ASNP

TELEConference

January 13, 2009

How Military/VA Benefits Can Jeopardize SSI Benefits

BY:

VICTORIA L. COLLIER, Attorney

– Accredited by the VA, #9079

– Admitted to Practice before the United States Court of Veterans Claims

– Member of the National Organization of Veteran Advocates

– Member of the National Academy of Elder Law Attorneys

– Co-Founder, Veteran Advocates Group of America

– Co-Author of VisPro

– Author and Presenter of “In the Trenches” 2-day VA Workshop

Author Contact Information:

Victoria L. Collier

The Elder & Disability Law Firm of Victoria L. Collier, PC

160 Clairemont Ave., Suite 440

Decatur, GA 30030

404-370-0696

All rights reserved © 2008
VA Benefits and Special Needs Planning –

Often Not Considered Together

By Victoria L. Collier, Attorney

  1. Introduction of Need and Awareness

Special Needs Planning attorneys spend a great deal of time researching, devising, and implementing the perfect plan for a person with special needs. However, rarely does the special needs planner ask if the person with disabilities is a veteran, a child of a veteran, spouse of a veteran, or parent of a veteran. Each of these individuals may receive certain military or VA benefits due to their veteran status. Moreover, the receipt of these benefits may jeopardize SSI and Medicaid benefits. Being familiar with veteran benefits, and whether your client has special veteran status, is important before and during the implementation of any special needs plan.

  1. The Basics of VA and Military Benefits

Before being able to know how to plan for the special needs of a veteran or a veteran’s disabled child, it is imperative to have knowledge of the different veterans and military benefits available.

  1. Service Connected Disabilities

A veteran who obtained an injury or disease while on active duty, and the injury was the result of his service or was exacerbated by service, can receive monthly income called disability Compensation.[1] Veterans are entitled to compensation if certain criteria are met:

1.the veteran was discharged/released under conditions other than dishonorable,[2]

2. the disease or injury was incurred or aggravated in the line of duty, and[3]

3. the disability is not a result of their own willful misconduct or abuse of alcohol or drugs.[4]

Service connected compensation is the VA’s version of worker’s compensation in the private sector. Employment by the veteran is not a bar to receiving service connected compensation. Furthermore, VA compensation benefits are not reduced by earned or unearned income or the value of the veteran’s net worth. VA disability compensation is tax free income.

Thus, a client who is a veteran and is expecting to receive a personal injury settlement, inheritance, or financial windfall of another sort, will not lose eligibility or the receipt of any service connected benefits.

Receipt of service connected compensation; may however, reduce the client’s receipt of SSI. Compensation will reduce SSI benefits dollar for dollar, like any other kind of income the SSI beneficiary receives. Thus, if a person relies on SSI for Medicaid services, the advisor will need to analyze whether the receipt of compensation from the VA is more advantageous or less advantageous for the client. The veteran can choose to discontinue to the receipt of compensation at any time. If the client does so, compensation can be applied for again in the future if the need arises.

Before making the decision too hastily, it is important to recognize that the veteran receives increased access to healthcare at the VA clinic and pharmacy when a service connected disability has been awarded.

Moreover, dependants of a veteran who has a service connected disability can make a claim on their own based on the status of the veteran. The different benefits that may be available include: Dependency and Indemnity Compensation (DIC),[1] Accrued Benefits, and Death Pension. Dependent survivors of veterans include the surviving spouse, surviving child, and dependent surviving parents.[2]

Once it is established that the claimant is a qualified family member, the claimant may receive death indemnity compensation, accrued benefits, or pension. Only the “pension” benefit is affected by the receipt or windfall of income or assets.

Pension benefits will be discussed in more detail in section II.B. The criteria for eligibility and retention of the benefit is essentially the same for a dependant as it is for the veteran.

  1. Non-Service Connected Disabilities

Veterans or dependants of veterans (usually widow(er)s) are entitled to an Improved Pension which will provide a Special Monthly Pension (SMP) to offset the cost of necessary health care. The three categories of SMP are called “Low Income Pension”, pension with “Housebound” benefits and pension with“Aid and Attendance” benefits. Eligibility is based on the following criteria:

1. Basic Eligibility Criteria for Improved Pension, Housebound and Aid and Attendance

All of the following criteria must be met before a veteran or dependant of a veteran can receive Improved Pension benefits:

i.The veteran must have served at least 90 days of active duty service, one day of which must have been during a war-time period[1];

In general, wartime is:

