RE: This is submitted in response to ”RIN 2900-AO73, Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits.” Proposed Rules change.

I am submitting my comments as a Retired Navy Veteran, active veteran in many veterans organization, as a son of a WWII veteran and Grandson of a WWI veteran, a practicing attorney and as one of the initial group of VA Accredited Attorneys.

It is interesting that these regulations are being proposed to preserve the program integrity; yet, the VA will not provide a system where those who know can recommend cost savings measures and report problem areas that are costing the VA money and/or harming veterans due to poor training, people not doing their jobs correctly, or other reasons.

Congressional Intent

It is interesting that the VA is trying to do what Congress would not do – implement a three year look back period. In the long history of this program, the Congress has changed many VA laws but they have never tried to implement any kind of look back period or penalty for asset transfers until last year.

The House approved a bill with a three year look-back period, but most House members did not even know that this amendment was attached to the main bill on improving VA claims processing. The Senate did not let this provision out of committee.

Even the Congress did not show any intent to implement a penalty period that could be as long as ten years.

Cost Savings Suggestions

I have suggested to the Under Secretary of Benefits and others that the VA set up a fax line or email just for claims that should be stopped due to Medicaid qualification. This would cost next to nothing but could save the VA hundreds of thousands of dollars per year. The current rules provide that all pension payments received after the VA is notified that payments should be reduced to $90.00 are not recoverable by the VA. I have worked with families where it has taken well over 12 months to get the VA to change the pension payments. I have discussed this with many other attorneys who have had the same experience.

Other cost savings measures are ignored and instead, the VA proposes to make it even more complicated for these elderly veterans and surviving spouses to receive assistance with their long term care expenses.

It seems the purpose of these new regulations is to destroy this program for needy veterans and their families. These regulations will not affect the ones with very little or the ones twho have significant net worth. They will have a serious impact on veterans and spouses who have tried to do the right thing and save but have not been able to save enough to provide all of the care they will need.

The Secretary of the VA issued a News Release in December of 2006 stating that the pension program was a terribly underutilized benefit. Yet nothing was done to increase public awareness of the program or make the rules understandable to claimants, their families or VSOs.

As it is now, less than 10% of the World War II veterans are receiving any payments under this program and the average pension benefit is less than half of the maximum. Evidently most are not getting adequate advice on what they are allowed to do or should do.

Most of the WWII veterans and spouses are all over the age of 90; many are over 100. The vast majority of these people do not have any significant assets or income and have significant medical needs. Yet the VA has not done a good job of reaching out to these veterans and their families to help them receive the financial assistance they need to cover their medical expenses in their remaining years. In fact, they are still being told by the VA that if their income is over the pension amount, they do not qualify for the pension benefit. No one is telling them that there is a special definition of income. Income for this purpose is what is left over after deductions for unreimbursed medical expenses.

If it were not for healthcare workers, attorneys and financial advisors, very few veterans or surviving spouses would ever have learned about the pension benefits.

Projected Cost Savings from Proposed Rules

Any projected cost savings due to these new regulations are fiction. Claims may drop somewhat for the three years after the regulations become effective, and the VA may have some savings due to the number of claimants who die receiving three years less benefits. These savings will be offset by the additional claims due to the publicity of the benefit, training, an increase in the number of personnel needed to process claims due to the additional complexity of the rules, and the additional reconsiderations, DROs and appeals that will come from misapplying these rules.

Is it truly the VA’s desire to seek cost savings by denying this benefit for a three year period to needy claimants? Is this part of the enhanced VA concern for veterans?

New Training

These regulations will do nothing but confuse the situation even more than it is. The current VA employees, state employees and VSOs have not been adequately trained to do the job they have now. These new regulations would do nothing to help the veterans become aware of and qualify for this benefit. In addition, it will increase the burden on the VA by requiring additional training for their employees, state employees and VSOs. The time that it would take to have all these people trained to handle these new regulations has been overlooked by the cost of implementing these new regulations and the increased time to process claims and process them a second, third and fourth time due to not knowing what to look for when matching income.

