Lawyers With Purpose

Understanding the Child Caregiver Exemption

As many of us are aware, the federal guidelines allow Medicaid applicants to transfer their home to a child caregiver without suffering a Medicaid penalty for the transfer. It is a transfer often attempted by families in the Medicaid application process. It is also a transfer that often fails to meet the requirements necessary for the Medicaid agency to acknowledge the transfer under the child caregiver exemption.

The federal guidelines for the transfer remain somewhat vague, declaring that each state must develop “reasonable standards … for determining eligibility for and the extent of medical assistance,” and that the individual must “fulfill the criteria established by the State in which he lives.” 42 USCA 1396a(a)(17)(A), 453 US 34. This makes it of critical importance that we look to our individual state laws for the specific guidelines necessary. It is also crucial that our clients provide the documentation necessary to prove they acted properly as a caregiver for the parent for at least two consecutive years prior to the transfer.

Generally, individual states require that the child caregiver has resided in the parent’s home for at least two consecutive years immediately preceding the institutionalization of the parent AND provided full-time care for the parent who would otherwise have required institutional care for that entire time period. This is a very specific burden to meet. Just last month, the Superior Court of New Jersey held that a transfer made to a child caregiver who had taken care of her parent for five years prior to institutionalization and met all other requirements of the rule was not valid because the parent had left the nursing home and resided with her son for five months prior to moving back to the nursing home and making the transfer to the daughter. MK v. Dep’t of Human Services, Superior Ct of NJ, Docket No. A-0790-14T3.  

So, what must we ensure that our clients have in order to make the transfer? First, we as attorneys must have a clear understanding of the Medicaid guidelines in our own states. Then we need to be sure our clients obtain, and we review, the required documentation. The Medicaid Child Caregiver Exemption generally requires the following documentation.

1.  Doctor’s letter

I immediately require that my clients bring me the letter from the doctor as soon as they indicate they may qualify for the exemption. I encourage them to have the doctor state all conditions that the parent suffers from, the time period the parent has suffered from those conditions, and that BUT FOR THE CARE OF THE CHILD, the period of time the parent would have required institutional care. Medicaid may, after reviewing the doctor’s letter, request medical records; however, they do not generally need to be provided without Medicaid requesting them.

2.  Proof of child’s address

To qualify for the exemption, the child is required to have lived in the parent’s home for the two years IMMEDIATELY preceding the institutionalization. The fact that the child owns a home and spent part of the time there may pose an issue. Any break in living together in the parent’s home may pose issues as it did in the New Jersey case.

3.  Proof of relationship

If the child has a different last name than the parent, he or she needs to be prepared to present a birth certificate in order to prove relationship. Step-children generally do not qualify for the child caregiver exemption.  

4.  Proof the child provided full-time care

Medicaid may also ask for the past two years of tax returns. Clients may run into an issue here if they worked during the past two years. Generally, the exemption disallows any occupation other than acting as caregiver for the parent. However, in some states, part-time work outside the home is allowed when another child was providing services, or a caregiver was hired, during that time period.

Again, the first step in successfully transferring a home under the child caregiver exemption is knowing the rules of your jurisdiction. Second, we must make sure our clients can actually provide us with the proof required to meet Medicaid’s standards. Often, it is the second prong where we run into trouble. Medicaid rules are often not malleable, and documentation must prove that each prong of the state standard is met.

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Kimberly Brannon, Technical-Legal & Software Trainer - Lawyers With Purpose

When the VA Wants Its Money Back: Handling a VA Overpayment Demand

Receiving mail from the Department of Veterans Affairs (VA) may be a source of excitement for some folks, particularly when they are waiting for news of an initial VA decision. However, once a claimant is getting the correct monthly benefit, correspondence from the VA is generally not good news. Unfortunately, there are times when the VA decides that benefits were awarded and paid in error, resulting in an overpayment demand from the VA’s Debt Management Center. The Debt Management Center (DMC) is a separate department from the Pension Management Center (PMC). The PMC may send you a decision letter explaining why a claimant’s entitlement has changed, but it is left to the DMC to issue the actual request for repayment if the change in entitlement has resulted in a so-called overpayment. This is done via a form letter punctuated by only a few personal details, such as the type of benefit, the amount of debt, and the date on which the VA plans to start withholding benefits until the amount overpaid is recouped. The horror is compounded by the convenient payment remittance stub at the bottom, by which the VA hopes you will pay in full within 30 days.

