Most of us are familiar with VA disability compensation. We know it is income-tax free, is based upon service connected or service aggravated disability, and can replace on a dollar-for-dollar basis military retired pay, thus providing the retired veteran with a modest tax break. This is not about concurrent receipt — I’ll talk about such non-incendiary topics as Don’t Ask Don’t Tell, Wikileaks, and Lady Gaga’s sexual orientation before I’ll take on something really controversial like that.
What many of us don’t know about is that the VA provides pensions for veterans who are in severe need. One must be a qualifying veteran, meaning that an honorable or general discharge, and active wartime service. That service need not be in a combat zone, but must involve at least 90 days active duty, at least one of which was during a defined period of war. The VA has a chart for wartime periods. According to that chart, for example, Vietnam goes from 1964 to 1975, and we’ve been at war from 1990 to the present.
There are three types of pension: the basic, or service pension; basic pension with housebound allowance; and basic pension with “Aid and Attendance.” The benefit varies according to the number of dependents from about $1,000/month service pension to close to $2,000/month if you qualify for aid and attendance with dependents. Unlike disability compensation, this is a needs-based benefit. Actual income offsets the benefit on a dollar-for-dollar basis. However, and this is a big however, income can be set off for certain unreimbursed medical expenses. The formula is complicated, but a veteran who, for example, is paying for nursing home or assisted living care may well have his entire income offset by the pension, and thus would qualify.
Beyond the question of income is the net worth test. Unlike Medicaid, there is not a set dollar-amount maximum. As with Medicaid the home is excluded, even though the proceeds from the sale of a home are countable for purposes of computing Income for VA Purposes (IVAP). Pensions will be denied or discontinued when the corpus of the veteran and the veteran’s spouse’s “estate” is large enough that “it is reasonable that some part of the corpus be consumed for the veteran’s maintenance.” Translated from the precise VA legalese, that means your maximum net worth is . . . whatever the VA pension calculator decides it is. Experienced practitioners advise that the absolute maximum net worth is $80,000, but that pensions are more routinely (and quickly) approved where the total resources are between $10,000 and $20,000. The VA is pretty inclusive in defining net worth, much as it is in assessing IVAP — it’s pretty much everything you own exclusive of the value of your house and personal effects.
A degree of disability is also involved, but it’s much different than the disability compensation system. For the basic, or service pension, there must be a permanent and total disability, but it is for non-service connected disability. Here’s the kicker. If you are over 65, or a nursing home patient, or disabled according to the Social Security Administration, or unemployable due to disability, you are considered permanently and totally disabled.
The pension with household allowance is the next step up. Qualification is for those with a single disability rating of 100%, plus a second rated at 60% (don’t bother calling, I’ve no idea what that means either), or (and this is the real-world test) the veteran is “substantially confined” to the home and is expected to remain so.
Finally, the most generous pension is the service pension with “aid and attendance allowance.” To qualify, the veteran must be effectively blind, or a patient in a nursing home, or bedridden, or unable to take care of the basic needs and functions of life without care and assistance on a regular basis.
These benefits may also be available to widows and widowers of qualifying veterans. Importantly, payment to a surviving spouse is not automatic, must be applied for, and is circumscribed by the same needs-based analysis as the original benefit for the veteran. So, if the surviving spouse receives a death benefit, life insurance proceeds, or other assets at the death of the veteran spouse, she may be disqualified for a period of time under the net worth or income analysis.
As so many government programs tend to be, the VA pension benefit is pretty involved and complicated. Recognizing that for those of us who are retired active duty it is unlikely that we will qualify for or have need of these pension benefits, we may be aware of friends or family who are in need and who may qualify. Surprisingly, the orientation of many VA employees and veterans’ service organizations towards the disability compensation scheme means that lay assistance, including from the VA itself, may be less robust when it comes to VA pensions. Knowledgeable attorneys (did I just say that??!) can sometimes help, but to represent a client before the VA they have to have been certified by the VA to practice before it.
And finally, this is the time of year when we give and receive gifts. As I wrote a couple of months ago, I like to think that it is always the season to give thanks for the gifts we have already received. My thanks this year goes to all of you who have devoted your lives in service to this, the greatest country on this earth, at this or any time in human history. Everybody’s tree is fuller, New Year’s more promising, and life more bounteous, because of you.