Claims Processing Time

In addition to the time required to process these claims with new regulations, there will also be the additional requirements to review three years of financial records. This makes it impossible for the VA to speed up its claims processing procedures as is claimed in the proposed regulations. We are already seeing additional errors by the VA with the income matching program that is now in place. The VA has done a poor job of training their personnel on how to read financial statements. Currently, claims that are correct are being handled multiple times and claimants are being denied benefits when in fact they are fully qualified.

Financial Advisors

The new regulations will not stop financial advisors from advising claimants any more than the changes to Medicaid did. In the premise of why these regulations are needed, it is stated that the financial advisors’ advice to transfer assets renders the claimant ineligible for other needs based benefits. This not always the truth; in fact, the transfer of assets may be more important for Medicaid than even the pension benefit since Medicaid has a five year look back period.

It does not make sense to change rules for the 1/10 of 1% of applicants who will find a way to abuse any program. There are always some people who will abuse any program, but the ones who will be hurt by these regulations are the claimants who have more assets than the VA is going to allow but do not have enough money to provide for themselves for the remainder of their lives. This benefit has kept many at home with their children and out of Medicaid nursing homes. It gives them some dignity in their remaining years. Even if they start out with $300,000 or more, most will run out of money before they die. Many of the claimants I have seen have never sought medical treatment from the VA, yet now when they need it the most, the VA wants to take away this critical benefit.

The need to transfer assets will continue even for claimants who do not have enough assets to cover their expenses for the remainder of their lives. The financial need is much greater than the VA is acknowledging.

Deductible Medical Expenses

Proposed § 3.278 would define and clarify what VA considers to be a deductible medical expense for all of its needs-based benefits. This proposed rule change will be helpful if they are clear about the fact that people with mental disorders do not always need help with activities of daily living but need to be kept in a safe environment. This is an ongoing problem with current claims. This rule still keeps the confusing aspect of when to count independent living facilities as a medical expense. This needs to be addressed in more detail. There is quite a bit of confusion from the different pension centers as to when and how independent living expenses can be counted as a medical expense. There are many cases where both or one of the husband or wife need to live in an assisted living facility but by living in a protected environment, such as an independent living facility(ILF), they are able to help each other and keep their costs down and live a somewhat better lifestyle.

It should be clear that independent living facilities are to be counted as a medical expense when the veteran or spouse would have to move to an assisted living facility (ALF), but for the services of the ILF, the spouse or a 3^rd party is providing assistance with ADLs.

This helps to keep the cost down for the veteran and spouse.

Hourly Rate for Home Attendants

Proposed rule 3.278 is proposing a limit on the hourly payment rate the VA will count as a medical expense for home attendants. The VA is proposing to use the national average of the cost of hiring a home attendant. This is very unreasonable for those areas where the cost is very high. The claimant has no control over the cost in their area. In high cost areas they will be paying more than the VA will allow as a deduction against their income. Therefore, they will either get less pension or could be denied pension because their income was too much to qualify.

Example: Veteran lives in high cost area. Income is $3,000 per month with $119,000 of net worth. Home care cost is $3,000 per month but the national average for the same hours is $2,000 per month.

Income ($3,000) less countable Medical costs ($2,000) = $1,000 of countable income

$1,000 of countable income x 12 = $12,000 of income to add to the veterans net worth.

Net worth is $119,000 + $12,000 = $131,000.

He is denied pension because his net worth is too high.

13 months later when he has spent down $13,000 of his net worth he reapplies for pension.

Now his net worth is $118,000 so he would qualify on net worth but he still has $1,000 of income left.

Maximum pension is $1,788 per month less $1,000 (remaining income) = $788 (the maximum pension he could receive).

If he lived in a low cost area, he would have qualified for the full pension in the first year.

This is horribly unfair. The person who lives in a high cost area gets punished for living when they need the pension even more yet they get less.

