New VA rules went into effect on October 18, 2018 for all applications for Aid and Attendance on or after that date. While some of those rules appear to correlate with Medicaid rules, they really do not resemble those rules at all.
First, a veteran in 2018 may have up to $127,061 in “net worth” and still maintain eligibility for Aid and Attendance purposes. But, the annual income is included in that $127,061 number, which is not the case for Medicaid, which speaks in “countable assets” not “net worth”.
World War II veteran Zane Grimm at the Memorial Day Ceremony on May 27th, 2013, at the San Francisco National Cemetery. Attribution to Frank Schulenburg, source: https://commons.wikimedia.org/wiki/File:Memorial_ Day_2013_%E2%80%93_San_Francisco_National_ Cemetery_%E2%80%93_06.jpg
So, a couple with $100,000 and a $36,000 annual income will not qualify for Aid and Attendance without something else. That something else may be the cost of care that the Veteran pays, that may be deducted from the income for eligibility purposes. So, if a veteran is paying $3,000.00 per month for care, then the income is 0.00.
Next, there are exceptions to net worth and how they are counted. As we discuss in more detail in another post, your home may or may not be countable. Typically your vehicle, your funeral benefits, household contents and personal effects are not countable.
The other aspect of the new rules is how the amount for penalty is calculated, which differs from Medicaid as well. For Medicaid purposes, if you transfer $100,000, for example, and there are no exceptions to the transfer rule, then Medicaid will penalize $100,000.
First, for the VA only the amount that affects VA eligibility is impacted, so the amount transferred is added back to your “net worth”, and only to the extent that the transferred funds impacted your eligibility are you penalized. So in these two examples, you can see how the “penalty” is calculated for both medicaid and the VA:
1. Veteran transfers $40,000 to adult disabled child who does not meet VA criteria for disabled child. Veteran has net worth, after transfer, of 71,000. The VA does NOT penalize at all, since $71,000 plus $40,000 is $111,000, so the transferred funds were not for the purpose of having the Veteran qualify for benefits, as he qualified prior to the transfer. Medicaid will not penalize so long as disabled child meets criteria for disability under Social Security regulations.
2. Veteran transfers $ 40,000 to adult disabled child who does not meet VA criteria for disabled child. Veteran has net worth, after transfer, of 111,000. The VA will penalize the difference between $151,000 and $127,061, the net worth limit, since the amount prior to the transfer kept the Veteran from qualifying for Aid and Attendance. So, the VA will divide the difference of $22,939 by the MAPR or Maximum Annual Pension Rate of $2,230 and the penalty period will be 10 months that the Veteran will not receive Aid and Attendance. Medicaid will not penalize so long as disabled child meets criteria for disability under Social Security regulations.
3. Veteran transfers 120,000 to non disabled adult child who is out of work and Veteran has, after transfer, no assets, but does have $31,000 income. In this case, the VA will treat the penalty the same as in example 2, but Medicaid will penalize the $100,000. Because the Medicaid penalty will be longer than 10 months, there shouldn’t be any other fallout. But, if the Medicaid penalty was shorter, there could be. Again, stay tuned.
So a question may arise about how to handle these penalties, particularly if the client goes into the nursing home. If you do not apply for Aid and Attendance, then you do not qualify for Medicaid, period. If you do apply for Aid and Attendance, it will be subject to a 10 month penalty. Medicaid will still award but it is unclear how Medicaid will treat the VA’s imposition of a penalty, since in the situation set out in the second scenario, Medicaid would not have penalized under the same circumstance and in the third scenario, it will. I think its going to be a great debate for some time. In these circumstance, the client has done absolutely nothing wrong and is simply trying to care for a child that is not self sufficient. Would Medicaid require that the client pay back the funds or face a penalty for Medicaid purposes? Not without a great overhaul of their rules in the second scenario but could be for the third? Or in the case that the Medicaid penalty ends before the VA penalty? I don’t think that Medicaid can simply act like you received the benefits either, as some transfer situations may dictate in those most draconian of jurisdictions. The requirement that you apply for benefits for which you are entitled has been met, so Medicaid should simply award without reference to VA benefits. But, you should be prepared for the 10 month penalty period to be over and for the additional income to be awarded to ensure that it does not affect eligibility at that point for Medicaid and notify Medicaid of the new income.
