What Is A Non-Service Connected Pension?
A non-service connected pension is one of the two VA benefits offered by the Veterans Administration. The first VA benefit is the VA service-connected benefit. It is essentially a VA benefit payable to veterans and their families when the veteran has incurred an injury or disability related to his or her military service. The non-service connected pension is the second type of VA benefit. It is a benefit that is available to veterans or surviving spouses who meet a means test. It does not require an injury during military service. The non-service connected pension can be awarded in situations where the military veteran served for six months and then went home. Both benefits offer a payout directly to the veteran or surviving spouse. It is not payable to other providers. It is cash in the bank, tax-free.
The non-service connected pension is available to veterans who never left the United States. It is a more broadly awarded benefit with the aim of providing veterans with limited funds higher quality care, such as assisted living or additional in-home care.
The VA Requires Pension Applicants To Prove Limited Net Worth. What Does That Really Mean?
The VA requires applicants to prove limited net worth. Improved pension with aid and attendance applications have four criteria that measure for eligibility, one of them is net worth. On the website and online literature, the term-limited net worth is used, but not defined. Limited net worth means that the veteran’s gross annual income and countable assets need to be below a certain threshold at the time of application. The threshold of the gross annual income plus countable assets changes year to year. It is approximately $128,000 for the year 2020.
The limited net worth first considers the veteran’s annual gross income, which is not the income that is deposited in the bank, but rather the income that is above the line of their social security before any kind of Medicare deductions. It’s the top-line benefit of their pension before any taxes are withheld or health insurance is deducted. It is the top line gross benefit, which the IRS will tax on next year’s tax return. That’s the gross income annually. Next is countable assets. Countable assets usually include all of a person’s assets, excluding their primary residence. There are a few exceptions, but generally, the veteran does not have investments, bank accounts, annuities, stocks, bonds, and mutual funds in high amounts. If you’re a lower-income individual with more money in the bank, that’s one way to meet the limited net worth rule. Also, if you do not have much in savings, but you are a higher income individual, it is another way to meet the net worth requirement of the improved pension.
Can I Create Artificial Pension Eligibility By Giving Away Part Or All Of My Estate?
After reviewing the rules about limited net worth, many people concluded that the quickest way to become eligible for VA improved pension would be to gift money to children or other trusted people. That intuition held true up until October 2018, at which time the VA enacted regulations prohibiting gifting and transferring assets within three years of VA benefits and improved pension applications for new tenants. Under the former law, there was no look-back period like there is under Medicaid law. In Florida, Medicaid law requires a five year look-back period starting from the date of the Medicaid application.
Thus, starting in October 2018, the VA regulations were summarily enacted to discover whether applicants for VA benefits had transferred assets within three years from the date of their VA benefits application.
My Attorney Says I Can Buy An Annuity Or Put My Estate In An Irrevocable Trust. Can I Do That?
Attorney and adviser techniques and strategies for becoming eligible for VA benefits have vastly changed since October 2018. Attorneys and financial advisers, prior to October 2018, routinely advised about the purchase of immediate single premium annuities and other types of annuities. They also advised on creating irrevocable trusts to protect assets from both VA benefits creditors and Medicaid after five years have lapsed. That advice does not hold true anymore. Currently, the use of annuities and an annuitization of existing annuities is severely limited by the new law. The VA penalizes veterans who have purchased annuities or transferred irrevocable trusts within the three year look-back period.
Therefore, attorneys and others providing advice about VA benefits and irrevocable trusts and annuities should be doing so from the perspective of pre-planning for an application for 3 years or more, and not as a form of immediate planning. Be very careful and aware of advice regarding the purchase of annuities or irrevocable trusts. This type of advice requires an extended explanation and discussion about how the trusts will affect current and future eligibility for VA benefits.
For more information on Non-Service Connected Pension In Florida, an initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (904) 398-6100 today.
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