A fairer and more reasonable way would be for the families to provide information on the average cost for their area. This can easily be accomplished by getting quotes from companies in their area.

VA’s Application of Current Rules on Net Worth

Congress has not prescribed criteria for determining whether it would be reasonable to require an individual to consume his or her assets before receiving pension. Isn’t this the job of Congress?

While the VA implemented sections 1522 and 1543 in current 38 CFR 3.274 and 3.275, they have determined that the current regulations also do not prescribe effective criteria for determining whether or not net worth bars pension entitlement.

That has not stopped the VA from continuously denying pension benefits to claimants with insignificant amounts of net worth. The use of the CSRA is a somewhat welcome change. Claimant have had to reduce their net worth to amounts that are totally unreasonable to be assured they will not be subjected to the unreasonable subjective limits that are currently being applied to pension claims.

It is appropriate to limit the net worth which would be reasonably be expected to be needed to support the claimant during their lifetime.

We would welcome a reasonable formula rather than a fixed net worth. This would take into consideration the period of time funds for support are needed, cost in different parts of the country, different care needs, number of people needing to be provided for and difference in income.

For example:

Take into consideration: Life expectancy of claimant, spouse and dependents and cash flow shortage per month currently

Example: Veteran age 85

Life expectancy 5.8 years

Cash flow shortage per month $3,000

5.8 years x 12 months x $3,000 = $208,000 minimum expected to be

utilized during his lifetime.

Example: Veteran age 90 spouse 85

Life expectancy: Veterans 4.2 years

Spouse 6.95 years

Cash flow shortage per month $3,000

6.95 years x 12 months x $3,000 = $250,200 minimum expected to be utilized during their lifetime.

Claimant	Male age 85	Male age 90
Spouse	none	Female age 85	Female 85
Cash flow	($3,000)	($3,000)	($1,000)
Net worth needed	$208,000	$250,200	$83,400

How can the VA state that Congress did not intend that a claimant who has sufficient assets for self-support could preserve those assets for his or her heirs or transfer them as gifts and still qualify for pension at the expense of taxpayers when Congress wrote the current law and has had many opportunities to change the law over the years.

Why is it an unreasonable interpretation of current law to conclude that Congress intended that veterans and survivors could use the pension program as an estate planning tool, under which they may preserve or gift assets and shift responsibility for their support to the Government when Congress has allowed these laws to remain unchanged and has basically approved these same provision in the Medicaid laws?

VA’s Inability to Write Clear Rules

The current rule § 3.275(d) requires VA to consider the claimant’s income with (1) the liquidity of the property, (2) the life expectancy of the claimant, (3) the number of dependent family members, and (4) the potential rate of depletion of available assets. Absent from current §§ 3.274 and 3.275(d) are clear rules for evaluating these factors and determining whether a claimant’s assets and income are sufficient to meet his or her needs without pension. As a result, GAO concluded that VA adjudicators had to use their own discretion, leading to inconsistent decisions for similarly situated claimants. See GAO–12–540, at 14–15. This issue could be addressed much more simply by tightening up the current rules and providing adequate training to the VA adjudicators.

The VA admits they cannot write clear rules or train their personnel, yet they think it is best to throw out the rules that did allow for some thought process and write new rules. If they cannot write clear rules, why would they think the new rules would be any easier to understand and administer.

The previous rules provided that if the adjudicators were going to approve a claim where the claimant had more than $80,000 of countable net worth, they must write a report justifying their decision. That showed that at some point in the past the VA understood that significant assets were needed to support claimants.

Therefore, because the VA cannot train their people adequately or write clear rules, the VA is proposing to implement arbitrary and illogical rules that will clearly not benefit the claimants or the VA.

