What is the Net Worth Limit for Aid and Attendance Pension

Posted June 11, 2020

When it comes to seniors with veterans benefits, it can be difficult to sort everything out and understand how and what you qualify for. This information from www.veteransaidbenefit.org will help you understand how Aid and Attendance Pension entitlements work.

What is the Asset / Net Worth Limit for Aid and Attendance Pension?

Up to December 1, 2020, a claimant for Aid and Attendance Pension cannot have a net worth of more than $129,094. This amount goes up every December 1 with inflation. Net worth is defined as assets plus IVAP (Income for VA Purposes).

The net worth limit for Pension or Survivor Pension entitlement is $129,094 for effective dates of payment starting December 1, 2019 through November 30, 2020. This limit is increased by the same percentage as the COLA in Social Security benefits each year on December 1 of each year and will parallel Medicaid’s Community Spousal Resource Allowance (CSRA). The divisor for calculating the penalty period to be used for 2020 is $2,266 a month.

Definition of Net Worth and the Bright Line

Test Effective October 18, 2018, the Department of Veterans Affairs (VA), changed the net worth criteria for Pension claims. Net Worth on or after October 18, 2018 is the sum of a claimant’s: assets + income for VA purposes (IVAP), including the income of a spouse and dependent children under certain circumstances

Please note when IVAP is a negative number, it is to be considered zero dollars. As a result, assets cannot be further reduced by negative income. Net worth can only be reduced to the extent that there is no income to add to the assets and thus if IVAP is zero, the net worth is the value of the assets alone. Also, the IVAP calculation is based on an initial application for Pension. This means that only reasonably predictable medical expenses can be subtracted from household gross income such as recurring insurance premiums, the recurring cost of paying caregivers or care services and possibility the recurring cost of renting medical devices.

Income for net worth purposes includes the income of the claimant and spouse or the income of a single surviving spouse.

VA calculates net worth when eligibility has been met and then only under the following conditions:

with an original Pension or Survivor Pension claim;
with a new claim after a period of non-entitlement;
with a request to establish a new dependent; or
with information that a veteran’s, surviving spouse’s, or child’s net worth has increased or decreased

If the evidence shows that net worth exceeds the net worth limit, VA may decide the claim before determining if the claimant meets other entitlement factors. VA will notify the claimant of the entitlement factors that have not been established.

VA will deny or discontinue Pension if a claimant’s or beneficiary’s net worth exceeds the net worth limit. This is referred to as the Bright Line net worth test. If the claimant does not meet other factors necessary for Pension entitlement, such as military service requirements, VA will deny the claim without calculating net worth.

Example 1 – The net worth limit is $129,094. A claimant has assets of $116,000, annual retirement income of $8,000, and annual predictable nursing home expenses of $29,000. Apply the nursing home expenditure to income, which decreases annual income to $0. Because income is $0, the claimant’s net worth is $116,000; therefore, his/her net worth is not excessive for VA Pension.

Example 2 – The net worth limit is $129,094 and the maximum annual Pension rate (MAPR) is $13,752. A claimant has assets of $129,000 and annual retirement income of $10,000. The claimant pays reasonably predictable annual medical expenses of $9,000. In this case, medical expenses that exceed $687 (5% of the MAPR) are deductible from income. After applying the expenditures, annual income decreases to $1,000. Adding income to assets produces net worth of $130,000, which is over the bright line limit, just barely. VA must deny the claim for excessive net worth. The claimant may re-apply as soon as their net-worth is spent down below VA’s limit.

Defining Assets

Assets are the fair market value of all property that an individual owns, including all real and personal property, unless excluded under 38 CFR 3.275(b). If the total value of an annuity or similar financial instrument is used when calculating the asset amount, VA does not include the monthly income derived from the same annuity or similar financial instrument when calculating income for net worth. This would result in double counting for calculating net worth.

Fair market value is the price at which an asset would change hands between a willing buyer and seller. VA will use the best available information to determine fair market value, such as inspections, appraisals, public records, and the market value of similar property. Fair market value is determined based on valuations at the time of application.

The following are rules for asset inclusion for net worth.

If the claimant is a veteran then the veteran’s assets include the assets of the veteran as well as the assets of his or her spouse.
If the claimant is a surviving spouse, the assets include only the assets of the surviving spouse.
If the claimant is a surviving child and he or she has no custodian or is in the custody of an institution, the child’s assets include only the assets of the child.
If a surviving child has a custodian other than an institution, the child’s assets include the assets of the child as well as the assets of the custodian. If the child is in the joint custody of his or her natural or adoptive parent and a stepparent, the child’s assets also include the assets of the stepparent.
VA will not consider a child to be a veteran’s or surviving spouse’s dependent child for Pension purposes if the child’s net worth exceeds the net worth limit

The total value of an annuity, trust or other similar financial instrument is counted as an asset if the claimant establishes that he or she has the ability to liquidate the entire balance. For example if the entire asset is locked up in an irrevocable trust and unavailable, it is not an asset. Likewise if an income annuity is income only and has no feature to get to the original purchase amount, it is not an asset. Other such arrangements as limited partnerships, private stock or an installment sale would likely not have an option to sell or liquidate and as a result would also not be counted as assets.

If the claimant cannot liquidate the value of the annuity, trust or other similar financial instrument or information about the liquidity of an annuity is unavailable, VA counts the monthly income received as income for net worth purposes and excludes the financial instrument value from assets. The same would be true of any other financial arrangement that locks up the asset but produces income.

This information is provided by www.veteransaidbenefit.org – an excellent resource where you can learn more about veterans aid benefits. As always, give us a call to get help finding senior living options for your loved one or need to discuss your situation. We welcome your call.