Question: My father is a World World II Veteran. He is 89 years old and lives alone. Unfortunately, his health is declining and he needs some assistance with his activities of daily living. What benefits might be available to him? What estate planning would he need to complete in order to be eligible for these benefits?

Answer: The first benefit your father may be eligible to receive is the VA pension. In order to receive this monthly stipend, your father must have at least 90 days of active duty service, with at least one day during a wartime period. The Veterans Administration considers the following dates as “wartime:

World War I
(April 6, 1917 – November 11, 1918)
World War II
(December 7, 1941 – December 31, 1946)
Korean conflict
(June 27, 1950 – January 31, 1955)
Vietnam era
(February 28, 1961 – May 7, 1975 for Veterans who served in the Republic of Vietnam during that period; otherwise August 5, 1964 – May 7, 1975)
Gulf War
(August 2, 1990 – through a future date to be set by law or Presidential Proclamation)

The Veteran must also be age 65 or older, totally and permanently disabled, a patient in a nursing home receiving skilled nursing care, receiving Social Security Disability Insurance, or Receiving Supplemental Security Income.

Assuming your father met the service requirements, the Veterans Administration will do a financial analysis of both his income and his assets to determine whether or not your father is eligible for the pension. In order to receive the pension, your father’s income and assets must be less than the limits as set forth by Congress.

While the Veterans Administration does publish its income rates each year, the net worth threshold is not exactly clear. However, many practioners believe that seniors with less than $80,000.00 in assets are usually eligible for the pension. Unlike community Medicaid, which exempts the homestead while the applicant is living there and retirement accounts, the Veterans Administration considers homes and retirement accounts as available resources, making it difficult to stay under the $80,000 threshold. However, by creating an irrevocable trust that complies with the Veterans Administration’s requirements, assets can be transferred to said trust and will be disqualified as available resources. It should be noted that retirement accounts, if transferred to the trust, will cause a taxable event and therefore should never be transferred unless the potential benefit outweighs the tax consequences.

The irrevocable trust authorized by the Veterans Administrations as acceptable for protecting assets, is not the same as a traditional Medicaid Qualifying irrevocable trust. Namely, the trust must provide that the grantor (the creator of the trust) is not entitled to any income. This is in contrast to the Medicaid Qualifying trusts, which often permit the grantor to receive income from their trusts.

The Veterans Administration appears to be becoming more strict with their analysis as recently assets in an otherwise acceptable Veteran’s Trust were considered available to the grantor because of a simple provision which stated “We are creating this trust as part of our estate plan to ensure efficient management, administration and protection of the trust assets for our beneficiaries.” The applicant was denied benefits because the Veterans Administration felt the provision implied that the applicant was trying to “build up their estate” and that the VA pension was not designed to do so. Moreover, while there is currently no look-back for the VA pension, there are new regulations expected which would include a 36 month look-back period. This would mean assets would have to be transferred 36 months prior to application in order for an over-resourced Veteran to be eligible for the VA pension.

Unfortunately, the maximum annual pension rates are quite low for many seniors living on Long Island. For instance, the rate for a single Veteran is was only $12,652 in 2013. This means that if your father’s income exceeded $12,652, he would not be entitled to any pension benefit. However, if his unreimbursed medical expenses exceeded 5% of the maximum annual pension rate, any expense over the 5% would be deducted from his income thus increasing his chance of receiving more funds. For example: if your father’s income was $16,000 in 2013 he would not be entitled to receive the VA pension because his income exceeded the rate for that year. However, if your father had medical bills totaling $5,632 (including pay an aide or assisted living expenses, etc.), any amount over $632 (5% of the maximum annual pension rate), could be deducted from his income. In this example, we could deduct $5,000 from his income of $16,000 bringing him to $11,000. If we then deduct $11,000 from $12,652, we can calculate that your father would have been eligible for a benefit of $1,652 for 2013.

If a Veteran, or their spouse, is entitled to the VA pension and his housebound or requires the assistance of another person to complete their activities of daily living, they may also be entitled to a second benefit called Aid and Attendance. Since the Aid and Attendance allowances increase the maximum annual pension rate, even those whose high income make them ineligible for the basic VA pension, may be eligible for benefits under the Aid and Attendance income limits. Using the same chart from 2013, the maximum annual pension rate for a single Veteran on Aid and Attendance increased greatly to $21,107.

The Aid and Attendance program will increase the monthly pension amount if your father meets one of the following conditions:

You require the aid of another person in order to perform personal functions required in everyday living, such as bathing, feeding, dressing, attending to the wants of nature, adjusting prosthetic devices, or protecting yourself from the hazards of your daily environment

You are bedridden, in that your disability or disabilities requires that you remain in bed apart from any prescribed course of convalescence or treatment
You are a patient in a nursing home due to mental or physical incapacity
Your eyesight is limited to a corrected 5/200 visual acuity or less in both eyes; or concentric contraction of the visual field to 5 degrees or less
You are substantially confined to your immediate premises because of permanent disability.

If you think your father may be eligible for one or both of these benefits, contact your VA regional office to file a claim.

Disclaimer: The author references 2013 rates as this is the most recent rate published by the Veterans Administration’s website. For current rates, please contact your regional Veterans Administration office.