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Legal Matters: A look at the changes made to veterans pensions in October

When the Veterans Administration changed the eligibility rules for veterans pensions in October 2018, some veterans were left scratching their heads.

The changes — and what they will mean to new pension applicants, were on the minds of local residents — at a recent seniors luncheon in Westminster.

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Vietnam-era veterans are moving into senior citizen status, and many may need VA pensions for retirement income.

The rules changes will affect whether new applicants can qualify for military pension benefits. Those already receiving pensions are not affected by the changes, according to information from the VA, www.federalregister.gov.

The type of pensions affected by the changes are those available to eligible veterans who served in wartime and did not receive an other-than-honorable discharge. Surviving spouses may receive the pensions, if their spouses were eligible.

The rules changes adopted by the VA will make the pensions somewhat similar to Medicaid qualifications, because rules now impose net worth limits that make the pensions more need-based than in the past.

Major changes:

There is now a net worth limit for eligibility; before, there was none. To qualify, an applicant can have a maximum net worth of $127,061 for 2019 (the amount changes from year to year) in countable assets. Net worth means the total of an applicant’s assets and annual income.

Some assets are excluded from the net worth calculation. For example, a veteran’s primary residence is excluded, regardless of its value, if the residential lot is not larger than two acres.

There is now a 36-month “lookback” to determine whether an applicant disposed of assets for less than fair market value during that period. Before, there was no lookback for disposal of assets. If the applicant disposed of assets at less than market value, the VA assumes he was trying to spend down to the level that would qualify him for a pension. The VA may impose a penalty period of ineligibility, which can be up to five years.

To calculate a penalty against an applicant, the VA uses the pension rate — $2,230 per month this year. The agency divides the value of the disposed assets by that rate, and the result will be the number of months the veteran or surviving spouse will be ineligible for a pension.

So if a veteran disposed of $50,000 in assets at less than market value, he would be ineligible for a pension for approximately 22 months.

Many individuals who commented on the changes at hearings held before the new rules were adopted expressed the view that veterans should be entitled to pensions without needs-based qualifications because they contributed to the pension system during their military service.

In a statement on the Federal Register website cited above, the VA acknowledged that veterans served their country during a period of war, but stated that a VA pension is not a benefit that military personnel contributed directly to during their service.

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