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VA Benefits for Aid and Attendance: An Introduction
By Dallas Leigh Atkins, Esq.
Many or most of our aging clients in their seventies or eighties are veterans of the Korean War or World War II or the surviving spouse of a veteran who served during these wars. These clients and others who have served at least one day during any U.S. wartime and 90 days altogether may qualify for a non–service connected pension from the VA. To qualify for a "non–service connected pension," the veteran does not need to have a disability related to the military service. Aid and Attendance falls under this group of benefits for which no military injury is required. In contrast, to qualify for service–connected compensation, the vet must have a military disability rating stemming from a military service injury or illness.
The basic non–service connected pension is comparable to SSI with a maximum benefit of up to $985 per month with no dependent spouse or child, or $1,291 with one dependent. If the veteran is housebound or needs ongoing assistance with activities of daily living or supervision due to cognitive impairment, then he or she may qualify for a higher benefit. Housebound benefits for the vet are up to $1,204 with no dependents or $1,510 with a dependent. Aid and Attendance benefits for the vet are up to $1,644 with no dependents or $1,949 with a dependent, and $168 per month for each additional dependent. Married vets (both spouses are vets) could qualify for up to $2,540 per month for Aid and Attendance.
The surviving spouse with no dependent child can qualify for up to $661 for death pension, $808 if housebound, or $1,056 if in need of aid and attendance. These rates are $168 per month more for each dependent child.
These pension benefits can give the financial boost to pay for care at home, in assisted living, or even in a nursing home. Pension benefits will further qualify the beneficiary for VA health benefits, such as free prescription drugs. A SNF resident who has Medi–Cal will be able to keep only $90 per month of the Aid and Attendance benefit, the rest of which goes towards Share of Cost, but $90 surpasses the $35 personal needs allowance normally allowed for Medi–Cal LTC beneficiaries.
VA non–service connected pensions and the additional health benefits are under–utilized because of lack of awareness that these benefits exist or misunderstanding eligibility requirements. To screen for clients who may qualify for these benefits, you need to know the basics, even if you do not want to learn yet another quirky area of law. There are three hurdles to clear—medical needs or age, net income, and assets as compared to net income and life expectancy.
Medical qualification: The vet must be permanently and totally disabled (with a disability rating from the VA or Social Security or otherwise proven) to receive the benefit. Amazingly, all vets who are age 65 or over are considered automatically to be permanently and totally disabled, even if they are not. Surviving spouses do not have to meet this disability or age requirement for death pensions. For the benefits exceeding the basic pension, "housebound" means the vet or surviving spouse cannot leave home unattended, or leaves unattended only for medical appointments. The need for "regular aid and attendance" means ongoing assistance with activities of daily living or supervision due to cognitive impairment, as prescribed by a physician.
Income qualification: To qualify, the annual gross household income minus exclusions for the veteran or the surviving spouse must be less than the Maximum Annual Pension Rate (MAPR) for the category of application (basic pension, housebound, or aid and attendance; no dependent or with one or more dependents; and veteran’s application or surviving spouse application). To determine whether this test is met, the income of the household is discounted by unreimbursed medical expenses, or UMEs. UMEs are the medical and care expenses of the vet and the vet’s dependents in the month of application that are expected to occur every month over the next 12 months. Before applying this UME discount, the annualized UMEs are first reduced by 5% of the Maximum Annual Benefit Rate for the basic pension for the applicant. Example: If the gross income of a single vet is $72,000 per year, and his medical and care expenses total $60,000 per year, then his income for VA purposes is $72,000 minus $59,908 ($60,000 minus $592, which is 5% of the MAPR of $11,830 for the basic pension for a single vet), with a net adjusted income of $12,092 per year. Since $12,902 is less than the MAPR of $19,736 for a single vet with aid and attendance, the vet has passed the income test. If he qualifies under the net worth test below, his annual benefit would be the MAPR of $19,736 minus his adjusted income of $12,902, or $6,834 per year, plus VA health benefits.
Asset qualification or net worth: You may have heard the misinformation that a married vet can have $80,000 and a single vet can have $50,000 in countable assets. Not true. While it is true that a supervisor’s review will be required if the total net assets exceed $80,000, unlike Medi–Cal, there is not a set limit to the net worth that a vet can have. A vet and the spouse can have less than these figures and still not qualify, or more than these amounts and still qualify.
Net worth is a subjective determination by the VA representative. The VA seeks to determine whether the countable assets of the veteran and spouse are "such that under all the circumstances, including consideration of the annual income of the veteran, the veteran’s spouse, and the veteran’s [dependent] children, it is reasonable that some part of the corpus of such estates be consumed for the veteran’s maintenance." CFR Chapter 38, Section 3.274(a). The factors that will be considered are income, whether the property can be readily converted into cash at no substantial sacrifice, life expectancy, number of dependents, potential rate of depletion, including unusual medical expenses of the claimant and claimant’s dependents. Certain income sources are exempt.
There are a few delightful surprises of planning for VA non–service connected pensions and housebound or aid and attendance benefits. For instance, there are no penalties for gifting so long as control is fully released; and adding joint tenants who are not household members to countable assets can reduce the claimant’s ownership interest proportionately even if the claimant originally owned all of the property. An unhappy asset rule is that retirement accounts are countable, but there appears to be an unwritten practice of exempting an IRA that is annuitized under the VA interpretation, not necessarily the same as paying out RMDs. The claimant’s primary home (and the contents) with a reasonable lot area and one vehicle are exempt. Personal care contracts, gifts, irrevocable trusts, and other planning techniques are common in VA benefits planning to divest the claimant of assets, but VA planners must be vigilant not to disqualify a client from future Medi–Cal benefits while making the client eligible for VA non–service connected benefits. The rules for the two programs are different, and sometimes conflicting.
Most VA Aid and Attendance practitioners agree that you can charge for pre–application VA benefits planning (so long as it is to determine eligibility or to make and implement a plan for eligibility for future VA benefits, and hopefully for future Medi–Cal benefits) and for an appeal from an unfavorable decision. No attorney or other person can charge for doing the application itself or the Notice of Disagreement, a short form that starts an appeal. You must be accredited by the VA to be an authorized representative, which is simple and speedy to achieve by filling out a short form (VA 21a) confirming that you are in good standing with the state bar and sending it to the VA. Three hours of VA CLEs are required per year to maintain accreditation.
Like Medi–Cal practice, VA Aid and Attendance practice is its own universe of complex, sometimes irrational, nitpicky, or hidden rules. The VA is a far cry from a user–friendly bureaucracy. If you want to go beyond the basics and add this complementary area to your Medi–Cal practice, I cannot recommend highly enough that you get comprehensive, specialized training and software. This will require an investment of your time, effort, and money. I will be happy to share the contact information for the state–of–the–art training, software, and the list serve options I have found to be essential to my practice if you email me through the CANHR list serve or at Dallas@AtkinsElderCareLaw.com. And thanks to Gene Osofsky for his useful editing comments.
(Dallas Leigh Atkins is an attorney in private practice in Santa Barbara, CA)