Veteran s Benefits vs. Medicaid

Transcription

1 Veteran s Benefits vs. Medicaid Mike Weeks The Weeks Group, LLC NAELA Annual Meeting BASICS DAY May 2013

2 Who is a Veteran? Active vs. Reservist Wartime vs. Peacetime Date and Length of Service Character of Discharge Other than Dishonorable

3 Basic Benefits Montgomery GI Bill VA Home Loans VA Life Insurance Burial Benefits Cemetery Health System Compensation Improved Pension

4 VA Health System Different than ChampVA or Tricare for Life All veterans theoretically eligible, but subject to priority groups VA hospitals and clinics Prescription Drug Benefits Veteran must register- Form 10-10EZ Lower Priority Groups are frequently ineligible Difficulties with emergency care and billing

5 Service Connected Compensation Veteran was injured, or injury was contributed to as a result of military service Must prove nexus between injury and time in the military Illness can manifest itself after discharge If on active duty, any injury suffered is service connected, unless willful misconduct

6 Common Injuries for Veterans PTSD- must prove existence of stressor, and then prove disabling effect Hearing loss- some occupations have a higher presumption Peripheral Neuropathy- WWII and Korea veterans Agent Orange exposure- Vietnam era Veterans

7 Agent Orange Exposure Veterans that served in Vietnam, or around 38 th parallel during Vietnam Era Boot on the Ground Eliminates need to identify nexus Brown Water ships Presumptive diseases

8 Rating Percentage Based on objective tests Private physician evidence can be used The higher percentage, the more $$ Boost based on unemployability If 60%+, also get long term care supports Also possible to have home modifications, some in home care

9 Survivor s Benefits Who is a surviving spouse? Veteran must either have: Death contributed to by service connected condition 100% disabled for at least 10 years prior to death 100% disabled for 1 year prior to death, and a POW AND death after % disabled for at least 5 years immediately upon leaving active duty

10 Survivor s Benefits Monthly compensation Can be increased if there are dependent children Can also be increased if spouse requires aid of others CHAMPVA benefits

11 Improved Pension Designed to provide for basic essentials for wartime veterans and their surviving spouses Remarriage issues for spouses Both means tested and income tested

12 Classification of Veterans/Spouses Disabled Housebound Aid and Attendance

13 Maximum Benefits- Base Pension Single Veteran $1,021 Per Month or $12,256 Per Year Married Veteran (Vet is healthy) $1, Per Month or $16,051 Per Year Widowed Spouse $685 Per Month or $8,219 Per Year Veteran Married to Veteran $1, Per Month or $16,051 Per Year

14 Maximum Benefits- Housebound Single Veteran $1,248 Per Month or $14,978 Per Year Married Veteran (Vet is healthy) $1,564 Per Month or $18,773 Per Year Widowed Spouse $ Per Month or $10,046 Per Year

15 Maximum Benefits- Aid & Attendance Single Veteran $1, Per Month or $20, Per Year Married Veteran (Vet needs A&A) $2, Per Month or $24, Per Year Widowed Spouse $1, Per Month or $13, Per Year Veteran Married to Veteran $2, Per Month or $32, Per Year

16 Income Test IVAP- Income for VA Purposes Almost any source of income Includes IRA distributions, business income, conversion of assets (house sale) Deduction for medical expenses over 5% of base pension rate Medical expenses can include home care, insurance, assisted living and maybe independent living

17 Income Test Test is to see if IVAP is less than maximum benefit, if so VA will make up the difference, up to maximum payment If Single Vet (A&A) has IVAP of $500, VA will pay $1,233 If same vet has IVAP of $-750, VA only pays $1,733

18 Asset Test Since program is designed to pay for life s necessities, and not to allow for wealth building, VA will deny benefits if net worth is excessive No hard and fast test Age analysis vs. $50,000 vs. $80,000 No transfer of asset penalty for transfers PRIOR to application

19 Trusts and VA Limited body of law on availability of trust assets Expectation is full divestiture of access and control VAOPGCPREC vs New regulations coming?

20 Pension and Independent Living Pre-2009, Independent Living costs (rent) routinely approved as a medical expense with a Dr s letter Anyone s guess what would work October Fast Letter Only count Ind. Living expenses if receiving help with 2 of 6 ADL s What about dementia?

21 Trusts and VA Income only trust? Grantor trust? Third party special needs trust? First party special needs trust? Pooled trust? Power of appointment? Right of reversion? Claimant in same household- what if parent lives with child?

22 Eligibility Verification Reports Annual comparison of estimates to actuals Very important to be returned, and accurately filled out Attorney can not charge for assistance Overpayment demands do happen!

23 Scenario #1 Bill comes into your office asking about veteran s benefits because his wife has Alzheimer s and needs to go to skilled facility. Couple has assets of $150,000. His income is $3000 per month, hers is $650. What questions would you ask?

