Comparing Veterans Aid & Attendance & Housebound Pensions to Medicaid Long-Term Care

Last updated: January 16, 2024

 

Introduction

Medicaid and Veterans’ pensions are both needs-based programs that provide assistance in paying for long-term care.

Medicaid

Medicaid is a state and federal funded program that will cover the cost of nursing home care as well as a variety of home and community based services (HCBS) to prevent and delay institutionalization. The exact benefits available vary based on the state and specific Medicaid program, but commonly include adult day health care, personal care assistance, homemaker services, personal emergency response systems, home modifications for safety and accessibility, respite care, and assisted living services. These services and supports are generally provided via HCBS Medicaid Waivers and require a Nursing Facility Level of Care (NFLOC). They are not entitlement programs; the number of participant slots are limited, and sometimes long waiting lists exist. Nursing Home Medicaid, however, is an entitlement program.

Medicaid may also pay for personal care assistance via a state’s Regular Medicaid Plan. Often, this allows persons who do not meet a NFLOC to still receive needed long-term care assistance. Other HCBS, such as homemaker services, adult day care, and personal emergency response systems, may also be available. Benefits via State Plan Medicaid are an entitlement, but financial criteria is generally more restrictive than it is for Medicaid Waivers and Nursing Home Medicaid.

VA Pensions

The U.S. Department of Veterans Affairs (VA) offers two pensions specific for wartime Veterans and their surviving spouses who require long-term care: The Aid & Attendance (A&A) Pension and the Housebound Pension. These are “enhanced” pensions that provide monthly cash assistance above and beyond the Basic Veterans / Survivors Pension. The A&A Pension is for Veterans / surviving spouses who are blind (or nearly blind), reside in a nursing home because of a physical or mental incapacity, or require assistance with daily living activities, such as bathing, dressing, and eating. The Housebound Pension is for Veterans / surviving spouses who are permanently disabled, and for the most part, are confined to their home or an institution. Persons cannot simultaneously receive both pensions. Pension funds can be used towards in-home personal care assistance, modifying the home to allow for wheelchair access, adult day care, assisted living costs, nursing facility care, or whatever else one sees fit.

 Veterans and surviving spouses can simultaneously be eligible and receive long-term care Medicaid and the Veterans Aid & Attendance Pension or Housebound Pension.

 

Which Program is Better for Which Type of Care?

While one might wonder which program would best suit one’s needs and circumstances, it is possible for Veterans / surviving spouses to be eligible and receive assistance via both programs. In fact, Medicaid requires that persons apply for all potential available assistance for which they might be eligible, including VA pensions.

Nursing Home Care

For nursing home care, Medicaid will pay the full cost for all persons who are eligible. However, with a few exceptions, including a small Personal Needs Allowance of between $30 and $200 / month, all of a nursing home beneficiary’s monthly income must go towards nursing home costs. In contrast, neither the VA’s Aid & Attendance Pension nor the Housebound Pension will cover the full cost of nursing home care. In 2024, the Maximum Annual Pension Rate (MAPR) that an unmarried Veteran with no dependent children can receive via the Aid & Attendance Pension is $27,609 / year ($2,300 / month). For the Housebound Pension, it is $20,226 ($1,685 / month). According to Genworth’s 2023 Cost of Care Survey, the average cost of nursing home care is $8,669 / month, which is well above the MAPR. See additional MAPRs by Pension Type, Marital Status, and Dependents.

Single Veterans / surviving spouses who have no dependent children and receive both Medicaid-funded nursing home care and the Aid & Attendance Pension or Housebound Pension, do not receive their full pension amount. Instead, it is reduced to $90 / month, which they can keep as a Personal Needs Allowance. Married Veterans do not have their pension amount reduced, which potentially could go to their non-applicant spouse as a Monthly Maintenance Needs Allowance.

 

In-Home Care, Adult Day Care, & Assisted Living
 Medicaid will not pay for room and board in assisted living, but VA Pensions can be used for that purpose.

VA pensions are often utilized to pay for home and community based care, such as personal care assistance, homemaker services, home health care, adult day care, and assisted living. Recall that Medicaid-funded home and community based services are often provided via HCBS Medicaid Waivers, which are not entitlement programs. This means that even if one meets all of the Medicaid eligibility criteria, there may be a waiting list to receive benefits. During this interim, a VA pension can be used to pay for these types of care.

