In honor of my dad, Corporal Joseph Meister, 1921-2013
Well Kept Secret:
Veterans Benefits for Long Term Care
Veteran’s Benefits for Long Term Care
My Story
Over 20 years ago, a client came to me and told me that her friend was getting “Veteran’s Benefits” for her husband in an Assisted Living Facility. I was very skeptical because I had been trained by the “masters” in Elder Law and there was almost nothing in my training manuals about this.
Nonetheless, I was not going to dismiss this. After much research (more than 100 hours) I came across, and then mastered, the “best kept secret” in Elder Law – the VA Aid and Attendance Program..
Now, after personally training lawyers and professionals all over the country, it is no longer a secret, so much so that there are issues with “companies” taking advantage of clients by selling unnecessary insurance products etc. in exchange for doing “free” VA applications.
Veterans benefits for long term care.
One of the best kept secrets, but an excellent potential source of funds for long term care (either at home or in a facility) for the elderly is veteran’s benefits. For those veterans and widow(er)s who are eligible, these benefits can be a blessing for the incapacitated individual who is not yet ready for, or who wants to avoid, a nursing home.
“Aid and Attendance” pension benefits are available to a veteran who requires the aid and attendance of another person in order to avoid the hazards of his/her daily environment. Under this program, a veteran can receive a maximum of approximately $2100 per month in benefits, and a widow/er can receive up to approximately $1100 per month if they meet the following requirements:
1. SERVICE REQUIREMENTS: In general, to qualify, a veteran must have 90 days or more of active duty under other than dishonorable conditions, (generally an Honorable Discharge) one day of which was during wartime.
2. DISABILITY REQUIREMENTS: The veteran must be determined to be “permanently and totally disabled.” The VA will generally accept a letter from the person’s personal doctor as to the veteran’s disability. The veteran does not need to be helpless – he/she need only to show that he/she is in need of aid and attendance on a regular basis. A patient in a nursing home or assisted living facility is presumed to be in need of Aid and Attendance.
3. NET WORTH REQUIREMENTS: The VA will consider the net worth of the applicant and will deny the application if the net worth is such that part of it could be consumed for the applicant’s care. As a rule of thumb, the cutoff is less than $80,000. (I prefer my clients have no more than $50,000) The home is not counted.
As of this writing, there is no penalty period for transfer of assets. The application asks for the net worth of the applicant on the date of the application and does not inquire as to previous transfers. Note, however, three important issues:
4. INCOME REQUIREMENTS: The general rule is that even if the applicant fulfills all of the above requirements, the application will be denied if the veteran’s countable income exceeds the maximum annual pension rate, which is currently approximately $2100. *However, in computing the income of the applicant, certain items can be deducted from income. Specifically, unreimbursed medical expenses paid by a veteran may be used to reduce the veteran’s income. These include only recurring expenses such as insurances, the costs of the ALF or in home aid. Obviously, these can make up a big portion of the unreimbursed medical expenses.
Effective October 18, 2018
Veterans Affairs has made some major changes to the rules regarding the VA Aid & Attendance benefit. One of these changes is the implementation of a 3 Year look-back period that will penalize the transfer of assets within the look-back time frame. These changes take effect October 18, 2018.
Why the changes? Up until about 15 years ago, this program was a deep dark secret. The rules were very subjective and not specific. As the program got more known and popular, the need for more consistent rules became apparent. The changes are to ensure the integrity of the VA’s needs based benefit programs by making the requirements more uniform and to prevent the program to be used as an estate planning tool to preserve assets for heirs at the expense of the taxpayers.
Pension vs compensation Pension is the VA’s version of SSI – a needs based program. Compensation is the benefit paid to service members injured in service. This is like SSDI – it is not a needs based program. You will see ratings of anywhere from 10% to 100% disabled and the more disabled the higher the benefit. You cannot receive pension on top of compensation. If someone is entitled to both, the VA will give the higher amount only.
What is the Aid & Attendance Pension?
The Aid and Attendance (A&A) Pension provides benefits that reduce the cost of senior care for veterans and surviving spouses who require assistance with daily living. It is a needs based program, meaning, like Medicaid there are income and asset requirements and limits
Any wartime veteran with 90 days of active duty, honorably discharged, with at least 1 day beginning or ending during a period of war, is eligible to apply for the Aid & Attendance Pension. A surviving spouse (marriage must have ended due to death of veteran) of a wartime veteran may also apply. The individual applying must qualify both medically and financially.
In general, “financially” meant assets (not counting the home) under a set amount (formerly generally $80,000 and income below the Maximum Annual Pension Rate. However, unreimbursed medical expenses can be deducted from income to determine the benefit. Benefits for a single surviving spouse are approximately $1100 per month, for an unmarried veteran $1700 per month and a married veteran $2100 per month.
The dates of the war are as follows; they are not obvious and are in fact expansive.
Accreditation requirement – The VA has stepped-up enforcement.
Here’s a quick summary of the new regulations:
Net worth calculation
Note: All assets and income of both spouses
count toward the calculations
Under the old rules, there was no exact amount of money that a claimant (including the spouse) could have but the general rules was that an applicant and spouse could have no more that $80,000 plus the home. $80,000 has been the most commonly mentioned asset amount, but there has never been a written rule. The new ” net worth limit” will be a nationwide number that tracks-sort of- the Medicaid’s maximum community spouse resource allowance. As of 2018, this amount is $123,600. But unlike Medicaid, the VA’s calculations would add an applicant’s annual income and assets to see if a veteran or surviving spouse is over the $137,400 limit. “The amount of a claimant’s net worth would be determined by adding the claimant’s annual income to his or her assets,” according to the new rules. Clearly, figuring out net worth for an application is more complicated.