24 Scenario #2 James daughter comes into your office for power of attorney for her father who is in hospital with diabetes complications. He also has ischemic heart disease and several lung ailments. She thinks he will need either assisted living or skilled care. His assets are $15,000 and his monthly income is $2800. What are questions you would ask, and recommendations you might give?

25 Scenario #3 Steve and Mavis recently moved to assisted living at a combined cost of $6,000 per month. Their assets are $350,000 of CDs and a $250,000 home that they are likely to sell. What would you recommend? What pitfalls should they be aware of?

26 Scenario #4 Cliff, a WWII veteran, is fairly independent, but has numbness in his fingers and toes, and has significant hearing loss. He also takes several hundred dollars per month in prescription medications. He came to you to draw up a will, and drove himself to your office. What would you advise him, or questions you would ask?

27 Scenario #5 Eddie has been on community based Medicaid for many years, but his health is failing more recently in the past year from an automobile accident. He has been receiving $300 a month from the VA and he s not sure exactly why he is getting this monthly payment. He s concerned that he might need facility based care in the next year. Eddie is 64 years old, and is about to receive $25,000 from a lawsuit settlement. What would you advise?

28 VA Basics: From the Law to Attorney Certification Michael C. Weeks, CELA 2013 NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 1

29 VETERAN S BENEFITS By Mike Weeks, CELA Over the past decade, but in particular the last five years, Veteran s benefits have become a very hot topic for elder law attorneys. Unfortunately, this has also been an area that has attracted a lot of attention from financial sales professionals- some of whom have very limited knowledge, and often indifference towards whether qualifying for benefits is actually beneficial to the client, as long as they can earn a commission in the process. Most of the attention has focused on the Improved Pension (commonly referred to as Aid and Attendance) program. However, there are actually many different types of veteran s benefits, and a skilled elder law attorney needs to be informed as to all of these programs, and how they interact with each other, and how they may or may not interact with Medicaid benefits (or any other type of asset based public benefit program). Before discussing specific benefit programs, it is important to discuss who is a veteran, and how does one figure out if they are eligible for any benefits? This question may seem overly basic, but there are actually many veterans who will not be eligible for some or all programs for various reasons. As a basic rule, in order to be eligible for any Veteran s benefits, the individual must be a veteran who received a any discharge other than dishonorable. 1 So a veteran could receive a general discharge (as opposed to honorable), and still qualify for benefits. If you are advising a veteran who has a dishonorable discharge, then you should try to ascertain whether this discharge was inappropriate and whether it might be changed. If you have a veteran, it will next be important to understand if this is a wartime veteran or non-wartime veteran. A wartime veteran is any veteran who served at least 90 days of active duty, at least one of which was during a period of war. For veterans who were on active duty after September 8, 1980, it must be 24 months of consecutive active duty, unless the reason for not completing the 24 months was because of the completion of the full period that the veteran was called to active duty. 2 There is no requirement that the veteran was actually engaged in the war, just that they be on active duty during the wartime. The Veterans Administration has a listing of dates that will count as war-time service, and they are generally more expansive then most people would associate the wars beginning and conclusion. These dates are as follows: World War II: 12/7/ /31/1946 Korean War: 6/27/1950-1/31/1955 Vietnam War: 2/28/1961-5/7/75, if served in the country of Vietnam, otherwise 8/5/1964-5/7/1975 Persian Gulf: 8/2/90- Date to be announced later 3 The reason that it is important to differentiate if you have a wartime veteran is that certain benefit programs are only available to wartime veterans (such as Improved Pension benefits). Frequently, 1 38 USC USC 1521, and 38 USC 5303A for post 9/7/80 service 3 38 USC NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 2

30 clients will question on whether time in the reserves count towards being considered a wartime veteran. Generally, the answer is no, reserve service is not active duty, unless claiming an injury suffered during training or other periods while actually actively participating in military activities, or if the unit was activated for a period (such as many reserve units have been called into duty for service in Iraq and Afghanistan over the past ten years). Basic Benefits: With the recent popularity of veteran s benefits, particularly amongst senior veterans, it is easy to lose focus on benefits that are often available to veterans of all ages. Some of these include: Montgomery GI Bill: Provides educational assistance to veterans and in some cases their dependents based on amount and time in service. VA Home Loans: provides low cost loan options for veterans, regardless of whether they are wartime or peacetime veterans VA Life Insurance: Life insurance that is available only to veterans, many senior veterans still have policies that were taken out during their time in the service that might have significant cash value at this point. VA (national) cemeteries: Wartime veterans, and peacetime veterans who were killed on active duty are eligible for burial in a national cemetery at no charge. Their spouse is also entitled to burial in the national cemetery. VA health system: All veterans that have an honorable discharge are theoretically eligible for either free or low cost health care at VA hospitals and clinics. This can include many different types of health care, including some personal care services received at home, if medically necessary. Many veterans will utilize the VA health care system in lieu of having health insurance, while other will use the system only for the prescription benefits and the $8 copays for drugs. In order to qualify for benefits, the veteran must apply for benefits, and be placed into a priority group. Dependent on funding, the VA will close enrollment to higher priority groups (Group 8). These priority groups are as follows: Priority Group 1: Veterans with VA Service-connected disabilities rated 50% or more. Veterans assigned a total disability rating for compensation based on unemployability. Priority Group 2 Veterans with VA Service-connected disabilities rated 30% or 40% NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 3

