Within the Department of Veterans Affairs there exists the Veterans Benefits Administration, which has:
a. Different benefits available to veterans related to education loans, home loans, life insurance, etc;
b. Service Connected Disability; and
c. Non-Service Connected Wartime Pension Benefit
There are three types income a veteran may receive from VA:
1. R&A Pay: When someone retires from military, they receive a DFAS (Defense Finance and Accounting Service) annuity referred to as Retired and Annuitant (R&A) Pay. This is countable income – the military just refers to it as an annuity.
2. VA Compensation (VA Comp): money received because of a service-related disability. This is also countable income.
3. VA Improved Pension: This is the VA’s version of SSI and is the focus of elder law attorneys.
Overview of VA Non-Service Connected Pension
Designed to provide a safety net minimal level of financial security for those who qualify. This is tax-free income paid to wartime veterans (or surviving spouses) who are (a) 65 years old or older; (b) totally disabled; with (c) limited income.
In addition, the Veteran must have:
1. been on active duty for at least 90 days (not training); and
2. served at least one day during a war-time period; and
3. received a discharge other than dishonorable; and
4. be disabled due to any reason other than willful misconduct (age 65)
a. anyone over age 65 is automatically deemed disabled; and
5. meet the VA limited income and asset test.
Survivor's Death Pension
For surviving spouse (or dependent child) of veteran who meets above criteria. Surviving spouse must have been married to the Veteran at the time of the Vet’s death and for a year prior to death and must have lived together (unless Vet was in ALF or Skilled Nursing Home). Surviving spouse must not remarry for this VA benefit as well.
If these requirements are met, the pension benefits that are available for the veteran are also available to the widow.
VA Improved Pension
There are three levels of VA improved pension: Low Income Pension, Homebound Pension, and Aid & Attendance.
Low Income Pension (foundation)
1. VA’s version of SSI.
2. Can add more income when our healthcare needs increase (i.e. become housebound and then when a Veteran has severe disabilities and require aid and attendance).
3. Cannot get both Housebound and Aid & Attendance. One or the other (in addition to Low Income Pension).
Housebound (VA pension supplement #1)
1. When Veteran is substantially confined to their home (or nursing home/ALF if institutionalized) or immediate premises due to disability, which will almost certainly continue throughout the Veteran’s lifetime (38 CFR Sec. 3.351(d)(2)). The definition of “permanently housebound” is met when the Veteran is simply unable to leave the home to earn a living (does not require that the Veteran be unable to leave the house ever). Essentially – no driving except to go to doctors and obtain necessities. If Veteran drives to visit family or to go to religious services or out to dinner, then will not meet this standard.
2. VA Form 21-2680 is doctor’s affidavit to prove the level of care needed (essentially confined to house).
3. Ironically, it is easier to establish and obtain the theoretically higher Aid & Attendance standard.
Aid & Attendance (A&A | VA pension supplement #2)
Requires that Veteran is either:
1. blind (5/200 when corrected); or
2. living in a Skilled Nursing Facility (nursing home)
a. If veteran lives in a nursing home they are presumed to be disabled and need Aid and Attendance
b. Needs VA Form 21-0779 and VA Form 21-2680; or
3. Lives at home or assisted living facility and unable to:
d. Other ADLs
VA Improved Pension/Housebound/A&A Income Requirements
Both Veteran and spouse’s gross income is counted. When income is lower than amounts set forth below, the VA will bring their income up to the set amount (so not a lump sum provided, only amount needed up to maximum amount below is provided). *Note that SSI is not countable for Veteran’s pension purposes (social security is counted, SSDI is counted, SSI is not). BUT VA pension IS COUNTABLE for SSI / Medicaid-planning attorney purposes.
Veteran Qualifies for Low Income Pension if annual income is less than:
• $12,868 (without spouse or child);
• $16,851 (with one dependent)
Veteran Qualifies for Housebound Pension if annual income is less than:
• $15,725 (without spouse or child);
• $19,710 (with one dependent)
Veteran Qualifies for Aid and Attendance Pension if annual income is less than:
• $21,466 (without spouse or child);
• $25,448 (with one dependent)
VA Aid & Attendance Income and Asset Standards
VA Income Standard
VA looks at all gross income of both the Veteran and the Veteran’s spouse. They will deduct recurring and unreimbursed medical expenses. This is colloquially known as IVAP (Income for VA Purposes).
