VA Pension is a benefit that pays for long term care costs for veterans and their surviving spouses. VA Pension provides monthly tax free cash payments that can be used to fund a wide range of long term care, including assisted living and at home care. Veterans and surviving spouses seeking to receive VA Pension must meet an income and asset tests to receive pension, as well as showing that the veteran or surviving spouse has a need for long term care.
Currently, if a veteran or surviving spouse has assets over the level permitted by the VA to qualify for VA Pension, they can transfer the assets to friends or family members, either outright or through trust and qualify to receive VA pension. The proposed regulations would put in a multiple year delay for transferring assets. This delay would decrease the number of veterans and surviving spouses that qualify for VA Pension.
There are two methods to avoid the proposed penalty on VA Pension. First, if you are a veteran or surviving spouse that has a need for long term care currently, you should make any gifts before that proposed penalty is enacted. If you are a veteran or surviving spouse that does not currently have a need for long term care, it is a good time to make gifts to start the clock on any penalty.
As the making of gifts to qualify for VA Pension can have complex tax and Medicaid consequences, it is recommended to seek the advice of an experienced elder law attorney before making gifts.