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With the number of comments and changes made in the published VA regulations, we are breaking down a few more of those changes. In this post, we will specifically be covering changes and specifics in regards to residential lot size, income exclusions and what constitutes a medical expense.
Residential Lot Size
The residential lot area that is allowed is up to 2 acres or 87,120 square feet. The lot area may be bigger if the excess acreage is not marketable, not accessible or there are zoning limitations that prevent selling the additional property.
Comments made about this rule were mainly in regards to setting a price limit on a residential lot and not necessarily an acreage as a small farming home in Iowa and a penthouse apartment in New York will have wildly different acreage, and the prices will be extremely different as well.
The VA is keeping acreage as the benchmark so as not to penalize claimants that live on small but valuable land.
If the residence is sold, “any proceeds from the sale become an asset except to the extent the proceeds are used to purchase another residence within the same calendar year as the year in which the sale occurred.”
In order to avoid a lapse in coverage, if someone sold their house in November 2018, they would need to buy a new residence or spend down the excess funds by the end of December 2018. If, however, an applicant sold their house in the three-year lookback period, they would just need to buy a new residence or spend the excess funds before the date of the claim.
If a claimant rents rather than owns a house or apartment, the rent will continue to not be excluded from income. However, the purchased primary residence will still be excluded from total assets.
Income exclusions are money that will not be counted towards monthly income. People may receive these payments because of certain legal acts or from certain businesses that maintain a certain kind of work. Income exclusions include compensation or restitution payments, payments to Native Americans, work-related payments for places such as AmeriCorps or volunteer work and other payments like child care and student financial aid.
Regarding annuities, the monthly payment an individual receives from their annuity will count towards their income “unless expressly excluded by statute.” In most cases, the monthly payment from an annuity will count. Note immediate annuity purchases will now result in a penalty period of ineligibility, however knowing how it affects your client’s monthly income is pertinent if your client has an existing annuity.
Any payments from an IRA will be included in income as well. Although many commenters made arguments about how this may penalize someone who saved money in a different place, like a bank account, the VA upholds this regulation so it will not contradict the precedential General Counsel opinions.
To begin, the VA went through a number of definitions to clarify and amend certain definitions. They define a health care provider as “an individual licensed by a State or country to provide health care in the State or country in which the individual provides the health care, as well as a nursing assistant or home health aide who is supervised by such a licensed health care provider.”
The activities defined in ADLs continue to be “assistance in walking, getting in and out of bed, bathing, dressing, feeding and using the toilet, preparation of special diets, and supervision of medication that usually can be self-administered,” but the VA added in “ambulating within the home or living area” to be consistent with the U.S. Census Bureau’s Survey of Income and Program Participation.
Medical expenses, as defined by the VA, are expenses that are “medically necessary; that improve a disabled individual’s functioning; or that prevent, slow, or ease an individual’s functional decline.” These expenses include health care provider payments, medications, adaptive equipment, transportation expenses, health insurance premiums, smoking cessations products and institutional forms of care and in-home care.
Items that do not count towards medical expenses are general health maintenance, cosmetic procedures, meals and lodging or assistance with IADLs.
To look at specific regulations or wording of rules, you may want to read further about medical expenses, income inclusions or residential lot size in the published rule that you can find here. If you have a case where your client is hoping to become eligible for VA benefits, pay close attention to the new regulations so your client won’t be left without coverage for longer than necessary.