish a look back period of 3 years from the date of the application.

Penalty Period: Second, if any gifts were made during the look back period a penalty would be imposed during which no VA pension (with or without aid and attendance) would be paid. The maximum penalty period is 10 years. The actual duration of the penalty period is determined by dividing the value of the gift(s) by the maximum annual pension rate (in months) ($25,488 per year or $2124 per month for a Vet with a spouse). So if a gift of $100,000 was made by a married vet, the penalty would be 47.08 rounded to the nearest whole number, i.e. 47 months.

Net Worth Limit: The net worth limit is proposed to be established at the Medi-Cal limit for a married couple (whether the VA pension applicant is married or not). That limit for 2015 is $119,220. If your Dad has no other countable assets, your Dad will be eligible under the new rules without making any gifts (assuming he meets the other requirements). However, under the old rules he will need to make gifts.

Effective Date: When do the new rules take effect? That is a question for which we do not have an answer yet. There are a possible 4 potentially important dates that might establish a deadline for grandfathering (we’ll discuss for what they may be important later). Jan 23, 2015, the date the proposed rules were first published by the VA; March 24, 2015, the date the comment period ends; October, 2015, as some examples in the proposal seem to discuss that date; or Jan 23, 2015, as some pundits have theorized that it takes Federal Agencies a year to work through all of the comments. If there is a date that establishes a deadline, then is it that gifts have to be made before then to be under the old rules or is it that the application has to be filed before the deadline. All of this is unknown at this time.

Conclusion: That being said, depending on the circumstances there are some definite strategies that are developing that competent and qualified advisors are using to analyze the situations. So obviously, it is important to work with a qualified and competent advisor if any of these issues affect you.


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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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