VETERANS BENEFITS BOOT CAMP

Transcription

1 VETERANS BENEFITS BOOT CAMP By Laurie G. Steiner Budish, Solomon, Steiner & Peck, Ltd Chagrin Boulevard, Suite 450 Beachwood, Ohio America s veterans deserve the best health care and compensation system we can provide. (Anthony Principi, Secretary of Veterans Affairs, News Release, February 3, 2003). Noble words, but the VA benefits system in this country has largely been kept a secret, especially by the VA. Veterans deserve health care assistance and compensation, and it is important to understand the available benefits. In fact, not knowing the programs available to a veteran AND the widow(er) or dependents of a veteran could be construed as malpractice. So, pay attention, this is important information. Number of veterans in the USA in 2009: 23.2 million Number of veterans over age 65: 9.7 million Number of WWII veterans: 2.9 million I. Who might be eligible? Veterans Veteran s dependents Surviving spouse, child or parent of a deceased veteran Active duty military service member Member of the Reserve or National Guard II. There are three main types of monthly payments available. A. Disability Compensation for the Veteran (38 C.F.R. 3.4) Many people think this is all that VA benefits include. 1. This means a service-related disability. Need not be a combat injury. You might have been injured in transit to your National Guard duty. 2. Compensation is unrelated to income or assets. 3. Monthly payments are determined by the degree of disability, from 10% (like tinnitus) up to 100% (unable to work or function normally). This is determined by a doctor, and the level of disability is appealable. 1

2 4. As an example, a 30% rating merits $376 per month for a single veteran, $421 if married. To see more about rating various conditions, see 5. To view compensation levels for various disability ratings, see B. Dependency and Indemnity Compensation (DIC) (38 U.S.C. 101(14)) for survivors 1. Available to certain survivors of veterans who died in active duty, who died from service related disabilities or who were receiving 100% disability compensation at the time of death. 2. Death Pension can be payable to surviving spouses and children, based on financial need. 3. Parents DIC can be paid to surviving parents based on financial need. 4. VA Civilian and Medical Program (CHAMPVA) can help cover the cost of medical care 5. Some education and training could be available. There are certain time limits and age limits on benefits (10 to 20 years, for children from ages 18-26) 6. Some surviving spouses can get assistance with home loans. C. Veterans Service Pension Benefits (38 C.F.R. 3.3) Most people are completely unaware of these benefits 1. Eligibility criteria for Improved Pension to receive a Special Monthly Pension (SMP): a. Veteran must have served at least 90 days of consecutive active duty, one day of which must have been during active war time: World War II: Dec. 7, 1941 to Dec 31, 1946 Korean War: Jun. 27, 1950 to Jan. 31, 1955 Vietnam War: Aug.5, 1964 to May 7, 1975 Gulf War: Aug.2, 1990 to date yet to be set by law or President b. Must have been a discharge type OTHER than dishonorable. c. Claimant must have limited income and assets. d. Disability was not through the willful conduct of the claimant. DOES NOT HAVE TO BE SERVICE RELATED. Normally age related. e. Available to veterans and widow(er). f. Must sign an application and provide it to the Dept of Veterans Affairs. 2. These benefits are good way to help pay for home care or assisted living 3. Three kinds of benefits: Service Pension, Housebound Benefits, Aid and Attendance. For more information about this program, see 4. Service Pension is low income and asset requirement only (like SSI). 2