Overpayment demands occur for various reasons. The claimant’s income may have increased and/or there is a decrease in medical expenses, so he/she no longer qualifies for the same monthly benefit. Or the claimant may have received an inheritance that disqualified him/her completely, based on the VA treating the inheritance as both income and countable assets after a certain date, even though the claimant continued to receive a benefit. If there is indeed more income/less medical expenses than previously reported, consider submitting actual medical expenses for the same time period if sufficient to offset the discrepancy. However, just because the VA claims to have overpaid, that does not necessarily mean that the claim is accurate. Sometimes an overpayment demand is simply the result of a clerical error or the VA considering historical income and/or asset information that should be irrelevant post the effective date.

When you receive an overpayment notice from the DMC, you must generally respond in some way within 30 days of the date of the letter. Responding within this time frame will also ensure that any scheduled withholding action does not occur until after your response is considered by the VA. How you respond depends on whether the overpayment demand has merit and/or whether or not the claimant can repay the debt. If the claimant does owe the debt, the back of the form letter gives you four different ways to pay: by phone, by mail, online, and via Western Union Quick Collect. The DMC has its own toll-free number: (800) 827-0648. If you cannot afford to pay the entire debt at once, the VA is willing to make arrangements for repayment over time or even ultimately to grant a waiver of the debt, if the claimant does not have the means to repay at all.

Claimants may dispute a debt if it is not owed or dispute the amount of the debt if it is inaccurate. The form letter from the DMC should be accompanied by VA form 0748, which is a Notice of Rights and Obligations that explains the claimant’s options for appealing and requesting a waiver of a debt. If you dispute the debt, you must explain in writing why you dispute the validity of the debt or the amount of the debt. If you request a waiver of part or all of the debt, you must explain in writing either why you are not responsible for the debt or how collection of the debt would cause undue hardship. Claims of hardship should be documented by submitting a VA form 5655 Financial Status Report within 180 days, which the VA considers in deciding whether to waive the debt. Pursuant to 38 CFR §1.963, “Recovery of overpayments of any benefits made under laws administered by the VA shall be waived if there is no indication of fraud, misrepresentation, or bad faith on the part of the [claimant] and recovery of the indebtedness . . . would be against equity and good conscience.”

Finally, you must remember – having now dealt with the DMC – to consider whether you should also respond to the appropriate pension department. If an overpayment occurred because the VA made an erroneous decision, you would need to file a request for reconsideration or notice of disagreement with the Pension Management Center serving your particular state in order to start the appeal process. I would not count on the VA to consider your dispute of a debt as an appeal of the PMC’s decision.

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC, and Director of VA Services for Lawyers with Purpose.

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit”; Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers with Purpose; and Co-Founder of Veterans Advocate Group of America.

Pat Summitt: Redefining Heroism in the Face of Alzheimer’s

Those of you who know me well, know that I am an avid University of Georgia fan (or perhaps fanatic). I arrive at football games at 6 a.m. to set up my tent. I will stand in the 100-degree sun, downpours, 90,000-person adversarial crowds and whatever else is thrown at me to support the Red & Black.

As any true Bulldog should, I refuse to wear or own anything orange. Working for a Syracuse company owned and dominated by graduates thereof, this is not an easy feat. Kyle, our Brand Development Specialist, continually tries to present me with orange apparel, cards and business accessories I will neither use nor touch.   So, until the untimely death of Patricia Summitt earlier this week, it was hard to imagine any circumstance under which I would say anything positive about any orange team, much less our bitter rival, the Big Orange of Tennessee.

But Coach Pat Summitt may have softened my perspective on that. I have watched Coach Summitt many times from the stands as she and her orange-clad teams continually dominated women’s college basketball. She appeared loud and strong, and seemed to tower with confidence over a group of women all averaging 6 feet tall and half her age.

