What Are My Options for Paying for Care – VA Benefits

 

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We know the majority of Americans cannot pay out-of-pocket for senior care services and housing — especially over an extended period of time. And no doubt you’ve done a lot of thinking and financial planning to get your loved one to this place in life. However, you may still have questions about how to pay for their future costs. There are financial alternatives available to seniors, and this section is designed to educate and provide helpful guidance to you on the options for paying for different types of care. 

VA Benefits

This pension is available to many veterans and their surviving spouses or dependents, based on a number of criteria pertaining to personal care needs and financial status, per Patty Servaes, a VA Accredited Agent & Founder of Elder Resource Benefits Consulting (which is one of several companies specializing in this financial resource).

The Value of VA Benefits

VA benefits allow you to extend the amount of time you can pay for assisted living — sometimes without even having to dip into your assets.  

Example: If you’re a surviving spouse with a monthly income of $3,000, and you can get $1,209 per month in VA benefits, you’ve just increased your buying power by 25 percent. When you’re moving into any residence, that’s a game changer.  

“We want every veteran and surviving spouse to have the VA Pension benefit information in their Retirement tool box.  Understanding that this is not a Yes or No benefit but an If and When benefit will help you make the decision on the best living situation for mom or dad,” says Servaes.


2020 Aid and Attendance Maximum Pension Rates

Informational graphic with info on veterans paying for senior care

So How Does the VA Pension Work?


In our interview with Patty, she shares the following information, which can also be found on her website.

There are three basic criteria for the VA Pension, and they build on each other in a stair-step fashion, according to Servaes.

Step One - Military Service
If the veteran…
1. Served on Active Duty at least one day during a Period of War, at least 90 days in total, and were other than dishonorably discharged. (Note that if the veteran entered active duty after September 7, 1980, generally he/she must have served at least 24 months or the full period for which called to active duty – See Periods of War
1a.) In the case of a surviving spouse, you meet the criteria if you were married to someone at the time of their death who met the step one criteria, were married for at least one year, and you were still married when they died.  Note that with few exceptions you must use the service of your last spouse. 

If you meet the military requirement, don’t worry about your current health or wealth status: it’s just a matter of time until you qualify. 

Step Two - The Medical Requirement  
Here we have to determine the level of need — the why? — of services or care required.  Because this program starts with Basic Pension, and depending on your level of physical medical need, the VA gives you a medical rating — which can add more dollars to your eventual pension award.
 
While the veteran is alive, only their medical situation determines the rating. If the veteran has passed away, the surviving spouse's medical condition determines the rating. In VA parlance, the claimant is the only one with a rating and if the veteran is alive, the veteran is the claimant.
 
You can ask yourself these questions to determine the medical rating the claimant is likely to receive from the VA:
 
  • Is the veteran or surviving spouse unable to leave their home alone but needs no other assistance? If yes, they may be able to get the pension at the housebound level.
  • Is the veteran or surviving spouse in need of the assistance of another person with Activities of Daily Living (ADLs) such as bathing, dressing, eating, getting in or out of bed or a chair (mobility), or personal hygiene such as toileting? If yes, they may be able to get pension at the Aid and Attendance level.
  • Is the veteran or surviving spouse in need of regular supervision because a physical, mental, developmental or cognitive disorder requires care or assistance on a regular basis to be protected from the hazards or dangers related to their daily environment? If yes, they may be able to get pension at the housebound or Aid and Attendance level — depending on the level of need.
  • Is the veteran well but their spouse is housebound or in need of the assistance of another person with ADLs? If so, they may be able to get a basic pension.

There are medical exceptions, and talking with experts such as those at Elder Resources Benefits Consulting is recommended. 
 
Step Three - The Financial Criteria
The Financial Criteria is a two-pronged test, comprised of income & assets.
 
Income – the household income of the claimant (i.e. a married veteran must include the spouse’s income) must be less than the pension. The VA definition of income is income from all sources, such as social security, pensions, and interest, less any regularly occurring medical expenses. These generally include medical insurance premiums and Medicare, the cost of home care, and independent or assisted living fees. For more specifics, consult with an expert such as Elder Resources Benefits Counseling.
 
When you take your income and subtract these recurring medical expenses, you are left with Income for VA Purposes. If that number is less than the pension at the medical rating you are applying for, then you pass the income criteria!

