Do you remember the Medicaid scare in 1996 when Congress passed the “Granny Goes to Jail” law? The effect of that short-lived law lingers on today with many seniors thinking that they can’t legally protect their life savings when facing long-term health care costs.
Congress is at it again—this time creating another hurdle for war veterans. Take a look at H.R.2189, deceptively titled: To improve the processing of disability claims by the Department of Veterans Affairs, and for other purposes.” Section 202 of the bill includes a Medicaid-style 3-year look back on transfers as one way to improve the backlog of claims.
By Stephen K Lehnardt
In 1996, Congress passed the Kennedy-Kassebaum health insurance bill into law. Hidden inside was a provision that made it a crime to transfer assets to qualify for Medicaid. The law was widely criticized and (despite the 98-0 vote) most members of Congress denied any knowledge of the criminal provision, saying it must have been “slipped in at the last moment.”
More telling, however, was that repeal efforts met with stiff opposition, which led not to repeal, but to a minor change, converting "Granny Goes to Jail" to "Granny’s Lawyer Goes to Jail." The second law made it illegal for an attorney to help seniors and their families with asset-transfer based Medicaid planning. That second law was later ruled unconstitutional.
This time, Congress is not hiding anything. Congress wants to add a 3-year look-back period to delay the award of pension benefits earned by war veterans. Although the look-back period is not the same as threatening to send Grandma to jail, the effect is strikingly similar: it turns otherwise eligible veterans away from applying for benefits.
In a written statement to the House Veterans’ Affairs Subcommittee on Disability Assistance and Memorial Affairs, Rep. Thomas J. Rooney (FL) said that the look-back period is to ensure benefits for those veterans who truly qualify for the program by penalizing veterans who transfer assets to meet the current financial eligibility requirements.
Sadly, Rep Rooney and the Subcommittee make a mountain out of the pension molehill. In 2012 of the approximately $120 Billion dollars the VA spent only 4% was allocated to veteran pensions. The vast majority of VA spending was for death and disability compensation benefits (41.4%), healthcare benefits (37.9%), and education benefits (8.3%) (see VA Annual Benefits Report for Fiscal Year 2012).
Why is the pension allocation so small? Pension is only available to a very small (and shrinking) number of veterans—those who served during a period of declared war. In addition, current eligibility requirements already confuse those attempting to apply for the pension they earned with their wartime service. The result is errors on applications and improper denials.
If H.R. 2189 becomes law, it will help cut down the backlog by making pension even harder for wartime veterans to qualify for their pension benefit at the time they need it most--before they have run out of money and are forced to look at Medicaid qualification.
Are you are a senior wartime veteran, spouse, or the child of a wartime veteran? Now is the time to review your eligiblity for the VA pension benefit—before you need it. If your situation will require you to do proper transfer planning, then you will need to take those steps much sooner so you can qualify before your assets run out.
For more information about veteran benefit planning and estate planning for veterans in Liberty, MO and the Kansas City Area and to access free tools to organize your estate, visit our estate planning website.
H.R. 2189: To improve the processing of disability claims by the Department of Veterans Affairs, and for other purposes. https://www.govtrack.us/congress/bills/113/hr2189/text
The Baltimore Sun( February 18, 2997) “White House would repeal ‘granny-goes-to-jail’ law Medicaid rule calls for year term in dumping of assets to get care“
New York State Bar Ass’n v. Reno,999 F.Supp. 710 (N.D.N.Y. 1998)
Sacramento Bee - Editorial by Jerry McNerney, July 12, 2012: “VA Needs to Crack Down on Backlog“
Veterans Benefits Administration,Annual Benefits Report FY 2012