31 Priority Group 3 Veterans who are former POWs. Veterans awarded the Purple Heart Medal. Veterans awarded the Medal of Honor. Veterans whose discharge was for a disability incurred or aggravated in the line of duty. Veterans with VA Service-connected disabilities rated 10% or 20%. Veterans awarded special eligibility classification under Title 38, U.S.C., 1151, benefits for individuals disabled by treatment or vocational rehabilitation. Priority Group 4 Veterans receiving increased compensation or pension based on their need for regular Aid and Attendance or by reason of being permanently Housebound. Veterans determined by VA to be catastrophically disabled. Priority Group 5 Nonservice-connected Veterans and noncompensable Service-connected Veterans rated 0%, whose annual income and/or net worth are not greater than the VA financial thresholds. Veterans receiving VA Pension benefits. Veterans eligible for Medicaid benefits. Priority Group 6 Compensable 0% Service-connected Veterans. Veterans exposed to ionizing radiation during atmospheric testing or during the occupation of Hiroshima and Nagasaki. Project 112/SHAD participants. Veterans who served in the Republic of Vietnam between January 9, 1962 and May 7, Veterans who served in the Southwest Asia theater of operations from August 2, 1990, through November 11, Veterans who served in a theater of combat operations after November 11, 1998, as follows: Veterans discharged from active duty on or after January 28, 2003, for five years post discharge Priority Group 7 Veterans with incomes below the geographic means test (GMT) income thresholds and who agree to pay the applicable copayment. Priority Group 8 Veterans with gross household incomes above the VA national income threshold and the geographically-adjusted income threshold for their resident location and who agrees to pay copays Veterans eligibility for enrollment: Noncompensable 0% service-connected and: 2013 NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 4

32 Subpriority a: Enrolled as of January 16, 2003, and who have remained enrolled since that date and/ or placed in this subpriority due to changed eligibility status. Subpriority b: Enrolled on or after June 15, 2009 whose income exceeds the current VA National Income Thresholds or VA National Geographic Income Thresholds by 10% or less Priority Group 8 Continued Veterans eligible for enrollment: Nonservice-connected and: Subpriority c: Enrolled as January 16, 2003, and who remained enrolled since that date and/ or placed in this subpriority due to changed eligibility status Subpriority d: Enrolled on or after June 15, 2009 whose income exceeds the current VA National Income Thresholds or VA National Geographic Income Thresholds by 10% or less Veterans not eligibility for enrollment: Veterans not meeting the criteria above: Subpriority e: Noncompensable 0% service-connected and high income Subpriority f: Nonservice-connected and high income Service Connected Compensation Benefits: Much like social security disability benefits, Compensation benefits are considered to be earned, meaning that the amount of assets or other income that the veteran has does not have any effect on eligibility for compensation benefits. The fundamental need for a successful compensation claim is the development of some injury, and the linking of that injury to an event that occurred during the veteran s active duty service. If a veteran is on active duty, then they are considered to be on active duty 24 hours a day during that period, even if the injury occurs while not at work. If the veteran injured his knee during a pickup basketball game with his friends, that injury is service connected. 4 For many veterans, their injuries may not significantly present themselves for many years after service has ended. This greatly increases the difficulty for the veteran to have a successful claim because they have the burden to establish that the injury occurred during active duty. For instance, if the veteran who injured his knee during the basketball game never sought treatment for the injury at that time, but later had complications from the untreated knee injury, he would have to prove that the injury occurred during the basketball game, which would require substantiation of the injury from others (who the veteran may not remember their names, or even if he/she does, haven t contacted those people for 10+ years, and even if they were in contact, will the others remember?). For veteran s claiming Post Traumatic Stress Disorder (which commonly is unreported initially, particular for WWII, Korea, and Vietnam veterans), they have to be able to identify a stressor, or the specific event that caused the traumatic stress. For someone who is already suffering from these symptoms, recalling specific dates and places, may be very difficult. Linking injuries back to active duty service was for many decades a very challenging issue for Vietnam veterans who were claiming exposure to Agent Orange because they had 4 38 CFR NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 5