However, I only once had the privilege of meeting Pat Summitt in person – at the 2012 National Alzheimer’s Association dinner, where she was being honored for her work for the association. There, she stayed close behind her son the entire night as he guided her through the room. When they took the stage, he held her hand, took her speech and read it. She stood silent with a look of slight discomfort and confusion. Yet there she stood on stage in Washington D.C. in front of advocates, celebrities and Congress members from every state. For me, in that moment, Patricia Summitt of Clarksville, Tennessee redefined bravery and heroism.

Coach Summitt made a conscious choice after her diagnosis to champion Alzheimer’s awareness. As she struggled with early onset and discovered the lack of information and research on the subject, it is said that she made her son promise to help her bring the awareness to the cause necessary to make change. She and her son Tyler did just that until the day she left us. She taught us that Alzheimer’s does not discriminate based on physical fitness level, race, gender, age or wealth. She showed the world that even the strongest among us with the best resources will buckle to this disease if we do not continue to fight together for a cure.  

Pat Summitt once said, “It is what it is, but it will be what you make it.” Through her powerful example, Coach Summitt put Alzheimer’s on a national stage and led a growing team of advocates, caregivers, families and sufferers across our country to fight for funding, research and reform. In my mind, that will always be her greatest coaching feat. Therefore, in honor of Patricia Summitt, I will say (just this one time), GO BIG ORANGE!

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Kimberly Brannon, Legal-Technical & Software Trainer

Where in the world is Janesville, Wisconsin? Possible changes to where VA claims should be filed.

If you had asked me a few months ago where you should mail your VA non-service-connected (NSC) disability pension claims, I would have answered with conviction . . . it depends! I’m not trying to be funny, it’s just that it literally depended on the state where the claimant resides. Every state is served by one of three Pension Management Centers (PMC): Philadelphia, Milwaukee, or St. Paul. Philadelphia, PA serves the eastern states; Milwaukee, WI serves the central states; and St. Paul, MN serves the rest of the states from Minnesota to the west coast. Alaska and Hawaii are served by the St. Paul PMC as well. Claimants living in Mexico, Central and South America, and the Caribbean should file in St. Paul for NSC disability pension claims and appeals of those claims. Residents of all other foreign countries should file such claims at Philadelphia’s PMC. See Resources below for mailing addresses and a list of all corresponding states and countries. The Pension Management Centers, as their name suggests, focus on pension benefits and do not handle any service-connected-disability compensation claims, or claims for both compensation and NSC disability pension, sometimes called dual claims.

Title 38 of the Code of Federal Regulations (CFR) §3.155 on “How to file a claim” begins, “The following paragraphs describe the manner and methods in which a claim can be initiated and filed,” but in all the detail that follows, nowhere does it tell you where specifically to mail a claim. The VA Adjudication manual M21-1 similarly fails to give such particulars. If you search online for “how to apply for veterans’ benefits,” you may eventually end up at the VA website that – as of the time this was written – still clearly directs you to “mail your application to the Pension Management Center (PMC) that serves your state.” However, since last year, rumblings of a change have begun to be heard that the mailing process may be undergoing an update.

That brings us to Janesville, WI, which may be familiar to those who file service-connected-disability compensation claims, but may not be to those of us who deal exclusively with NSC disability claims. It is the Janesville Evidence Intake Center (EIC) in Wisconsin where all claimants residing in states roughly west of the Mississippi have been filing service-connected-disability compensation claims for some time. However, Janesville may become the hub of a centralized mail intake system for all veterans’ pension AND compensation claims from all over the world. Since last year, the VA has periodically inserted with their correspondence the directive that all mail should now be sent to a PO box at the EIC in Janesville. In addition, an 11-page VA fact sheet on centralized mail processing was quietly issued in March 2016 stating that “New addresses for the submission of material went into effect on July 7, 2014.”

Per this fact sheet, the U.S. Postal Service is apparently automatically redirecting material that is mailed to Regional Offices or PMCs to Janesville. Specific PO boxes have been designated to specific categories of claims. However, from this hub, the claim will eventually be routed back to the pension management center where you are currently sending your claims for processing. Therefore, those who have been routinely filing NSC disability pension claims at the appropriate PMC may now be faced with a dilemma: obey the “new” – and by no means widely-known – directive, or continue as before. At our law firm, except for replies to VA letters that provide a specific return address, we continue to file all our claims at the appropriate PMC. Some law firms, in an abundance of caution, have started filing at both the PMC and the Janesville EIC. And yet others use only the addresses and fax number in Janesville that are given on the fact sheet.

