The Nuts and Bolts Guide to Veterans Benefits:
An introductory tour of the Special Monthly Pension available for wartime veterans and/or survivor spouses who are age 65 or older OR permanently and totally disabled.
Most people think of veteran’s benefits as being only for servicemen and women who were wounded or disabled while serving in the armed forces. By and large, that is true. But - we have learned that there are substantial benefits that may be available to wartime veterans who are now senior citizens and are facing the burden of long term care due to a host of diseases such as Alzheimer’s, Parkinson’s, MS, Lou Gehrig’s Disease, and many others. In fact, the Veterans Administration estimates that millions of wartime veterans and their spouses may be eligible for Special Monthly Pension benefits, and not even be aware of it!
Wartime veterans, or their surviving spouses, become eligible for the Special Monthly Pension benefit when they are over 65 years of age, are permanently disable and unable to work, are homebound, or need the regular aid and attendance of another - whether at home, in assisted living, or in a nursing home. The program is based on actual financial need for assistance, so there are income and asset limitations.
Unfortunately, there is a widespread misunderstanding regarding how to determine qualification for this important benefit. Even though finding your way through the maze can be extremely difficult, it is worth the effort to assist wartime veterans and their surviving spouses during times of great need.
The maximum benefit available can provide significant help in paying for long term care costs, either for the homebound, assisted living and/or nursing home care for the veteran/surviving spouse.
There are only four (4) types of persons who are authorized to provide a veteran with assistance filing a claim for veteran’s benefits:
Unfortunately, there are few attorneys who have knowledge in this particular area of legal practice due to the fact that it is illegal to charge a veteran a legal fee for providing assistance in filing a claim for benefits. VSOs are often hard-pressed to have sufficient resources to assist multiple generations of veterans, so it is often difficult for a veteran or his/her surviving spouse to get help in filing a claim. Sadly, the Knight-Ridder Newspapers reported on December 30, 2005 that “a veteran who turns to the VA for information about veterans benefits might want to get a second opinion. According to the VA’s own data, people who call the agency’s regional offices for help and advice are more likely to receive completely wrong answers than completely right ones.”
The only other common source of information regarding this benefit generally comes from annuity salespeople who often offer to consult with veterans and their families for free. This “free” offer is based on the strategy of counseling the veteran to meet the asset and income limitations of the benefit by buying an annuity and giving away their assets to their children. The offer is that the annuity sales organization will assist the veteran in filing for the VA benefit claim. They also promise to provide any necessary estate planning work and no charge. In reality, the annuity salesperson is being compensated by the annuity company for selling a financial product to the veteran. An annuity may be an excellent financial decision or a poor one, depending on the facts and circumstances. All we are saying is this: You should seek independent advice before making a decision to purchase an annuity.
A Medicaid Trap ......
Another important factor that one must consider when thinking about trying to meet the VA asset limitation test is that giving away cash or other things of value can create terrible problems for senior citizens if or when they later need to apply for Medicaid to assist them skilled nursing home care. Giving away assets can create a long penalty period of ineligibility for Medicaid benefits. Any senior facing long-term care needs to seek capable legal advice from an attorney who is skilled in the areas of estate planning, financial planning options, Medicaid, Medicare, income tax, and gift tax, as well as having experience regarding VA rules.
The big question for many families will be, “What will it cost me to seek advice in this area?” Although an attorney who chooses to actually file a claim for veterans benefits must do that portion of his/her work for free, the attorney may charge the usual fees related to any estate planning, financial planning options, Medicaid, Medicare, income tax, or gift tax work, as well as the determination of the financial suitability of filing for a veterans benefit claim. No one should pay an attorney fee unless receiving a fair return on his/her investment.
Compensation and Pension Benefits
There are many types of VA benefits available to veterans through the Veterans Administration for things such as education, life insurance, health care, home loans, and burial benefits. Two major categories of benefits, however, are compensation and pension.
Service-Connected Disability COMPENSATION
Compensation is a benefit that veterans receive when the veteran has a disability caused by, or exacerbated by, military service. Disability compensation is available to a qualified veteran regardless of their level of income. Once a veteran can show that they are disabled because of their military service, their level of disability is rated by the Veterans Administration (for example, 20% disabled) and the amount of compensation paid depends on the rating assigned. A veteran can apply for increases in the percent rating if the condition worsens. A rating above 100% disabled will qualify the veteran for special monthly compensation that could more than double the normal benefit. For 2009, monthly compensation payments range from $123 for a veteran with no dependents and a 10% disability rating, to $2,673 veteran with a spouse and a 100% disability rating. Special monthly compensation benefits can raise the maximum monthly payment up to $7,909.