33 to prove when and where they encountered Agent Orange. This will be discussed in more detail later, but thousands of claims are now being revisited because of an initial inability to effectively link injuries back to a specific event during active service. Once the injury is linked to an active duty event, the next hurdle is figuring out how disabling the injury is at this point in time. This portion is referred to as the rating decision, and is a percentage from 0-100% disabling. The more disabled the veteran is, the higher amounts of monthly compensation they will receive. For 2013, the amount of compensation is as follows: 5 Percentage Single Veteran Married Veteran 10% $129 $129 20% $255 $255 30% $395 $442 40% $569 $631 50% $810 $888 60% $1,026 $1,120 70% $1,293 $1,402 80% $1,503 $1,628 90% $1,689 $1, % $2,816 $2,973 Additionally, the compensation amount can be raised if there are dependent children or parents, and also if the spouse of the veteran requires the aid and attendance of other individuals. This extra amount is generally a few hundred dollars per month. The determination as to the rating percentage is basically an objective test. The VA has published regulations that outline a series of tests depending on the nature of the injury. Based on the results of these tests, a percentage is assigned. For a veteran who is claiming neuropathy based loss of function in the extremities, there are tests to examine range of motion, tactile ability, etc. to determine how severe the neuropathy is at that point in time. Because these tests are fairly standardized, it would hopefully eliminate any preferential treatment between one examiner and another, and provide equal treatment for all veterans. These regulations can be found online at Many veterans will have multiple injuries suffered during their time in service. For example, a World War II veteran who served in the artillery during the Battle of the Bulge (Ardenne Forest) might have hearing loss and also have loss of function in each of his four extremities because of exposure to extreme cold during the winter of So that veteran might have five different injuries suffered. Each injury is separately rated, but then those ratings are combined and a percentage is used, but is not as simple as adding each of the injuries together (and is actually not beneficial to the veteran, as the NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 6

34 multiple injuries will never cause the same percentage as adding the two numbers together- it will always be lower). This calculation is explained in 38 C.F.R. 4.25, but the basic logic is that if condition A renders you 40% disabled, then condition B can t be judged vs. a completely healthy person, so they will take the percentage that is left over (60% in this example) and multiply that times the normal percentage if there weren t multiple conditions. For example, if A=40%, B=20%, then the combined percentage would be equal to.4 + (.2*.6), which would equal 52%, rounded down to 50% instead of 60% (.4+.2). Another possibility for a veteran who was significantly disabled, but his/her rating is not 100% is to make a claim for unemployability. This claim is effectively saying that because of the injuries, the veteran is unable to hold employment, so for all practical purposes, the veteran is 100% disabled. If it is found that the veteran is unemployable, then they will be compensated as a 100% disabled veteran. In order to make this claim, the veteran must have a rating of at least 70% in the event of a single injury or 60% in the event of multiple injuries where at least one of the injuries is 40% rated. 6 Vietnam Era Veterans Agent Orange was used extensively as a defoliant during the Vietnam era in several areas of Southeast Asia. This herbicide is now known to cause many health issues for people who have been exposed, but these symptoms were typically not present for a significant period of time after exposure. Because of its widespread use, and after intense pressure and lobbying from veterans groups, Congress passed legislation that created a presumption that any veteran who had a boot on the ground in Vietnam (and also for veterans serving at the 38 th parallel in Korea during the Vietnam era) was exposed to Agent Orange. This eliminates the need for the veteran to prove exactly when and where he/she was exposed, which was often impossible years after the fact. This presumption is a very significant breakthrough for veterans, and it is important for any elder law attorney to be aware of how Agent Orange exposure affects compensation benefits. However, just because exposure to Agent Orange is conceded, that does not mean that your claim for any injury will be successful. It is still necessary to show that Agent Orange caused, or is at least as likely as not to have caused the claimed injury. This has been another hard fought battle with the VA in getting concessions that certain diseases are caused by exposure, and the last several years has seen many breakthroughs. The VA maintains a list, which is being added to periodically, of certain diseases that they will concede was caused by Agent Orange Exposure. This list currently includes the following: CFR 4.16(a) 2013 NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 7

35 Adult Fibrosarcoma AL Amyloidosis (also known as Primary Amyloidiosis) Alveolar Soft Part Sarcoma Angiosarcoma B-cell Leukemias Cancer of the Brochus Cancer of the Larynx Cancer of the Lung Cancer of the Prostate Cancer of the Trachea Chloracne Chronic Lymphocytic Leukemia Clear Cell Sarcoma of Aponeuroses Clear Cell Sarcoma of Tendons Congenital Fibrosarcoma Dermatofibrosarcoma Ectomesenchymoma Epithelioid Malignant Leiomyosarcoma Epithelioid Maligent Schwannoma Epithelioid Sarcoma Extraskeletal Ewing s Sarcoma Hairy-cell Leukeima Hemangiosarcoma Hodgkin s Disease Infantile Fibrosarcoma Ischemic Heart Disease Leiomyosarcoma Parkinson s Disease 2013 NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 8

