To receive VA Pension payments for being disabled, or over the age of 65, or a surviving spouse of a wartime veteran, the VA looks at your “Income for Veterans Administration Purposes” (IVAP) and your net worth.
The net worth, for VA purposes, does not include:
1. Your home (regardless of value);
2. Burial policies/plans;
3. Small life insurance policies;
4. Personal property (regardless of value); and 5. Your vehicle (regardless of value).
Note this differs from how Medicaid looks at your assets — in a lot of ways the tests for eligibility for VA benefits and Medicaid benefits are quite different so we have to make sure we don’t get them confused.
There is a rumor — almost an urban legend — that says that on the “non exempt” assets that a married couple is limited to $80,000 and a single person is limited to $50,000.
There is no bright line number — the one handling the claim decides the somewhat fuzzy standard of assets that are reasonably expected to be used up in your lifetime.
The regulations do say if you have over $80,000 in net worth, a special report must be written to justify. So as a practical matter this won’t be done.
The bottom line is you need to have a low net worth because you give the VA an excuse to deny the claim.
The best practice is to look at cash flow and leave enough money to last for about 12-24 months and we also need to look at Medicaid planning.
Getting the assets lower also protects the veteran and spouse will be protected from fraudulent activities in the next 12-24 months even if they are of sound mind right now.
If you live in Alabama and have questions about this benefit for you or your spouse or your parents, please let us know by calling us at 205-879-2447 or you can fill out a contact form on our Alabama Consumer site. Do note we are creating a separate site just for this area of the law in Alabama but it is not up and running yet so feel free to give us a call at 205-879-2447.