The VA is claiming that in addition to producing inconsistent decisions, current rules require development of additional information not solicited in the initial application for compensation and pension, VA Form 21–527EZ, or the application for survivors’ benefits, VA Form 21–534EZ. For example, to determine the potential rate of depletion of a claimant’s net worth, the VA must gather information about a claimant’s living expenses and reconcile those expenses with the claimant’s income over an unspecified period of time. This development necessarily adds time and complexity to the adjudication of these needs-based benefits, potentially creating greater financial hardship for claimants as they wait for VA to decide their claims. This is a strange statement since the VA is proposing to add more time and complexity with these rules. They can easily change the forms they require to get whatever information they need. The VA already asks for form 21-527EZ or 21-534EZ in many cases as well as demand that claimants explain extremely small differences in income when they run an income match with the IRS.

While nothing in current § 3.274 or any other VA regulation addresses the issue of whether claimants denied pension due to excessive net worth may lawfully decrease their net worth and qualify for pension, the VA is forgetting that their manual used to have examples of how giving away assets would qualify the claimant for pension benefits.

New Maximum Net Worth Proposed Rules

Proposed § 3.274 would establish a clear net worth limit. The proposed approach to set a specific amount of net worth that is allowed is somewhat better than the current rules but fails in many ways to acknowledge reality.

Such as:

• Cost of living is significantly different in different parts of the country.
• The amount is the same for a single person, a married one or one with multiple dependents.
• It is the same of a couple where the claimant is ill and spouse is healthy and where the claimant is ill and the spouse is ill.
• It is the same for a claimant who is 65 and one that is 95.

Tying the amount to Medicaid does not acknowledge that Medicaid is paying all of the Medicaid expenses of the person receiving care while the VA is only providing some financial assistance. It also fails to understand that in many states Medicaid does not count income producing property (farm, business, rental property, assets that cannot be sold) or retirement accounts (401k, IRAs). Many other states have other rules that allow what counts as net worth to be much greater than the CSRA.

The establishment of a look-back and penalty period for claimants who transfer assets before applying for pension will not stop financial advisors or attorneys from advising claimants of the rules. In fact, it makes the use of advisors even more critical. All that will happen is the ones who don’t get educated advice could suffer a penalty period when the ones who get advice will avoid the penalty.

Proposed § 3.275 would describe how VA calculates assets. It would provide that the VA would not consider a claimant’s primary residence, including a residential lot area not to exceed two acres, as an asset. This can create problems where the required lot area is greater than two acres due to zoning or where the house cannot be sold in a timely manner. It also discriminates against claimants who live in rural areas.

Proposed § 3.275 would also provide that if the residence is sold, proceeds from the sale are assets unless the proceeds are used to purchase another residence within the calendar year of the sale. This is better than the current rules but can create a hardship unless they are given a reasonable amount of time to purchase a new residence. Why would the VA punish a claimant who must sell their residence in the last few months of the year or one who cannot purchase another one within an unreasonably short period of time?

Proposed § 3.276 would provide new requirements pertaining to pre-application asset transfers and net worth evaluations to qualify for VA pension. Considering the VA’s administration of current claims, the presumption would take years of appeals to overcome regardless of the level of proof provided. How do you prove a negative? There are no exemptions for normal family activities, such as paying for school, supporting a child who is out of work or having other financial problems, gifting to family members, charitable donations, etc.

Section 3.276 would establish a presumption, absent clear and convincing evidence showing otherwise, that asset transfers made during the look back period were made to establish pension entitlement. Considering how well the VA has hidden this benefit or given incorrect information about it, many claimants do not learn of this benefit until they need care. At the age and/or health of most of the claimants, three years is a very long time. The majority of the claimant’s I have seen receive the pension benefits for less than three years before they either transition to Medicaid or die.

Using Medicaid CSRA as Asset Limit

The VA proposes to use the standard maximum community spouse resource allowance (CSRA) prescribed by Congress for Medicaid. What is missing is that (1) Medicaid covers all of the medical expenses of the institutionalized spouse (IS), (2) there are significant differences between states in what is countable assets towards the CSRA, (3) the community (non-institutional) spouse (CS) is allowed all of their income and part of the IS’s income if the CS’s income is lower than the spousal allowance, (4) Medicaid does not have a penalty that can run past 60 months, (5) Medicaid does a fairly good job of explaining their rules and making the public aware that transfers made more than 60 months prior to applying for Medicaid will not create any penalty, (6) Medicaid will allow trusts to be used to reduce net worth, and (7) Medicaid allows the purchase of immediate annuities to reduce net worth.

