VA Changes Looming

The Veterans Administration recently announced proposed changes to policy with respect to the increasingly popular Aid and Attendance enhanced pension program.  This program allows Veterans who served during periods of conflict, and their spouses, to access additional income if they have significant health care costs.  This commonly arises in situations where an elderly Vet is receiving in home care or in an assisted living facility.  Unlike many VA benefits, eligibility for this benefit does not require a service-related injury or disability.   There are income and asset limits.  But at least for now, there are no divestment rules.

In recent years, the Aid and Attendance pension has become a significant source of funding for many assisted living facilities and homecare agencies.  It has also become a favorite of what I sometimes call the VA Vultures, who have used this program to sell Veterans (or their spouses) on the idea of giving their assets away, or placing them in irrevocable trusts.  Often these sales programs are presented at Assisted Living Facilities, and often also involve the sale of annuities.

In any event, the explosion in the number of Veterans applying for this program has caught the attention of legislators and policy makers.  Last year a bill was introduced in Congress which would have imposed divestment penalty rules on this program.  This week the Veterans Administration announced proposed rule changes that would not need legislation to implement.  To read these changes, click here.  The proposed changes include the imposition of divestment penalty, including a three-year lookback period.  But the proposed policy goes well beyond divestment, and would make the Aid and Attendance program asset rules similar to Medicaid long term care rules.  If adopted, these rules would dramatically change the ability of Veterans to qualify for this benefit.  In light of the detail included in the proposed rules, one must assume that their adoption is likely.  It remains unclear when the new rules, if adopted, would take effect.