Suffolk County, NY Probate & Estate Administration Law Blog

Veterans Pension Benefits and Medicaid Eligibility

Both the VA and Medicaid offer significant pension and healthcare benefits to veterans and/or their spouses, that have income and asset eligibility requirements. For eligibility purposes, Medicaid only considers income that is available to the applicant, while the VA counts the income of  the entire household. Unlike the VA, Medicaid permits "spousal refusal". Once spousal refusal is asserted, the refusing spouse's income cannot be deemed to be available to the applicant spouse.  If an individual applicant's income exceeds the allowable level, the applicant can transfer his or her excess income to a pooled income trust.

Briefly, the VA generally requires  the claimant have no more than $80,000 in assets, excluding the personal residence.  For property over that limit, it is possible to utilize Medicaid qualifying trusts for eligibility for VA pension in addition to using them to preserve assets when planning for Medicaid eligibility.

 The VA will not count an asset unless: (1) it is actually owned by the claimant; (2) the claimant possesses such control over the property that the claimant may direct it to be used for his or her benefit; or (3) the funds have actually been allocated for the claimant's use. On the other hand, NYS Medicaid counts resources as cash or other property that can be readily converted to cash, excludes the personal residence in a community case, and has a present resource cap of $13,800. Assets in an irrevocable are not counted for community care.

NY does not have a look-back period when applying for community Medicaid. Similar to Community Medicaid, the VA does not employ a "look-back" period. The claimant must be aware of the interplay between VA and nursing home Medicaid benefits, similar to the interplay between transfers to qualify for community Medicaid and transfers within the five year look-back period when applying for nursing home Medicaid.

Medicaid excludes from eligibility and post-eligibility income determinations the following: (1.) The portion of the VA pension that constitutes Unreimbursed Medical Expenses (UMEs); and (2.) The portion of the VA pension that constitutes Housebound or Aid and Attendance enhancements. Also, for nursing home claimants on Medicaid, the reduced (limited) $90 VA pension is disregarded.

Caveat - This reduction does not apply to claimants who are receiving care in NYS Veterans Homes. Pension beneficiaries who are living in a State Veterans Home are exempt from this reduction. This exemption allows the qualifying veteran to receive his or her full pension award.

HOw can a veteran or the spouse of a deceased veteran receive both Medicaid and the VA pension? Let's look at an example where the veteran has an annual income of $36,000. On its face, his income would disqualify him for both Medicaid and a VA pension. For VA pension eligibility purposes, the Maximum Annual Pension Rate ("MAPR") used by the VA for a single veteran is $11,830. The MAPR means a claimant cannot have income exceeding that rate and be pension-eligible. However, the VA allows claimants to deduct certain unreimbursed medical expenses from the MAPR, like caregiver agreement payments to children, or Medicare premiums. Special financial enhancements are added to the pension for greater disability. If the claimant is "housebound" and is "substantially confined to the home or immediate premises due to a disability which is reasonably certain will remain throughout his lifetime", he is entitled to an allowance paid over and above the MAPR service pension rate. This would raise the pension rate to $14,457. Or, if the claimant is "so helpless that he requires the aid of another person to perform the personal functions required in everyday living, or is in a nursing home, or blind", he will qualify for an allowance paid over and above the basic pension or housebound allowance. This allowance is called Aid & Attendance. The present A & A rate would bring the MAPR up to $19,736.