Congress’s intent in establishing the CSRA was to prevent the impoverishment of the CS. Since the VA does not pay for all of the expenses, the need for more than the CSRA is evident. The VA quotes the cost of the average nursing home to be $81,000 (semi-private) to $90,000 (private room) per year and assisted living to be $42,500 per year. These numbers show that these changes will force more veterans and spouses to rely upon Medicaid for their long-term care. What is not addressed is the decreasing availability of Medicaid facilities due to the increased population, lack of building, and states tightening their rules and spending. Where will these veterans and spouses go?

These figures show why the CRSA is not the appropriate number to use. The need is much greater than that. The goal should be to provide assistance so that with their income, the pension and their assets, they can have a decent quality of life and not be a severe financial burden on their children. This is a small payment for their service.

While proposed § 3.274(a) would establish a clear net worth limit for pension entitlement and may promote uniformity and consistency in pension entitlement determinations, it will not provide the fairness that is needed in a critical program like this. It may be true that under a clear bright-line limit, it would no longer be necessary for claim adjudicators to complete lengthy, subjective net-worth determinations. However, any insurance company could easily develop a program to take the majority of the subjectiveness out of the calculation of the appropriate amount of net worth for that claimant.

Problems with Current Income Matching Program

Information about a claimant’s net worth may come from the claimant him or herself or from VA matching programs with the Internal Revenue Service (IRS) or the Social Security Administration (SSA). Such matching programs are authorized under 38 U.S.C. 5317. The VA would obtain information from the IRS and the SSA before paying pension and when recalculating net worth for pension under § 3.274(e).

We are seeing a significant problem with the current income matching program. The VA is going back as far as 2009. This is causing a significant hardship for elderly claimants many of whom do not have these financial records or the family does not know anything about them. The VA has not trained their people on how to read financial statements such as tax returns or 1099s. Significant amount of time is wasted by the VA on requests for information on income matches when the difference will not change the pension amounts. These elderly claimants must spend money on accountants to get and review records for years in which Eligibility Verification Reports (EVR) were filed. In addition, they are being threatened that the pension payments will be stopped if they do not respond in 30 days from the date of the letter. We see many letters that are not dated and others where the 30 days from the letter date have run out before the envelope was date stamped.

The Income Matching process is causing serious hardships and stress for Veterans and increased work for the VA. The additional time involved in processing small differences in income and/or incorrectly reading financial documents must be creating a significant additional work load for VA adjudicators. It is causing claimants stress, expense and in some cases, incorrect reductions or the stopping of pension payments.

Examples:

• WWII veteran was told that there was $0.80 per month difference in the income he had reported in 2009 and what the IRS reported for 2009. VA threatened to reduce pension by $10.53 per month without looking at the amount of Unreimbursed Medical Expenses (UME) or the resulting Income for VA Purposes (IVAP). The claimant had a substantial negative IVAP. To make it worse there was no shortage of income. The VA had rounded the claimant’s numbers for income down, so the claimant had reported more income than the IRS reported. What did this cost the claimant in worry and expense to get someone to review his financial records to find out how to reply?

• Korean War Veteran was told that he had $5,500 more income in 2010 than he reported on his EVRs. The VA sent him a letter stating that he had 30 days to provide the VA with bank statements for 2010 and explain the difference in income or his pension would be cut off. The letter took 15 days to get out of the VA mail room. He was in a panic because he could not afford the assisted living facility without the pension, and he feared he could not reply to the VA in time to keep the pension from being stopped. He had to pay an accountant to review his financial records to determine what the issue was. It turned out the VA adjudicator did not know how to read 1099s. He had sold stock in 2010 (which the assets were reported to the VA) but had almost no gain on the sale. The VA was counting the proceeds from the stock as income instead of the reported taxable income (which was listed on his EVR).

