It's a fact: People are living longer today than they used to generations ago. Although that's good news, the odds of requiring some sort of health care increase as you get older. And as the costs of home care, nursing home care, and assisted living escalate, you probably wonder how you're ever going to be able to pay for that care for yourself or your loved ones.
Medicaid and a Veterans Pension such as Aid and Attendance (A&A) are among the government programs available to help pay for some of these costs. While it's possible to qualify for both Medicaid and a VA Pension, very rarely does one receive assistance from both programs at the same time. However, that doesn't mean you should disregard either program when determining how to pay for the costs associated with long-term care.
What's the difference?
Medicaid and the Veterans Pension programs have similarities and many important differences. Very briefly, Medicaid is a joint federal-state program that provides medical assistance to aged, disabled, or blind individuals (or to needy, dependent children) who cannot otherwise afford necessary medical care. Each state administers its own Medicaid program based on broad federal guidelines and regulations. Medicaid is the primary payer across the nation for long-term care services.
The Department of Veterans Affairs administers programs for veterans (or their surviving spouses) with limited incomes who are eligible for a VA pension. The Basic Pension/Improved Income program pays a monthly benefit to healthy veterans over the age of 65 with low incomes. A&A is for veterans over age 65 who require assistance with activities of daily living, such as eating, bathing, and dressing. The Veterans Housebound Pension is similar to A&A, but is available for persons whose disability significantly limits their ability to leave their homes.
Veterans Pension benefits are paid monthly. The recipient is able to use the money as desired. Medicaid is an insurance program that pays for costs of care. While the Medicaid benefit amount is often much more than any Veterans Pension benefit, Medicaid generally pays the service provider directly.
Do you qualify?
There are several factors to consider when determining the program best suited for the type of care needed. First and foremost, will you qualify for either program? Both programs have asset and income limits that are similar, but not identical.
Also, both programs have look-back periods that can disqualify an applicant from receiving benefits if assets are transferred for less than fair market value, such as by gifting to family members. It is possible to qualify for A&A but not for Medicaid, or vice versa. Pension benefits are generally counted as income for Medicaid eligibility purposes and could cause the recipient to exceed Medicaid's income limits. Consult with an elder law attorney or advisor who specializes in this type of planning.
What type of care is needed?
Another important consideration relates to the type of care required. Generally, if home care or assisted living is the type of care needed, Veterans Housebound or A&A benefits may be more advantageous. If nursing home care is needed, Medicaid is usually the better option. The amount of pension income is rarely enough to make up the difference between the cost of nursing home care and the recipient's income. Conversely, Medicaid will cover this difference in most cases. Equally important, the pension benefit is reduced to $90 per month for a single person (veteran or surviving spouse) who is in a Medicaid-approved nursing facility and is covered by a Medicaid plan for services furnished by the nursing facility.
However, there may be limited circumstances when a pension is appropriate for a beneficiary in a nursing home. For instance, if the beneficiary has to "spend down" assets before qualifying for Medicaid, the pension would continue to be paid while the recipient is paying for nursing home costs "out-of-pocket."
There's another situation in which a married couple may be dually eligible for Medicaid and a Veterans Pension; for example, the veteran spouse is at home or in an assisted-living facility (community spouse), and the non-veteran spouse is in a nursing home. If both spouses are able to meet the respective income and asset qualifications for each program, the veteran community spouse may receive a Veterans Pension and the spouse in the nursing home may qualify for Medicaid.
What's the verdict?
As you can see, coordinating Medicaid with a Veterans Pension can be a complicated process. Often, dovetailing a pension with Medicaid does not work well. It is always a good idea to consult with a professional who is proficient in planning for both Veterans Pension benefits and Medicaid to help you decide the best way to proceed.
Have more questions? Want to go over all your options?
This article was prepared by Broadridge Financial Solutions.