VETERAN’S A&A: THE VA’S BEST KEPT SECRET FOR LONG-TERM CARE

By Colin B. May, Esquire
Estate Planning Attorney

This Veteran’s Day we show our respect for those who served our country and reflect on how we continue to honor their sacrifice.However, it is important to remember that like the rest of us, our veterans will require long-term care as they get older, and as we well know, the burden of providing this care can be quite expensive.What choices do we have in dealing with the costs of long-term care?In general, our options include: (1) paying for these expenses with our own resources; (2) utilizing products like long-term care insurance policies with long-term care riders; or (3) transferring certain assets in order to qualify for programs like Medicaid. Fortunately for our veterans, the story doesn’t have to end here. Let’s explore the Veteran’s Aid and Attendance Pension.

Who Qualifies?

The Veteran’s Pension is a benefit available to a veteran, a veteran’s surviving spouse, and a veteran’s dependents, when that veteran:

• Served on active duty with a military branch[1];
• Served for at least 90 consecutive days;
• Served one day during an eligible wartime period; and
• Received a discharge on terms other than dishonorably.

The “eligible wartime periods” include:

• World War I: April 6, 1917, through November 11, 1918, or, for those who served in Russia, April 1,1920. Service after November11, 1918, and before July 2, 1921, qualifies as wartime service if the veteran had any active service from April 6, 1917, through November 11, 1918.
• World War II: December 7, 1941, through December 31, 1946, extended to July 25, 1947, if continuous with service on or before December 31, 1946.
• Korean Conflict: June 27, 1950, through January 31, 1955. However, February 28, 1961, through May 7, 1975, for a veteran who served in the Republic of Vietnam during that period.
• Persian Gulf War: August 2, 1990, through a date to be prescribed by Presidential proclamation or law.

Do you fit the above criteria? Read on to see if this benefit is right for you or your family member.

What does the VA A&A Pension Cover?

The VA Aid and Attendance Pension is an enhancement to the basic VA Pension, disbursed as a cash payment available for expenses associated with long-term care. Unlike Medicaid, the VA Pension comes in the form of a payment to the veteran or surviving spouse that can be utilized even before an individual requires skilled nursing care. The VA will base the amount of the payment on a veteran and/or spouse’s income minus the cost of unreimbursed medical expenses, which may include the cost of assisted living care.[2] An individual may be eligible when unreimbursed medical expenses causes income to fall below a certain annual threshold, generally being $21,692 for a single or married veteran and $14,113 for a surviving spouse.[3] With the average cost of assisted living hovering around $43,000,[4] you can see how this can happen quickly.

Medical Eligibility 

In addition to the wartime service discussed above, a veteran or spouse must also demonstrate that they are medically eligible for this benefit. Fortunately, the VA has decided that a veteran or surviving spouse will be considered medically eligible upon reaching the age of 65 for the basic pension. In order to obtain the Aid and Attendance enhancement, a veteran or surviving spouse must also require the assistance of another individual in certain activities of daily life including bathing, feeding, and dressing. 

Income and Assets

As with Medicaid, the VA will consider a veteran or spouse’s income and assets to determine whether they are entitled to the pension benefit. While the old rules did not specify an asset limit per se, the Department of Veteran’s Affairs recently issued new guidance to clarify the issue.

The VA allows an applicant to have assets and annual income of less than $123,600[5], not including the residence or primary vehicle. Even if you do not currently fall below this threshold, there are a number of estate planning techniques to achieve eligibility for this benefit while also protecting your assets for the next generation.

Beware of the Transfer Rules

As of October 18, 2018, the VA imposed a “penalty period” for all transfers made within three years from the date of application.[6] In plain English, this means that transfers of certain assets from you to another person or entity (such as a Trust) will create a period of disqualification even if you would otherwise qualify. This period of disqualification will depend on the size of the transfer or transfers made, and may be quite substantial. As a result, it is always wise to begin this planning well before the emergence of a medical crisis and not to make transfers without considering the potential consequences. As the new transfer rules can be fraught with potential pitfalls, we never recommend attempting to transfer assets without the assistance of an attorney skilled in this area.

About Our Law Office

At the Estate Planning Centers at Coulter & May, P.C., we devote our practice to estate planning and assisting families through such transition times with estate and trust administration counseling. We offer guidance and advice to our clients in every area of estate planning, and offer comprehensive and personalized estate planning consultations. For more information or to attend an upcoming seminar or to book a consultation directly, please contact us at (412) 253-7526 or visit us online at www.estateplanningcenters.com.

Disclaimer: The information presented in this article is a conversational summary of a complex area of law and should not be construed to constitute legal advice. No person should rely upon the content of this article for making any decisions, and should instead consult with appropriate legal and tax professionals.