Proposed Changes to Aid & Attendance Affect Caregiver Wages


(Editor's note: This is part two of an overview of some of the proposed changes that will impact veterans and their caregivers that the Department of Veterans Affairs gave notice on January 23, 2015. Read part one here: VA Aid & Attendance Gets New Eligibility Rules.)

Here's part two of an overview of the proposed changes to the Aid & Attendance eligibility rules that will impact caregiver reimbursement and the transfer of annuities and trusts.

Expenses that Aid & Attendance will pay for: Activities of Daily Living

The VA knows it needs to "define and clarify" deductible medical expenses, so that claims workers can process claims "fairly and consistently."

To get reimbursement for custodial care under the newly proposed rules, the claimant must require either "regular assistance with two or more activities of daily living (ADLs)" or custodial care and assistance because a mental disorder makes it unsafe for the veteran or surviving spouse to be left alone.

The activities of daily living (ADLs) that the VA will reimburse for are: "bathing or showering, dressing, eating, toileting, and transferring."

As defined by the VA, "transferring" means "an individual's moving himself or herself, such as getting in and out of bed. These activities are essentially those described in current § 3.352, and the inability to perform these activities is considered at least partly determinative of an individual's need for the regular aid and attendance."

Medical expenses include all payments made to a facility, including: "meals and lodging, if the primary reason for the veteran or surviving spouse to be in the facility is to receive health care services or custodial care that the facility provides. Otherwise, only
payments for assistance with health care or custodial care are medical expenses."

Expenses that Aid & Attendance will not pay for: Instrumental Activities of Daily Living

Independent Living Facilities may be concerned about the proposed regulations. "Generally, payments to facilities such as independent living facilities are not medical expenses, nor are payments for assistance with Instrumental Activities of Daily Living," according to the new guidelines. "However, there would be exceptions for disabled individuals who require health care services or custodial care."

As far as the VA is concerned, Instrumental Activities of Daily Living (IADLs) that will not be covered by Aid & Attendance include:

"Shopping, food preparation, housekeeping, laundering, managing finances, handling medications, using the telephone, and transportation for non-medical purposes.

"Proposed paragraph (e)(4) would provide that VA does not consider expenses for assistance with IADLs to be medical expenses except in certain circumstances because such personal care expenses are not intrinsically medical. Other Government agencies, such as the Internal Revenue Service and Social Security Administration, also do not consider such expenses to be medical expenses for their purposes except in limited circumstances.

"One item that is often included as an IADL is transportation. Our definition of IADL would include ‘transportation for nonmedical purposes' because it is longstanding VA policy to consider transportation for medical purposes to be a deductible medical expense, and we would continue that policy."

The medical expense calculation can include "a veteran's dependent spouse, a veteran's dependent or surviving child, and other relatives of the claimant who are members or constructive members of the claimant's household whose medical expenses are deductible."

Caregiver wages

The VA plans to use the MetLife Mature Market Institute's Market Survey of Long-Term Care Costs to decide whether caregiver wages are reasonable. The survey reported a national average private-pay hourly rate of $21 per hour for home health aides in 2012. "The lowest average hourly rate was $3.00 per hour and the highest was $32.00 per hour," according to the report.

Says the VA:

"We have determined that using the higher hourly rate as a limit better supports our policy decision to ensure that wartime veterans and their families receive the highest level of care possible while simultaneously being mindful of the interests of taxpayers. We would use the most current applicable MetLife report and would publish the limit on a VA Web site.

"[A]n in-home attendant must be a health care provider for the expense to qualify as a medical expense and that only payments for assistance with ADLs or health care services are medical expenses. However, if a veteran or a surviving spouse (or parent for parents' DIC) meets the criteria for regular aid and attendance or is housebound, the attendant does not need to be a health care provider. In addition, VA would consider payments for assistance with IADLs (as defined by VA) to be medical expenses, as long as the attendant's primary responsibility is to provide the veteran, surviving spouse, or parent with health care services or custodial care. In accordance with current VA policy, this provision would also apply to a qualified relative if a physician or physician assistant states in writing that, due to physical or mental disability, the relative requires the health care services or custodial care that the in-home attendant provides."

Expenses for "assisted living, adult day care, and similar facilities" could only be reimbursed if the payments were "for health care services and assistance with ADLs provided by a health care provider."

However, "if a veteran or surviving spouse (or parent for parents' DIC) meets the criteria for regular aid and attendance or is housebound, the care does not need to be provided by a health care provider. In addition, if the primary reason for the veteran or surviving spouse to be in the facility is to receive health care services or custodial care that the facility provides, then VA would deduct all fees paid to the facility, including meals and lodging. This provision would also apply to a qualified relative if a physician or physician assistant states in writing that, due to the relative's physical or mental disability, the relative requires the health care services or custodial care."

