An overview of the much misunderstood VA Improved Pension (aid and attendance, housebound) benefit, by Bob Mason, Certified Elder Law Attorney

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2. VA IMPROVED PENSION:
An Overview
Robert A. Mason, JD, CELA
Mason Law, PC
Asheboro, NC
Savannah, GA
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3. VA Benefits
Improved Pension
• Overlooked
• Misunderstood
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4. Improved Pension
Actually 3 Levels
$ “Base” Pension
$$ Housebound Rating
$$$ Aid & Attendance Rating
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5. Improved Pension
BE METHODICAL!
Analyze Step-By-Step:
1. Eligible Veteran? (Even if Deceased)
2. Meet the ADJUSTED Income Levels?
3. Meet the Asset Levels
TAKE THESE IN ORDER!
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6. STEP I
Is the “Veteran” a QUALIFIED Veteran?
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7. VA Benefits
Service Eligibility Issues
• 90 Days Active Duty - 1
Day of Which Was During
“War Time Period”
• Totally Disabled OR Over 65
• Disability Not A Result Of Willful
Misconduct
• Limited Income and Assets
• Signed Application
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8. VA Benefits
Service Eligibility Issues
“War Time Period” Defined:
• World War II - Dec. 7, 1941 -
Dec. 31, 1946
• Korean War - June 27, 1950 -
Jan. 31, 1955
• Vietnam War - Aug. 5, 1964 -
May 7, 1975
• Gulf War - August 2, 1990
through date to be set by law by
Presidential Proclamation
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9. STEP II
Does the Qualified Veteran or His/Her
Surviving Spouse Meet Income & Medical
Expense Requirements?
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10. Calculating The Benefit
The ACTUAL Benefit PAID
EQUALS
Maximum Allowable Benefit Rate (MAPR)
MINUS
Adjusted Total Income
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11. Calculating The Benefit
THREE Levels of Benefits:
• Base Pension
• Housebound Rating
• Aid and Attendance Rating
EACH Level Has Its Own MAPR
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12. VA Benefits
Base Pension - 2012
(VA’s Version of SSI)
MAPR - INCOME LIMITS
• $1,038 Vet
• $1,360 Vet + Dep
• $696 Widow
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13. VA Benefits
Housebound Rating – 2012
Threshold: Veteran or Widow (NOT the
Veteran’s Spouse) Must Be . . . .
Disabled & essentially confined to the
home . . . “Housebound!”
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14. VA Benefits
Housebound Rating – 2012
(Disabled & essentially confined to the home)
MAPR - INCOME LIMITS
• $1,268 Housebound Vet
• $1,591 Housebound Vet + Dep
• $851 Housebound Widow
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15. VA Benefits
Aid & Attendance Rating - 2012
Threshold: Veteran or Widow (NOT the
Veteran’s Spouse) Must Meet One Of
Following:
• Blind, or
• Living in a nursing home/assisted living
facility, or
• Unable to:
– dress/undress or keep self clean and presentable
– attend the wants of nature without assistance
– has a physical or mental incapacity that requires
assistance to live safely or hygienically
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16. VA Benefits
Aid & Attendance Rating - 2012
MAPR - INCOME LIMITS
• $1,732 A&A Vet
• $2,054 A&A Vet + Dep
• $1,113 A&A Widow
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17. Calculating The Benefit
REMEMBER:
For Each Benefit Level:
MAPR – Adjusted Income =
ACTUAL Benefit Paid
How Is Income Defined?
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18. VA Benefits
Definition Of “Income”
GROSS INCOME – ADJUSTED!!
“Qualified” Medical Expenses Are
Deducted From Income
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19. VA Benefits
Definition Of “Income”
Adjustments to Income:
– Medical Expenses
– Health Care and Insurance
– Premiums/Deductibles
– Prescriptions, hearing aids, transportation, etc.
– Home Health Care
– Assisted Living Facilities
– Nursing Home Care
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20. STEP III
Does the Qualified Veteran or His/Her
Surviving Spouse Meet ASSET
Requirements?
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21. VA Benefits
Aid & Attendance
ASSET ISSUES
• $80,000 “Ceiling”
• Countable vs. Noncountable
• No Transfer Rules - YET
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22. VA Benefits
Applications – A HUGE
Backlog 22

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28. VA Benefits
APPLICATIONS
A Real Pain
By Federal Law Only The Vet, A VSO,
State Agency, Licensed Attorney or
Accredited Advisor May Complete . . .
And all must be “accredited by VA”
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29. VA Benefits
APPLICATIONS
By Federal Law: No One May Charge A
Fee For Completing
BUT
MAY Charge For Planning and
Incidentals
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30. Attorneys Fees - Planning
• Attorneys can charge for VA Benefits
Planning
–Reviewing eligibility status
–Devising a Plan to become eligible
–Drafting necessary documentation to
effectuate the Plan
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31. VA Benefits
Aid & Attendance
STRATEGIES
• Reduce Income With PCAs
• Move Assets to Trust
• Joint Accounts
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32. Putting VA Benefits Together
With Other Plans
There is more to it than knowing how
VA benefits work . . . An advisor MUST
know Medicaid, Special Assistance
and estate planning to be truly
effective.
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33. One Strategy
(Many situations/Many strategies)
Example:
• Mom and Dad gift 100 acres worth
$200,000 on February 1, 2012
• Dad a WWII vet
• On February 1, 2015 Dad goes to
nursing home
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34. First: Medicaid Basics
Transfer Penalties
• Transfers Less Than FMV Within 60
Months of Application
• Penalty: 1 Month for each $6,300
Transferred
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35. Medicaid Basics
Transfer Penalties
Resulting Penalty BEGINS On Date
Otherwise Financially Eligible AND in
Skilled Facility
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36. Medicaid Basics
• Transfers More Than 5 Years Old:
IRRELEVANT
• Go To Nursing Home During 5 Years:
Pay Remainder of 5 Years OR Undo
Earlier Transfer
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37. 5 Year Strategies
• Give Assets Away
– Many Negatives
• “Income Only” Trust
– Much Better Solution
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38. Income Only Trust
• Irrevocable – Sort Of
• Income Continues
• Great Tax Advantages
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39. Income Only Trust
• 5 Years To Be Fully Effective
• What Happens If Need NH Within 5
Years?
– Pay Difference Until 5 Years From Trust
Set-up Has Elapsed
– Remember: Difference Between Income
and NH Cost
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40. In The Example Above . . .
• Mom and Dad incurred a 31.75 month
penalty on February 1, 2012
• On February 1, 2015 Dad goes to
nursing home (IF applies for Medicaid
31.75 month penalty)
• The penalty is irrelevant in any event
on January 1, 2017 (2 years after
nursing home admit)
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41. In The Example Above . . .
• Mom and Dad have income of
$2,500/mo
• Nursing home costs $6,500/mo
• Mom and Dad decide NOT to apply for
Medicaid
• Mom and Dad realize they have to
cover nursing home bill for 2 years
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42. Income Only Trust
• How Pay For Remainder of 5 Years?
– Savings
– LTC Insurance
– VA Benefits? (Maybe as much as
$2,054/mo)
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43. Now serving Central Carolina and Coastal Georgia
Elder Law * Wills & Trusts * Guardianships
All contents of this presentation © 2013 Mason Law, PC