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BarJournal ESTATE PLANNING

JU LY /A UGUST 20 15
feATUre The VA Pension BenefiT

WHAT EvERY PRACTITIONER SHOULD KNOW

BY ALLISON M. MCMEECHAN

he U.S. Department of below the maximum annual pension rate unmarried veteran who requires aid and
Veterans Affairs (VA) offers (MAPR); and, as of October 18, 2018, have attendance (assistance with 2-ADLS),
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several benefits to service net worth less than the Community Spouse his MAPR is $21,962. Therefore, Joe can
men and women including Resource Allowance (CSRA), which is deduct UMEs in excess of $1,098 annually
T healthcare, education, currently $123,600. ($21,962 x 0.05). Joe’s annual income is
insurance, and burial. However, one little- $36,000. Joe’s annual UMEs (including
known or often misunderstood benefit is How to Calculate Income? memory care) are $60,000. Joe can deduct
the pension. The VA pension is a means- The total amount of pension payable UMEs up to $58,902 from his income of
tested income benefit for veterans, or to a claimant is based on the income $36,000 resulting in his monthly income
their surviving spouses, who meet certain of the claimant’s household (including being considered $0. In this case, Joe
age or non-service connected disability both spouses as part of the “household”) would therefore be entitled to the full
requirements. On September 18, 2018, the reduced by certain unreimbursed medical MAPR of $21,962.
VA issued Final Rule Number 8320-01, expenses. 38 CFR § 3.271 defines income
RIN 2900-AO73, which went into effect as: “payments of any kind from any source How to Calculate Net Worth?
on October 18, 2018. This Rule establishes shall be counted as income during the As of October 18, 2018, the net worth limit
new requirements for evaluating net worth, 12-month annualization period in which is equal to the CSRA, which is currently
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medical expense deductions, and asset received unless specifically excluded $123,600. This amount will increase by the
transfers. This Article will serve as a primer under 3.272.” To be eligible for pension, same percentage as the Social Security’s cost
on the VA pension benefit as well as an the veteran or surviving spouse must have of living increase. To determine a claimant’s
update and summary of the new Rule. income below the MAPR; however, the VA net worth, the VA will consider the fair
will allow certain unreimbursed medical market value of all non-exempt property
Who is Eligible? expenses to be deducted in order to reduce owned by the claimant and his/her spouse,
The VA pension is available to veterans or countable income. less mortgages or other encumbrances.
surviving spouses (claimant) of limited income The MAPR begins with a base rate and Exempt property includes the residence
and resources. To be eligible, the veteran then increases depending on the number and up to two acres, family transportation
must: 1) have been discharged from service of dependents and whether the claimant is vehicles, personal effects used on a regular
under other than dishonorable conditions; housebound or in need of aid and attendance basis, and prepaid funeral and burial lots.
and, 2) have served 90 days or more of active (claimant must require assistance with at Any trust, annuity, or other asset where the
duty with at least one day during a period of least two activities of daily living (ADLs) claimant retains the ability to liquidate, is
war time. Furthermore, the veteran must be to be approved for an aid and attendance considered a non-exempt asset.
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aged 65 or older or permanently and totally rating). As an example, a single veteran Under the new Rule, net worth is
disabled (non-service connected disability). can receive between $13,166 and $21,962 calculated by adding all countable assets
Receipt of Social Security disability benefits annually depending on his/her rating. This to the annual gross household income
is sufficient to prove total disability prior amount will increase based on the number less allowable net unreimbursed medical
to age 65. A surviving spouse can qualify of dependents. A surviving spouse without expenses. Joe has $120,000 in countable
at any age and the surviving spouse is a dependent can expect to receive between assets. He has gross annual income of $36,000
not required to be disabled; however, the $8,830 and $14,113 annually. and his allowable net UMEs are $58,902.
surviving spouse must have been married to The pension benefit amount is the Adding annual income to assets results in
the veteran at the time of the veteran’s death, difference of the “countable” income a net worth of $156,000 which exceeds the
lived continuously with the veteran prior to and the MAPR. Countable income is net worth limitation for pension. However,
his/her death, and must be single at the time determined by adding the household’s the VA would consider Joe’s income to be
of application (and cannot have remarried income and then deducting a portion of zero because his UMEs exceed his income
prior to November 1, 1990). unreimbursed medical expenses (UME). and thus his net worth is $120,000. Joe’s net
Finally, as a means-tested benefit, the UMEs in excess of 5% of the MAPR are worth is within the allowable limit and Joe is
claimant is also required to have income deductible. As an example, if Joe is an entitled to the pension.
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