Submitted by Richard R. Roller of Pearson Bollman Law
The Department of Veterans Affairs (VA) released new eligibility rules for the VA pension program (often referred to as “Aid and Attendance”), effective October 18, 2018. The VA pension is a tax-free monthly cash benefit for eligible wartime veterans and surviving spouses.
What is Aid & Attendance?
The Aid and Attendance (A&A) pension provides benefits for veterans and surviving spouses who require the regular attendance of another person that is medically necessary, that improve a disabled individual’s functioning, or that prevent, slow, or ease an individual’s functional decline. It also includes individuals who are blind or a patient in a nursing home because of mental or physical incapacity. Care in an assisted living facility, or nursing home qualifies. In-home care also qualifies as long as health care or custodial care is provided.
Who is eligible for Aid & Attendance?
To be eligible, the veteran must have served in active duty at least 90 days, including at least one day during “wartime,” and has been discharged honorably. Service in combat is not required. A service- connected disability is not required. In addition, the applicant must meet a Medical Needs Test, and an Income and Asset Test. The wartime service periods are as follows:
• WWII 12/7/1941 through 12/31/1946
• Korean Conflict 6/27/1950 through 1/31/1955
• Vietnam 8/5/1964 through 5/7/1975 (back to 2/28/1962 if time served in Vietnam)
• Gulf Wars 8/2/1990 through current
What is the monthly benefit?
The A&A Pension can provide up to $1,830 per month to a veteran, $1,176 per month to a surviving spouse, or $2,169 per month to a couple.
What is the Medical Needs Test?
Some of the medical conditions that can qualify an individual for this benefit include those that result in need for assistance with the following: dressing or undressing, bathing, other hygienic needs, attending to the wants of nature, ambulating within the living area, eating, adjustment of any special prosthetic orthopedic device, being legally blind in both eyes, or any physical or mental incapacity that requires ongoing supervision and assistance to ensure safety and wellbeing. Additionally, independent living activities, such as shopping, food preparation, housekeeping, laundering, managing finances, handling medications, using the telephone, and transportation for non-medical purposes can also qualify so long as they are medically necessary, improve a disabled individual’s functioning, or prevent, slow, or ease an individual’s functional decline.
What is the Asset / Income Test?
On October 18, 2018, the VA amended its qualification rules and provided a clear, but complicated, formula to determine eligibility based on an applicant’s income and assets. The new rule, simply stated, is that the combined net annual income and assets of an applicant must be below $123,600. Qualification is determined using the following method:
First: An applicant’s net annual income is calculated by subtracting qualifying expenses from the applicant’s gross income. Qualifying expenses include, but are not limited to, unreimbursed medical expenses, Medicare Part B Premiums, and the cost of home care or assisted living care. For example, If an applicant has $2,000 in monthly income, but is paying a total of $1,500 for home health care and Part B premiums, the applicant’s net monthly income is $500, and net annual income is $6,000.
Second: This net monthly income amount is added to the applicant’s non-exempt assets. An applicant’s home, one vehicle, personal property, and prepaid funeral planning are considered exempt assets and do not count towards an applicant’s assets. Non-exempt assets include, but are not limited to, checking and savings accounts, investments, real estate that is not an applicant’s primary residence, and multiple vehicles. For example, if an applicant owns a home worth $150,000, a car worth $10,000, a checking account worth $10,000 and a CD worth $80,000, their non-exempt assets would total $90,000.
When the applicant’s annual income of $6,000 is added to their non-exempt assets of $90,000, their combined income and assets total $96,000, which is less than the limit of $123,600. In this situation, the applicant would qualify for Aid and Attendance benefits.
What about gifts or transfers?
In addition to the changes noted above, the VA has introduced a 36-month lookback period for transactions for less than fair market value (gifts). If an applicant is interested in creating a Veterans Asset Protection Trust in order to reduce their countable assets to qualify for Aid and Attendance, it now must be completed 36 months prior to application. Transfers completed prior to October 18, 2018 will still count as reductions to assets.
Where do I start?
The VA pension program can be a huge financial benefit to wartime veterans or surviving spouses of wartime veterans. It is a benefit that is often overlooked. With proper planning, eligibility may be attained sooner than without planning. Pearson Bollman Law specializes in analyzing your medical needs, income, and assets to develop a plan in order to qualify you for this well-deserved benefit.
Pearson Bollman Law helps families plan for long term care. If you have any questions or would like to register for one of our workshops on “Asset Protection for Iowa Seniors,” please feel free to contact Richard Roller at 563-355-8345.