Using Medicaid and VA Pension for Nursing Home Costs

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Nursing Home costs continue to rise and long-term and short-term rules for eligibility will continue to change for related benefit programs. When the time arises for a loved one's placement in a nursing home, whether it is for a short- or long-term stay, it is best to gather as much information as possible so that the decision will be an informed one that is best for the potential resident.

A veteran (or surviving spouse) who is receiving VA "pension" payments will quickly realize that their monthly stipend is not enough to cover the full cost of care in a nursing home. That is because the maximum monthly VA benefit amount in 2017 (basic pension plus Aid & Attendance) is approximately

  • $2,127 for a married veteran and
  • $1,794 for a single veteran.

The average cost of a nursing home in the U.S. is now over $7,500 a month. However, the qualifying processes and parameters will continue to change.

According to American Veterans Aid, “The Department of Veteran Affairs offers a special benefit to war era veterans and their surviving spouses called Aid and Attendance. This is a tax-free benefit designed to provide financial assistance to help cover the cost of long term care in the home, in an assisted living facility or in a nursing home.”

Veterans who are eligible for Aid and Attendance:

  • Must have served at least 90 days of active duty with at least one day during a recognized period of war;
  • Must have anything other than a dishonorable discharge;
  • Must require the assistance of another person to perform some of the daily activities of living;
  • Must meet income and countable asset criteria established by the VA;
  • Must be at least 65 years old or totally disabled; and
  • A surviving spouse must have been married at the time of the eligible veteran's passing.

Should the veteran in the nursing home qualify for Medicaid, however, they will be happy to find out that Medicaid will pay the entire difference between their income and the cost of the nursing home.

Based on the above, it would appear pointless for a veteran who qualifies for Medicaid to also apply for VA pension if they are already in a nursing home or will need to move to one shortly. After all, Medicaid will pay the nursing home bill regardless of whether they are receiving VA pension. Nevertheless, Medicaid rules require that Medicaid applicants also apply for VA benefits (if they are entitled to them) as a condition of receiving Medicaid benefits. Learn more about qualifying for Medicaid to pay for long-term care.

There are also situations where the pension income would be helpful. For example, if a veteran is in a nursing home and has a spouse living at home who has very little income of their own, it would be possible for the veteran to shift a portion of their pension to the at-home spouse and still qualify for Medicaid.

Another example where the pension might be useful is when a veteran has made a gift that results in a penalty period during which Medicaid will not pay any benefits. During this time, the VA pension can help defray the cost of paying the nursing home privately until the penalty period has expired. Visit the federal register of articles to find out more about the current penalty and look-back periods, considerations for asset transfers, and information regarding the Maximum Allowable Pension Rates (MAPR).

Because of the income limitations of the Medicaid program, it appears at first that the amount of VA pension could disqualify a veteran from receiving Medicaid coverage in the nursing home by putting them "over income."

However, various state rules either allow for that income to be put into a simple trust to pay the nursing home bill, or allow that income to pay down the nursing home bill before Medicaid comes in to pay the rest of the balance. So, as a practical matter, a VA pension will not disqualify the applicant from receiving Medicaid coverage in a nursing home.

Note that, for a veteran with no spouse or child, any VA pension to which they are entitled will be reduced to $90 once they enter a nursing home and qualify for Medicaid. That $90 does not have to go to the nursing home, though, and can be added to their "personal needs allowance" (between $35 and $90, depending on the state) and used for personal expenses.

Because of the ever-changing nature of these governmental programs, preplanning is becoming more and more important. It is wise to seek professional help with Medicaid and VA planning strategies and applications.

K. Gabriel Heiser is an attorney with over 25 years of experience in elder law and estate planning. He is the author of "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets," an annually updated practical guide for the layperson.

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7 Comments

how does it affect the spouse that depends on the VA pension along with our SSI?
In the second to last paragraph: "Note that for a veteran...." The application to Medicaid contains the full VA pension amount, since it would not be reduced until after approval. If this portion of the income puts the Vet over the income limit at the time of application should a QIT be set up even though the amount will decrease after approval and then be within the income limit?
I'm also questioning the second to the last paragraph's language, which states "The $90 does not have to go to the nursing home," whereas the VA’s own guidelines are more adamant: “No part of the $90 monthly Improved Pensifon may be used to reduce the amount of Medicaid paid to a nursing facility.” The guidelines, based on regulations at 38 CFR 3.551(i), derive from 38 USC 5503(d) and are, therefore, Federal law.