The good news is that, assuming the applicant/couple do not have unusual income, they can keep more assets.
3-year lookback period for transfer of assets (think Medicaid lookback, including a similar transfer penalty).
Under the old rules there was no penalty for the transfer of assets prior to an application. The date of the application and the assets owned that day were the only ones counted.
The “new requirements pertaining to pre-application asset transfers and net worth evaluations” will “establish a 36-month look-back period and establish a penalty period not to exceed 5 years for those who dispose of assets to qualify for pension. The penalty period would be calculated based on the total assets transferred during the look-back period to the extent they would have made net worth excessive.”
The transfer of a ‘‘covered asset” would “mean an asset that was part of net worth, and was transferred for less than fair market value. Transfer of “a smaller covered asset amount” would incur a shorter penalty period.
If you make a transfer during the three-year look-back period, then you must have clear and convincing evidence that transferring the asset was not “for the purpose of reducing net worth to establish entitlement to pension.”
Otherwise, the VA will deny your Aid & Attendance benefits for months or years, based on how much you transferred. The amount you transferred will be divided by “the maximum annual pension rate at the aid and attendance level” and the result (quotient) is the number of months you will be disqualified. That is approximately $2000; so as you can see it’s a very harsh rule.
Income reduction with Medical expenses and what constitutes a medical expense
Income can be reduced by subtracting unreimbursed medicaid expenses from income. Under the old law there was no definition of UMES. Now the law is very specific.
As to institutional care can be in home or in a facility, two things are important to note:
The Home
It doesn’t matter that the individual is not living in the home, or even being cared for in another state. The VA “will exclude a claimant’s primary residence as an asset regardless of whether the claimant is residing in a nursing home, medical foster home, or an assisted living or similar residential facility that provides custodial care, or resides with a family member for custodial care,” according to the new rules.
But as soon as the home is sold, the sale proceeds count as assets. If the residence is sold, proceeds from the sale are assets unless the proceeds are used to purchase another residence within the calendar year of the sale,” the VA says. For instance, if you sold your house in December, you would have only a few days to decide what to do with the sale proceeds.
If the home is rented, the rent counts as income. “Any rental income from the primary residence would be countable annual income . Individuals can take excess assets and pay down a primary residence mortgage without causing a transfer penalty.
Homes sitting on more than 2 acres may now be countable toward net worth.
Purchases of certain annuities
(and transfers to certain trusts)
will be penalized during the lookback period.
Trust planning will remain an effective pre-planning tool. Annuities take another hit and will now be penalized in addition to creating income which affects eligibility.
Be sure you are referring your seniors and their families to accredited attorneys / agents.
Caregiver wages
The VA plans to use the MetLife Mature Market Institute’s Market Survey of Long-Term Care Costs to decide whether caregiver wages are reasonable. The survey reported a national average private-pay hourly rate of $21 per hour for home health aides in 2012. “The lowest average hourly rate was $3.00 per hour and the highest was $32.00 per hour,” according to the report.
Summary: With the changes in law, it is more important than ever to plan ahead. And see below on how to get both Medicaid and Veteran’s benefits Please feel free to contact our office for any of your Veteran’s questions or on any elder law matter. We’re happy to help!
COORDINATING VETERANS BENEFITS AND MEDICAID:
Often when clients come to us, they ask us to advise them of all the public benefits to which they may be entitled. Being able to inform clients of potential Veterans Benefits and how to take advantage of them adds to the value we offer our clients.
Sometimes we assist our clients with the transfer of assets in order to qualify for Veteran’s Benefits. We must remain mindful of the fact that these transfers rules are very different for Medicaid than Veteran’s benefits and can ultimately create an ineligibility period for Medicaid purposes should Medicaid Benefits be necessary in the future. Therefore, when we do Veterans benefit planning we also plan as if this individual will also be applying for Medicaid benefits in the near future. Qualifying for Veterans benefits only to be ineligible for Medicaid down the line can create irreparable harm to a family.
Usually Veterans payments are counted as income for Medicaid eligibility purposes. The portion attributable to Aid and Attendance benefits, however, are specifically excluded from the definition of income.
Many planners are not aware that after eligibility, if the single veteran resides in a nursing home, the Aid and Attendance benefit is typically reduced to $90 payable directly to the veteran. A married veteran can keep their Aid & Attendance portion for maintenance of the spouse in the marital home.
Please contact our office at (954) 726-6602 for more information on Veterans benefits and Medicaid benefits for long term care and how we can help you.
To learn more about the eligibility requirements to be able to apply for these valuable benefits, Click Here to access my Priceless Primer, Consumer’s Guide to Medicaid, Veteran’s Benefits and Asset Protection for Long-Term Care Needs Planning. It’s absolutely FREE!
My staff and I work hard every day to ensure that our clients who are Veterans receive all of the benefits they’re entitled to receive. I appreciate the opportunity to give back by offering this free information to the people who it may benefit the most. I trust that you will find the information contained within to be both educational and timely. Don’t delay.