3 5. Housebound benefits require over age 65 OR with a disability rating at 100% (similar to disability defined in Aid and Attendance below) AND unable to leave the house to earn a living ALONG WITH low income and assets. 6. Aid and Attendance requires disability as follows: Blind, Living in assisted living or a nursing home OR unable to dress/undress or keep self clean, unable to attend to wants of nature or physical or mental incapacity that requires assistance on a regular basis to protect person from daily environmental hazards, ALONG WITH low income and assets. 7. INCOME limits (38 C.F.R , 3.272, 3.323). Income includes gross payments or earnings of veteran AND household. Income does not include SSI, tax refunds, loans, insurance dividends, life insurance that is a return of premiums. They annualize the income, then reduce it by the annual out of pocket medical expenses, both already paid and that WILL be paid (in-home help, assisted living, nursing home), health insurance premiums, Rx. If care is being provided by a family member, there must be a written Personal Care Agreement. If the income is less than the Maximum Annual Pension Rate (MAPR), then the claimant is income eligible. 8. ASSET limits (38 C.F.R , 3.275, 3.276, etc). There is no flat amount to qualify. It used to be $50,000 for a single veteran and $80,000 for a married veteran, but you are not safe simply using those amounts. It is now a sliding scale. Assets include A...the market value less mortgages or other encumbrances, of all real and personal property owned by the claimant, except the claimant s dwelling (single family unit), including a reasonable lot area, and personal effects suitable to and consistent with the claimant s reasonable mode of life.@ 38 C.F.R. '3.275(b). No pension is available where the assets are so high that they would not be expected to be consumed during the remaining life expectancy of the claimant, considering their health and other needs. The life expectancy chart is at M21-1MR Part V, Subpart III, Chapter 1, Section J. 9. There are lots of evidentiary issues with regard to proving the disability. You need doctor s reports, care plan by someone like a geriatric care manager, prescribed care plan in place. If someone is rated incompetent, then someone from the VA has to meet with the claimant personally to allow any accrued past benefits to be paid out. 10. Benefits for the Surviving Spouse. This is called the Widow s Pension. Veteran has to have met the requirements. Surviving spouse must have been married to and living with the veteran at his or her death and not remarried. Also, she needs to demonstrate the disability required to obtain the benefits and meet the income and asset requirements. If the veteran was getting benefits and dies, the surviving spouse has to reapply for her own benefits. 3

4 11. Accrued benefits. It can take 6-12 months to qualify for a Service Pension. The benefits that accrue from time of application to approval are normally paid out in a lump sum after approval. If you die in the process, you rarely can get the accrued benefit. 12. Can undertake planning to reduce income and reduce assets. But you must be careful. VA does not penalize you from getting benefits if you gift assets to children or to certain irrevocable trusts, BUT MEDICAID DOES. We need a course on Medicaid eligibility too! 13. The application can be started online, but the supporting documentation has to be provided to the VA regional or local service office. Appeals are available. Only the claimant or a CERTIFIED REPRESENTATIVE can assist in the application and appeal process. III. Other benefits available from the VA. A. Health care. Veterans and sometimes families can get free or reduced cost health care at 1,400 VA hospitals and clinics across the country. VA can provide, hospital, medical, dental, pharmacy, rehabilitation, alcohol and drug counseling. There is a disability and income/assets test as well. B. Vocational Rehabilitation and Employment. VA can provide assistance for veterans with service-related disability to find and keep appropriate employment. This is provided by vocational rehabilitation, education, resume and job search assistance. This is available for 12 years after the disability rating. C. Education and Training. There are benefits for college and other training programs available under the Montgomery GI Bill or the Veterans Educational Assistance Program (VEAP). This is available for 10 to 14 years after leaving active duty. D. Home Loans. The VA can guarantee part of mortgage loans for purchasing, building, repairing or refinancing homes. There is no time limit for these loans. E. Life insurance. Service members Group Life Insurance (SGLI) is low-cost term life insurance offered while in active duty, up to $400,000. Veterans can convert the VA policy to their own policy within one year and 120 days after leaving active duty. F. State Nursing homes. Ohio has two Veterans homes, Sandusky and Georgetown. There is an application process and normally a waiting list to get in. The requirements to be accepted vary from state to state, some requiring total disability and no income, some active duty, some allow spouses and family members. Since the VA pays the home a per diem subsidy, the homes can charge much less for money nursing home care than private nursing homes. There is usually a sliding scale charged for care, based on income and assets. See for a directory of Veterans homes. G. Burial benefits. The VA can provide an America flag to drape the casket and a military color guard and 21 gun salute to a veteran. It can also provide a 4

