Veterans

COVID-19 individual stimulus payment for dependents of Social Security, SSI and VA benefits

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The Internal Revenue Service (IRS) has issued a special alert that Social Security and Railroad Retirement recipients who enter information on the IRS portal by noon Eastern time on April 22, 2020 can get the $500 per dependent payment at the same time as their individual stimulus payment.  After noon Eastern Time on April 22, 2020, Social Security recipients the will no longer be available to enter dependent information.  After noon Eastern time on April 22, 2020, Social Security and Railroad Retirement recipients will only be able to get the $500 per dependent payment by filing a tax return and the $500 per dependent payment will be issued sometime after the $1,200 individual payment.

SSI and VA benefits recipients will have more time to enter dependent information into the portal.  Their deadline has not yet been determined.  Note that a Social Security press release states that the deadline will be in April.  After that deadline, SSI and VA benefits recipients will need to file a tax return to get the $500 per dependent payment.  (IR 2020-76, April 20, 2020.)

VA mortgage special relief for COVID-19

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The Department of Veterans Affairs (VA) has issued information regarding special relief for COVID-19.  VA will conduct meetings by telephone with persons for people with symptoms of or exposed to COVID-19.

VA encourages holders or guaranteed loans to extend forbearance to borrowers in distress because of COVID-19. VA encourages waiving late charges on affected loans.  Servicers are encouraged to suspend credit reporting on affected loans.  (Circular 26-20-7, March 16, 2020.)

VA request for foreclosure moratorium

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The Department of Veterans Affairs (VA) strongly encourages loan holders to establish a 60 day moratorium beginning on March 18, 2020 on completing foreclosures or initiating new foreclosures on loans.  VA regulations allow additional interest in a guarantee claim when termination is delayed by VA requested forbearance.

Loan holders should consider the impact of completing an eviction action when choosing to retain a property instead of conveying to VA.  VA requests holders not expose Veterans and their families to additional risk through an eviction action.  (Circular 26-20-8, March 18, 2020.)

Net worth, asset transfer and income exclusions for needs-based veterans benefits programs

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The Department of Veterans Affairs has issued final regulations regarding net worth, asset transfer and income exclusions for needs-based veterans benefits programs.  The regulations adopt the Community Spouse Resource Allowance from the Medicaid program as the net worth limit for eligibility for needs-based veterans benefits programs.  In 2018, the Community Spouse Resource Allowance is $123,600.

The regulations include several provisions about calculating net worth.  These provisions include the claimant’s primary residence is excluded as an asset, the income and assets of a child living in the primary residence are counted in the applicant’s net worth, assets of the claimant’s spouse are counted even if the claimant does not live with the spouse and assets of a guardian are counted for a surviving child’s claim, an income deduction for disabled veterans, and both the principle and distributions from individual retirements accounts are counted.  The regulations do not distinguish between liquid and non-liquid assets.

The regulations also implement a penalty for transfer of assets for less than fair market value.  The maximum penalty is 5 years of benefits eligibility.  Assets transferred as a result of fraud, misrepresentation or unfair business practice related to sale or marketing of financial products or services are not considered transferred for less than fair market value.

Amounts paid by a veteran, veteran’s spouse or surviving spouse on behalf of a veteran’s child for unreimbursed medical expenses are deductible if expenses exceed 5 percent of the veteran’s benefit amount.  In addition, expenses for institutional care and in home care are deductible.

The pension rate is reduced when a pension recipient is receiving Medicaid-covered nursing home care.  The regulations implement a statutory change that this provision applies to surviving children.  The regulation also adds that this provision should not cause an overpayment of benefits unless there is willful concealment of information.  (83 Fed. Reg. 47246, September 18, 2018.)