April 1

NAELA Says the VA Could Be Sued If Proposed Transfer Regs Are Enacted

In its response to the Department of Veterans Affairs’ proposed regulations that would establish a look-back period and asset transfer penalties for pension claimants, the National Academy of Elder Law Attorneys’ (NAELA) raises the prospect that the VA could be sued if the rules take effect.  

Proposed § 3.276 would establish a 36-month look-back period and a penalty period of up to 10 years for those who dispose of assets to qualify for a VA pension. Currently, there is no prohibition on transferring assets prior to applying for needs-based benefits, such as Aid and Attendance. 

“[W]e express the serious concern that the proposed rule’s 3-year look-back period and transfer of assets penalty exceed statutory authority, opening up VA to future litigation and causing additional uncertainty for Veterans and their families,” write Bradley J. Frigon, NAELA’s president, and Victoria Collier, Chair of NAELA’s VA Task Force, in March 17, 2015, comments on the proposed rules.

Frigon and Collier argue that the proposed rules do not meet the standard of either an explicit or implicit delegation by congressional statute that the U.S. Supreme Court set forth Chevron USA, Inc. v. NRDC, Inc., 467 U.S. 837 (1984).  They point out that Congress had the opportunity from 2012 to 2014 to create Medicaid-like transfer rules but that each proposal died in session.

NAELA’s comments also maintain that the proposed transfer penalties exception is too narrow.  “Veterans and their surviving spouses will be unjustly penalized for prior transfers that had absolutely nothing to do with VA pension eligibility,” Frigon and Collier write. “Gifts to children at holidays and birthdays will be penalized. Donations to places of worship will be penalized. Contributions to charities will be penalized. All because there is a presumption that the transfer was made for the purpose of qualifying for VA pension. . . . The final rule should require that transfers only made for the sole purpose of qualifying for VA pension be penalized.”

The 27-page comments highlight a number of other flaws in the proposed regulation, including that it should allow for partial cures, that the time allowed to cure transfers should be expanded, that the rule disproportionately harms surviving spouses of veterans, and that the proposed net worth limits are harsher than Medicaid’s limits.

To read NAELA’s comments, click here.

For the VA’s proposed regulations, click here.  Comments must be received no later than Tuesday, March 24.

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March 24

Medicaid: Making it work for you under the new guidelines and Miller Trust

On Wednesday, March 25th, elder law attorney Harold Grodberg, Esq. will be offering a special seminar to discuss the new Medicaid guidelines and the elimination of monthly income limits for Assisted Living and Medically Needy for Long Term Care.

The Chelsea at Fanwood
295 South Avenue
Fanwood, NJ 07023
March 25, 2015 at 6:30 PM

Please RSVP at (908) 654-5200.

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March 4

New Jersey Settles Federal Lawsuit Involving Veterans Benefits and Medicaid Eligibility

The state of New Jersey has settled a class action lawsuit and agreed not to count veterans pension benefits as income when determining Medicaid eligibility.  Plaintiffs’ counsel has been paid $100,000 in fees.

Alma Galletta filed a class action lawsuit against New Jersey, seeking to enjoin the state from treating Veterans Administration Improved Pension (VAIP) as income for Medicaid eligibility purposes. Ms. Galletta argued that the entire income she received from her VAIP benefit resulted from unusual medical expenses, so it should not count toward her income for Medicaid eligibility purposes.

After a U.S. district court enjoined the state from counting one of the class member’s VAIP as income, the state began settlement negotiations with Ms. Galletta. On February 6, 2015, the court approved a consent order between the parties, in which the state agreed that VAIP will not be included as countable income during the Medicaid eligibility process and a notice will be distributed to caseworkers explaining the ruling. Ms. Galletta also received Medicaid benefits retroactive to her application. In addition, the court approved $100,000 in fees and costs for the plaintiffs’ attorneys.

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February 3

Obama Calls for End to Basis Step-Up at Death

In his State of the Union message, President Obama called on Congress to raise taxes on the wealthy and on large financial firms to pay for middle class tax cuts. Most of the plan’s funding would come from an increase in capital gains taxes and an end to the step-up in basis for inherited wealth.

Mr. Obama would eliminate what some have called the “angel of death loophole”by taxing capital gains at death rather than allowing a basis step up when assets pass to heirs, as under current law. The first $100,000 in gains would be exempt for single people ($200,000 for couples), with an additional $500,000 exemption for the home. There would be special rules to protect small businesses, and gifts to charity would be exempt.

The White House proposal would also raise the top capital-gains tax rate to 28 percent from 23.8 percent for couples with incomes above $500,000 a year.

It is highly unlikely that Mr. Obama expects a Republican Congress to turn his bid to make the tax system more progressive into legislation he would sign, but it does begin a conversation that could prove useful for Democratic candidates in 2016.

For coverage by the New York Times, click here.

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