If the VA does not address these training issues with their claims processing procedures before they change the rules, they will just increase the administrative burden with the additional new rules.

Primary Residence

The proposal to change the rules to state that VA would exclude a claimant’s primary residence as an asset regardless of whether the claimant is residing in a nursing home, medical foster home, or an assisted living or similar residential facility that provides custodial care, or resides with a family member for custodial care will help to prevent adjudicators from mistakenly trying to count the residence when the claimant cannot return or rents the house for income.

The limitation of 2 acres for the residence discriminates against claimants that have larger lots because of zoning or because they live in rural areas.

Annuities

There is this rush to judgement that all annuities are bad. The GAO report failed to understand that there are many different types of annuities. Annuities have many different forms and options such as tax deferred investment, guaranteed income, convertible to a long term care plan, death benefit riders, and many others.

To penalize the purchasing of an annuity is to fail to understand what they are or why they would be used. The use of the term annuity does not adequately describe the financial vehicle. To be exact, there are two types of annuities (1) deferred annuities and (2) immediate annuities. Deferred annuities are an asset. They are purchased to defer income taxes while earning income. Income taxes are paid when the taxable gain is taken out. These types of annuities are not purchased to reduce net worth, so they would not be governed by this section. Immediate annuities are ones in which an income stream has been purchased. Generally, there would be no cash value; instead, there would be fixed payments over the term of the annuity.

Many pension plans use both types of annuities to avoid market risks. To treat these any differently from a Pension plan is to discriminate against the claimant who saved money on their own and the one who has a retirement plan from an employer like the VA. When a person retires from a company with a pension plan, it is common for the pension to purchase an immediate annuity to provide the lifetime pension payments.

The discussion is assuming that someone would purchase an annuity for less than they can get out of the annuity to qualify for the pension benefit. That is not how annuities work. They can purchase an income stream that may run for many years or life, but these plans are generally good options for people, even if they are not eligible for the pension benefit. The only immediate annuities that do not guarantee the full return of the investment are annuities that only pay a fixed amount for life. Unless the annuitant lives much longer than their life expectancy they will not get all of their investment back. These are purchased in spite of the possibility that the payments will not equal the purchase price because the person wants guaranteed income for life.

Immediate annuities are acceptable under Medicaid rules and are governed by state insurance commissioners. A blanket condemnation of these annuities is inappropriate. Medicaid rules would give the assurance that the VA wants that the annuity is a transfer for full value and therefore appropriate. Medicaid requires the annuity to be actuarially sound, payout period can be no longer than their life expectancy, and payments must be equal.

A Medicaid compliant immediate annuity would not fit the proposed definition of “uncompensated value” as all of the money paid for the annuity would be returned over the term of the annuity.

The GAO was discussing the “pension poachers”whot were selling inappropriate annuities to veterans to qualify them for the pension benefit. These were deferred annuities that had long surrender penalties, restrictions on withdrawals, high commissions and were purchased with the children being the owner and annuitant. There are numerous problems with this planning but the rule change will not stop these abuses. The assets will still be gifted to the children and they will purchase the annuity.

Penalty Period

This proposed penalty period discriminates between the veteran and the spouse by penalizing the spouse almost twice as long for the same amount of transferred assets. If $30,000 of covered assets were gifted, the penalty period would be:

Veteran with a dependent (Max Pension $2,120) 14 months

Single Veteran (Max pension $1,788) 16 months

Surviving spouse (Max pension $1,149) 26 months

If the transfer was made 24 months ago and the claimant went to the VA for help with their claim, would the VA be able to give the advice to wait a few months before filing their claim so they would be eligible without a penalty or would the VA file the claim like many do now and cause the claim to be disqualified because they did not know the rules?