5 monument to mark the grave of an eligible veteran. There is a payment of up to $2000 for veterans who die from service related causes and for certain other veterans, $300 for burial and funeral expenses and $200 for a plot. Most veterans and some dependents can be buried in a VA national cemetery. For a list of such cemeteries, see H. The Veterans Service Commission (there is one in each county) can also provide emergency assistance in the form of groceries, rent or mortgage payments, utilities, food, clothing, transportation, and many other services. They will also provide free assistance with applications for VA benefits. Here are the websites for some of the commission offices in my area: The main website for the Department of Veteran=s Affairs is IV. Practical Pointers in VA Claims Practice A. Attorney Accreditation for Veterans Benefits Planning. 1. History of Regulations Regarding Attorney ARepresentation@ for VA Benefits. Pre-1988 attorneys were allowed to be paid to submit claims, but fee cap of $10 discouraged representation amendments repealed the $10 fee cap and established strict prohibition against attorneys charging a fee for the preparation, presentation and prosecution of claims. This was Ato protect the interests of veterans from the perceived threat that agents or attorneys would charge excessive fees for their services, which essentially required only preparation and presentation of an application for benefits.@also established that Ano fees may be charged for any services rendered prior to the issuance of the statement of the case@ See OGC Letter dated May 24, The above noted OGC Letter of May 24, 2004 advises that the attorney may charge fees for a wide range of services (pre-filing consultation) provided prior to the veteran (or dependent) expressing an intention to file a specific claim. (Also see definition of Aclaimant@ below). OGC Letter of November 21, 2006 states that representation Amay include counseling on veterans benefits, gathering information necessary to file a claim for benefits, preparing claim forms, submitting claim information to VA, and communicating with VA for a claimant.@ These services become part of the acts that make up representation only when provided to a claimant. VA Fast Letter 06-29, dated January 3, 2007 summarizes the law, code and regulations surrounding attorney and agent representation for a fee. Note a narrow 5

6 exception under VA regulations that allows disinterested third parties to pay an accredited attorney or agent for services, including preparation of claims. VA Fast Letters & 07-15, dated March 27, 2007 and June 6, 2007 respectively summarize changes to the law pursuant to the Veterans Benefits, Health Care, and Information Technology Act of 2006, effective December 22, 2006 affecting VA regulations, to establish agent and attorney accreditation. Effective June 23, 2007 attorneys can charge fees pursuant to fee agreements submitted to the VA for approval for services provided after the notice of disagreement is filed. See the Federal Register, Thursday, May 22, 2008, Part II, Department of Veterans Affairs contains the final rules amending 38 C.F.R. Parts 1, 14, 19 and 20 B Accreditation of Agents and Attorneys; Agent and Attorney Fees. 2. Current law and regulations: Attorneys representing claimants must be accredited pursuant to requirements of 38 C.F.R. ' To apply to become accredited you must file a VA Form 21a AApplication for Accreditation as a Claims Agent or Attorney@. Attorney qualifications include i. self-certification of good standing with a State Bar and any other Court, bar or state or federal agency ((38 C.F.R. '14.629(b)(ii) and also see 38 USC ' 5904(a)(2)-(4)); and ii. Good character by providing 3 character references. As an additional condition of initial accreditation agents and attorneys are required to complete 3 hours of Continuing Legal Education within 1 year of obtaining accreditation. To qualify a CLE course must be approved for a minimum of 3 hours of CLE credit by any State bar association and at a minimum must cover the following topics: (a) Representation before the VA (b) Claims procedures (c) Basic eligibility for VA benefits (d) Rights to appeal (e) Disability Compensation (38 U.S.C. Chapter 11) (f) Dependency and Indemnity Compensation (38 U.S.C. Chapter 13) (g) Pension (38 U.S.C. Chapter 15) (See also 38 C.F.R. ' (b)(1)(iii)) To maintain accreditation, agents and attorneys are required to complete an additional 3 hours of CLE on veterans benefits law and procedure not later than 3 years from the date of initial accreditation and every 2 years thereafter. (See 38 C.F.R. ' (b)(1)(iv)). 6

