Uncle Sam Wants to Pay Me Back?
When a person requires someone else to help with physical or emotional needs over an extended period of time, this is long term care. Help may be required for a terminal condition, disability, illness, injury, or the infirmity of old age. The older a person is, the more likely the need for long term care. A Veterans pension is available to Veterans who served at least 90 days with at least one day during a period of war. While many Veterans (or their surviving spouses) have income above the pension rate ceiling and would normally never expect to be eligible for this disability benefit, what is not generally known is that the VA, in calculating eligibility for this disability pension, allows the Veteran to reduce family income by the amount of recurring, future medical expenses that are not reimbursed (including insurance premiums, home care aids, assisted living or the cost of a nursing home). Because of this the Veterans pension is extremely valuable in helping Veterans, their spouses, or their survivors pay for the high costs of home care, assisted living or nursing home care. If your parents are in a situation where, due to their physical and financial condition, they are unable to care for themselves, you should investigate eligibility for this Veterans Department program. The program will pay the difference between “countable” family income (income AFTER permissible deductions e.g. recurring non-reimbursed medical expenses) up to $19,736 yearly for a Veteran without dependents or $12,681 for a widow of a veteran.There is both this income test and an asset test which must be met (however, a personal residence, personal property and automobiles for personal use are exempted form the asset test). Currently there is no penalty from the VA if the Veteran chooses to “rearrange” assets as there is a penalty with Medicaid Planning. So if preplanning is to be done, coordinate your planning with the potential need for future Medicaid Planning. Following is a general outline of the steps you might consider in making a claim:
- Determine the proper care setting and the monthly cost of care Most people want to live and home, or alternatively with their children, and only then, if this is not possible, in an assisted living facility. The majority do not want to go to a nursing home. A reasonable goal allows Veterans and their spouses to remain as independent of care arrangements as possible as long as possible.
- Determine eligibility for pension There are three different levels of pension: 1) Low Income Pension; 2) Pension with Housebound; and 3) Pension with Aid and Attendance. Service record eligibility criteria are the same for each level, however, the medical and financial criteria are different at each level.
- Calculate total income, recurring medical expenses, and total assets. Recurring, non-reimbursed medical expenses of BOTH the Veteran and spouse are deductible from gross income. These expenses typically include medical premiums, such as Medicare premiums, supplemental health care premiums, prescriptions, doctors visits, home health care, assisted living facility care and nursing home care. Under certain levels of care, family members can be paid caregivers, which is a deductible expense (if housebound must be licensed caregiver, if aid and attendance can be unlicensed family member [but not the spouse]).
- Decide if the amount of assets will meet an asset test applied by the local regional office and apply strategies, if necessary to reduce assets. You can qualify for VA Pension even if your assets exceed the limit. To receive the VA pension, you assets (net worth) must be under a certain dollar amount. The VA currently determines this by comparing your assets to your expenses over your expected remaining lifetime. If your assets are greater than your expenses for that remaining lifetime you will be denied.
- Make an estimate of the pension benefit (based on your proposed transfer of assets and readjustment of income Trained attorneys who know the VA administrative rules and who are accredited by the VA can assist you in preserving your excess resources while still being awarded the pension. Ensure you are coordinating this planning with the potential need for future Medicaid Planning.
- Arrange an exam or completion from the Veteran or claimants attending physician to be used by the VA Each level of pension requires different levels of medical need. Low Income Pension is the basic level of Improved Pension. Veterans who are under 65, who cannot maintain gainful employment, and who are not expected to improve, will receive low income pension from the VA. If the Veteran is 65 years old or older, the VA presumes disability, and it does not have to be proven. If the Veteran is deceased and the surviving spouse is applying for low income pension, the spouse can be of any age and does not have to be disabled. There are different medical tests for Pension with Housebound Benefits. And, Pension with Aid and Attendance is easier to obtain than housebound benefits.
- Make sure care arrangements are in place and monies have been applied or arranged for the cost before making application.
Next Steps Gather your necessary forms and documents to verify the costs of recurring medical expenses and request annualization of those costs. Complete the appropriate claim forms, submit with the proper documentation and then manage additional requests from the regional office (retain your original documents [have copies certified as true and correct]). Note it is better to submit all documents in one package.
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The Lechner Group, Ltd.
 The Lechner Group, Ltd. is a registered public accounting firm focused on business counsel and transactional financial diligence. We focus on providing a combination of legal, tax, and financial services to the privately owned business market. Recent assignments include acquisition reviews and transaction structuring.Find out more by calling Paul at 708.460.6686.
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Paul instructs in the “Financial Fraud” (Certified Fraud Examiner) Certificate Program at the Chicago Police Academy. He is also and Adjunct Professor in the Graduate School of Business at Saint Xavier University in Chicago and in the College of Business and Public Administration at Governors State University.
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