Veterans Benefits

Veterans Benefits are perhaps the most misunderstood and underutilized resources available to millions of veterans and their families.  While it is commonly known that certain benefits are available for the brave men and women who were injured while serving in our armed forces, many veterans (and their families) are unaware that they could be eligible for a wide range of benefits through the United States Department of Veterans Affairs even if they did not directly retire from the military or suffer injuries in the line of duty.  Many of these veterans and surviving spouses are receiving long term care or will need some type of long term care in the near future, and there are funds available from the United States Department of Veterans Affairs ("VA") to help pay for that care.

Benefits Available

There are three types of benefits available that provide a monthly cash payment to veterans or their surviving spouse who have long term care needs. Below is an overview of the three benefits, and more detail will be provided on each benefit in the following paragraphs.

Service Pension. The VA provides a monthly cash payment to wartime veterans who meet active duty and discharge requirements, who are either age 65 or older or disabled, and who have limited income and assets. The Service pension is also available to a surviving spouse of a wartime veteran too. An unmarried veteran can receive up to $1,054 per month, a married veteran can receive up to $1,381 per month, and a surviving spouse can receive up to $707 per month (with additional payments available if dependent children are present in the home).

Pension with Housebound Allowance. A slightly higher monthly payment is available to wartime veterans (who meet the same service requirements as Service Pension) but who are largely confined to their home for medical or age related frailty reasons. An unmarried veteran can receive up to $1,288 per month, a married veteran can receive up to $1,615 per month, and a surviving spouse can receive up to $864 per month (with additional payments available if dependent children are present in the home).  To be considered “homebound,” one must generally not be able to leave the home without the assistance of another person or still be driving a car.

Pension with Aid and Attendance. The highest monthly benefit is available when a wartime veteran or surviving spouse requires the assistance of another person to perform activities of daily living, is blind or nearly so, or is a patient in an assisted living facility , a nursing home, and some other senior living facilities. This benefit, often referred to simply as "Aid and Attendance" is the most widely known and talked-about benefit as it offers the highest possible monthly payment. An unmarried veteran can receive up to $1,758 per month, a married veteran can receive up to $2,085 per month, and a surviving spouse can receive up to $1,130 per month (with additional payments available if dependent children are present in the home).

Planning Note: While Aid and Attendance is the most popular VA benefit, it is important to remember that Service Pension is available to wartime veterans or surviving spouses who do not require assistance with activities of daily living but are either disabled or 65 or older and have limited income relative to their medical expenses and limited assets.

Basic Eligibility Requirements

Wartime Service. As noted above, a veteran must first meet certain service and discharge requirements before being considered for any type of pension benefit. A veteran must have served 90 days of active duty with at least one day beginning or ending during a period of war. For veterans who served in the military after September 1, 1980, the active duty requirement increases to 180 days. In addition, the veteran must have been discharged under circumstances other than dishonorable.  There is no requirement that the veteran have served overseas or in a combat zone.

Disability. To qualify for any type of pension benefit, a claimant must also be 65 or older or be permanently and totally disabled. A claimant is the individual filing for benefits, either a veteran or surviving spouse.  Permanent and total disability includes a claimant who is:

• In an assisted living facility or a nursing home;
• Determined disabled by the Social Security Administration;
• Unemployable and reasonably certain to continue so throughout life; or
• Suffering from a disability that makes it impossible for the average person to stay gainfully employed.

Asset and Income Requirements

The financial eligibility requirements of any pension benefit address a claimant's net worth and income. A married veteran and spouse should have no more than $40,000 to $80,000 in countable assets (less for a single veteran or surviving spouse), which includes retirement assets but excludes a home and vehicle. However, the $40,000 to $80,000 limit is a guideline only, it is not a rule set by the VA.  The asset circumstances of each case are reviewed. The VA looks at a claimant's total net worth, age and life expectancy, income and medical expenses to determine whether the veteran or surviving spouse is entitled to special monthly pension benefits.

Planning Note: Many times the most difficult task in this area is to reduce a claimant's assets down to the applicable level (or what one hopes will be acceptable to the VA). The assistance of legal counsel is important to ensure the right strategies are used with minimal impact on Medicaid in the future. In addition, income, estate, and gift tax issues must be considered so as to not incur tax problems while qualifying for veterans benefits.  As such, an analysis of the suitability of any asset preservation strategy would include a review of medical expenses, the claimant’s health, the claimant’s income and assets, and the tax, Medicaid, and estate planning implications of any asset preservation strategy.

A veteran or surviving spouse must have Income for VA Purposes ("IVAP") that is less than the benefit for which he or she is applying. IVAP is calculated by taking a claimant's gross income from all sources less countable medical expenses. Countable medical expenses are recurring out-of-pocket medical expenses that can be expected to continue throughout a claimant's lifetime. If a claimant's IVAP is equal to or greater than the annual benefit amount, the veteran or surviving spouse is not eligible for benefits. The Table below shows the applicable income and pension amounts for both veterans and surviving spouses.

