Military Connection: VA Proposal Could Hurt Low-income Veterans

An attempt by the government to close a loophole found in eligibility requirements for a Veteran benefit would most likely disqualify the majority of Veterans from the services that the benefit was intended to help.

The Department of Veterans Affairs (VA) recently proposed to close a loophole that allowed war time Veterans to transfer assets to family members or trusts in order to meet income requirements for a benefit that helps provide funding for medical care and assisted living to low-income Veterans.

A report written by the Government Accountability Office in 2012 recommended that the VA introduce a look-back provision into their system, to keep Veterans from transferring assets in order to meet income guidelines. The GAO report referenced one instance where a Veteran transferred more than one million dollars into a trust just weeks before applying for the benefit. And even though VA case workers knew about the transfer, the claim was approved because of the loophole. The GAO found that financial planners have charged Veterans hundreds, sometimes thousands of dollars in fees and urged them to transfer assets into trusts. The transfers are legal for VA benefits but tend to disqualify the Veterans for other programs, such as Medicaid coverage.

Under the proposed change to the program, there would be an evaluation any transfer of assets made within the three years prior to the application of the benefit, when looking to meet income requirements. The VA claims that the proposed change to a penalty period might keep financial advisers from suggesting that Veterans create the appearance of an economic need where the need does not exist.

The VA’s proposal to close the loophole would do more than just eliminate the opportunity for wealthier Veterans to move around their assets to qualify for benefits. The change could essentially eliminate funding for assisted living services for truly low-income Veterans.

The benefit, as it currently stands, provides up to $2,120 per month for wartime Veterans who are at least 65, or who have a disability not connected to their military service. This benefit is intended to provide medical care only. But the proposed change eliminates many of the services from assisted living from its allowable expenditures, services that many elderly and disabled Veterans depend on. The new proposal classifies such services as help with medications and assistance with daily functions as “non-medical” services and will therefore no longer be covered if the change is made.

The VA estimates that the proposal could save the department $134 million over five years from the look-back provision, and would save $313 million on denied coverage for assisted living services. This estimation has some Veteran advocates wondering if the transferring of funds wasn’t the prime target of the proposal.

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