VA Pensions Impact on Medicaid Eligibility

A person can be dually eligible for the Veterans Affairs (VA) Aid & Attendance (A&A) Pension or Housebound Pension and Medicaid. In other words, it is possible for one to receive benefits from both the VA and Medicaid simultaneously. However, the cash payment received via the VA might be counted towards Medicaid’s income limit, potentially causing one to be denied benefits due to excess income.

The VA Aid & Attendance Pension is a monthly cash allowance for wartime veterans and surviving spouses who require assistance with their daily living activities. It is intended to help cover the cost of long-term care, whether it be in the home, an assisted living residence, or a nursing home facility. The Housebound Pension, also a monthly cash allowance, is for veterans and surviving spouses who are permanently disabled and significantly confined to their “home”. “Home” can also include an assisted living residence or nursing home facility.

The A&A Pension and Housebound Pension is an “add on” benefit to the Basic Veterans Pension, or in the case of surviving spouses, the Basic Survivors Pension. This means a person must not only meet the eligibility criteria for the Basic Pension, but also for the A&A Pension or the Housebound Pension. While we won’t dive into the eligibility criteria as part of the answer to the above question, one can find the relevant information here. Note that a veteran cannot receive both the A&A Pension and the Housebound Pension simultaneously.

There is a Maximum Annual Pension Rate (MAPR) to which a Veteran or surviving spouse is entitled. For persons who receive the Aid & Attendance Pension or the Housebound Pension, the MAPR includes the total cash benefit amount for the Basic Pension, plus the “add on” Aid & Attendance Pension or Housebound Pension. This means the Basic Pension portion can be separated from the A&A Pension portion or the Housebound portion. (This information is relevant further below when it is explained how receiving an A&A Pension or Housebound Pension impacts Medicaid eligibility.)

Like with the A&A Pension and Housebound Pension, Medicaid can also help to cover the cost of long-term care. This is often done via Institutional Medicaid, also called Nursing Home Medicaid, and Home and Community Based Services (HCBS) Medicaid Waivers. Via HCBS Waivers, seniors and persons with disabilities are able to receive supportive services in their homes or the homes of a loved one. Based on the waiver, program participants might also be able to receive Medicaid benefits in assisted living residences or adult foster care homes. Note that room and board for assisted living and adult foster care homes is not covered by Medicaid.

When considering the VA Aid & Attendance Pension or the Housebound Pension and Medicaid, one must first apply for VA benefits. This is because Medicaid wants to ensure all other payment sources have been considered and applied for first. Therefore, the eligibility requirements for long-term Medicaid become relevant to this discussion.

Generally speaking, the cash benefit from the VA Aid & Attendance Pension or Housebound Pension should not count as income for Medicaid eligibility purposes. However, this doesn’t necessarily hold true across all of the states. When a veteran or surviving spouse receives the A&A Pension or Housebound Pension, the VA considers a specific amount to be for the Basic Pension and the remaining amount for A&A or Housebound. While some states may disregard the pension in its entirety from Medicaid’s income limit, other states may count the Basic Pension amount as income. To learn how VA income is considered in the state in which you reside, it is highly suggested that you reach out to a Professional Medicaid Planner for guidance. Find one here.

As an example, in Florida, the Basic Pension benefit amount is counted towards Medicaid eligibility, while the A&A Pension benefit amount is not. This means that the difference between the Basic Pension amount and A&A Pension amount is disregarded. If an applicant’s monthly income combined with their Basic Pension benefit exceeds Medicaid’s income limit, they are income-ineligible for Medicaid.

Furthermore, Medicaid has an asset limit, which is generally $2,000 for a single applicant. See state-specific asset limits. The VA, on the other hand, has a net worth limit, which changes annually. This net worth limit includes one’s annual income plus any countable assets. (This excludes the value of one’s home). This means that an applicant may meet the VA’s net worth limit, but not Medicaid’s asset limit.

For applicants who are over Medicaid’s income and / or asset limit(s), it is possible that with the assistance of a Medicaid Planning Professional, finances can be restructured to meet Medicaid’s limit(s).

As a side note, if one receives both Medicaid and a VA Pension, is single, does not have a dependent child, and resides in a nursing home, their pension benefits are reduced to $90 / month. There is an exception; Veterans who reside in States Veteran Homes do not have their pension amount reduced. To be clear, this $90 rule does not include married veterans who are nursing home residents. Nor does this rule extend to persons living in assisted living residences or receiving long-term care at home.