Is the Claimant Housebound?

If a claimant qualifies for regular pension and is housebound, the claimant's maximum allowable income increases (as does the annual benefit amount) to the special monthly pension. The VA defines housebound as being substantially confined to the home or immediate premises due to a disability that will likely remain throughout the claimant's lifetime. A veteran with no dependents who is housebound is eligible for benefits of up to $15,462 in annual income.

Unreimbursed medical expenses will reduce a claimant's income dollar for dollar after a small co-pay (5% of the annual pension amount) is met. But remember, to be eligible for a special monthly pension for being housebound, the claimant's IVAP must be less than the annual income threshold.

To illustrate, a veteran with exactly $15,233 in annual income would not be eligible for a special monthly pension for being housebound. However, if that veteran was able to show annual income of $20,000 and unreimbursed medical expenses of $25,000, the veteran would be eligible for $15,462 in special annual pension (paid on a monthly basis) because the veteran has negative IVAP. A surviving spouse with no dependents who is housebound must have annual IVAP of less than $10,217.

Does the Claimant Require the Aid and Attendance of Another?

If a claimant can show, through medical evidence provided by a primary care physician or facility, that the claimant requires the aid and attendance of another person to perform activities of daily living, that veteran or surviving spouse may qualify for an additional special monthly pension commonly referred to as aid and attendance pension benefits.

The VA defines the need for aid and attendance as:

• Requiring the aid of another person to perform at least two activities of daily living, such as eating, bathing, dressing or undressing;
• Being blind or nearly blind; or
• Being a patient in an assisted living facility or a nursing home.

The Table below shows the applicable pension amounts for each type of VA pension.

Planning Note: The maximum aid and attendance pension for a married veteran is $2,085 per month ($25,022 per year), while the maximum pension for a veteran's widow is $1,130 per month ($13,563 per year). The VA pays this pension directly to the claimant regardless of where the claimant is living.

Qualification

As stated above, the VA looks at a claimant's total net worth, life expectancy, and income and medical/care expenses to determine whether the claimant should qualify for special monthly pension benefits. Unlike Medicaid, there currently is no look-back period and no penalty for asset protection planning. However, one must use caution when considering a gifting strategy to qualify a veteran or surviving spouse for special monthly pension benefits as this will cause a period of ineligibility for Medicaid if nursing home benefits are later needed. Other Medicaid planning strategies may apply when trying to qualify a veteran or surviving spouse for special pension with aid and attendance.

Planning Note: An elder care attorney can determine the best strategies that will gain eligibility for special monthly pension but not disqualify the client from Medicaid or minimize Medicaid disqualification issues.

An Illustration. Robert, age 82, is a World War II veteran who is widowed. Robert's total monthly income consists of Social Security income of $1500 per month. Robert was diagnosed last year with dementia and now lives in an assisted living facility as he needs help bathing, dressing and taking his medication. The assisted living facility costs $3000 per month. Robert has liquid assets totaling $100,000.

Robert's IVAP is -$1,500

Income $1500 - Unreimbursed recurring medical expenses $3000 = - $1500

The maximum monthly benefit that Robert could qualify for is $1,758 of pension with an allowance for aid and attendance. Because Robert has a negative IVAP of $1500, he is eligible for the full pension with aid and attendance benefit. However, his assets are too high. But because Robert has negative income of $1500, one option may be to take a portion of his liquid assets and convert them into an income stream through the use of an immediate annuity.  This will provide an income stream to help pay for his care.  The use of an Irrevocable Trust for VA Purposes may also be considered. As long as Robert's IVAP remains a negative number or $0, he can qualify for the full pension with aid and attendance amount.

The Application Process

While the application process for special monthly pension can be slow, in some cases the benefit is awarded retroactive to the month after application is submitted. Having the proper documentation in place at the time of application (for example, discharge papers, medical evidence, proof of medical expenses, death certificate, marriage certificate and a properly completed application) can reduce the processing time significantly.

Planning Note: Benefits can be retroactive to the month after application submission. Therefore, it is imperative for potential claimants to seek legal help immediately to become eligible and to apply as quickly as possible.

Due to the complexity of the VA’s regulations, in 2008, the VA began requiring that anyone who assists a veteran or their family member with a claim for Service Pension, Pension with Housebound Allowance or Pension with Aid and Attendance be accredited with the VA before they can legally provide assistance. Thus, to protect yourself while going through the VA process, make sure you are using an accredited attorney.

Andrew Byers advises seniors and their families on the VA Aid and Attendance benefit as part of his elder care practice.