What does the VA consider an “Unreimbursed Medical Expense?”
Any medical expense the Veteran will not be reimbursed through another source. VA will consider prospective 12-month recurring/regular medical expenses (examples of permissible deductions from income for IVAP purposes: health insurance premiums and deductibles, Medicare premiums, co-pays, hearing aids, walking devices, home-health care, assisted-living care, nursing home care).
• Personal services contracts are also an “unreimbursed medical expense.”
• Total medical expenses must exceed 5% of maximum applicable pension rate (MAPR) (this is 5% of the basic VA improved pension rate, not housebound or aid and attendance).
Net Worth/Asset Requirements
If the applicant has sufficient means to self-pay, they will not meet this standard. Sufficient means standard is subjective. The VA guidelines state that if they have more than $80,000, not eligible (primary residence, personal property, and vehicles not counted). But if they have less than 80K, can still be denied depending on age (older the applicant is, the less money they need….so a 90 year old veteran earning 55K might still be denied, while a 70 year old with the same amount would likely be approved).
Annuities are countable (except SPIAs, because no cash value).
Joint accounts – If two people on account: 50% for veteran, 50% for joint account holder. If four people on account: then only 25% of that account’s value is counted against VA applicant.
Is there a look back period for VA Pension qualification?
Currently there is no look back period (as there is with Medicaid planning). As long as the assets are transferred to someone outside of the Veteran’s household and the VA applicant has no access to those transferred assets. However, most elder law attorneys believe that it is only a matter of time before some kind of lookback penalty period applies to those seeking VA benefits.
How the VA pension benefit interacts with Medicaid planning
If Veteran is single, the maximum benefit is the Medicaid personal needs allowance. Need to be careful because, while VA benefits are not countable for Medicaid planning purposes, it is countable when calculating the patient’s required contribution to cost of care. So generally, if a Veteran needs home-health care or Assisted Living Facility care, it makes sense to apply for VA pension / aid & attendance benefits (there are often waiting lists for the Medicaid home-health care benefit. If the Veteran requires skilled nursing care, they might forego applying for the VA benefits and only apply for Medicaid. The VA pension benefit income by itself, and when combined with social security income, is rarely enough to pay for the usually large nursing home bill.
Also, the applicant’s marital status is important. A single person cannot receive both Medicaid skilled nursing home care and VA pension. In contrast, when the applicant is married, one spouse can receive Aid & Attendance, while the other spouse receives Medicaid (so VA can help spouse pay for ALF or home health care, while veteran receives Medicaid to pay for nursing home).
The VA pension could help bridge the gap if doing 5-year irrevocable trust planning.
VA benefits are also not subject to estate recovery.
What do I need to bring to the VA attorney's office?
- discharge paperwork (see the Elder Law Attorney Resource Section below for information on how to request military discharge records if not readily available)
- verification of gross income (from all sources - e.g. social security retirement, pensions, VA, annuities, 401(k), IRA distributions, etc...)
- all asset values (real estate, bank accounts, brokerage accounts, retirement accounts, cash value life insurance policies, etc...)
- recurring medical expenses, such as: medicare part B premiums, private health insurance premiums, home health care, facility care (not Rx or copays for initial application)
Elder Law Attorney – Veterans Benefits Resources
Title 38 US Code of Federal Regulations contains is everything related to VA:
War Time Periods
World War II: 12-7-1941 through 12-31-1946
Korean War: 6-27-1950 through 1-31-2955
Vietnam: 8-5-1964 through 5-7-1975
2-28-1964 through 5-7-1975 (for those who served in country before 8-6-1964
Gulf War: 8-31-1990 through present is a wartime veteran
How to Request Military Veteran Discharge Status?: To verify, check discharge papers, DD-214. Without discharge papers, the Veteran can file SF-180, Request Pertaining to Military Records with National Archives: http://www.archives.gov/veterans/military-service-records/. This takes about two to three weeks to receive a response.
Defense Finance and Accounting Service: http://www.dfas.mil/militarymembers/payentitlements/military-pay-charts.html
Pension Rate Numbers are as of 2016. For updated benefit requirements see: http://www.benefits.va.gov/pension/current_rates_veteran_pen.asp and http://www.benefits.va.gov/pension/current_rates_survivor_pen.asp.
Pension Adjudication Articles:
Pension Adjudication M21-1 Manual: http://www.benefits.va.gov/warms/m21_1.asp