Unlike with Nursing Home Medicaid, single Veterans / surviving spouses who receive Medicaid and live at home or in their community and have no dependent children do not receive a reduction in their VA pension. This is extremely beneficial when it comes to paying for assisted living. Medicaid will only pay for assisted living services; Medicaid will never pay for room and board. Therefore, a VA pension can go towards room and board costs.

 

Financial Eligibility Criteria

For long-term care Medicaid and / or VA Aid & Attendance or Housebound Pension eligibility, there are financial requirements that must be met. Medicaid has both an income and asset limit, but these limits are not consistent across the states. For VA Pension eligibility, there is a monthly income limit and a net worth limit (annual income plus assets), which remains the same nationwide.

Medicaid

For Nursing Home Medicaid and HCBS Medicaid Waivers, the applicant income limit in most states is generally $2,829 / month. For applicants who are married, the income of their non-applicant spouse is disregarded; it is not counted towards the income limit. Furthermore, a non-applicant spouse may be entitled to a Spousal Income Allowance, called a Monthly Maintenance Needs Allowance (MMNA), from their applicant spouse. In 2024, this allows the applicant spouse to transfer as much as $3,853.50 / month to their non-applicant spouse. When both spouses of a couple are applicants, each spouse is usually allowed up to $2,829 / month in income. Persons over the income limit may still qualify by establishing a Qualified Income Trust or via the Medically Needy Pathway.

The asset limit is generally $2,000 for a single applicant. For a married applicant, the assets of both the applicant and their non-applicant spouse are calculated towards the asset limit. However, the non-applicant spouse is entitled to a Community Spouse Resource Allowance (CSRA). In 2024, the CSRA allows the non-applicant spouse to keep up to $154,140 (in most states), while the applicant spouse can keep up to $2,000. When both spouses are applicants, there is a couple asset limit of generally $3,000 or $4,000. California is an exception and has no asset limit for Medicaid eligibility.

For personal care assistance and other home and community based services via the State Medicaid plan, the income limit in approximately half of the states is $943 / month for a single applicant or $1,415 / month for a married couple. In many of the remaining states, the income limit is $1,255 / month for a single applicant and $1,703 / month for a married couple. The couple income limit includes both spouses, regardless of if one or both spouses are applicants. The asset limit is generally $2,000 for a single applicant and $3,000 for a couple (with one or both spouse as applicants). CA does not have an asset limit.

See state-specific Medicaid financial eligibility criteria.

 Did You Know? VA Aid & Attendance Pension or Housebound Pension funds are not counted towards Medicaid’s income limit. Recall that these pensions are an “add on” to the Basic VA Pension. Some states allow the full amount to be disregarded as income and other states only allow the A&A or Housebound portion to be disregarded.

 

VA Pensions

To be income-eligible for a VA pension, a Veteran’s / surviving spouse’s income cannot be greater than the Maximum Annual Pension Rate (MAPR) for the pension for which they are applying. For married Veterans, the income of their spouse is counted towards the MAPR. As a few examples, eff. 12/1/23 – 11/30/24, the MAPR for Housebound benefits for a single Veteran with no dependent children is $20,226 ($1,685 / month) and for Aid & Attendance benefits is $27,609 ($2,300 / month). For a married Veteran, the MAPR for Housebound benefits is $25,348 ($2,112 / month) and for Aid & Attendance benefits is $32,729 ($2,727 / month). Veterans / surviving spouses who have income over the MAPR may still be income-eligible if they have medical expenses for which they are not reimbursed. Learn more.

The VA established a net worth limit on October 18, 2018. “Net worth” includes a Veteran’s (and their spouse’s) annual income plus their assets. Effective Dec. 1, 2023 – Nov. 30, 2024, the Net Worth Limit is $155,356.

 Additional Eligibility Criteria: Both Medicaid and the VA have additional eligibility requirements in addition to those listed on this page. Learn more about Medicaid eligibility for long-term care and VA Pension eligibility and how to apply for these programs.

 

Other Considerations When Comparing VA Pensions and Medicaid Long Term Care

Home Exemption

For both long-term care Medicaid and VA Pensions, one’s primary home is generally exempt from being a countable asset. The VA allows for one’s home on up to 2-acres to be exempt, even if a Veteran / surviving spouse is in a nursing home. Medicaid, on the other hand, has a home equity interest limit for Nursing Home Medicaid and HCBS Waiver beneficiaries who do not have a spouse, minor child, or permanently disabled or blind child living in the home. In 2024, the home equity interest limit is generally either $713,000 or $1,071,000, depending on the state. California is an exception and has no home equity interest limit. See home equity interest limits by state. Furthermore, if the Medicaid beneficiary does not live in their home and none of the above mentioned persons live in it, the Medicaid beneficiary must have Intent to Return home in order for the home to remain exempt.

