Following the recent topic of discussion regarding proposed Senate Bill S.3270 and Veteran Benefits, I have more thoughts on the proposed divestment penalty for veteran benefits.
As an elder law attorney working with veterans in the Detroit area, we strive to keep veterans informed of changes to federal law that may affect their benefits. This new bill will impact future claims for improved pension benefits, including aid and attendance (A&A) benefits.
The proposed bill will change an important aspect of benefit planning known as the “look-back” period. Current law only provides that transfers made prior to application must be disclosed if the transfers will retain ownership or income rights to the applicant. New law will strictly enforce a “divestment penalty” for all transfers made prior to application.
The maximum penalty will be three years of ineligibility form the date of transfer. The current form of the bill provides a penalty period calculated by dividing the amount of the transferred resource by the value of the benefit the applicant seeks.
As an example, if a resource is transferred to create eligiblity is worth $100,000.00 and the applicant is a single veteran seeking a maximum A&A benefit of $1,703.00, the resulting penalty will be 58 months. But, since the maximum penalty will be three years (36 months), the penalty will be capped at 36 months.
The creation of the “look-back penalty” will provide a fantastic opportunity for seniors veterans seeking this benefit to creating effective long term care plans by working with qualified financial planners and elder law attorneys.
If you would like more information about this topic, please call for a free consultation.