House Passes Bill for Three (3) Year Look-Back Period on Transfers for Veterans Pension Benefits Planning

On October 28, 2013, the U.S. House of Representatives passed a bill (HR 2189) that has a three (3) year look-back period and penalizes a claimant for VA pension benefits (typically made by the veteran or his or her surviving spouse when such person has high medical expenses such as assisted living or nursing home costs) who made such a transfer within the three (3) years prior to the claim. Since these benefits are “means-tested” (given only to those with lower assets), those who want to claim these benefits often make transfers (not penalized under current rules) to reduce their assets so that they can get the VA benefits (which could exceed $2000 a month for the veteran and his or her spouse). Often these benefits are referred to as “Aid and Attendance” – but that is something actually added to the base pension benefit.

The bill has now made its way to the Senate. The bill specifically mentions a transfer of an asset (including transfers to an annuity) as the disposal of a covered resource for less than fair market value if such transfer reduces the amount in the corpus of the estate of the veteran and of the veteran’s spouse that would be reasonable to be consumed for the veteran’s maintenance. At the present time, veterans (or their surviving spouse) often transfer assets (since there is no look-back period) and purchase annuities. If this bill passes, planning for VA pension benefits is likely to change. So, instead of making a transfer, the purchase of an annuity in the name of the claimant would probably be considered – depending on the exact language of the final bill. The bill will not be effective until one year from the date of its enactment. Given the present budget deficit of our government, all public benefits issues are likely to be reviewed to reduce the deficit. So, in this author’s opinion, there is a good chance of passage in some form. We will keep you advised since this is a benefit that many veterans or the surviving spouse of a veteran depend upon for help with homebound, assisted living or nursing home care.

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