The Department of Veterans Affairs provides monthly income assistance to disabled Veterans and their spouses or widows through their Veterans Pension program. To qualify for pension benefits, the Veteran must have served no less than 90 days (one of which must have been during a designated “wartime”) have received an honorable discharge and meet qualifying income and asset standards.
To qualify for pension, a veteran must be “permanently and totally disabled,” meaning “any impairment of the mind or body which is sufficient to render it impossible for the average person to follow a substantially gainful occupation.” The VA has a schedule of specific injuries that constitute permanent and total disability, but will consider other factors including a veteran’s age. Veterans age 65 and older are presumed to be permanently and totally disabled for the purpose of determining eligibility for pension. Evidence of disability, such as a statement from a private physician should be included with the application. If this evidence is sufficient for rating purposes, further medical evaluation may be unnecessary.
The VA income standards are set based on need, with monthly benefit amounts (changed annually) for single Veterans, married Veterans, and widows of Veterans.
A pension will supplement the individual’s regular monthly income up to the level for which they qualify. Thus if the Veteran meets a standard of $1,000 in monthly VA pension and has income of $600 per month, he/she will be entitled to receive a pension payment of $400 per month.
Certain medical expenses are deducted from regular monthly income to determine the Veteran’s need. If the Veteran meets a standard for $1,000 in monthly pension and has an income of $1,600 per month, he could still qualify for the full $1,000 in VA pension if his qualified monthly medical expenses amounted to $1,600 or more.
Medical expenses are payments for items or services that are medically necessary, improve the disabled persons functioning, or prevent slow or ease the individual’s functional decline. These might include expenses for doctors, hospital, homecare, assisted living, nursing home, medications, medical or adaptive equipment, health insurance premiums, etc.
An applicant for VA pension must have a net worth equal to or less than the prevailing Medicaid maximum community spouse resource allowance ($123,600 in 2018). The VA defines “net worth” as assets (not including the home) plus annual income (as adjusted by monthly medical expenses).
Thus an individual who owned $100,000, and has an annual income of $30,000 would have a net worth of $130,000 and would not meet the asset standard. The same individual would meet the standard, however, if his regular monthly income was offset by qualified medical expenses of $2,000 per month, ($24,000 per year). His net worth would then be only $106,000 ($100,000 + $30,000 – $24,000 = $106,000).
The VA has established a 36 month look back period and a penalty period of up to five years for individuals who reduce their net worth by giving assets away or transferring them for less than they are worth. The VA looks back from the date it receives a claim either initially or after a period of non-entitlement.
The penalty is determined based on all assets transferred during the look back period which would have put the applicant over the net worth limit at the time. For example, if the net worth limit was $123,600 and the applicant now has a net worth of $100,000, but gave $50,000 to his children within the past 36 months, the penalized amount would be $26,400 ($100,000 + $50,000 – $123,600 = $26,400).
The penalty is measured in months of disqualification. The penalty period is calculated based on the maximum monthly pension rate for a veteran who needs aide and attendance and has one dependent ($2,169 in 2018). Thus, the individual in the example above (with a penalized amount of $26,400) would have a penalty period of 12 months ($26,400 ÷ $2,169 = $12.17).
The penalty period would begin on the first day of the month following the last asset transfer. The maximum penalty can be no more than 5 years regardless of the amount penalized.