Tens of Thousands of our Veterans have earned and qualify for a pension benefit of up to $1,800 per month that can be used to pay for assisted living or attendant in-home care, but information about the program appears to be a well kept secret.  Inquiries to local VA offices are often met with denial of any information about this valuable pension benefit.   

Even advisors who focus on higher net worth clients should not discount
the opportunities that exist with Aid and Attendance pension benefits.
There are now over 25 million US veterans eligible for some type of VA
benefits, many of whom have no idea Aid and Attendance pension benefits
exist (and their local VA office won’t tell them about it!). Moreover,
World War II veterans are dying at the rate of approximately 1,800 per
day. Thus, the need for this type of planning is greater than ever.

Many of the veterans or their
surviving spouses you discuss this planning with may not qualify, but
they could become traditional wealth planning clients. Alternatively,
this benefit may be of interest to their aging parents, siblings or
other family members.

                           
                           

                           

Planning Tip:
While Aid and Attendance pension benefits are only available to a
limited segment of the population, the general lack of knowledge
regarding this benefit makes it a marketing opportunity for all wealth
planning professionals, not just those who focus on Elder Law.

                            What is Aid & Attendance?
Aid and Attendance is a "special monthly pension" available to wartime
veterans or surviving spouses of wartime veterans. Aid and Attendance
is not actually a stand-alone benefit. Rather, it is an additional
allowance that a veteran or surviving spouse who is already entitled to
certain VA pension benefits (because of his or her wartime service and
non-service-connected disability) may additionally be entitled to upon
meeting certain medical and financial requirements. Aid and Attendance
differs from compensation, which is available to all veterans who
suffer from a service-connected disability. Table 1 below identifies periods of war for purposes of all VA pension benefits.
                           

                           
                           

Planning Tip:
                            Aid
and Attendance pension benefits are additional veterans’ benefits
available to wartime veterans who need the aid and attendance of
another to meet their daily needs.

                            Prerequisite Benefits
A veteran or surviving spouse (called a claimant by the VA) must first
be eligible for what the VA refers to as regular pension. Regular
pension is available when a wartime veteran (one with 90 days of active
duty, and at least one day beginning or ending during a period of War)
has limited income and assets and suffers from a non-service-connected
permanent and total disability. In some circumstances, being over the
age of 65 may qualify a claimant without the need to show a disability.

 
                            Permanent and total disability includes a claimant who is:
                           

                           

1. In a nursing home;
2. Determined disabled by the Social Security Administration;
3. Unemployable and reasonably certain to continue so throughout life; or
4. Suffering from a disability that makes it impossible for the average person to stay gainfully employed.

                            Asset & Income Requirements
The financial eligibility requirements of Aid and Attendance benefits
address a claimant’s net worth and income. A married veteran and spouse
can currently have no more than $80,000 in countable assets (less for a
single veteran or surviving spouse), which includes retirement assets
but excludes a home and vehicle. However, the $80,000 limit is a
guideline only; it is not a rule set by the VA. The VA looks at a
claimant’s total net worth, life expectancy, income and medical
expenses to determine whether the veteran or surviving spouse is
entitled to special monthly pension benefits.

   
                           
                           

Planning Tip:
                            Many
times the advisor’s most difficult task in this area is to reduce a
claimant’s assets down to the applicable level (or what one hopes will
be acceptable to the VA). Like Medicaid planning, this often requires
income tax planning and the utilization of financial products such as
annuities.

There is no income limit for VA pension
benefits. There is, however, what the VA refers to as Income for VA
Purposes (IVAP), or a claimant’s gross income from all sources less
countable medical expenses. If a claimant’s IVAP is equal to or greater
than the annual benefit amount, the veteran or surviving spouse is not
eligible for benefits. Table 2 and table 3 show the applicable income and pension amounts for both veterans and surviving spouses. 