36 In addition to the Veterans who actually did have a boot on the ground in Vietnam, there are also certain Navy Veterans who will be included in presumptive exposure because of the proximity of their ships to Vietnam. These ships are called Brown Water Ships and typically operated on inland waterways in Vietnam or just off the coast for extended periods. 7 If you have a Vietnam era veteran who was in country, and is affected by one of the above diseases (or you feel that you can prove the nexus between their injury and Agent Orange exposure), the Veteran will receive some level of compensation, but they will still need to have an examination to determine their rating percentage prior to receiving any benefits. These claims typically take many months, with many lasting over a year. The VA does pay back benefits that typically will go back to the first time that the Veteran expressed a clear intent to file for compensation. This can be as simple as a written statement to the VA (and delivered to them) that says I believe I have a compensation claim resulting from my time in the military. This by itself would be obviously be insufficient to have a successful claim, but should be able to hold the date of intention if expanded with a complete application, medical records, etc. Survivor s Benefits (DIC) For those veterans whose death was related to the service connected compensation claim, there is and additional benefit to surviving spouses, known as Dependent and Indemnity Compensation (DIC). This benefit is only for surviving spouses (so not ex-spouses and/or long-time boyfriend/girlfriend). This benefit can also be paid if there are minor dependent children, as long as they are minors (or up to age 23 if in school). There are several ways to prove that the Veteran s death was related to the service connected relationship. The first would obviously be if the Veteran died while on active duty. The second is if the veteran was 100% disabled for at least 10 years prior to his death, regardless of the actual cause of death. The third is if the veteran was 100% disabled for at least a year prior to death AND was a prisoner of war AND died after September 30, Another way is if the veteran was rated as 100% disabled upon exit from active duty and for at least five years prior to death. Finally, if the veteran s death was contributed to by the service connected injury, regardless of rating percentage, then the spouse can be eligible for benefits. The cause of death does not need to be exclusively or even primarily the service connected injury. For example, if you had a client who was sustained a lung injury that permanently inhibited lung function, and then that veteran passed away from complications of pneumonia, there is a good chance that a successful DIC claim could be made, because if the lung had been fully functional, there is at least a reasonable chance that the veteran might have been able to survive the pneumonia. As with all claims for service connected compensation, the veteran must be given the benefit of the doubt if there is some doubt as to whether the injury is service connected. In other words, the veteran/spouse must prove that it is at least 50% possible that the claim is valid, as opposed to a preponderance of the evidence or other standard. 8 If a spouse is successful in their claim for DIC benefits, what amount should they expect to receive? The base answer is $1, This amount can be increased if the spouse needs the aid and attendance of another individual by an additional $301. If there are minor/dependent children, this award can be CFR 3.307(a)(6)(iii) USC 5107(b) 9 See 38 U.S.C for actual law regarding DIC benefits, including rates payable.

37 increased by an additional $301 per child. Finally, if the veteran was 100% disabled (including if that award was increased due to unemployability) for at least 8 years prior to the Veteran s death, then the DIC award will be increased by an additional $258 per month. Improved Pension (Non-Service Connected) The program that has caused most of the extra attention on Veteran s Benefits over the past several years is the Improved Pension program. To the surprise of many (including veterans), this program has been around for many decades, but has been getting attention because it is one of the few benefits that can pay actual cash benefits (as opposed to providing access to medical care) to veterans who were not injured during their time in the military. This program is available to any wartime veteran who has any discharge other than dishonorable, and also to a surviving spouse of a wartime veteran. Because of the advancing age of many of our WWII and Korea vets (and their spouses), many of these veterans who served, now need significant medical care and are struggling to pay for this care. Fortunately, the vast majority of the veterans who served during this era were not injured, so the Improved Pension program is one of the few options that are available. The basic premise behind this program is that wartime veterans should never be without a basic level of income to provide for food and shelter. This program is also available to the surviving spouse of a wartime veteran. Depending on the health of the veteran (or the spouse if the veteran is deceased), there are different levels of income that it is determined that they need to provide for the basic elements of living. Because this program is designed to ensure funds are available for food/shelter, etc. the Veteran s Administration provides an offset to countable income for medical expenses. This calculation leads to a phrase known as IVAP, or income for VA purposes. Quite simply, this calculation is all sources of income (including distributions from retirement accounts, business income, and gifts/inheritances) minus medical expenses that exceed an amount equal to 5% of the maximum annual pension rate for a veteran. This amount is currently $623 for a single veteran or $816 for a veteran/spouse. 10 Classifications of Veterans As stated above, the law requires that Veteran s whose health is compromised will need a certain level of income each month. The VA has three classifications of veterans who could potentially be eligible for Improved Pension benefits. 1. Disabled- There are two different ways that a veteran can claim that they are disabled. The first would be to show evidence of some medical condition that would render them 100% disabled, much like (but not exactly) the requirement for someone who is applying for social security disability. This can obviously be burdensome as it will require significant medical evidence to substantiate the disability, but can certainly be done. The second, and more common for elder law attorneys, would be to simply have the veteran be at least 65 years old and there is a presumption of disability CFR 3.272(g) 11 Pub. Law No NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 10

