Little-Known Long-Term Care Benefit for Veterans

Update: In 2014 the Veterans Administration proposed new rules that would restrict significantly the number of veterans eligible for the Aid & Attendance benefits described in this post. Details of the proposed rules are described here.

In 2006 the Secretary of Veterans Affairs quietly issued a media release about an “underused, special monthly pension benefit called Aid and Attendance.” The benefit is a monthly cash payment to certain veterans and surviving spouses who need long-term care, including home care, assisted living, or nursing home care. Many who served in the military during wartime are entitled to the benefit, even if they aren’t eligible for a regular veterans’ pension or other benefits. The VA doesn’t publicize the benefit, apparently to avoid abuse and overuse. But it’s a real benefit for those who qualify.

You might not know about the program, but it’s not new. It’s been around for a long time. A recent study commissioned by the VA suggested only about one-fourth of eligible veterans nationwide, and about 17 percent of eligible widows, are participating.

“Aid & Attendance” is the military term for long-term care assistance. To be eligible for the benefit a doctor must certify that you require help with at least two of the activities of daily living. In other words, you need the aid and attendance of another person or residence in a care facility to live safely.

Unlike private insurance and other government programs, the VA program doesn’t reimburse your expenses. Instead, when you qualify you receive a monthly payment to be disbursed any way you want. For 2011, the maximum monthly Aid & Attendance benefit was $1,644 for a single veteran in 2011 and is $1,704 for 2012. It was $1,949 in 2011 and $2,020 for 2012 for a married veteran or a veteran with one dependent. An un-remarried surviving spouse could receive up to $1,057 in 2011 and $1,094 in 2012. Note that these are the maximum amounts. Multiplied by twelve these are called the Maximum Annual Pension Rate.

After determining you meet the service and health requirements, there are financial need requirements to pass. Your income and asset levels are examined to determine the amount, if any, of the monthly payment you’ll receive. Here’s where the benefit is a little tricky. The financial need tests are not as clear as for Medicaid and other federal programs.

Your net worth, or liquid assets, are the first test. Excluded from your assets are a residence, its contents, personal possessions, and an automobile. All your other assets are counted, such as bank and investment accounts, investment real estate, second homes, and business interests.

Unlike Medicaid, there’s no stated “look-back period” for the asset ownership. Under Medicaid, assets you gave away in the five years before applying are included in your net worth. Under the VA program, apparently you can give away or dispose of assets the day before filing the application for benefits, and those assets won’t be counted as yours.

But this test is imprecise, because the caseworker reviewing your application has discretion. There is no formal limit on the amount of assets you can own and be eligible for the benefit. Instead, it’s up to the caseworker who reviews your application to determine if your net worth is too high to qualify. The standard the reviewer uses is whether or not you’re likely to run out of money in your lifetime. People familiar with the program say caseworkers work with an informal asset limit of $80,000 (not counting a residence and the other excludable assets) but that it is flexible.

Also, while the program doesn’t have the look-back rule or detailed law that Medicaid does, caseworkers apparently can and will ask about assets given away and trusts the applicant funded.

The other financial test is income. Your “countable family income” includes the following income received by you and your dependents: earnings, disability and retirement payments, interest, dividends, and net income from a business. On the application, you report all income and payments you receive, and the VA excludes any that isn’t countable, such as public assistance payments.

Your countable income is reduced by unreimbursed medical expenses you paid for you and your dependents. Unreimbursed medical expenses include the cost of long-term care (including all payments to a nursing home or assisted living facility), health insurance premiums (including Medicare premiums), diabetic supplies, private caregivers, prescriptions, and dialysis. But only the portion of unreimbursed medical expenses that exceeds 5% of the Maximum Annual Pension Rate are deducted from the countable income.

Consider the case of a single veteran with no spouse or dependents. His annual countable income is $10,736, and he has no unreimbursed medical expenses for the year. The MAPR for him is $19,736. His benefit is calculated as $19,736 – $10,736 = $9,000. This will be received in $750 monthly payments. If his countable income exceeded $19,736 annually or $1,645 monthly and he didn’t have any deductible medical expenses, he won’t be eligible for any benefit.

Suppose the eligible veteran had annual income of $30,000 but unreimbursed medical expenses of $20,000. He first computes 5% of the MAPR, which is $986.80. Subtracting that from the $20,000 of medical expenses gives a total of $19,013.20 of unreimbursed medical expenses to be subtracted from the income. The result is $10,986.80 of countable income. This veteran would receive a benefit of $8,749.20 or $729.10 monthly.

Here are a few key points to remember. The benefit is referred to as a pension, though it is triggered by the need for long-term care. You can be eligible for this pension benefit even if you aren’t eligible for any other veteran pension. The income calculation is done every year to determine the amount an eligible veteran will receive. Also, the long-term care cost (whether at-home care, assisted living, or a nursing home) is a medical expense that is subtracted from countable income when the expense isn’t reimbursed. So, as in the last example you might be ineligible for the benefit the year before needing long-term care but be eligible for a full or partial benefit when you need long-term care.

You can’t apply for the benefit until you’re actually receiving long-term care. It also can take the VA an average of six months to process the application. So, if you plan to give assets away or place them in a trust to meet the asset requirement, keep enough to pay at least six months of care. If you’re eligible, the VA will pay the benefits retroactive to the day you first needed the care. When you’re eligible for Aid & Attendance you also might qualify for full veterans’ medical benefits.

Applications are reviewed and the program is administered by the VA’s regional offices. I called the VA national information telephone number with questions and was referred to the regional offices. You can download the application from the web at www.va.gov (VA Form 21-526 for vets and Form 21-534 for surviving spouses). Then, complete it and mail it to your regional VA office.

There are local veterans organizations that know about the program and will assist vets with the process. They usually will charge a fee to help with the application. There also are Veterans Service Officers around the country who help and can be found on the VA web site.

Of course, there are lawyers and other professionals who would like to help you. They charge a few thousand dollars, depending on the area of the country. I’ve read indications that federal law doesn’t allow a person to charge more than a minimal amount to help process the benefits application, so the lawyers actually will be charging you for creating trusts, helping with your estate plan, and other tasks.

My suggestion is that you contact local veterans’ organizations first as well as your local Area Office on Aging. If those sources aren’t helpful with either information or referrals, then it’s time to seek out a local elder care lawyer or lawyer specializing in A&A.