So ask me today where you should mail your VA non-service-connected (NSC) disability pension claims and I will answer with conviction that you should take your pick – from the addresses provided below in the Resources section.

Resources

Philadelphia VA Regional Office

5000 Wissahickon Ave.

PO Box 8079

Philadelphia, PA 19101

Fax #: (215) 842-4410

Service Area: Connecticut, Delaware, Florida, Georgia, Maine , Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Vermont, Virginia, West Virginia, all foreign countries other than Mexico, Central and South America, and the Caribbean

Milwaukee VA Pension Center

PO Box 342000

Milwaukee, WI 53234-9907

Fax #: (215) 842-4430

Service Area: Alabama, Arkansas, Illinois, Indiana, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Ohio, Tennessee, Wisconsin

 

St. Paul VA Regional Office

Pension Management Center (335/21P)

PO BOX 11000

St. Paul, MN 55111-0000

Fax #: (215) 842-4420

Service Area: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Minnesota, Montana, Nebraska, North Dakota, New Mexico, Nevada, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming, Mexico, Central and South America, and the Caribbean

 

Janesville Evidence Intake Center

Fax #: (844) 822-5246

 

Philadelphia PMC

Dept. of Veterans Affairs

Claims Intake Center

Attention: Philadelphia Pension Center

PO Box 5206

Janesville, WI 53547-5206

 

St. Paul PMC

Dept. of Veterans Affairs

Claims Intake Center

Attention: St. Paul Pension Center

PO Box 5365

Janesville, WI 53547-5365

 

Milwaukee PMC

Dept. of Veterans Affairs

Claims Intake Center

Attention: Milwaukee Pension Center

PO Box 5192

Janesville, WI 53547-5192

If you would like to learn more about becoming a Lawyers With Purpose member join us for our FREE webinar "Running Your Firm Like A Business" on Wednesday, July 27th at 8 EST / 5 PST. Click here to reserve your spot today.

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC and Director of VA Services for Lawyers with Purpose.

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit”; Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers with Purpose: and Co-Founder of Veterans Advocate Group of America.

Taking on DHS: Successfully Challenging the Medicaid Penalty

We want to welcome Richard Winblad, Guest Blogger and Lawyers With Purpose member.  Today Richard shares about his win with the Medicaid Penalty. Great work making a difference for your clients!

Taking On DHS Benefits the Client and Referral Source

An accounts receivable director of a nursing home advised me about a disturbing Medicaid denial they received. The case had already gone to one Fair Hearing. The caseworker identified $60,000 of checks that she contended were made without receiving “commensurate return.”[1] During the hearing, she wanted to amend the finding so that $113,000 was improper and to deny benefits for 792 days. In Medicaid language, this means that it would not reimburse the nursing home until after the two years had passed. Not a great result for a 95-year-old widow suffering from Alzheimer’s disease. This was bad news for the facility and for the family. The family had no resources to self-pay.

The nursing home was interested in having the result reversed. They were already out approximately $40,000 in unreimbursed fees and were not relishing funding an additional $70,000. Clearly, the caseworker’s decision had to be examined and perhaps challenged. Eviction was not an option the nursing home was willing to consider. It also wanted to avoid funding her care. The administrator saw the value of paying an elder law attorney to represent the resident. Of course, the resident’s guardian agreed to the arrangement.

Training Builds Confidence

Lawyers with Purpose provides training that is useful in dealing with Medicaid eligibility gatekeepers. Sometimes caseworkers get things very wrong, resulting in improperly denied benefits. This case involved a “lookback period” which is 60 months prior to the Medicaid application. The agency looks for transfers for less than “fair market value.” Generally, the agency examines transactions with family members and often treats these as gifts. The amount of the gifts is then divided by that state’s reimbursement rate to compute the penalty period. For example, Oklahoma’s reimbursement rate is $143.70 per day.