38 2. Housebound- If a veteran is not only disabled, but substantially confined to his or her dwelling, they will be considered to be housebound. Additionally, if the veteran has one condition that would be 100 percent disabling and another that would be 60% disabling, that veteran will be considered to be housebound, regardless of whether they are actually confined to their home Aid & Attendance: The most common classification for the typical client is going to be Aid & Attendance. This is because this classification not only provides the highest monthly benefit, for many clients one of the keys to receiving any benefits is the presence of high medical expenses. It makes sense that for clients who have high medical expenses, that they are also dependent on the aid of others to provide the functions required by everyday living 13. Examples of someone who would qualify for this classification can be as follows: a. Being blind or nearly so blind as to have corrected visual actuity of 5/200 or less or concentric contraction of the visual field to 5 degrees or less. b. Being a resident in a nursing home because of mental or physical incapacity c. Showing that the veteran is unable to dress or undress or keep themselves clean and presentable, that they need frequent adjustments to any prosthetic or orthopedic appliance, that they are not able to attend to the wants of nature, or has any physical or mental incapacity that requires assistance on a regular basis to protect the veteran from the dangers of their daily environment. 14 These classifications are written from the perspective of the veteran needing the aid, and as long as the veteran is alive, then only their health will be evaluated for purposes of establishing this classification. So if you have a healthy 80 year old veteran with a 80 year old spouse who is wheelchair bound, and has advanced dementia, the appropriate classification would be disabled. If the roles were reversed, then the appropriate classification would be aid and attendance. In the event that the veteran has deceased, then the same classifications would be made based on the health of the surviving spouse, as they are now the claimant for benefits. Maximum Benefit Based on the classification of the veteran or the surviving spouse, below are the maximum monthly benefits that are available for qualified claimants Maximum Pension Rates for Base Pension Benefits Single Veteran $1,038 Per Month or $12,465 Per Year Married Veteran (Vet is healthy) $1, Per Month or $16,324 Per Year Widowed Spouse $695 Per Month or $8,219 Per Year Veteran Married to Veteran $1, Per Month or $16,051 Per Year 2013 Maximum Pension Rates for Housebound Pension Benefits CFR 3.351(d) CFR 3.351(b) CFR (a) NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 11

39 Single Veteran $1,269 Per Month or $15,233 Per Year Married Veteran (Vet is healthy) $1,591 Per Month or $19,093 Per Year Widowed Spouse $ Per Month or $10,046 Per Year 2013 Maximum Pension Rates for Aid and Attendance Pension Benefits Single Veteran $1, Per Month or $20, Per Year Married Veteran (Vet needs A&A) $2, Per Month or $24, Per Year Widowed Spouse $1, Per Month or $13, Per Year Veteran Married to Veteran $2, Per Month or $32, Per Year The Income Test As stated previously, the Improved Pension program is designed to provide a base level of income to the veteran/surviving spouse. Therefore, if the veteran already has a sufficient level of income, then the VA will decline to provide assistance for the veteran or spouse. Particularly for senior veterans, the key to a successful application will be the ability to show enough qualified medical expenses the reduce income sufficiently. Income from each and every possible source counts as income, so accurately expressing medical expenses is extremely important. The VA has a fairly liberal policy of counting medical expenses, but documentation is key. Examples of appropriate medical expenses include health insurance premiums, expenses for co-pays/deductibles, and non-reimbursed medical costs for paying for treatments. Additionally, all expenses associated with medically necessary long-term care will be counted as a medical expense. This certainly includes payments to home health agencies, and private individuals who are actually providing care and receiving compensation for the same (even if the caregiver is a family member). This should also include payments made to licensed assisted living facilities or skilled nursing facilities, and 100% of the payments should be medical expenses, in spite of the fact that some portion of the monthly charge would also be for shelter or food (although at the time of writing, some practitioners have reported assisted living costs being questioned if 2 of the 6 ADL s are not being serviced in what appears to be an expansion of the Fast Letter explained below). For seniors that are living in independent living facilities, there has been some controversy as to whether some or all of these payments should also be included over the past 1-2 years. According to the VA adjudicator s (claim processor) manual, if the claimant medically requires the services that are being provided by the independent living facility, such as 24 hour supervision, the facilitation of a protected environment, etc. then the entire costs of the facility should be counted. However, in the last two years, many of these claims were being denied by the adjudicators. In an attempt to provide clarity for adjudicators and veterans, the VA Office of General Counsel issued FAST Letter on October 26, At this point, the test appears to be only to count the rent portion of independent living costs if assistance with at least 2 of the 6 Activities of Daily Living (ADL) is being received by the claimant. It is important to note 15 for a full copy of the letter NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 12

