Eligible veterans of the United States Armed Forces can receive pension benefits from the U.S. Department of Veterans Affairs (VA). Veterans who need additional care may be able to receive further benefits through the VA Aid and Attendance program. The VA modified the rules for the Aid and Attendance program last year. Much like Medicaid, Aid and Attendance is a means-tested program. In order to qualify for benefits, a veteran must be able to show financial need. The new rule added requirements for net worth, a lookback period for asset transfers, and changes to the treatment of certain medical expenses. Unlike Medicaid, which operates through both state and federal agencies, these rules apply nationwide at the federal level. The VA administers these programs mostly the same way in Michigan as in any other state. Medicaid planning has some similarities to planning for VA Aid and Attendance benefits, but also some significant differences.

What Is a VA Pension?

The VA Pension program provides monthly benefit payments to wartime veterans who meet qualifications regarding age, disability, income, and dates of military service. Since the Aid and Attendance program supplements VA Pension benefits, it is worth reviewing the major eligibility requirements for VA Pensions:

• Age or Disability: A veteran must be 65 years old or older; or they must be permanently disabled, residing in a long-term nursing care facility because of a disability, or receiving disability benefits from the Social Security Administration.
• Income and Net Worth: A veteran’s household income and net worth must be below levels established by Congress.
• Discharge from Military Service: A veteran must not have received a dishonorable discharge.
• Dates of Service: A veteran must have served a minimum amount of time on active duty in the military, often with a minimum amount of time spent on active duty during “wartime.”

The wartime service requirement does not mean that a veteran must have seen combat to qualify for a VA Pension. It only means that they must have served on active duty during specific periods of time declared by Congress or the White House to be “wartime.” According to the VA, six time periods currently qualify as wartime for pension eligibility purposes:

• Mexican Border period (1916-17);
• World War I (1917-18);
• World War II (1941-46);
• Korean conflict (1950-55);
• Vietnam War (1961-75 or 1964-75, depending on the location of service); and
• Gulf War (1990 to a date not yet set).

What Is VA Aid and Attendance?

The Aid and Attendance Benefit is available to eligible VA Pension recipients and their surviving spouse. The main criteria, other than the means-tested criteria, involve a veteran’s need for ongoing assistance. A veteran must demonstrate one of four conditions:

• They cannot perform daily functions like eating, bathing, or dressing without assistance;
• They are confined to bed for all or a substantial part of each day due to illness;
• They reside in a nursing home because of a disability that impairs their ability to perform daily tasks; or
• Their eyesight is below certain standards, including vision of no better than 5/200 with corrective lenses.

The program provides additional benefits on top of the VA Pension. A related program administered by the VA, known as the Housebound Benefits program, also supplements VA Pension income. It is available to VA Pension beneficiaries with permanent disabilities that require them to spend most of their time at home. These benefits are also known as VA Improved Pensions.

New Aid and Attendance Rules

The VA published its new rule in the Federal Register on September 18, 2018. It took effect a month later, on October 18. The rule addresses multiple needs-based VA programs, but much of the focus is on Aid and Attendance. It adds several forms of means testing to the Aid and Attendance program:

• Net worth limits: The rule sets an eligibility cap on net worth, which includes annual gross household income, but excludes the primary residence and various items of personal property. It also excludes deductible medical expenses, to be discussed below.
• Asset transfer penalties: The rule penalizes veterans for every $2,169 that they give away or transfer to an annuity or trust, except for a trust established to provide care for a disabled child.
• Lookback period: The transfer penalties described above apply to any transfer made in the three years, or thirty-six months, preceding the application for benefits.
• Deductible medical expenses: Unreimbursed medical expenses are not included in net worth calculations, but the new rule limits the kinds of expenses that may count as deductible.

The net worth limit is set at the maximum Medicaid community spouse resource allowance (CRSA). This is the benchmark used in eligibility decisions in Medicaid planning when one spouse requires long-term nursing care, and the other spouse remains in the community. These are financial limits to ensure the community spouse is not left impoverished. The maximum CRSA for 2019 is $126,420. While Medicaid only uses the CRSA when an applicant is married and the other spouse does not need Medicaid, the VA uses it for all applicants. This number is applied to the household, not individual spouses, meaning a married applicant cannot have more than $126,420 in net worth between the couple, whereas a single applicant cannot have more than that same number but only their net worth is counted.

Estate planning and elder law attorney Rebecca J. Braun practices in Southeast Michigan with Mobile Legal Services, PLLC. If you have questions about estate planning and Medicaid eligibility, she is available to help. She will travel, free of charge, to clients in Oakland, Washtenaw, Wayne, Livingston, and Southern Macomb Counties. Please contact us today to schedule an initial assessment.