Unlike Medicaid, the penalty period is much longer than the look back period. The VA is very worried about a claimant’s transferring a substantial amount of money and not getting a longer penalty period than the one who transfers a smaller amount. If anyone was going to transfer a significant amount of money, they would get competent advice. Then they would just wait out the three year look back period and not be subject to any penalty period. The ones who will face the penalty period will be those claimants who have a little to too much net worth and don’t seek advice from someone knowledgeable about the VA rules.

For example:

• a widow (85) has $175,000 and $2,000 per month income.
• She is in an assisted living facility at $3,000 per month.
• She files for pension.
• Three months later she is told she has $55,000 too much net worth.
• So she pays her unemployed son’s debts off.
• She goes back to the VA to reapply.
• She is assessed a 48 month penalty.
• So she is denied pension benefits for 51 months.
• If she had gotten good advice, she would have only missed the pension for 36 months.
• This costs her $17,235.
• The wealthy claimant only missed 36 months of benefits.

There are many unanswered questions about how these rules will be applied

Another example:

Couple:

• Vet is 95 and spouse is 85
• They have $200,000 of net worth
• They gifted away $150,000 2 months before he filed for pension
• 1 year later he dies
• She files for survivors pension
• Will the gift under the old rules be ignored?
• Will the gift be attributed to her?
• If the gift is attributed to her, she will have made a gift of $30,800
• Will the penalty period start as of the date of the gift?
• If so and she files within one year of his death
• o the VA will try to use his date of death as the application date.
• o That is only two months from the date of the gift and
• o the penalty period is 27 months
• o which will mean the penalty will run for 25 more months.

This complicates how to qualify so much that they would be foolish to not get help from a qualified attorney. The difference between using the VA and a qualified attorney is if the VA makes a mistake and it costs them benefits, they are just out of luck. If the attorney makes a mistake, the attorney can be held liable to the client for their mistakes.

Start Date of Penalty Period

Page 3841 of the Federal Register states that under proposed § 3.276 the penalty period would start on the date of the last gift for all gifts made within the three year look-back period.

There is an error on page 3849 of the Federal Register. It states that under proposed § 3.276(e)(2), the penalty period would begin on the date that would have been the payment date of an original or new pension award if the claimant had not transferred a covered asset and the claimant’s net worth had been within the limit.

Recalculation of Penalty Period

Proposed § 3.276(e)(5) states that, with two exceptions, the VA would not recalculate a penalty period under this section. The VA would recalculate the penalty period

• (1) if the original calculation is shown to be erroneous or
• (2) if all of the covered assets were returned to the claimant before the date of claim or within 30 days after the date of claim.
• How is the claimant going to know about the asset limits or the 30 day return rule unless the VA tells them? How is the VA going to tell them when they will not even look at the claim until that 30 days has expired?
• If you are going to have this rule, then it needs to (1) be longer than 30 days to correct the gift, and (2) the time cannot start running until the VA gives them real notice of the problem.
• No Clear Implementation Date:
• The previous Bill that was passed by the House had an implementation date of one year from the enactment of the Bill.
• Under these proposed rules there is the fear that the rules could be applied retroactively.
• The VA must postpone the implementation of these rules or grandfather all claims made before effective date of these rules. How is anyone going to be able to return any covered assets if they gift them today and apply for pension under the current rules and six months from now the VA states that these new rules will apply as of the first of April? The 30 days to return the assets from the date of the claim will have expired.
• Without grandfathering all claims made prior to the effective date of any rule changes will effectively force claimants to hold off filing any new claims until they know what the rules are. Will the VA continue filing claims that may cause claimants to be denied under the new rules?

Reasons for Rule Changes

The motivation for these rule changes was to stop “pension poachers” as the GAO called them in their report. While there are some unscrupulous people preying on veterans, these rule changes will have no impact on their behavior.

The only people to be hurt by the rule changes will be veterans who gave part of their lives, and for some everything, to protect this country in time of war and their surviving spouse and dependents.

The VA’s time would be better spent finding ways to go after the “pension poachers”, not their victims.