As Congress and the President debate putting limits on Medicare and Medicaid, new restrictions are also being placed on Veterans benefits.
The Department of Veterans Affairs (VA) provides a wide array of benefits for America’s veterans. Claimants must meet both general eligibility and specific entitlement criteria for the particular VA benefit. Qualification rules differ with the program. Most of Pennsylvania’s 1.12 million veterans are eligible for at least some VA benefits.
VA benefits that can be of significant value to older veterans (and their surviving spouses) include: health benefits; disability-based compensation benefits; and needs-based pension benefits.
A number of studies have shown that a majority of older veterans are unaware of many of the benefits for which they may be eligible. Many veterans who are over age 65 are completely unaware that they might be eligible for VA pension benefits.
But knowledge of the pension program has been increasing recently through the efforts of elder law attorneys, assisted living facilities, and others. This has contributed to an increase in the use of the pension program by older veterans, especially those who are looking for ways to finance their health and long-term care needs.
How VA Pension Benefits Work
To qualify for pension the veteran must be 65 years or older or permanently and totally disabled for reasons not related to military service (i.e. a non-service-connected disability). In addition, the veteran must have low income and limited net worth.
Pension can provide additional income so that an older veteran can pay for critically needed health and long-term care services. It can mean that the veteran can stay at home and not be institutionalized. Or it can help pay for care at an assisted living facility. It can also provide needs-based income to the surviving spouse of a deceased veteran.
To receive a pension benefit a veteran must have countable income which is below the maximum annual pension rate (MAPR). If a qualified veteran’s net countable income for VA purposes is below the MAPR, and the veteran has limited net worth, he or she should be eligible for a monthly pension allowance. Assuming the veteran is aware of the benefit and applies for it, the VA will award monthly cash payments in an amount necessary to bring the veteran’s countable income up to the monthly pension allowance.
Unreimbursed medical expenses can be deductible – which means they reduce the veteran's countable income. Older veterans who would not previously have qualified for an award may become eligible when they encounter increased medical and long term care expenses. This makes the VA’s definition of a deductible medical expense critically important to veterans seeking pension.
Click here to see an example of the pension calculation.
New Limitations on Pension
Recently, VA has changed its policy in a way that limits the pension awards available to veterans who are receiving care in senior and independent living facilities. Issued as a “clarification” of policy, VA Fast Letter 12-23 limits the unreimbursed medical expenses (UMEs) that may be deducted from income for pension purposes - specifically in regard to the cost of room and board at a facility.
Fast Letter 12-23 discusses the circumstances under which the cost of room and board paid to senior or independent living facilities will be treated as a UME. It suggests that in some past cases the VA has been too generous in allowing veterans to deduct such room and board costs. The Fast Letter concludes that room and board is only a deductible UME when the facility provides custodial care.
Custodial care is care that assists persons with the activities of daily living (ADL). As defined in VA regulations, ADLs involve basic self-care and include bathing or showering, dressing, eating, getting in or out of bed or a chair, and using the toilet. The Fast Letter notes that “[t]o preserve the integrity of the pension program, VA considers a facility to provide custodial care if it assists an individual with two or more ADLs.” [My translation: “to preserve the integrity of pension program” means “to save money.”]
The Fast Letter directs that, in the future, VA will interpret its pension regulations as follows:
- The cost of room and board at a residential facility is a UME if the facility provides custodial care to the individual, or the individual's physician states in writing that the claimant must reside in that facility to separately contract for custodial care with a third-party provider.
- A facility provides custodial care if it assists the individual with two or more ADLs.
- If the facility does not provide the claimant custodial care, or the claimant's physician does not prescribe care by a third-party provider in that facility, VA will not deduct room and board paid to the facility but will deduct the cost of any medical or nursing services obtained from a third-party provider.
Fast Letter 12-23 goes on to note that VA does not consider emergency pull cords, 24-hour staffing, and locked exterior doors as a medical or nursing service.
In addition, charges for assistance with Instrumental Activities of Daily Living (IADLs) are not UMEs for pension purposes because such assistance is not a medical or nursing service. (VA regulations define IADLs as “activities other than self-care that are needed for independent living, such as meal preparation, doing housework and other chores, shopping, traveling, doing laundry, being responsible for one's own medications, and using a telephone.”)
However, VA will deduct the cost of assistance with IADLs from the individual's income in limited circumstances when: (1) The individual is entitled to pension at the A&A or housebound rate, or a physician has certified that the claimant has a need to be in a protected environment, AND (2) the facility provides medical services or assistance with ADLs to the individual.
Note that Fast Letter 12-23 does not apply to residents of nursing homes and assisted living facilities. And the new UME deduction clarification will apply only to original claims pending on or filed after the date of the Fast Letter (October 26, 2012).
“Running awards will not be terminated based solely on the elimination of room and board expenses paid to a facility other than a nursing home or assisted living facility, which VA previously counted as a valid UME. However, if a claimant relocates to a different facility other than a nursing home or assisted living facility, these procedures will apply.” [Emphasis added]
Transfer Penalties coming soon
There is even more bad news on the way for future pension claimants. Veterans can expect the next Congress to pass new legislation that will penalize veterans who have made gifts that reduced their net worth. See my earlier blog post GAO recommends changes to VA Pension Eligibility Rules for more about these proposed transfer penalties.
These changes will make it both more complicated and more difficult for veterans to claim pension benefits. The Government is looking to reduce the growing cost of benefit programs, and many older veterans will feel the effects.
- The new VA Policy guidance is available here: Fast Letter 12-23: Room and Board as a Deductible Unreimbursed Medical Expense (October 26, 2012).