Special Improved Pension Benefit for
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Many Veterans who served during a period of war are unaware that they may be eligible for a monthly benefit even if they do not suffer from a service connected disability. The program is the special improved pension, often known as “VA Aid and Attendance” (A&A). A&A is the highest level rating. The lowest level is basic pension, the next step up is Housebound.
To be eligible for the pension program, a veteran must be “permanently and totally disabled” because of a non-service related condition. Being age 65 and over satisfies this condition. The veteran must have served 90 days on active duty (the requirement is longer for more recent veterans), with at least one day during a wartime. Discharge must have been under conditions other than dishonorable.
WWII: December 7, 1941-December 31, 1946. Korean Conflict: June 27, 1950- January 31, 1955. Vietnam Era: August 5, 1964 – May 7, 1975 (February 28, 1961, for veterans who served “in country” before August 4, 1964). Persian Gulf War: August 2, 1990 – TBA
To be aid and attendance rated a veteran must require “care or assistance on a regular basis” that protects him or her from dangers of a daily living environment. The rating can be established by showing one, or more, of the following conditions:
Furthermore, it is generally presumed that a veteran who is residing in an assisted living facility does meet one, or more, of the aforementioned conditions. A letter from the veteran’s personal physician must substantiate the veteran’s disability and need for assistance and that the facility meets those needs.
Please note that the benefit is an annual benefit. (see below) However most folks want to know “How big will the monthly check be?” The current maximum monthly A&A pension benefits are:
However, the actual monthly pension benefit is determined by the total yearly income of the veteran and/or the veteran’s spouse, less the total annual cost of “unreimbursed medical expenses” of the veteran. The expenses of the spouse do not count.
The pension benefit is an annual benefit. For example the total benefit for an Aid & Attendance rated veteran and spouse is $26,765. The VA has the right to review payments made. So, if a veteran got a large income check after benefits started, and received an IRS reported form 1099, then after a couple years the VA will review the information from the IRS and demand the veteran pay back any benefits wrongly received – by the VA’s reckoning.
But the annual benefit is a two way street. If the veteran is not receiving the maximum benefit, and the vet has a large unpaid medical expense, the VA, upon receiving the information needed, will adjust the annual benefit upward.
Unreimbursed medical expenses (UME) are generally defined to include the costs associated to health and Medicare insurance premiums, prescription drugs, dental and vision care, and expenses related to an assisted living facility, an in-home care aid, and/or adult day care. The first 5% of UME is disregarded.
Once the UME are deducted from the vet’s income the result is “income for VA purposes (IVAP). When IVAP is deducted from the Vet’s income the result is compared to the A&A rated income level. Suppose a single vet has an IVAP (net income after deduction of UME) of $1,000. after the 5% reduction. That means he should get assistance at the rate of $881 per month. That is the result of deducting $1,000 from $1,881 the A&A income level for a single vet.
You might note that we said above, the medical expenses of the spouse do not count. The reason is only the vet can claim during the vet’s lifetime. The spouse can claim only as a “surviving spouse” after the veteran’s death. Suppose the vet’s wife has dementia and is in an assisted living facility? Can the he claim for a benefit? Yes, he may claim for Basic pension. Here’s an example. Suppose the Vet and spouse have a combined income of $2,500 per month. And suppose her assisted living bill is $4,000 per month. The vet will have an IVAP of $0 so he would qualify for the full Basic pension allowance of $1,127 per month.
Assuming a veteran or his/her surviving spouse has tentatively qualified for the A&A monthly pension benefit on the basis of income and unreimbursed medical expense, the next consideration is the net worth of the applicant. With the exception of the applicant’s home on a lot of two acres or less, an automobile, traditional household furnishings and personal property, which are treated as exempt.
In 2018 the net worth limit of spendable assets is $127,061.
VA will impose a penalty period in applications for benefits made in 2019. The VA lookback is three years for any gratuitous transfers of assets and purchases of annuities to qualify for benefits. One important difference between the Medicaid penalty provisions on transfers of assets and those rules of the VA is the concept of maximum net worth. The VA will impose a penalty period only for transfers of assets that if retained would have caused the applicant to exceed the net worth limit of $127,061. Example: a veteran transferred $50,000 to his son and then applied for pension benefits. He now has $75,000 in assets. There will be no penalty period since even with the addition of the transferred assets the vet is below the net worth maximum.
In 2018 penalty period rates are $2,230 per month. So if a vet transferred $11,000 that was subject to a penalty he would not be eligible for benefits for almost five months: $11,000 divided by $2,230 = 4.9 months.
Pre-planning for the benefit is recommended. The Veterans Administration only looks at the applicant’s net worth at the time of the actual A&A application. At this time there is a three year “look back period” for the transfer of assets prior to the application. Also. a transfer of assets after a claim is made can result in a denial or loss of benefits.
The rules of the Veterans A&A program regarding asset transfers conflict with the Medicaid program. Medicaid pays for long term care in a nursing home. Medicaid has a “five year lookback” on asset transfers. The VA program has none. Pre-planning for the VA program can wreak havoc if the veteran needs nursing home care within five years.
If the Medicaid application were made less than five years after the asset transfers made to qualify for the Veterans program, then a Medicaid divestment penalty must be dealt with. All assets would need be returned, or the application be held off till after the five years or other corrective action be made. One can see that trying to satisfy the rules of both programs is like riding two horses. It can be done with difficulty.
It is clear that the poor vet needs no help from an elder law attorney to arrange his affairs to coordinate with the requirements of the VA Pension program. Those who have significant assets must be much more careful. It is very important that these vets engage a qualified elder law attorney when developing a total Long-Term Care Plan.
Jim Schuster, Certified Elder Law Attorney, Southfield, MI (248) 356-3500 www.JimSchuster.com