40 that neither medication management not 24 hour supervision are considered to be ADL s. This seems to be an overly strict interpretation (particularly in light of the generous interpretation often found just months earlier). For example, if a veteran has moderate to severe Alzheimer s, and as a result, he can t recognize his family, has no orientation to time or place, can t manage his prescriptions, and needs help with bathing- he may very well not qualify because he is only receiving help with 1 ADL (bathing). Continued lobbying is going on to seek clarification expansion of this to include claimants with more ailments of mental impairment instead of just the ADLs which are more physical in nature. These extra services do not need to be actually rendered by the facility, a third party company can be providing these services on-site, but the doctor will need to certify to both the need for the extra services, and the medical necessity of residing in the Independent Living Facility. It will continue to be important for those advising veterans in independent living facilities to stay abreast of this, as for many seniors the availability of this pension benefit is a major factor in their decision to move. As stated above, some independent living facilities will also have relationships with home care companies (sometimes an affiliated company) that will allow them to combine services to provide more of an assisted living level of care. The costs that are payable to the home care company would still be medical expenses, even if they are not assisting with 2 ADL s, but the room and board portion is often what it is critical to a successful claim. Net Worth Test Once again, because the Improved Pension plan is designed to ensure the veteran and their surviving spouse have a minimum income to provide for life s essential expenses, it makes sense that this program would also have an asset test in addition to an income test. In calculating net worth, the Veteran s administration will not count the primary residence, a vehicle, the personal property of the veteran, and burial plots and plans. These rules are generally the same as for Medicaid, but it is important to note that there is no exception to counting income producing property as there is for Medicaid. If a claimant has a farm, rental property, or other business, this asset will be counted, and also the income from the business will be counted as income. Over the years, the VA has used different standards to determine what an appropriate level of net worth would be to not cause denial of benefits. For many years, it was $50,000, then that was raised to $80,000. In recent years, the VA has switched to a policy of following an age-analysis method, which generally says that the older the claimant is, the less assets they will need because they should have a shorter life expectancy than a younger claimant. The issue is that because the law states that benefits will only be payable if the veteran does not have sufficient means to pay for their own care, this can be quite ambiguous. 16 With the age analysis test, it is not only necessary to look at the veteran s age, but also their individual situation. For instance, it might be possible for an 88 year old veteran to have $50,000+ if they are in a skilled facility that is costing $6,000/month above and beyond their normal income, but not if they are living at home and only incurring $1,500 month in caregiver expenses. Transfer of Assets and eligibility for Improved Pension, how trust assets can affect eligbility. At this time, there simply is no transfer of asset penalty for improved pension. This provides tremendous opportunities for planning in order to help a family qualify for benefits which can be used to help with the high costs of long-term care. However, there is unfortunately some ambiguities in the CFR NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 13

41 law regarding what will count as a completed transfer, and make assets no longer countable in determining net worth. The first source of guidance is found in 38 USC which provides that pension payments should be denied when it is reasonable that some part of the corpus of the estate be consumed for the veteran s maintenance. This statute is not unique to trusts, as it is the basis for why the pension program is needs based- if the veteran can afford to pay their own expenses, they should do so. The only other source of codified law is found in 38 CFR 3.276(b). This regulation reads: (b) Transfer of assets. For pension purposes, a gift of property made by an individual to a relative residing in the same household shall not be recognized as reducing the corpus of the grantor s estate. A sale of property to such a relative shall not be recognized as reducing the corpus of the seller s estate if the purchase price, or other consideration for the sale, is so low as to be tantamount to a gift. A gift of property to someone other than a relative residing in the grantor s household will not be recognized as reducing the corpus of the grantor s estate unless it is clear that the grantor has relinquished all rights of ownership, including the right of control of the property. [emphasis added] The most favorable ruling is VA Office of General Counsel Opinion Letter dated December 17, 1991 (VAOPGCPREC 73-91). In this letter, the General Counsel agreed that the veteran placed assets into an irrevocable trust where his grandchildren were the beneficiaries of the trust were not to be considered as countable assets. The key is that the veteran must completely give up full equitable and legal ownership such that it is not reasonable to expect the funds to be used for the veteran s benefit. In 73-91, citing previous rulings, the VA instructs to not count assets in an irrevocable trust unless one of three things occur: 1) The property is actually owned by the claimant 2) The claimant possess such control over the property that the claimant may direct it to be used for the claimant s benefit; 3) The funds have actually been allocated for the claimant s use. This ruling would appear to allow considerable planning discretion to put the trust assets out of reach by simply not allowing the veteran or claimant spouse to not have any control over the property, and then also ensuring that the property isn t actually used for the veteran. However, this ruling is in contrast to another general counsel opinion letter dated August 29, 1997 (VAOPGCPREC 33-97). In this letter, the VA stated that the assets of a special needs trust created by one spouse for the benefit of the other spouse was countable. This letter, which appears to be reaching for a desired result, as opposed to basing its ruling on defined law, shows the general lack of established precedent that would make advising clients much easier. There are also a handful of other general counsel letters that appear to sometimes not count the assets, and sometimes they instruct to count the assets. There is talk that regulations that would clarify some of these issues are coming in the not too distant future, which would be helpful. However, it is very important to note that just because the VA has no transfer of asset penalty, doesn t mean that transferring assets for purposes of qualifying for VA benefits is automatically a good decision. More often than not, clients that are looking for assistance from the VA will need higher levels of care, including skilled care, in the not too distant future. Transferring assets either outright or in certain types of trusts will definitely cause penalties for Medicaid. While it might be possible to unwind a trust to eliminate Medicaid penalty periods, there are often significant estate, gift, and/or income tax 2013 NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 14