7 3. Definition of Representation, Claimant and Proceeding. Defined at 38 C.F.R. ' (n), is AYthe acts associated with representing a claimant in a proceeding before the VA pursuant to a properly executed and filed...va Form 21-22aY@ (Also see OGC Letter of May 29, 2009 summarizing the new rules pertaining to attorney representation). Note that to fully define Arepresentation@ the terms Aclaimant@ and Aproceeding@ must also be defined. AClaimant@ is defined as AYa person who has filed or has expressed to a representative, agent, or attorney an intention to file a written application for determination of entitlement to benefitsy@ 38 C.F.R. ' (h). A Aproceeding@ is not specifically defined under the Code. The Code helps define some of the services that can be provided for a fee. 38 C.F.R. ' (c) ACircumstances under which fees may be charged@, sets out the circumstances in which an attorney may be paid fees for representation. Aattorneys may charge claimants and appellants for representation provided: after [1] an agency of original jurisdiction has issued a decision on a claim or claims, including any claim to reopen under 38 C.F.R or for an increase in rate of benefit; [2] a Notice of Disagreement has been filed with respect to that decision on or after June 20, 2007; and [3] the [] attorney has complied with [Form 21-22a power of attorney] and [4 the attorney has complied with] the fee agreement requirements in [38 C.F.R (g)].@ Note the above requirement that to be appointed as representative in a particular matter a properly executed VA Form 21-22a AAppointment of Individual as a Claimant=s Representative@ must be filed with the VA. It appears that the proper completion and filing of the VA Form 21-22a is a requirement to be recognized by the VA as the representative and to be paid. It does not appear that attorneys can stand behind the wording of 38 C.F.R. ' (n) to mean that representation only occurs after the completion and filing of a VA Form 21-22a. Also see M21-1MR, Part 1, Chapter 3, Section A, Page 3-A-2 regarding VA POA Versus General POA under State Law. An attorney could be deemed to be providing representation even without the services being related to the conditions outlined in 38 C.F.R. ' (c) and the attorney may not charge for any such services. AYamong other things, representation of [] a claimant may include counseling on veterans benefits, gathering information necessary to file a claim for benefits, preparing claim forms, submitting claim information to VA, and communicating with VA for a claimant.@ See OGC Letter dated November 21, 2006; also see VA Fast 7

8 Letter 06-29, dated January 3, In combination, the history of attorney representation regulations, OGC Letters, and VA Fast Letters would appear that the distinction as to when begins (for a fee or pro- bono) is dependent on whether the person serving is a claimant B (i.e., has filed or expressed an intent to file a written application for benefits). 4. How to charge Attorney=s fees. As noted above, pursuant to 38 C.F.R. ' (c) an attorney may properly charge a claimant for representation after a decision has been made on a claim; and a Notice of Disagreement has been filed; properly completed and filed a VA Form 21-22a; and complied with the fee agreement requirements of 38 C.F.R. ' (g). This is the new rule and applies for representation related to a decision by the VA that occurred on or after June 20, The regulations governing attorney fees for representation related to decisions that pre-date the new rule see 38 C.F.R. '14.636(c)(1)&(2). Fee agreements must be in writing signed by both the attorney and the client (claimant / appellant). To be valid the fee agreement must include: 1. The name of the veteran; 2. The name of the claimant or appellant if other than the veteran; 3. The name of any disinterested third-party payer and the relationship between payer, claimant / appellant and veteran; 4. VA file number; 5. Terms of how the amount to be paid to the attorney is figured. If attorney wishes to collect fees directly from the VA from past due benefits, then the fee agreement must clearly specify that the VA is to pay the attorney directly. Otherwise the attorney will be required to collect fees from the veteran / claimant / appellant. Note that 20% is the maximum contingency fee the VA will pay directly and subject to the VA retaining a 5% assessment (not to exceed $100) for processing the direct payment. The attorney must submit a copy of a compliant fee agreement to the Office of the General Counsel within 30 days of its execution by mailing the copy to the following address: Office of the General Counsel (022D), 810 Vermont Avenue, NW, Washington, DC (For information about the VA paying attorney fee see M21-1MR, Part 1, Chapter 3, Section C, Part 15 - Paying Attorney Fees and FAST Letter relating to fee agreements. Also see 38 USC ' 5904(a)(5)&(6)). Fees must be reasonable 38 C.F.R. ' (e). The VA considers several factors to determine reasonableness, including: i. the extent and nature of the representation; ii. complexity of the matter; iii. skill of the attorney; iv. the amount of time spent on the matter; v. the results achieved; vi. the point in the appeal that attorney commenced 8

