Under 38 CFR § 3.274, net worth for VA Pension purposes is defined as the combined total of your assets plus your annual income. This is a critical concept many veterans and families miss: income is not just what you earn — it adds to your "net worth" calculation for pension purposes.
Net worth = Assets + Annual Income
This means a veteran with $130,000 in assets and $30,000 in annual Social Security income would have a combined net worth of $160,000 — which exceeds the 2026 limit of $159,240 and would disqualify them. The calculation is surprisingly easy to misunderstand.
VA defines assets as any property that a veteran (or surviving spouse) owns that could be converted to cash. This includes:
Annual income for VA Pension is counted "gross" before many deductions apply. It includes:
The most important concept: VA adds your annual income directly to your asset total for net worth purposes. A veteran with $100,000 in savings and $50,000/year in Social Security + pension income has a net worth of $150,000 for VA calculation purposes. Medical expenses can reduce that income figure — see the Income Deductions section below.
For 2026, the VA Pension net worth limit is $159,240. This figure is adjusted annually on December 1st of each year, tied to changes in the Medicaid community spouse resource allowance under the Social Security Act.
Here's how the limit has increased over recent years:
| Year | Net Worth Limit | Change |
|---|---|---|
| 2022 | $138,489 | — |
| 2023 | $150,538 | +$12,049 |
| 2024 | $155,356 | +$4,818 |
| 2025 | $159,240 | +$3,884 |
| 2026 | $159,240 | Pending Dec 1, 2025 adjustment |
Note: The 2026 limit reflects the figure in effect as of early 2026. VA typically announces the adjusted limit in late November or December for the following year. Always verify the current limit at VA.gov before filing.
There is no partial pension for veterans who exceed the net worth limit. If your combined assets plus annual income exceed $159,240 (2026 figure), your pension claim will be denied in full. Reducing net worth below the threshold — through legitimate means — before filing can be the difference between receiving and losing a benefit worth up to $24,610/year for Aid and Attendance.
Use this step-by-step process to estimate your VA Pension net worth:
Add up the fair market value of everything you own that VA would count, excluding the items covered under the exclusions below. Include bank accounts, investment accounts, retirement accounts you can currently access, second properties, and business interests.
Add up all gross annual income: Social Security, pensions, wages, investment dividends, rental income, and any other recurring income sources. Use the gross (pre-tax) figure — VA starts with gross income before deductions.
This is where many veterans reclaim eligibility. Unreimbursed medical expenses — those not covered by Medicare, Medicaid, or private insurance — can be deducted from your annual income calculation. Common UMEs include:
After deducting UMEs from income, add the adjusted annual income to your countable assets. If the total is below $159,240, you may be within the net worth limit for VA Pension.
Veteran has: $95,000 savings + $10,000 car (excluded) + primary home (excluded) + $28,000/year Social Security + $12,000/year military retirement = $40,000 gross annual income.
Veteran pays: $9,600/year in Medicare premiums + $4,800/year in caregiver costs = $14,400 in UMEs.
Adjusted income = $40,000 − $14,400 = $25,600
Net worth = $95,000 (assets) + $25,600 (adjusted income) = $120,600 — well below the $159,240 limit. This veteran likely qualifies on the net worth test.
Under 38 CFR § 3.274(b), VA excludes the following from net worth calculations:
Your primary home and a reasonable lot size are excluded entirely. There is no dollar cap on this exclusion — a $600,000 home counts the same as a $100,000 home: zero, for net worth purposes. See the detailed primary residence rules in the next section.
One vehicle used for transportation is excluded. If you own multiple vehicles, only one is excluded. A second car, boat, RV, or recreational vehicle would count as an asset.
Furniture, clothing, electronics used personally, and everyday personal possessions are excluded. However, valuable collectibles, art, jewelry, or personal property held for investment purposes may be counted depending on circumstances.
Property that cannot reasonably be sold or converted to cash may be excluded. This is a case-by-case determination — a minority stake in a closely held business that cannot be sold is one example.
The cash surrender value of life insurance policies is counted as an asset, but term life insurance (which has no cash value) is not counted. The face value of a policy is not counted — only the cash value that could actually be converted to funds.
The primary residence exclusion is one of the most valuable provisions for veterans and surviving spouses who are homeowners. Key rules:
Your primary residence is the home where you actually live as your main domicile. VA uses the same general standard as the IRS — it's where you spend the majority of your time, receive mail, and consider your home base. You can only have one primary residence.
The lot on which the primary residence sits is also excluded, as long as the size is "reasonable." VA has not defined a specific acreage limit, but a standard residential lot is clearly reasonable. A 50-acre farm with a residence on it is more complex — the residence itself and the lot immediately surrounding it would be excluded, but excess acreage used for income-generating purposes might be counted.
If a veteran or surviving spouse moves permanently into a nursing home or assisted living facility, VA may reconsider the primary residence exclusion — the home is no longer being occupied as a primary residence. However, VA's rules give a reasonable period for the home to be sold or for family members to continue living there. This is a nuanced area where consulting with a VA-accredited attorney or claims agent is advisable.
If a veteran moves to a care facility but their spouse remains in the home, the home continues to qualify as the primary residence and remains excluded from net worth.
VA does not cap the primary residence exclusion by home value. A veteran with a $800,000 home gets the same exclusion as a veteran with a $100,000 home. The entire value of the primary residence is excluded regardless of how much equity the veteran has.