 

Look-Back Period

Medicaid and the VA both have a Look-Back Period in which all assets transferred immediately prior to application / filing a pension claim are scrutinized (including asset transfers made by one’s spouse). This is to ensure no assets were gifted or sold for less than fair market value (the amount it would sell for in an open market). If this has been done, it is assumed it was to meet the respective program’s financial eligibility criteria. Persons who violate the Look-Back Period are penalized with a Penalty Period of ineligibility.

Medicaid has a 60-month Look-Back Period for long-term care. Two exceptions exist: California and New York. While CA is no longer reviewing asset transfers made on or after Jan. 1, 2024, the state continues to have a Look-Back Period for asset transfers made prior to Jan. 1, 2024. As of Jan. 2024, the Look-Back Period is 30-months, but will decrease by one month each month until the “look back” is completely phased out in July of 2026. New York currently has no “look back” for Community Medicaid, the program through which home and community based services are provided. The state, however, plans to implement a Look-Back Period of 30-months no sooner than sometime in 2025. Any assets that are transferred under fair market value during Medicaid’s Look-Back Period, even if the individual would have otherwise met Medicaid’s asset limit, violates the Look-Back Rule.

The VA has a much more lenient Look-Back Period of 36-months. Unlike with Medicaid, assets can be transferred under fair market value without penalty if these assets would not have caused the Veteran / surviving spouse to exceed the total Net Worth Limit. Only “gifted” assets that would have put one over the Net Worth Limit violate the Look-Back Rule and are penalized. Furthermore, the VA’s Look-Back Rule became effective on 10/18/18, and if a claim was filed prior to this date, the Look-Back Period is not applicable.

Any gifts, even extremely large gifts, made prior to the Look-Back Period (60-months for Medicaid / 36-months for VA) do not violate the Look-Back Rule.

 

Penalty Period

Both Medicaid and the VA penalize persons who have violated the Look-Back Period with a period of ineligibility. Essentially, all of the “gifted assets” in violation of the Look-Back Period are added together and divided by a Penalty Divisor to determine the length of one’s Penalty Period.

Medicaid uses the average cost of private pay nursing home care as the Penalty Divisor. This divisor is state-specific, tends to be a monthly divisor, and generally increases annually. In 2024, the following states have the following Penalty Divisors: Alabama ($7,300 / month), Colorado ($9,479.45 / month), Florida ($10,438 / month), and Connecticut ($14,524 / month – eff. 7/1/23). See Penalty Divisors by State. As an example of calculating the Penalty Period, say a Medicaid applicant lives in Florida and “gifted” $100,000 in assets. The Penalty Divisor is $10,438 / month. The Penalty Period is 9.6 months ($100,000 ÷ $10,438 = 9.6). Medicaid does not round the Penalty Period.

The VA uses the Veteran pension rate for the Aid and Attendance Pension with one dependent as the Penalty Divisor. Effective 12/1/23 – 11/30/24, this is $2,727 / month (MAPR rate of $32,729 divided by 12). For example, say a Veteran “gifted” $25,000. The Penalty Period is 9 months ($25,000 ÷ $2,727 = 9.16 months). The VA rounds the Penalty Period down.

While Medicaid does not limit the length of one’s potential Penalty Period, the VA limits the Penalty Period to 5 years. For Medicaid, the Penalty Period begins the date one applies for long-term care Medicaid and would have otherwise been found eligible had they not violated the Look-Back Period. For the VA, the Penalty Period starts on the first day of the month following the date the last “gifted” asset was made. Therefore, the Penalty Period generally begins prior to a Veteran / surviving spouse submitting a VA Pension application.

 The eligibility rules for long-term care Medicaid and VA Pensions are complex and tend to change. Persons over the financial eligibility criteria can still become eligible with planning strategies, but it is vital that one be aware of the potential for violating the Look-Back Rule. While some strategies may be okay for Medicaid Planning, they may not be acceptable for VA Planning, and vice versa. Persons considering applying for both Medicaid and a VA Pension are strongly advised to seek the counsel of a Professional Planner.

 

Estate Recovery

Following the death of a Medicaid long-term care beneficiary, the state attempts reimbursement of long-term care costs via the deceased’s estate. This is called the Medicaid Estate Recovery Program and it is often through the sale of one’s home that the state collects funds.

VA Pensions do not have an Estate Recovery Program.

Determine Your Medicaid Eligibility

Get Help Qualifying for Medicaid