9 representation; vii. fees charged by attorneys for similar services; and viii. the extent to which fees are contingent. Attorneys may not charge a fee for the preparation, completion or filing of claims. See OGC FAQs at Exhibit 14, Page 6; OGC Letter ; and OGC Letter to Lane Evans How to prevent representation issues. Obtain initial certification and comply with VA requirements regarding continued certification. Submit VA Form 21a (see Exhibit 15) to obtain initial accreditation. Take 3 hours qualifying CLE within the first year. Submit certification of CLE compliance with VA. Take 3 hours of further qualifying CLE within 3 years of initial accreditation and each 2 years thereafter. Submit certification of further CLE compliance with VA. For appellate services, fees can only be charged after NOD has been filed and must submit VA Form 21-21a and fee agreement. For other than VA appellate services: Be sensitive to if and when the client crosses the threshold of becoming a Aclaimant@. Do not charge fees for pre-claim submission services B if services are provided to a claimant. Do not charge fees for any services after threshold is crossed. B. Gifts and Penalty periods with regard to Special Pension Benefits. Currently, there are no look back periods or penalty periods imposed for most transfers of assets like there are for Medicaid eligibility. The exception is gifts made to family members who reside in the same household as the veteran. In that case, the gift does not reduce the countable assets of the veterans. The grantor of the gift must relinquish all rights of ownership, including the right of control of the property. This can be accomplished by outright gifts to children or others or by gifts to special kinds of Irrevocable Trusts. Gifts to children carry risks that the children will spend the money, that they will have creditors or lawsuits that will attach the assets, that a child becomes divorced and part of the assets become subject to marital settlements or the child dies and all the assets pass to the in-law or children (who may not be willing to assist the veteran). Gifts into irrevocable trusts may be better, so that the children do not have direct access to the assets. However, the terms of the trust must be carefully drafted so as not to affect VA pension benefits. Assets and/or income that can be used for the veteran from the irrevocable trust will render the assets and income countable to the veteran for pension benefits purposes. VA O.G.C. Prec Trust law is in flux and must be watched. Gifting and penalty periods are also law that is in flux and will likely be changed soon. Senate Bill 3270 was introduced last year and would impose a 36 month look back period and monthly reductions in Pension benefits as a result. It went nowhere. 9

10 However on April 17, 2013, Senate Bill 748 was introduced by Senator Ron Wyden of Oregon, and it appears to be identical to SB Currently, the bill has a 21% chance of getting past committee and a 6% chance of being enacted. If enacted, the bill would be effective the date one year after the date of the enactment and applies to all new applications or any old application for which eligibility will be re-determined. C. Annuities with regard to Special Pension Benefits. In addition to trust and gifting law rule changes, the practitioner must be careful with regard to the use of annuities purchased to protect assets for VA Pension Benefits. Some annuities are appropriate and can achieve benefits, but others are inappropriate and can cause ineligibility. Additionally, the VA is watching the planning tools used. The General Accounting Office (GAO) has stated that there are more than 200 organizations across the country that are Ahelping@ veterans obtain Pension Benefits. They Aadvertised help for veterans seeking to qualify for these pension benefits, mostly by transferring excess assets to annuities or setting up trusts.@ The VA is considering this abusive by locking away money in annuities or trusts that the veteran may need in order to survive, for a financial gain of the planning organization. Even though no money may be paid for the planning to obtain VA Pension Benefits, these organizations are benefitting. D. Protecting the homestead. The residence property is exempt for VA pension benefits as long as the veteran and/or the spouse are living in it. In fact, it currently remains exempt as long as kept and not sold. The problem lies in keeping the house, achieving VA Pension Benefits and then selling the house. The sale becomes income causing a loss of benefits, and then the house sale proceeds are assets that will again cause a loss of benefits until the money is exhausted, or must be paid back to the VA. Also, be careful not to rent the property if not selling it, because the VA likes to count income producing as business assets, making the house a countable asset again, even though not sold. Instead, it may be advisable to plan with the house like any other asset, to gift it before applying for benefits. E. Coordination with Medicaid. VA does not penalize you from getting benefits if you gift assets to children or to certain irrevocable trusts, BUT MEDICAID DOES. Any gifts made within five years (sixty months) of a Medicaid application (the look back period) will cause a penalty period for Medicaid benefits. The penalty period is calculated by dividing the amount of the gift by the state=s average monthly cost of care in the nursing home, as determined by the Medicaid agency. For example, 10

11 in Ohio, the average cost of care figure in 2013 is $6114. This number changes periodically, and each state=s number is different. For a $50,000 gift that may have been made for VA Pension eligibility, if a Medicaid application is made within five years, the penalty period IN OHIO would be 8.2 months ($50,000/$6114 = 8.2). As a result, any VA planning must be carefully coordinated with Medicaid planning in order to prevent penalty periods and ineligibility for Medicaid benefits. 11