                            Is the Claimant Housebound?
If a claimant qualifies for regular pension and is housebound, the
claimant’s maximum allowable income increases (as does the annual
benefit amount) to the special monthly pension. The VA defines
housebound as being substantially confined to the home or immediate
premises due to a disability that will likely remain throughout the
claimant’s lifetime. A veteran with no dependents who is housebound is
eligible for benefits of up to $13,356 in annual income.

Unreimbursed medical expenses will reduce a claimant’s income dollar
for dollar. But remember, to be eligible for a special monthly pension
for being housebound, the claimant’s IVAP must be less than the annual
income threshold.

To illustrate, a veteran with exactly $13,356 in annual income would
not be eligible for a special monthly pension for being housebound.
However, if that veteran was able to show annual income of $20,000 and
unreimbursed medical expenses of $25,000, the veteran would be eligible
for $13,356 in annual special pension (paid on a monthly basis) because
the veteran has negative IVAP. A surviving spouse with no dependents
who is housebound can have an annual IVAP of up to $8,957.

                            Does the Claimant Require the Aid and Attendance of Another?
If a claimant can show, through medical evidence provided by a primary
care physician or facility, that the claimant requires the aid and
attendance of another person to perform activities of daily living,
that veteran or surviving spouse may qualify for an additional monthly
special pension commonly referred to as aid and attendance pension
benefits.

                            The VA defines the need for aid and attendance as:

                           

1. Requiring
   the aid of another person to perform at least two activities of daily
   living, such as eating, bathing, dressing or undressing;
2. Being blind or nearly blind; or
3. Being a patient in a nursing home.

                            Table 2 and table 3 below show the applicable pension amounts for each type of VA pension.

                           
                           

Planning Tip:
                            The
maximum pension for a married veteran is $1,801 per month ($21,615 per
year), while the maximum pension for a veteran’s widow is $1,165 per
month ($13,976 per year). The VA pays this pension directly to the
claimant, and it makes no difference whether the claimant receives
medical care at home, in an assisted living facility or in a nursing
home.

                            Qualification
As stated above, the VA looks at a claimant’s total net worth, his or
her life expectancy, and his or her income and expenses to determine
whether the claimant should qualify for special monthly pension. Unlike
Medicaid, there is no look-back period and no penalty for giving assets
away. However, one must use caution when considering a gifting strategy
to qualify a veteran or surviving spouse for special monthly pension
benefits, as this will cause a period of ineligibility for Medicaid
which could be as long as five years. Other Medicaid planning
strategies may apply when trying to qualify a veteran or surviving
spouse for special pension with aid and attendance.

                           
                           

Planning Tip:
                            The
client’s advisors (particularly the attorney and financial advisor)
must work together to determine the best combination of strategies and
financial products that will gain eligibility for special monthly
pension but not disqualify the client from Medicaid.

For example, Bob, an unmarried wartime veteran, suffers from dementia
and needs help dressing, taking medication and bathing. He has assets
of $150,000 and social security income of $1,100. Bob lives at home and
pays a home health aide $2,000 per month. He has negative income for VA
purposes (the applicable annual rate is $18,234 or $1,519 monthly) and
is running short $900/month in covering his medical expenses. However,
Bob’s assets will most likely prevent him from receiving improved
pension with aid and attendance.

To qualify Bob for special monthly pension with aid and attendance, one
option might be for him to use $100,000 of his assets to purchase an
immediate annuity structured to pay less than $900 per month (the
annuity should be actuarially sound so as not to cause a problem with
Medicaid eligibility). Even with the annuity payment, Bob can a show
negative annual income, assets of only $50,000, and he can show a
medical need for the benefit. Therefore, Bob would most likely be
eligible for the maximum annual pension rate of $18,234 (paid in
monthly payments of $1,519.50).