Non-Service-Connected Disability PENSION
A pension is a benefit for veterans with low incomes who are permanently and totally disabled, when that disability is NOT related to military service. This is sometimes referred to as “Special Monthly Pension” (or sometimes an “Improved Pension”). A veteran will be considered permanently and totally disable if they are, (1) a patient in a nursing home for long-term care because of disability; (2) receiving Social Security disability benefits; (3) unemployable as a result of a disability that is reasonably certain to continue throughout their life; or (4) suffering from any disease or disorder that renders them permanently and totally disabled as determined by the Secretary of the Department of Veterans Affairs.
In 2009, the maximum disability pension rate for a veteran with no dependents is $11,380, or $985 per month. The rate for a veteran with one dependent or for two veterans married to each other is $15,493, or $1,291 per month. Each additional dependent child adds $2.020, or $168 per month, to the pension.
The VA pays a death pension to low-income surviving spouses and unmarried dependent children of deceased wartime veterans. In order to be eligible, a spouse must not have remarried, and a dependent must be under age 18, or must be under age 23 if attending a VA-approved school. Dependents who are permanently incapable of self-support because of a disability before age 18 are also eligible for the death pension. For 2009, the maximum death pension for a surviving spouse is $7,933, or $661 per month. If the spouse has a dependent child, the maximum pension is $10,385, or $865 per month. If the spouse has more that one dependent child, the benefit for each depended child is $2,020, or $168 per month. The pension for a surviving child is $2,020, or $168 per month.
If the veteran is in need of regular aid and attendance, the maximum Special Monthly Pension is increased further to $19,736, or $1,644 per month if the veteran has no dependents. With one dependent, the maximum pension is $23,396, or $1,949 per month. If the surviving spouse is in need of regular aid and attendance, the maximum pension is $12,681, or $1,056 per month. If the surviving spouse has a dependent child the maximum pension is $15,128, or $1,260 per month. Again, each additional dependent will increase the pension $2,020, or $168 per month. To be in need of regular aid and attendance, the veteran or spouse must be permanently and totally disabled and (1) a patient in a nursing home; (2) blind, or nearly blind; or (3) needing the regular aid and attendance of another person to perform basic activities of daily living, such as dressing, bathing, and attending to the wants of nature.
Attaining age 65 - Service Pension
A low-income, wartime veteran who attains the age of 65 is also entitled to a pension, known as a Service Pension, whether or not they are disabled. The amount of the maximum pension is the same as the Special Monthly Pension.
Low Income and Net Worth Requirements
In order to be eligible to receive any of the above non-service connected PENSIONS, the veteran must meet income and net worth requirements. First, the annual maximum pension amount is decreased, dollar for dollar, by the veteran’s countable income. Income that is countable is, in general: all the veteran’s income, including that of a spouse or dependents, MINUS unreimbursed medical expenses. Unreimbursed medical expenses include doctor’s fees, dentist’s fees, Medicare premiums and co-payments, insurance premiums, transportation to physicians’ offices, and the costs of assisted living facilities or in-home aides.
So, for example, if a veteran has a $20,000 in income and $10,000 in unreimbursed medical expenses, their countable income is $10,000. Their $10,000 in countable income is deducted from the maximum annual Special Monthly Pension of $11,830 for a benefit of $1,830. As another example, suppose the veteran is in a nursing home (and so qualifies for the additional pension for aid and attendance) and has an income of $50,000. If their unreimbursed medical expense for the nursing home are $5,000 per month, or $60,000, the veteran’s countable income is negative $10,000. Any negative income is counted as an income of $0 and the veteran will be eligible for the maximum annual Special Monthly Pension for aid and attendance of $19,736.
In addition to low income, the veteran must also have a limited net worth. The VA has not specifically defined “limited net worth” - however, a general guide is that the veteran must have a net worth lower than $50,000 if single or $80,000 if married. A veteran’s net worth is calculated by adding all the value of all personal and real property owned by the veteran (and their spouse), not including a home and car. Items included in the calculation of a veteran’s net worth would include things such as CDs, savings accounts, and bonds.
Who is eligible for the non-service-connected pension?
“Permanently and Totally Disabled” is defined as:
This is a needs-based program with income and asset tests.