Overview of VA Improved Pension Benefit
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The document provides an overview of the VA Improved Pension benefits for veterans and their surviving spouses, detailing eligibility criteria, income and asset requirements, and various benefit levels (base pension, housebound rating, and aid & attendance rating). It emphasizes the importance of understanding the calculation of benefits and the application process, which can be complicated due to significant backlogs and regulations. Additionally, it discusses interrelated strategies involving estate planning and Medicaid for effectively managing these benefits.
Overview of VA Improved Pension Benefit
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- 2. VA IMPROVED PENSION: An Overview Robert A. Mason, JD, CELA Mason Law, PC Asheboro, NC Savannah, GA 2
- 3. VA Benefits Improved Pension • Overlooked • Misunderstood 3
- 4. Improved Pension Actually 3 Levels $ “Base” Pension $$ Housebound Rating $$$ Aid & Attendance Rating 4
- 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! 5
- 6. STEP I Is the “Veteran” a QUALIFIED Veteran? 6
- 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 7
- 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 8
- 9. STEP II Does the Qualified Veteran or His/Her Surviving Spouse Meet Income & Medical Expense Requirements? 9
- 10. Calculating The Benefit The ACTUAL Benefit PAID EQUALS Maximum Allowable Benefit Rate (MAPR) MINUS Adjusted Total Income 10
- 11. Calculating The Benefit THREE Levels of Benefits: • Base Pension • Housebound Rating • Aid and Attendance Rating EACH Level Has Its Own MAPR 11
- 12. VA Benefits Base Pension - 2012 (VA’s Version of SSI) MAPR - INCOME LIMITS • $1,038 Vet • $1,360 Vet + Dep • $696 Widow 12
- 13. VA Benefits Housebound Rating – 2012 Threshold: Veteran or Widow (NOT the Veteran’s Spouse) Must Be . . . . Disabled & essentially confined to the home . . . “Housebound!” 13
- 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 14
- 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 15
- 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 16
- 17. Calculating The Benefit REMEMBER: For Each Benefit Level: MAPR – Adjusted Income = ACTUAL Benefit Paid How Is Income Defined? 17
- 18. VA Benefits Definition Of “Income” GROSS INCOME – ADJUSTED!! “Qualified” Medical Expenses Are Deducted From Income 18
- 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 19
- 20. STEP III Does the Qualified Veteran or His/Her Surviving Spouse Meet ASSET Requirements? 20
- 21. VA Benefits Aid & Attendance ASSET ISSUES • $80,000 “Ceiling” • Countable vs. Noncountable • No Transfer Rules - YET 21
- 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” 28
- 29. VA Benefits APPLICATIONS By Federal Law: No One May Charge A Fee For Completing BUT MAY Charge For Planning and Incidentals 29
- 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 30
- 31. VA Benefits Aid & Attendance STRATEGIES • Reduce Income With PCAs • Move Assets to Trust • Joint Accounts 31
- 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. 32
- 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 33
- 34. First: Medicaid Basics Transfer Penalties • Transfers Less Than FMV Within 60 Months of Application • Penalty: 1 Month for each $6,300 Transferred 34
- 35. Medicaid Basics Transfer Penalties Resulting Penalty BEGINS On Date Otherwise Financially Eligible AND in Skilled Facility 35
- 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 36
- 37. 5 Year Strategies • Give Assets Away – Many Negatives • “Income Only” Trust – Much Better Solution 37
- 38. Income Only Trust • Irrevocable – Sort Of • Income Continues • Great Tax Advantages 38
- 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 39
- 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) 40
- 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 41
- 42. Income Only Trust • How Pay For Remainder of 5 Years? – Savings – LTC Insurance – VA Benefits? (Maybe as much as $2,054/mo) 42
- 43. Now serving Central Carolina and Coastal Georgia Elder Law * Wills & Trusts * Guardianships All contents of this presentation © 2013 Mason Law, PC