$113,810 ÷ $143.70 = 792 days

Aside from the initial training, Lawyers with Purpose provides online content and webinars that reinforce and expand the initial training. It also connects attorneys through a Listserv email group where members can ask and answer questions. One-on-one legal technical service is also available.

Not Accepting Medicaid’s Answer

The caseworker acts as the initial gatekeeper. If an application is denied or penalty period is imposed, the applicant must be notified of the decision and provided with an opportunity for a “Fair Hearing.” If unsuccessful at the Fair Hearing, further appeals are available typically to the agency director, then to the state courts.

Federal Option

However, the state’s administrative process is not the only avenue for relief. Denials of benefits often trigger claims under 42 U.S.C. § 1983 which can be brought in federal court. A successful §1983 claim can entitle the victor to attorney’s fees. In many jurisdictions, this may be the best answer. It is good to review both federal and state decisions in order to determine the most advantageous route. In this case, the most expeditious way to challenge the caseworker was through the Fair Hearing.

Pretrial Preparation

This case involved review of the denial and of the Fair Hearing Packets. Family witnesses were interviewed and records examined. An opening brief demonstrated flaws in the caseworker’s logic and legal basis. It also involved developing the family story that showed the funds paid were for care, that there were time logs, and why the care was necessary. The state agency filed a reply, which used a different but nonetheless incorrect legal standard. Naturally, we filed a reply to the response.

The Hearing

Telephonic hearings are difficult, especially when using financial exhibits. About a week before the hearing, we delivered an exhibit that showed how challenged checks matched time records kept by the caregiver. Just like any trial, we wanted our evidence in and theirs out. Although not requested, we filed a brief containing the proposed findings of fact and conclusions of law. We received the decision about two weeks after the hearing. The themes in the briefs, testimony and exhibits were reflected in the findings and reasoning of the hearing officer. Of the $113,800 originally challenged, the administrative law judge found only $1,983 to be inappropriate. This reduced the penalty period from 792 to 13 days.

Don’t Be Afraid to Fight

I come from a litigation background, so a Fair Hearing is simple. Evidence standards are relaxed. It has the feel of a small-claims proceeding. There are few formal pretrial procedures, but it is good to play by the normal court rules of the jurisdiction. Informal requests for information normally resulted in production.

Conclusion

The imposition of a penalty period was based upon bogus views of the law and the facts. Despite being confronted with the applicant’s case, the agency was unwilling to make any substantial concessions. Unless the applicant won, she might have died without ever receiving any benefits. Ultimately, the administrative law judge agreed with the applicant’s position and accepted her facts. LWP’s training made the victory possible.

Richard Winblad,

Richard is an attorney and LWP member who practices estate and Medicaid planning in Oklahoma. He is a Veterans Affairs Accredited Attorney and provides educational programs to consumers and elder care professionals. Richard is president of the Oklahoma City Commercial Lawyers Association. His blog can be found at www.WinbladLaw.com 

[1] The caseworker was using the incorrect term; what she really meant was that the resident did not receive anything in return.

If you want to learn more about becoming a Lawyers With Purpose member, give us a little information, then check out our membership benefits here: http://lawyerswithpurpose.com/Membership-Brochure-Registration.php

Congratulations to John Holden, Lawyers With Purpose Member of The Month

What is the greatest success you’ve had since joining LWP?

I have had the honor of assisting a Vietnam Veteran and his family in the design and implementation of an asset protection plan that protected and preserved approximately 420 acres of land, 60 head of cattle, oil and gas production as well as a headright. It was gratifying to devise a plan that met the client’s wishes and also enabled the veteran to qualify for VA Pension Benefits. I would not have had the confidence or the skill to competently assist this family without the training and software provided by LWP.

What is your favorite tool?

So far, the LWPCCS templates. In addition, I have implemented the Risk Analysis Interview and have been able to use the Risk Analysis Letter and Funding Map to provide clients with a visualization of how to accomplish their stated goals of protecting most of their assets while positioning themselves for qualification for long term care assistance by means of either VA Pension Benefits or Medicaid. Further, the training videos for the various marketing workshops are helpful in the development of my marketing efforts.

