In October 2018, the Veterans’ Administration adopted several new rules that substantially change how VA benefits work. In particular, pensions now have a specific net worth limit. The VA has also adopted a look-back period for assessing net worth.

The calculation for any specific case can become quite complex, especially when factoring in other types of benefits a veteran may receive. Careful planning can help you optimize the chances of receiving the support you need and are eligible for.

Net worth limit

Prior to October 2018, the VA did not have a set net worth limit for receiving benefits, although there were some general guidelines. The current and recently implemented limit is $127,061 and includes a spouse’s assets as well. This figure will increase annually.

Assets that count towards the limit include funds in bank accounts and stocks, as well as real estate exceeding two acres and other than one’s primary residence. Total annual income also counts towards net worth.

Exemptions

Some types of property are exempt from the net worth calculation. These include a primary home and surrounding land of up to two acres, as well as a vehicle for personal use. Also exempt are personal and household items.

The new rules also allow the subtraction of unreimbursed medical expenses from the annual income figure for the purposes of net worth assessment. Unreimbursed medical expenses are costs one’s insurance does not cover, such as premiums, copays and deductibles. Assisted living or in-home care are also considered medical expenses for this purpose, which insurance typically does not cover.

Look-back period for transfers

Along with setting a strict net worth limit, the VA’s new rules also introduce a look-back period of three years. This means the VA scrutinizes transfers of assets one made during the three years prior. In particular, assets one sold for less than fair market value are deemed to be transfers for the purpose of sliding under the net worth limit. Such a finding can result in a penalty of ineligibility for benefits for up to five years.