Income Requirements.

In order to be eligible to receive any of the non-service connected pensions, the veteran must meet income and net worth requirements.

First, the annual maximum pension amount is decreased, dollar for dollar, by the veteran’s countable income. Income that is countable is generally defined as:  all the veteran’s income, including that of any dependents, minus unreimbursed medical expenses.

Unreimbursed medical expenses include doctor’s fees, dentist’s fees, prescription glasses, Medicare premiums and co-payments, prescriptions, insurance premiums, transportation to physicians’ offices, and the costs of assisted living facilities or in-home aides.

For example, if a veteran has $20,000 in income and $10,000 in unreimbursed medical expenses, their countable income is $10,000. This $10,000 countable income is deducted from the Maximum Annual Pension Rate (MAPR) of $11,830 for a benefit of $1,830. (This example assumes that the veteran has no spouse or child.)

The other MAPR categories and corresponding dollar amounts are as follows: With One Dependent, $15,493; Housebound Without Dependents. $14,457;  Housebound With One Dependent, $18,120.

Here’s another example. Suppose the veteran is in a nursing home (and therefore qualifies for the additional pension for aid and attendance) and has an income of $50,000. If their unreimbursed medical expense for the nursing home is $5,000 per month, or $60,000, the veteran’s countable income is negative $10,000. Any negative income is counted as an income of zero.

In this case, the veteran will be eligible for the monthly maximum Special Monthly Pension for Aid and Attendance of $19,736. This amount is the MAPR for “A & A Without Dependents.” In the category “A&A With One Dependent,” the amount is $23,396.

What about net worth?

Here’s what the VA has to say about this issue:

“Net worth means the net value of the assets of the veteran and his or her dependents.   It includes such assets as bank accounts, stocks, bonds, mutual funds and any property other than the veteran’s residence and a reasonable lot area.    There is no set limit on how much net worth a veteran and his dependents can have, but net worth cannot be excessive.    The decision as to whether a claimant’s net worth is excessive depends on the facts of each individual case.   All net worth should be reported and VA will determine if a claimant’s assets are sufficiently large that the claimant could live off these assets for a reasonable period of time.   VA’s needs-based programs are not intended to protect substantial assets or build up an estate for the benefit of heirs.”

As you can see, the VA has not specifically defined “excessive” net worth. However, a general guide is that the veteran must have a general net worth lower than $50,000 if single or $80,000 if married.

In the previous post, we talked about the service-connected disability compensation.  Another veterans benefit that is important for seniors to know is the Non-Service-Connected Disability Pension.

A  pension is a benefit for veterans with low incomes who are permanently and totally disabled, when that disability is not related to military service. This is sometimes referred to as a “Special Monthly Pension” (or sometimes an “Improved Pension”).

A veteran will be considered permanently and totally disabled if they are:

1) a patient in a nursing home for long term care because of a disability

2) receiving Social Security disability benefits

3) unemployable as a result of a disability that is reasonably certain to continue throughout their life, or

4) suffering from a disease or disorder that renders them permanently disabled as determined by the Secretary of the Department of Veterans Affairs.

Currently, the maximum disability pension rate for a veteran with no dependents is $11,830, or $985 per month. The rate for a veteran with one dependent, or for two veterans marriedd to each other is $15,493, or $1,291 per month. Each additional dependent child adds $2,020, or $168 per month, to the pension.

(It should be noted that the Aid and Attendance benefit is paid in addition to the basic pension rate.)

Eligibility.

Veterans who satisfy all of the following four conditions may be eligible:

1) You were discharged from service under conditions other than dishonorable.

2) You served at least 90 days of active military service 1 day of which was during a war time period.

3) Your countable family income is below a yearly limit set by law.  “Countable income,” for VA pension eligibility purposes, includes earnings, disability and retirement payments, interest and dividends, and net income from farming or business.

4) You are 65 or older, or, you are permanently and totally disabled, not due to your own willful misconduct.

Calculation of Pension Benefit.

The annual pension is calculated by first getting a total of one’s countable income. Any applicable deductions are then subtracted from this total. The remaining countable income is deducted from the appropriate annual pension limit which is determined by the number of dependents, if any, and whether or not you are entitled to housebound or aid & attendance benefits. This amount is then divided by 12 and rounded down to the nearest dollar. This is the monthly pension amount.