42 consequences to structuring this type of planning that will still be an issue if the planning is reversed in the next few months or years. What separates a good elder law attorney from the insurance salesman is the ability to truly examine the client s situation not only now, but a reasonable guess as to the future needs, and develop a plan that covers all of the bases. Application Effective Dates and Processing Times Generally speaking, most VA benefits are effective the first date of the month AFTER an application or notification of an intent to file for benefits is received by the VA. It is very important to retain proof of the first date that this is established, as it is not uncommon for the VA to not accurately report this date, which can cause the loss of thousands of dollars of benefits very quickly. While certain areas of the country are better than others, the VA is still very slow in processing applications. On average, it takes 6-8 months for an application to be fully approved. This can be greatly slowed down by not turning in completed applications, or applications that do not fully support the claim. Over the past few years, the VA has offered new forms for pension applications (21-526EZ and EZ) that can be used to simplify the application, and also declare that the claim is fully submitted. This basically means that you are not asking the VA to do any other research regarding the claim, and the claimant plans on not submitting additional evidence. The claimant is asking the VA to issue a ruling based on the evidence in the file. This has greatly increased (along with the deployment of additional workers at the VA for pension cases) the speed of applications, which is undisputedly a good thing. Annual Reinvestigations Effective for 2013, the VA has discontinued the process of annual reinvestigations. However, since this is so new, it was thought prudent to continue to include the history of what the reinvestigation typically entailed, as it will not be surprising if it comes back in the near future. Additionally, if the claimant is not receiving the entire benefit (because certain medical expenses were higher than projected), filing a reinvestigation report will be the only way to ask the VA to award more benefits for the calendar year that just expired. When a veteran/spouse submit a claim for improved pension, they are actually listing estimates for the next 12 months of income and expenses. Each year, in January, the veteran/spouse would have received an Eligibility Verification Report (EVR). This form asks the claimant to list actual expenses incurred during the past year, and to estimate the expenses for the next year. The VA uses this to make sure that the correct amount of benefits are paid. If the estimates were too low, and the claimant was not receiving the maximum benefit, the VA will make a payment. Conversly, if the estimates were too high, the VA can ask for a repayment. It is very important that your clients complete these forms, and do so accurately. If the form isn t returned, it is almost a guarantee that the family will get a demand for overpayment for all of the benefits received in that year. Given the new changes, it is not yet clear whether this form will be used if the Claimant understated estimated medical expenses to request the difference be made up, or if some other form will be required. Attorney Certification and Fees The VA has long held that fees cannot be charged by any individual (attorney or non-attorney) for helping a veteran apply for benefits. This remains the law today. The VA has additionally stated that no one may help a veteran with an application if they have a direct financial benefit from the outcome of that application (such as an advisor being paid by an assisted living facility for helping their potential 2013 NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 15

43 new residents get VA benefits, or the assisted living themselves helping the veteran). As attorneys, we are allowed to charge for other legal services, such as power of attorneys, trusts, long-term care planning, Medicaid planning, etc. If fees are being received, it is important to segregate those fees, and be clear that those fees are not part of completing the application or advising the veteran on their specific intention to file for benefits. If the veteran has previously applied for benefits, and been denied in whole or in part, then it is permissible to charge fees. Generally speaking, these fees need to be limited to 20% of the back-due payments. There are exceptions to the 20%, but those exceptions are beyond the scope of this article. If you are charging a fee to help with an appeal, you must have a fee agreement with the client, and the VA must approve this fee agreement. Additionally, every attorney that desires to be able to speak to the VA on behalf of the claimant, must be recognized as that claimant s authorized representative. This is done by the veteran/spouse completing Form 21-22a naming you as the claimant s representative. The claimant can only have one authorized representative, so if you have been named, then the VA won t talk to the son/daughter who has primary control over Dad or Mom s money. In addition to being that client s representative, the attorney must be accredited with the VA. In order to be accredited, the attorney must submit Form 21a to the Office of General Counsel. The main requirements are to complete the form, be in good standing with all bars licensed to practice law, and also to have attended a three hour CLE accredited course that covers specific topics within the first year AFTER submitting the application. The attorney will need to furnish proof of attending a qualifying CLE to the Office of General Counsel. Within the first three years after accreditation, and every two years after that, the attorney will need to complete another three hour course. These courses must cover the following: representation before VA, claims procedures, basic eligibility for VA benefits, right to appeal, disability compensation (38 U.S.C. Chapter 11), dependency and indemnity compensation (38 U.S.C. Chapter 13), and pension (38 U.S.C. Chapter 15). 38 C.F.R (b)(1)(iii) NAELA Annual Conference May: 2-4 Basics Workshop: May 1 Atlanta, GA Page: 16