How has being part of LWP impacted your team and your practice?

Evidently, I must be the “other one per cent”, since I have no team. However, the support I have received with respect to legal technical and marketing issues has been extraordinary. I am also grateful for the encouragement I have received to get out of my comfort zone and to actively engage in marketing to my surrounding communities.

Share something about yourself that most people don’t know about you?

I am blessed with two (2) great kids. My daughter, Marlowe, is an actor in New York. My son, Taylor, is an audio performance engineer and works for Clair Global.

What is your favorite book and how did it impact your life?

A friend gave me a copy of “Purpose Driven Life” by Rick Warren at a particularly difficult point in my life. The book provided me with clarity and a path forward when I really needed it.

 

Income vs Asset Transfer Lookback: When the VA Questions Income Prior to the Effective Date

You may be aware that the Department of Veterans Affairs (VA) will be implementing a proposed three-year lookback period for asset transfers sometime in 2016. Until this rule becomes final, veterans and their surviving spouses can continue to transfer assets out of their name and become almost immediately eligible for VA pension under the asset standard. However, you may have already experienced the “income lookback,” which is when the VA questions income prior to the effective date of a claim. Today, I will explain why this occurs, whether it matters, and finally, how you respond. But first, let’s cover what determines the effective date of a claim.

What is the effective date?

The effective date is technically the date the VA receives the intent to file claim or the formal claim. If you file an intent to file claim or a formal claim on June 6, 2016, the effective date is June 6, 2016. However, actual payment for awarded claims begins the first of the month following the month in which the intent to file or the formal claim is filed. Thus, when we think of effective date, we are usually thinking of when payment begins. Therefore, if you file an intent to file claim or formal claim on June 6, 2016, the effective date for payment would be July 1, 2016.

Regardless of the effective date, there are situations in which the VA will consider retroactive months. A veteran can seek benefits for up to 12 months prior to the effective date if he/she was disabled and financially eligible at that time. Note that when you seek this, you should specifically include the citation in Title 38 CFR Sections 3.114 and 3.400 and provide income, asset, and medical expense information for the prior 12 months as well as for the current time period. A surviving spouse has up to a year after the death of the veteran to file a claim for death pension, and the VA will grant retroactively to the month of the veteran’s death. If he/she files after this one-year window, the effective date will be the first of the month following the month in which the intent to file or the formal claim is filed.

Why does the VA question income prior to the effective date?

The VA is supposed to explore potential retroactive benefits, or at least inform claimants of them. Although you might not expect the VA to go out of its way to find out if a claimant was owed benefits for any period of time before filing a claim, it can happen. I have seen death pension claims awarded back to the month of the veteran’s death, even though the surviving spouse was not eligible at that time, and despite the fact that we specifically requested a later effective date when he/she was eligible.

Questions regarding prior income generally arise because the VA cross-checks income submitted on the application for benefits (the VA forms 21P-527EZ and the 21-534EZ) with what is on record with the Internal Revenue Service (IRS). The VA started doing this in the year 2013 once it phased out the Eligibility Verification Report, which was the annual review of income and medical expenses to confirm VA eligibility. Because the VA is seeing historical information, the income reported to the IRS in prior years may be substantially more than what a claimant currently expects to make.

Does it matter if the VA questions income prior to the effective date?

If you are seeking retroactive benefits, then you should expect the VA to question income prior to the effective date, as well as assets and medical expenses, which, in this case, does not matter. Another possibility – and this does occur – is that by checking with the IRS, the VA discovers an income stream that was not reported to you and thus is not included in the claim. This is not necessarily intentional on anyone’s part but may be due to a family’s unfamiliarity with an incompetent claimant’s financial details. This can occur with irregular sources of income in particular. In this case it does matter, as you must now concede to the VA that there is additional income of which the family was not aware. If there is more income being currently received by your claimant than you knew about, then you might not have enough recurring medical expenses to offset this newly found income, and this could result in a partial award or denial. You may need to plan to file actual medical expenses annually with the VA in order to maximize your claimant’s pension benefit.

