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Are You Taking Full Advantage of Your Veterans Benefits?
- Veterans Receiving a Pension May Be Eligible for Additional Cash Benefits
- Learn About Lesser-Known Benefit Programs
- Get Help Applying for Veterans Benefits
Helping Veterans and Their Spouses
This page is focused on helping veterans to understand VA Pensions income eligibility rules, how the VA calculates income, what can be done to ensure an applicant is eligible, and how to maximize their benefit. It is written specifically for elderly veterans and /or their spouses and concentrates on the Aid & Attendance and Housebound benefits.
VA Pension Income Limits for 2022
Veterans with VA pensions who have physical, mental, and/or mobility limitations, illnesses or disabilities, and/or reside in nursing home facilities may qualify for additional Aid and Attendance or Housebound benefits. However, for a veteran and/or spouse to qualify for and receive any VA pension benefits, the applicant must first meet certain eligibility criteria. One of these criteria is to have income within the VA’s limits.
A veteran’s income and the amount of pension he or she is due are linked. The VA decides the Maximum Annual Pension Rate (MAPR) that any veteran can receive for pensions with or without the Housebound or Aid & Attendance benefit. However, the veteran’s actual payments are calculated by subtracting their income from the MAPR. For example, as of 2022, the maximum pension for an elderly veteran who qualifies for Aid and Attendance and has no dependents is $24,610. If the veteran’s annual income is $12,000, he or she would receive $12,610 in benefits. Make note, that if one’s income is higher than the MAPR, one may still qualify for benefits. This is because unreimbursed medical expenses that are over 5% of one’s MAPR can be deducted from one’s income.
The good news is that the VA calculates income differently than the IRS. It allows many deductions (such as medical expenses, as mentioned above), and veterans can qualify for assistance even if their income is well over the limits published by law (see table below). It is not uncommon for households with a monthly income of over $6,000 to still be eligible to receive a pension. The bad news is that calculating and proving your income is confusing and complicated.
|2022 MAPR Rates for those who Qualify for Housebound / Aid and Attendance Benefits
||Aid & Attendance
|Veteran without dependents
|Surviving spouse without dependents
What You Need To Know About Rules That Impact the Consideration of Income for Pension Eligibility
In September of 2018, the VA released several rules, all of which still apply today. Three rules related to income that are important for VA pension applicants to know are described below.
Determining Financial Eligibility for VA Pension via Net Worth
Eligibility for a VA Pension is partially determined by one’s net worth. One’s annual income must be added to one’s assets to calculate net worth according to VA guidelines. However, those who have unreimbursed medical expenses are allowed to subtract some of those expenses from their countable income.
According to current 2022 pension rate charts, you “may deduct only the amount that’s above 5% of your MAPR amount. For example, say an applicant with no dependents has $9,000 in annual income. After subtracting 5% of his MAPR, his unreimbursed medical expenses total $3,000, so his countable income is actually just $6,000. Now, say the applicant has $110,000 in assets. With the addition of the $6,000 in countable income, his net worth is $116,000.
Net Worth Limit
Calculating net worth is critical, as the VA also has a rule that establishes a net worth limit and those with a net worth above this will be inelligible for a VA pension. For 12/01/21-11/30/2022, the limit is $138,489. (This figure is for both single and widowed applicants, as well as applicants who are married).
Changes In Income-Based Eligibility
A third VA rule is equally important to mention since income is tied to one’s net worth. This is a 36-month look back rule from the date of one’s pension application. In simple terms, one’s past asset transfers are reviewed for the 36-months immediately preceding one’s application. This is to ensure that the applicant has not given away assets or sold them for less than they are worth in order to meet the VA’s net worth rule. If one is found to have violated this rule, there will be a period of VA pension ineligibility of up to 5 years.
VA’s Definition of Income
There are two components to calculating income: Income streams and income deductions.
How the VA defines income when it comes to the veteran’s benefit is different from how the IRS defines Adjusted Gross Income or Medicaid calculates Countable Income. In VA-speak, income used to calculate a pension benefit amount is called IVAP or Income for VA Purposes.
A veteran’s income, if married, is always calculated as household income, or said another way, the combined income of the veteran and his / her spouse.
There are two components to calculating Income for VA Purposes. First, one must consider the type of earnings to include in the household income (veteran and spouse if married). Then all sources of income will be added up to calculate the total annual household income. Second, it’s important to know what expenses can be deducted, effectively lowering one’s IVAP amount. Expenses are discussed in depth in the next section of the page. The table below lists common income streams and whether or not they are counted for VA purposes.
|VA Pension Income Definition |
|Sources Counted as Income||Sources Not Counted as Income|
-Gifts of Stock or Property
-IRA & 401K Withdrawals
-Social Security Disability
-VA DIC (Dependency and Indemnity Compensation)
-Assistance Contributions from Non-Profits
-Family Assistance to Maintain the Vet’s Home
-Installment Sales of Property (in certain situations)
-Life Insurance Payments or Cash Surrender Value
-Supplemental Security Income (SSI)
-VA Pensions (Housebound and A&A)
-Loans from Reverse Mortgages
-Long Term Care Reimbursements
Expenses that Can Be Deducted from Income
Non-medical care costs such as home care or assisted living can be deducted from income.
