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Veteran’s Pension BenefitsTrust & Estate Planning
Posted in on March 13, 2014
A commonly overlooked benefit for many seniors is a Veteran’s Pension. People over 65 who served our country during a time of war may be eligible for a Veteran’s Pension. Those Veterans who need assistance with daily living may qualify for an additional benefit called Aid and Attendance Benefits. The current maximum pension benefit with aid and attendance benefits for an individual without dependents is $19,736 a year. While this alone can make a significant improvement in a Veteran’s life, the pension benefit is even more significant when you take into account that it is not subject to income taxation. In addition, seniors receiving MassHealth benefits are allowed to keep all of their pension benefit since it is not considered countable income. So long as the pension benefit is kept separate from other assets the accumulation of the pension benefit is not considered a countable asset for MassHealth purposes.
So if it’s so great why don’t more seniors receive a pension benefit? There are four possible explanations for why more Veterans aren’t receiving this benefit:
- The Veteran’s Administration has not done a good job promoting the program through advertising and education.
- Many Veterans have the incorrect assumption that unless they were injured during their service or served for a certain length of time they aren’t entitled to any benefits.
- The Veteran’s Administration prohibits most attorneys from representing Veteran’s before the VA unless an attorney is certified by the VA.
- The application is burdensome requiring considerable supporting documents such as discharge papers, marriage and divorce records, and financial account information.
To qualify for pension benefits the Veteran or surviving spouse needs to meet both the income and the asset criteria. The asset limit is not fixed but is generally $50,000 for a single person and $80,000 for a couple. The income limit is equal to the pension benefit in that for every dollar of countable income you receive your pension benefit is reduced by the same amount. Don’t confuse “countable income” for actual income as the VA allows you to deduct from actual income unreimbursed medical expenses and long term care expenses (such as home health aides, attendants, etc).
What if you are over the limits? If your income is too high you may be able to reduce your countable income by increasing the amount of care you are paying for in anticipation of receiving that same amount from the Pension Benefit. Care can be provided by family members in some circumstances. If your assets are too high you may be able to transfer them — give them away. Unlike MassHealth and other state Medicaid programs that have transfer penalties with the pension benefit in many instances you can transfer your assets one month and qualify for VA pension benefits the next month.
While a transfer of assets may not disqualify you for pension benefits, no one over 65 should transfer or gift away any property without consulting with an attorney. What might get someone eligible for a $19,000 pension benefit could backfire into disqualifying them for MassHealth benefits and costing their family $110,000 a year or more in nursing home care private payments.
At Baker, Braverman & Barbadoro our attorneys do a comprehensive evaluation of our clients’ needs as part of any estate plan. One benefit we consider are Veterans Benefits but one can not overlook other important factors in a plan including protection from creditors, qualification for MassHealth benefits, and optimal estate, gift and income taxation.