                            The Application Process
While the application process for special monthly pension can be
agonizingly slow – some applications take over a year before the VA
makes a decision – the benefit is retroactive to the month after
application submission. Having the proper documentation in place at the
time of application (for example, discharge papers, medical evidence,
proof of medical expenses, death certificate, marriage certificate and
a properly completed application) can cut the processing time in half.

                           
                           

Planning Tip:
                            Benefits
are retroactive to the month after application submission, so advisors
should help clients apply as quickly as possible while also helping to
ensure that the application is complete.

                            Conclusion
                           
Even
advisors who do not wish to practice in the area of Aid and Attendance
special pension benefits should be able to recognize the opportunity
for prospective and existing clients. They should also be ready to
recommend someone who can assist in this area.

Because of the
impact transfers may have on the client’s eligibility for other
benefits such as Medicaid, it is critical that the client’s advisor
team work together to maximize the benefits available to the client.

                           
                        
                  
               
               

               

                   

                   

                   

                   

                   

                   

                   

                   

               

Table 1: Wartime Periods
(a)	World War I. April 6, 1917 through November 11, 1918, inclusive.	If the veteran served with the United States military forces in Russia, the ending date is April 1, 1920. Service after November 11, 1918 and before July 12, 1921 is considered World War I service if the veteran served in the active military, naval, or air service after April 5, 1917 and before November 12, 1918.
(b)	World War II. December 7, 1941, through December 13, 1946, inclusive.	If the veteran was in service on December 31, 1946, continuous service before July 26, 1947, is considered World War II service
(c)	Korean conflict. June 27, 1950, through January 31, 1955, inclusive.
(d)	Vietnam era. The period beginning on February 28, 1961, and ending on May 7, 1975, inclusive.	In the case of a veteran who served in the Republic of Vietnam during that period. The period beginning on August 5, 1964, and ending on May 7, 1975, inclusive, in all other cases
(e)	Future dates. The period beginning on the date of any future declaration of war by the Congress and ending on a date prescribed by the Presidential proclamation or concurrent resolution of the Congress.
(f)	Mexican border period. May 9, 1916, through April 5, 1917, in case of a veteran who during such period served in Mexico, on the borders thereof, or in the waters adjacent thereto.
(g)	Persian Gulf War. August 2, 1990, through date to be prescribed by Presidential proclamation or law.

               

               

                   

                        

                   

                   

                        

                   

                   

                        

                        

                   

                   

                        

                        

                   

                   

                   

                   

                   

                   

                   

               

Table 2: Pension Rates for Veterans
If you are a Veteran…	Your yearly income must be less than:
Without spouse or children (no dependents)	$10,929 *to be deducted, medical expenses must exceed 5% of maximum annual pension rate, or $546
Veteran with 1 dependent	$14,313 *to be deducted, medical expenses must exceed 5% of maximum annual pension rate, or $715
Housebound without dependents	$13,356
Housebound with one dependent	$16,740
Aid and Attendance with no dependents	$18,234
Aid and Attendance with 1 dependent	$21,615
Add $2,480 for any early war veteran
Illustration: Veteran who is married and requires the aid and attendance of another has annual income less unreimbursed medical expenses, of $15,000. That veteran would only be eligible for $1,740 per year in improved pension which totals $145 per month.

               

               

                   

                   

                   

                   

                   

                   

                   

                   

                   

                  

Table 3: Pension Rates for Surviving Spouses
If you are a surviving spouse…	Your yearly income must be less than:
Without children	$7,329 *to be deducted, medical expenses must exceed 5% of maximum annual pension rate, or $366
With 1 dependent	$9,594                     *to be deducted, medical expenses must exceed 5% of maximum annual pension rate, or $479
Housebound without dependents	$8,957
Housebound with one dependent	$11,219
Aid and Attendance with no dependents	$12,471
Aid and Attendance with 1 dependent	$13,976
Illustration: Surviving spouse is housebound and has annual income, less unreimbursed medical expenses, of $8,000 and no dependents. That spouse would only be eligible for $957 per year in improved pension ($79 per month).