Updated August 3, 2026. Quick answer: VA looks back 36 months at assets given away before a pension claim. If a transfer would have put you over the net worth limit, it creates a penalty period during which no pension is paid — calculated by dividing what was transferred by a monthly rate, capped at five years.
First, the thing that catches everyone: income counts inside net worth
(a) Net worth limit. For purposes of entitlement to VA pension, the net worth limit effective October 18, 2018 is $123,600. This limit will be increased by the same percentage as the Social Security increase whenever there is a cost-of-living increase in benefit amounts payable under section 215(i) of title II of the Social Security Act (42 U.S.C. 415(i)). VA will publish the current limit on its website at www.benefits.va.gov/pension/. … (b)(1) Net worth. Net worth means the sum of a claimant’s or beneficiary’s…
— 38 CFR 3.274(a), (b)(1), (b)(3)-(4)
Net worth means the sum of assets AND annual income. That is the structural difference from Medicaid, which tests income and assets separately against separate limits. Here they are added together and compared to one number.
The limit is $163,699 for the period 1 December 2025 to 30 November 2026. The regulation itself only states the 2018 base figure and the mechanism that adjusts it each year, so the current number comes from VA’s published rates — which is why the period is stated beside it.
The lookback and the penalty formula
(a)(7) Look-back period means the 36-month period immediately preceding the date on which VA receives either an original pension claim or a new pension claim after a period of non-entitlement. This definition does not include any date before October 18, 2018. … (a)(2) Covered asset means an asset that— (i) Was part of a claimant’s net worth; (ii) Was transferred for less than fair market value; and (iii) If not transferred, would have caused or partially caused the claimant’s net worth to exceed the net worth limit under § 3.274(a). … (e) Penalty periods and calculations. When a claimant transfers a covered asset during the look-back period, VA will assess a penalty period not to exceed 5 years. VA will calculate the length of the…
— 38 CFR 3.276(a)(2), (a)(7), (e), (e)(1)
So the arithmetic is fully specified by the regulation:
Penalty months = the covered-asset amount ÷ the monthly penalty rate, rounded down — and never more than 60.
The divisor is the maximum annual pension rate for a veteran needing aid and attendance with one dependent, divided by twelve and rounded down. For 1 December 2025 to 30 November 2026 that is $2,874 a month.
Worked examples
| Case | Transferred | Penalty |
|---|---|---|
| Nothing transferred | $0 | 0 months |
| Below one month of rate | $2,000 | 0 months |
| Just under two months | $5,700 | 1 month |
| Exactly three months | $8,622 | 3 months |
| Mid-range transfer | $45,000 | 15 months |
| At the 5-year cap exactly | $172,440 | 60 months |
| Far beyond the cap | $500,000 | 60 months |
Two of those deserve attention. A transfer below one month of the rate produces no penalty at all, because the result rounds down to zero. And the cap is real — half a million given away produces the same 60 months as the amount that exactly reaches the cap. Beyond that point the penalty stops growing.
How this was checked
The arithmetic was implemented twice, independently — once as the regulation’s division and once by subtracting the monthly rate one month at a time without using division at all — and compared across seven cases including a zero-penalty case and both cap cases. They agree exactly, with zero divergence. The divisor was also reconciled against VA’s published rate: $34,488 ÷ 12 = $2,874, matching the rate VA states.
An inconsistency we found and did not use. A worked example elsewhere on VA’s own rates page cites a maximum annual pension rate of $33,548 for what appears to be the same scenario. That figure does not reconcile to the $2,874 penalty rate VA states on the same page; $34,488 does, exactly. We used the figure that reconciles and are flagging the one that does not, because a penalty period computed from the wrong divisor would be wrong by months. Check the current rate with VA before relying on any calculation, including this one.
What to do
- Do not give assets away to qualify. That is precisely what the lookback is for, and the penalty is measured in months of a benefit you were trying to obtain.
- Remember income is inside the net worth figure. A modest pension or annuity can matter more than people expect.
- Do not confuse this with Medicaid. Medicaid’s penalty runs on entirely different rules and a different lookback, and qualifying for one says nothing about the other.
- You can apply yourself, free. Accredited Veterans Service Organizations help at no charge — and what anyone may charge you is limited by law.
Related: the aid and attendance benefit itself.
General information drawn from the Code of Federal Regulations, the United States Code and VA published materials, not legal or benefits advice. VA figures are adjusted annually and every figure here carries the period it applies to. Nothing here is advice about disability ratings. You can apply for VA benefits yourself, for free, and accredited Veterans Service Organizations assist free of charge – we sell nothing and receive nothing from anyone who charges for claims help.