Part of the complexity of  this calculation has to do with understanding  the exclusions to income or deductions that may be made to reduce countable income, which in turn can increase the amount of monthly benefit received.

If you need to obtain more information about this topic, don’t hesitate to call our office at (562) 920-6100. We’re here to help. Ask for Sean McGuire, our Veterans Benefits expert…

We have talked about the VA Aid & Attendance Pension benefits program in previous posts. Recently, there have been numerous clarification questions submitted to us by seminar (and webinar) attendees about other benefits offered by the VA.

There are indeed many types of VA benefits available to veterans through the Veterans Administration for things such as education, life insurance, health care, home loans, and burial benefits. The two major categories of benefits, however, are compensation and pension.

Service-Connected Disability Compensation.

Compensation is a benefit that veterans receive when he/she has a disability caused by, or exacerbated by, military service. Disability compensation is available to a qualified veteran regardless of their level of income. Once a veteran can show that they are disabled because of their military service, their level of disability is rated by the Veterans Administration (for example, 20% disabled) and the amount of compensation paid depends on the rating assigned.

A veteran can apply for increases in the percent rating if the condition worsens. A rating of 100% disabled will qualify the veteran for special monthly compensation that could be more than double the normal benefit. For 2010, monthly compensation payments ranged from $123 for a veteran with no dependents and a 10% disability rating, to $2,823 for a veteran with a spouse and a 100% disability rating.

Dependency and Indemnity Compensation (DIC).

DIC is a monthly benefit paid to eligible survivors of a:

a) Military service member who died while on active duty, or

b) Veteran whose death resulted from a service-related injury or disease, or

c) Veteran whose death resulted from a non service-related injury or disease, and who was receiving, or was entitled to receive, VA compensation for service-connected disability that was rated as 100% disabling.

The last provision will hold if it satisfies one of  following three conditions: (1) that the veteran was disabled at least ten years immediately before death, or (2) since the veteran’s release from active duty and for at least five years immediately preceding death, or (3) for at least one year  before death if the veteran was a former prisoner of war who died after September 30, 1999.

Eligible survivors include spouses who have not remarried, and unmarried children under 18 years of age.

In the previous post, we discussed sources of help that veterans and their spouses can turn to for filing benefits claims to the Veterans Administration.

One common source of information regarding the pension benefit comes from annuity salespeople who often offer to consult with veterans and their families for free. This “free” offer is based on the strategy of counseling the veteran to meet the asset and income limitations of the benefit by buying an annuity and giving away their assets to their children. The offer is that the annuity sales organization will assist the veteran in filing for the benefit claim. Some even promise to provide any necessary estate planning at no charge.

The real situation is that the annuity salesperson is being compensated by the annuity company for  selling a financial product to the veteran. This is not to say that an annuity per se is automatically the wrong decision for a senior to get involved in. It can be a beneficial decision, or an inappropriate one. It really depends on the actual facts and specific circumstances of the senior’s financial and life situation. The bottom line is that seeking independent professional advice is the most prudent way to approach a major decision like this.

There is another important factor that one must consider when trying to meet the VA asset limitation test. Giving away cash or other things of value can create big problems for the senior if and when they later need to apply for Medi-Cal (Medicaid in other states) for assistance in covering the cost of long term care such as skilled nursing home care. Giving away assets can create a long penalty period of ineligibility for Medi-Cal benefits. Any senior facing long-term care needs to seek capable legal advice from an attorney who is skilled in the areas of estate planning, financial planning options, Medi-Cal, Medicare, income tax, and gift tax — as well as having experience regarding VA rules.

The important question for many families will be, “What will it cost to seek professional advice in this area?” An attorney who chooses to file a claim for veterans benefits must do that portion of the work for free. However, the attorney may charge professional fees for specific work related to estate planning, financial planning options, Medi-Cal, Medicare, income tax, or gift tax work, as well as the determination of the financial suitability of filing for a veterans benefit claim.

One should really examine the costs versus benefits of the options available to the senior when seeking VA benefits: (a) doing the filing yourself, (b) asking a sales person for “free advice,” or (c) engaging the services of a competent and experienced professional and advocate who knows the issues and help you navigate the legal and bureaucratic landscape of long term care. Qualification for a VA benefit is only one of several concerns that must be considered in planning for a senior’s safety and well being.