Unreimbursed Medical Expenses (UMEs) are deducted from your gross annual income before adding income to your assets to calculate net worth. This provision, codified in 38 CFR § 3.272, is often the key to qualifying for pension for veterans who appear to be just over the net worth limit.
VA distinguishes between recurring and non-recurring medical expenses. Recurring UMEs (such as monthly caregiver costs or regular prescription co-pays) are projected forward as an annual deduction. Non-recurring expenses (such as a major surgery) are typically deducted in the year they occurred but not projected forward.
When filing for VA Pension, you must provide documentation of your medical expenses. Keep receipts, caregiver invoices, insurance premium statements, and Explanation of Benefits documents. A personal log of recurring expenses with dates and amounts is helpful. UMEs are reported on VA Form 21P-8049 (Request for Details of Expenses).
Effective October 18, 2018, VA implemented a 36-month lookback period for asset transfers under 38 CFR § 3.276. This was one of the most significant changes to VA Pension rules in decades and fundamentally altered planning strategies for the pension.
When you file a VA Pension claim, VA will review all asset transfers made in the 36 months before your application date. VA is looking specifically for transfers where:
Prior to 2018, placing assets in an irrevocable trust was a common strategy to reduce pension net worth. Post-2018, this is a covered transfer subject to the lookback period and potential penalty. Creating an irrevocable trust funded with your assets within 36 months of a pension application may trigger a penalty period. Consult a VA-accredited attorney before creating any trust intended to reduce net worth for pension purposes.
Under 38 CFR § 3.276(d), if VA determines that you made a covered asset transfer within the lookback period, VA will impose a penalty period during which pension benefits will not be paid — even if you are otherwise eligible.
The penalty period is calculated by dividing the amount of the covered transfer by the monthly pension rate for a veteran with one dependent receiving Aid and Attendance (the highest pension rate).
Veteran transferred $60,000 to children 18 months before filing. VA determines this was a covered transfer.
Monthly A&A rate for veteran with one dependent (2026): approximately $2,843/month
Penalty period = $60,000 ÷ $2,843 = approximately 21 months
The veteran would be entitled to pension benefits, but those benefits would not begin until after the 21-month penalty period expires. The penalty period begins on the date of the pension application, not the date of the transfer.
The maximum penalty period is 5 years (60 months), regardless of the size of the covered transfer.
The penalty period begins on the later of: (1) the date VA received the pension application, or (2) the date the veteran would otherwise be entitled to pension benefits. The penalty runs from the application date forward — meaning a veteran waiting out a penalty period is still "in the system" and benefits will begin automatically once the penalty expires.
There are legitimate, VA-recognized ways to reduce net worth to qualify for pension without triggering the lookback penalty:
Spending money on your primary residence — home repairs, accessibility modifications, additions — converts countable assets into excluded assets (the home). Similarly, purchasing a vehicle (if you only have one) converts cash into an excluded asset.
Pre-paying funeral and burial expenses through a funeral home trust or prepaid contract reduces countable assets. These contracts are specifically excluded from net worth under 38 CFR § 3.274(b) if the funds are irrevocably committed to burial expenses.
Spending on medical equipment, home safety modifications (ramps, grab bars, stairlifts), hospital beds, and other disability-related home improvements reduces cash assets while converting them to excluded personal property.
Transfers that occurred more than 36 months before the pension application date are outside the lookback window and are not reviewed. If you made gifts or transfers more than 3 years ago, they will not trigger a penalty — though the assets those transfers produced (if they generated income) may still affect the recipient's situation in other contexts.
If you are currently over the net worth limit but have high medical or care costs, your net worth may naturally decrease over time as assets are spent on care. Many veterans who initially appear over the limit qualify within 12–24 months as care costs deplete countable assets.
Net worth planning for VA Pension involves interaction with Medicaid rules, estate planning, trust law, and VA regulations. What is permissible under VA rules may affect Medicaid eligibility and vice versa. A VA-accredited attorney who specializes in elder law and veterans benefits is the right professional to consult before making significant asset transfers.
The date VA receives your pension application establishes your application date — which is also when the lookback period ends. If you have prior covered transfers that fall within 36 months, filing later may mean those transfers age out of the lookback window. Conversely, if your UMEs are high enough to qualify now, filing sooner locks in an earlier effective date and earlier benefit start.
Asset documentation is critical. Be prepared to provide bank statements, investment account statements, real estate valuations, and retirement account statements for the 36 months prior to your application date. VA will request financial documentation during the pension review process.
VA Form 21P-0969 (Income and Asset Statement) asks specifically about asset transfers. Complete this form honestly. VA can identify unreported transfers, and providing false information on a federal benefits application is a federal offense. If you made covered transfers, disclose them and understand the penalty period calculation before filing.
If you or your spouse requires assistance with activities of daily living (bathing, dressing, eating, toileting), you may qualify for the Aid and Attendance pension enhancement, which significantly increases the pension benefit. See our complete Aid and Attendance guide for details.
Not Sure If You Qualify for VA Pension?
The net worth calculation can be complicated — especially when UMEs, lookback transfers, and excluded assets are all in play. A free claim review can help you understand where you stand before you file.
Get Your Free Pension Eligibility Review →Editorial Standards: Written by Marcus J. Webb, veterans benefits researcher. Verified against current 38 CFR § 3.274 regulations. Last reviewed: July 2026. Not legal advice — for representation, talk to a VA-accredited attorney.
Understand your pension options before you file. Free claim review — no phone calls required.
Start My Free Claim Review — No Phone Required →