When it does really matter is when that income is no longer being generated as of the effective date (e.g. because interest-bearing assets were liquidated, spent down or transferred, because a retirement fund was withdrawn, because bonds were cashed, etc.) because the VA Adjudication Manual M21-1, V.iii.1.E.6.o on “Income Received Before the Effective Date of the Award” specifically states:

Do not count income received before the effective date of an original or new award. (For Survivors Pension cases, do not count income received between the effective date and the date of the Veteran’s death.) The effective date is the date a claimant is entitled to benefits without regard to 38 CFR 3.31.

And elsewhere the VA Adjudication Manual M21-1, V.i.3.A.3.c defines the “Reporting Period for Current-Law Pension” as:

Current-law pension income is based on 12-month annualization periods. After the initial year, income-counting periods for irregular income and medical expenses coincide with the calendar year. Income is reported on a calendar-year basis.

If the case involves ... an original or reopened claim

Then ... the initial annualization period extends from the date of pension entitlement through the end of the month that is 12 months from the month during which entitlement arose.

Finally, even the main application forms for veterans’ improved pension (the new VA form 21P-527EZ) and the surviving spouse’s death pension (VA form 21-534EZ) specifically request income as of the effective date for expected income such as dividends and interest.

How do you respond?

You should respond to all inquiries from the VA, but depending on your claimant’s particular scenario you must decide whether the appropriate response is to rebut or regroup. Regardless of the scenario, make sure to reply in a timely manner or request an extension. You are usually given at least 30 days to respond or the VA will go ahead and decide a claim, and that may mean a denial or an approval for a lesser amount, if they are considering prior, higher income. This does not mean that you have no recourse after the VA has issued such a decision. If you get a denial, you still have up to one year from the date of the denial letter to appeal. If you have an approval for a lesser amount, you have a little more flexibility, as the VA must consider any income/medical expense information as long as it is submitted within the calendar year following the year in which that income/medical expense occurred. For example, if I had a claim approved today for a lesser amount based on income that the claimant received in tax year 2015, then I would have until 12/31/2017 to submit a rebuttal of this information, and the VA must consider it.

If you decide that the VA’s inquiries into income prior to the effective date should be rebutted as immaterial to your client’s claim, then you can respond with the citations from the VA adjudication manual above and essentially state in your rebuttal that income prior to the effective date is irrelevant.

However, despite the VA’s own regulations, you may struggle to get them to accept this rebuttal, and they often still insist on evidence of termination/liquidation of any accounts that historically have generated more income than what is declared on the VA claim. In the interest of getting your client awarded his/her rightful pension sooner rather than later, you may choose the path of least resistance and obtain the requested documentation.

Nevertheless, the very real possibility that the VA may question income prior to the effective date may shape how your firm recommends that clients transfer assets. Consider closing accounts rather than transferring or renaming accounts to create a clean break. Go ahead and collect documentation about closed accounts so you will be prepared in anticipation of such an inquiry from the VA. You may even want to consider inserting a statement with VA formal claims that explains that expected income will decrease significantly as compared to prior years due to liquidating interest-bearing accounts to pay for increasing medical costs. Also you may want to anticipate issues by requesting the prior year’s tax return of any VA claimant so you can see what information the VA is likely going to get from cross-checking with the IRS.

After the proposed changes affecting pension benefits and transfers of assets become final, we expect that the VA will specifically request financial information prior to the effective date – specifically three years prior to the effective date. And because net worth under the proposed rule may include annual gross income, you’d better believe that the VA will continue questioning income received prior to the effective date. Only time will tell what the proposed lookback period will look like when finally implemented, and that will determine how we recommend that you respond to such inquiries in the future. Rest assured, however, that when that time comes, Lawyers with Purpose will be there to develop strategies and draft recommendations that you can use in your firm.

If you are interested in our monthly complementary VA Tech School webinar you can register here.  We host it on the first Wednesday of every month and it's open to both members and non-members.  Our next webinar is on Wednesday, August 3rd at 12 EST titled Big Brother is Watching: Fiduciary Accounting.  

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC and Director of VA Services for Lawyers with Purpose.

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors;” Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit;” Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers with Purpose; and Co-Founder of Veterans Advocate Group of America.By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC and Director of VA Services for Lawyers with Purpose.