Rule Changes Will Tighten Restrictions on VA Aid, Assistance Pensions

The Veterans Affairs Department is proposing rules changes to a pension program for low-income veterans age 65 and older that officials say will protect the fund from those who have sought to manipulate their net worth to receive payments.

One change in particular -- basing program eligibility on an claimant's annual net worth during the three years prior to filing for the benefit -- will ensure "that VA only pays the benefit to those with genuine need," the rules proposal published Jan. 23 in the Federal Register states.

However, an attorney who specializes in elder law says the VA is rigging the system to disqualify those in need, or force them to bleed through whatever incomes or savings they have to retain the benefit.

"I don't see veterans gaming the system. I see veterans in real need," Eileen Walsh, an owner-partner of Elder Law in Louisville, Kentucky, said on Wednesday.

The VA has been trying to make changes with the pension program at least since 2012 following a General Accountability Office report that recommended the assistance be means-tested, as are other federal programs.

VA officials did not respond to Military.com's request for comment on the rules change.

In 2011, the VA paid out about $4.3 billion in pension benefits for about 517,000 recipients – including veterans or their survivors, according to the Government Accountability Office. These benefits were extended to low-income wartime veterans age 65 and older, or who were under age 65 but permanently and totally disabled due to military service.

Of the total number of recipients, GAO said about 314,000 were veterans and 203,000 were survivors. About 329,000 were over 65, with the average age 71 for veterans and 79 for survivors. On average, veteran claimants received $9,669 annually and survivors $6,209.

"It's a modest pension amount," Walsh said. "We see the veteran's cost of care will very often exceed monthly income, and exceed the pension benefit when it's included to supplement their income. So they're bleeding through their assets to some degree."

Under current law, eligible veterans or their survivors are able to transfer assets so they don't appear on an application for benefits that might make them ineligible for the pension. The GAO, in its May 2012 report, noted a claimant transferred more than $1 million into an irrevocable trust less than three months before applying – and then getting – pension benefits based on low income.

The GAO said it identified more than 200 financial and estate planning services companies that help individuals with excess assets meet financial eligibility to qualify for pensions. GAO investigators posing as veterans seeking help visited with 19 such providers, all of which advised they could transfer excess assets just before applying for the benefit.

"Two organization representatives said they helped pension claimants with substantial assets, including millionaires, obtain VA's approval for benefits," the report said.

The VA responded to the report in 2012 by agreeing it needed to means-test eligibility for the pension. Several bills later filed in Congress would have done just that, but failed to pass.

The rules change, if adopted, would establish net worth eligibility equal to that required for Medicaid, or $119,220 a year for a veteran and spouse. Net worth would include the veteran's assets and earnings, along with those of his spouse. It would not include their home, though a home with more than two acres of land could make the claimant not eligible. A veteran or survivor still wanting to file a claim, who has more than two acres of marketable land as part of their home, would have to sell the land under the rules change.

Subtracted form a claimant's net worth would be costs associated with food, clothing, shelter and health care.

Walsh said the pension has been an earned benefit for veterans since the Civil War, but most veterans are unaware of it.

"I think the proposed regulations are harsh," she said. "When Congress enacted the pension program they did not set an asset limit. They preferred to apply a number of factors, such as age, health, income, the cost of long-term care."

Now, it imposes a net worth standard based on being a single veteran, a married veteran or the survivor of a veteran.

The rules change establishes a one-size-fits-all standard, according to Walsh.

"Clearly a 72-year-old with care expenses should be entitled to have more assets or needs more assets than a 92-year-old," she said.

If the rules take effect, a claimant who in the three years before filing with VA transferred assets whose value would have made him or her ineligible for the pension would be penalized by having the amount withheld for up to 10 years.

The length of the penalty would depend on the value of the assets transferred and how they would have affected the claimant's net worth.

"It would be inequitable to calculate a penalty period using the entire transferred amount when net worth would have exceeded the limit by only a small amount if the claimant had not transferred any assets at all," the VA said in the proposed rules change.