Sunset on the Veterans Medicaid Nursing Home Stipend

The regulations also set November 30, 2016 as the sunset date for $90 monthly pension that has been allowed to veterans or spouses who receive Medicaid paid nursing home care.

Penalties could apply to annuities and trusts

Another provision of the new regulations makes any amount transferred to an annuity or a trust a covered asset. So, the value of the annuity or amount of money or other assets in a trust could disqualify the veteran or spouse.

The regulations seem to say that a transfer to any type of trusts will disqualify, even if the trust doesn't benefit the veteran!

According to the VA: "Trust means a legal arrangement by which an individual (the grantor) transfers property to an individual or an entity (the trustee), who manages the property according to the terms of the trust, whether for the grantor's own benefit or for the benefit of another individual."

The VA would exclude most of the payout from an annuity contract and count "only the interest component of the payments" If (1) VA has already considered the fair market value of the transferred asset as an asset, or (2) the funds used to purchase the annuity were proceeds from the sale of the claimant's or beneficiary's primary residence that was previously excluded as an asset from VA's net worth calculation and such funds are not sufficient to cause net worth to exceed the limit"

The public comment period has now passed, but it's not too late to contact your member of Congress. It's important to get Congress to inquire about these changes. Call your representative in the U.S. Congress to alert them to the problems with proposed regulations. They do respond to knowledgeable constituents.

Read the proposed regulations.

John L. Roberts, J.D., is an Elder Law Attorney serving clients in Hampden County, MA. After practicing for 15 years, he confronted the challenges of family caregiving when his own father developed dementia. The experience transformed his practice, enabling him to help clients who are family caregivers from a place of true understanding.

Law Office of John L. Roberts

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I am the only male in three generations that could not serve our country with military service due to a physical disability. My father was career military and proudly served our country during WWII, Korea and Vietnam. He retired in 1967 and passed away in June on 2012. I learned about Aid & Attendance in 2006 and was stunned to find out about this little known benefit. I am a securities licensed Investment Advisor and jumped at the opportunity to help our Greatest Generation and their families pre-qualify. Since learning and educating myself about A&A, I have pre-planned more than 6,600 families without charging them for my knowledge and prep time. Due to restrictive asset and income regulations, steps must be taken to preserve and protect assets and income for the surviving family by carefully gifting some of those asset to the heirs. If done incorrectly, other government benefits may be impacted. This is a process that is not for the "weak willed" or "faint of heart" due to very restrictive regulations that are already in place. My company philosophy is that no family or person should have to go broke because they didn't die! Dying is cheap, it's the lingering that wipe out a lifetime of savings. We seem to forget that this program is funded with taxpayer money and almost half of our population doesn't pay taxes and are immediately eligible for the A&A because they don't have assets to protect and preserve. Unfortunately, a few 'bad apples' use this life changing benefit to sell annuities and other insurance products in order to generate a large commission for themselves. California (my home state) has made this practice illegal by passing legislation. Why don't we just leave this "Greatest Generation", Korean and Vietnam Vets alone and allow them to age with dignity by accessing this need based entitlements. If we must contain costs, let's change the rules for those younger vets that are years away from catastrophic care. Leave WWII, Korea and Vietnam Vets alone! We owe them a debt of gratitude that can never be repaid, so let's honor that debt.
Just a suggestion - make sure you are eligible as far as income/assets are concerned before you embark on the filing process. I just spent 6 months going through the entire process for my husband who has dementia and is in a care facility - from getting a medical exam and blood work at a VA facility, filling out and submitting numerous forms, obtaining treatment records from our hospital and rehab, writing a personal statement, having our primary care physician write a statement, etc, etc. I received a letter from VA last week informing us we did not qualify for aid because we had enough assets to take care of ourselves. I was very disappointed and wish they had done the financial assessment at the beginning of the process. I wrote a letter suggesting just that but doubt anything will change.
Can not plan with this regulatory proposal. Dad has been confirmed to be impaired in all ADLs, yet, can "shower himself" (if accompanied to the shower, monitored during the shower, clothes laid out for him, meals prepared for him, etc.). Our caregiver does do housekeeping, laundry, etc. Do the rule-change proposers not believe that furniture filled with urine and feces, dirty clothes, etc., pose a health hazard? Do they not believe that a person who cannot or will not push the "start" button on a microwave, nor open a refrigerator door -- does not need shopping, meal preparation, etc. This is insane. This is what our veterans can look forward to for their "service." Their spouses, children -- can quit their jobs and abandon their own families to see to it these folks are cared for. Heartless.