Informational graphic about an income test for seniors

Assets – the amount of assets you are allowed is $127,091 for 2020.
 
The Asset test excludes your primary home, one car, and your normal personal possessions. So it is critically important to plan ahead and check into the VA benefit to decide when the timing is right to sell your house — because the proceeds from the sale will be counted toward the asset test and could delay eligibility.

Delaying VA Benefits In Favor of Long Term Care Insurance Benefits? Why This Plan May Not Work


Servaes recommends you do your due diligence on this: don’t start accessing your long-term care insurance without checking into the VA benefit first. Here’s why: If you have a long-term care insurance policy with a cap, it’s only going to pay for a specified amount of care. It’s not an unlimited plan. That maximum amount is considered income under the VA income test. It might be completely gone in two years, and because you’re accessing the full benefit each month — let’s say $5,000 per month — now you can’t qualify for VA benefits until the long-term care insurance policy is gone.  Long term care reimbursements are considered income. From there, you deduct the full assisted living fee, so it nets out but you gross both up.

Instead, determine the maximum you can take out of your long-term care insurance policy and still receive the VA benefit. In that way, you’re asking the question: “How can we make sure that mom and dad get the most inflow of cash in the next five years?” Servaes says.   

Example: A couple with $2,000 in income that is taking $100 a day ($3,000 a month) from their long-term care insurance to pay the $3,000 assisted living fee would only be eligible for $169 in VA benefits. But if that couple only takes $2,000 out of the LTC insurance policy each month, they may be able to get approximately $1,230 in VA benefits. So instead of the LTC insurance policy being gone in about two years, it might last four years. 

Bottom line: it is important that every veteran and their surviving spouse know the If and When in regards to when they are eligible to receive VA benefits.

Myths & Facts about VA Benefits

Did you know that 69 percent of veterans ages 55 or older (and their spouses) are unaware of VA benefits? Here, Servaes reviews several other commonly held myths about VA benefits — and offers the facts to dispel them. 

Myth: To qualify for aid and attendance, you must need assistance with at least two activities of daily living (ADLs). 
Fact: As of 2016, you must need assistance with two ADLs or just need regular supervision. In other words, does your doctor think you need to live in a senior community?

Myth: If the veteran doesn’t need assistance but the spouse does, VA benefits do not apply.
Fact: If the veteran is alive and the wife needs help, VA benefits are still available, even if the veteran doesn’t need Aid and Attendance himself. The couple can still get the basic pension.

Myth: You have to be in overseas combat to qualify for VA benefits.
Fact: You don’t have to leave the United States and you don’t have to see combat. As long as you were on active duty in one of the branches of the service during a period of war, you may qualify for VA benefits. 

Myth: VA benefits are available to those in the National Guard. 
Fact: The VA benefit is an active-duty benefit. If you’re in the National Guard or a Reservist and you were called up to active duty (not active duty training) you may be eligible to receive the benefit.

Myth: You can file claims for both your parents all on your own.   
Fact: You have to be accredited by the VA in order to work on any claim. You’re allowed to work on one claim without being accredited by the VA in your lifetime — so you can help one of your parents, but not both. 

VA benefit assistance is offered at no cost from the Department of Veterans Affairs and Veterans Services Officers. “But it’s important to get somebody to assist you who knows what they’re doing,” says Servaes. “It’s similar to filing your taxes: you might be able to do it on your own, and you can call the IRS and get free advice, but you might have better results using a professional who is going to discuss your current and future plans and how they may impact the VA benefit. It can make all the difference in getting the full award in a timely fashion versus getting on the denial merry-go-round, or having a long penalty period accessed that could have been avoided.”

Informational graph on paying for senior care with VA benefits
Graphic with outline of VA benefits for families

Several major VA legislative changes relating to income and transferring of assets were implemented in October 2018, including a 3-year lookback period after that date for annuities, gifts, or transfers. For more information, schedule an appointment with one of the intake consultants at Elder Resource Benefits Consulting or with another provider.
Stay tuned for more tips and insights at Open Conversations. 
Want to share a comment or ask question: openconversations@benchmarkquality.com
Content for Open Conversations was developed in partnership with Caregiving Advice.


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