The ability to deduct expenses when calculating Income for VA Purposes can help individuals become eligible for Aid & Attendance and Housebound pension benefits who would not otherwise qualify. In short, the VA allows applicants to deduct their unreimbursed medical expenses (UME) from their income. (As mentioned previously, UME’s over 5% of one’s MAPR can be deducted from one’s income.)
Keep in mind that the definition of unreimbursed medical expenses is very broad and is by no means limited to what we think of as “medical”, in the classic sense. In other words, it’s important to recognize that many non-medical care costs are deductible. Examples of UMEs might include Medicare premiums, transportation for medical purposes, certain cosmetic procedures, and care expenses.
For individuals with a disability rating for Aid and Attendance, the complete cost of assisted living, including room and board costs can be deducted from one’s income. The median cost (or middle value within the range of the very lowest to the very highest costs) for assisted living in the U.S. is $54,000 per year as of 2021. This means that, if they are getting assisted living care, even couples with relatively high annual incomes may be eligible for Aid & Attendance.
Home health care and non-medical home care (sometimes called companion care or personal care) are both fully deductible, as long as a physician says it’s necessary. This includes supervision of individuals with Alzheimer’s or dementia to prevent wandering and / or self-injury. Family members can be hired as home care providers. More on hiring family is discussedfurther down this page.
Adult Day Care
Adult day care costs, both for adult day health and non-medical care, are fully deductible. With a daily median value of $78 / day for 250 work days per year, this means an individual or spouse in full-time adult day care could subtract $19,500 off their annual income for VA purposes.
Medicare and Medicare Supplemental Insurance premiums can be deducted from income. Prescriptions, medical equipment, and supplies, such as disposable incontinence supplies can also all be deducted. These are some of the non-obvious, unreimbursed medical expenses. Veterans should be sure to closely record all their out-of-pocket, household medical expenses including transportation and travel mileage and submit these as expenses.
Strategies to Meet the VA Income Limit
– For some veterans, Aid and Attendance is a temporary step before they eventually require Medicaid to pay for nursing home care. Therefore, it is important than any strategies employed to qualify for A & A, not be in violation of Medicaid eligibility requirements.
Granular Record Keeping
Undoubtedly, the best “strategy” to qualify for a VA pension or to maximize the benefit amount is not a strategy at all, but a disciplined approach to paperwork. One should keep track of all the care and medical expenses incurred by members of the veteran’s household. For any expense the VA may express hesitation, it’s important to have supporting documentation certified by a physician as to the need.
One also needs to know when and how to inform the VA of these expenses. For example, knowing if one should inform the VA during the application process, following an award of benefits, or during an annual verification is critical. Finally, one must keep the VA well informed of any changes to the veteran’s or spouse’s health, living situation, income, assets, and home ownership status. Doing this well will ensure one receives the maximum benefits, and equally as important, helps avoid penalties or having to pay back benefits.
Paying Family Members as Care Providers
– Paying family members for care is complicated and requires expertise, supporting documentation and detailed record keeping. It is strongly advised that veterans and / or their families seek outside assistance in planning and applying if they are not highly confident they can adhere to the VA’s strict regulations.
Perhaps the most attractive and under-utilized component of VA Aid & Attendance and Housebound pension benefits is the fact they can and should be used to pay family members or friends for the care they are providing the aging veteran or their spouse. How this works can be confusing, but the process typically looks like this:
1) A veteran hires a family member to provide care.
2) The veteran pays the family member and documents those payments as Unreimbursed Medical Expenses (UME).
3) Expenses over 5% of the maximum annual pension rate are deducted from the veteran’s income. Therefore, their pension benefit is increased by the same amount the veteran is paying their family member (once expenses rise above 5% of their MAPR). By doing this, the family member receives compensation at no additional cost to the veteran.
As discussed above, the importance of providing supporting paperwork for this type of arrangement is paramount both for the reporting of the caregiver’s income to the IRS and for reporting the care recipient’s income to the VA. For the protection of all parties involved, it is strongly recommended that a caregiver contract be created. For more information about paying family members and how best to handle a caregiver contract, contact a veteran’s benefits planner.
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Help Planning & Applying for Benefits
A variety of different assistance options are available to help veterans and their spouses apply for VA pensions. Some of these are available free of charge, while others require a planning fee. For more information, read our analysis of the pros and cons of each type of assistance.