The newly proposed rules amend existing 38 C.F.R. 3.271 through 3.276 and add new section 3.277 through 3.279. These new rules make numerous detailed changes but the main ones are:
- Creation of a "brightline." A brightline is a cutoff point for net worth. Under the newly proposed regulations, a claimant may have up to $119,220 in total net worth. This odd amount is equal to the current Medicaid Community Spouse Resource Allowance (CSRA") and is subject to annual Cost of Living Adjustments.
- Implementing a three-year look-back. Medicaid currently has a five year look back period preventing the transfer of assets to create eligibility. VA is proposing a three-year period. Any assets over the brightline are termed "covered assets." After these rules take effect, any claim for Pension benefits will be subjected to an audit to uncover any transfer of covered assets in the last 36-months. The transfer of covered assets for any reason (except for a very few specific causes), will cause Va to deny the benefit claim.
- Penalty Period. VA will also impose penalties for these transfers. The penalty period can be up to ten years and is calculated by dividing the transferred asset by the maximum VA monthly benefit allowed the claimant. For example, the maximum monthly benefit for a surviving spouse is $1,149.00. If $75,000 were transferred as gifts, etc., the VA would divide $75,000 by $1,149. This results in a penalty period of 65 months. During the penalty period, the potential claimant would be ineligible for benefits.
At this point, the VA has 60-days to receive comments on the proposed changes. The VA must respond to these proposals and, when complete, will publish the final rules in the Federal Register. At this point the laws will take effect.