World War I

World War II - Dec. 7, 1941 - Dec. 31, 1946

Korean War - June 27, 1950 - Jan. 31, 1955

Vietnam Conflict - Aug. 5, 1964 - May 7, 1975

Gulf War - August 2, 1990 through date to be set by law by Presidential Proclamation

  1. the veteran must have received a discharge other than dishonorable;
  2. the claimant must have limited income[2] and assets available[3];
  3. the claimant must have a permanent and total disability at the time of application[4];
  4. the disability was caused without willful misconduct of the claimant[5]; and
  5. The veteran or widow signs an application and provides the application to the Veteran’s Administration.
  1. Pension Types
  2. Low Income Pension

Low income pension is the VA’s equivalent of SSI. The claimant must meet all the criteria above. The permissible income limits for Low Income Pension are detailed in the box below:[6]

Permissible family income limits: 2009 Low Income Pension:

(1) Veteran with no dependents$931/month; $11,181/year

(2) Veteran with one dependent$1,220/month; 14,643/year

(3) Widow(er) with no dependents $624/month; $7,498/year

  1. Pension with Housebound Benefits

Housebound benefits are available to a veteran or dependent who is

determined to be disabled and is essentially confined to the home.[7] The two ways to prove entitlement include:

(1) a single permanent disability rated as 100% disabling under the VA schedule and confined to the dwelling[8], or

(2) a 100% disability with another 60% disability, regardless of whether or not the person is confined to the dwelling.[9]

A disability rating is not required for people aged 65 or older. People aged 65 or older are presumed to be disabled; however, the VA will require a physician’s affidavit regarding the claimant’s condition.1[0] The maximum permissible income limits for Housebound Pension benefits are detailed in the box below:1[1]

Permissible family income limits:2009 Housebound benefits:

(1) Housebound veteran/no dependents $1,138/month; $13,664/year

(2) Housebound veteran/one dependent $1,427/month; $16,740/year

(3) Housebound widow(er)/no dependents $763/month; $9,164/year

  1. Pension with Aid & Attendance

Aid and Attendance benefits are available to a veteran or dependant of a veteran who meets one of the following conditions:

  1. Claimant is blind;
  2. Claimant is living in a nursing home; OR
  3. Claimant is unable to:

a. dress/undress or keep self clean and presentable;

b. unable to attend the wants of nature; OR

  1. has a physical or mental incapacity that requires assistance on a regular basis to protect Claimant from daily environmental hazards.1[2] The permissible maximum income limits are detailed in the box below:1[3]

Permissible family income limits: 2009 A&A:

(1) Veteran/no dependents$1,554/month; $18,654/year

(2) Veteran/one dependent$1,842/month; $22,113/year

(3) Widow(er)/no dependents$998/month; $11,985/year

  1. Income Limits

With regard to income requirements, the applicant will be denied benefits

if the veteran’s or dependant’s countable income exceeds the maximum permissible family income limits.1[4] Countable income is all income attributable to the applicant, the applicant’s spouse, and the applicant’s dependent children.1[5] A lump sum from a personal injury settlement, worker’s compensation settlement, or inheritance IS considered income. The lump sum will be “annualized” and broken down to a monthly figure. The monthly figure will be counted as regular income like all other income. One notable exception is SSI, which is not countable income and does not reduce the available pension rate.

Although most veterans have income that exceeds the permissible family income limits, recurring, unreimbursed medical expenses paid by the claimant may be used to reduce the claimant’s countable income.1[6] Unreimbursed medical expenses that may reduce income include: Medicare premiums, prescription medications, health insurance premiums, transportation to physician offices, therapy, co-pays, home health care, assisted living facility, nursing home costs, and funeral expenses.

4. Asset Requirements

  1. Standard

Pension benefits are based on financial need. Thus, the VA considers the net worth of the individual seeking benefits, excluding the value of the person’s home, furnishings, and car. The eligibility standard is whether the claimant has “sufficient means” to pay for his own care.1[7] The net worth of both the veteran and the veteran’s spouse are considered when determining eligibility.1[8]

  1. Presumption of Sufficient Means

“No specific dollar amount can be designated as excessive net worth. What constitutes excessive net worth is a question of fact for resolution after considering the facts and circumstances in each case. A number of variables must be taken into consideration when making a net worth determination.

“Factors to consider include

1.income from other sources

2. family expenses

3. claimant’s life expectancy, and

4. convertibility into cash of the assets involved.”1[9]

A commonly used measure, and an amount specifically listed in the M21-1 (VA adjudication manual), is $80,000 or less in assets, whether married or single.2[0]

C. Age Analysis

The VA has begun instructing adjudicators to perform an “age analysis” when determining financial need.2[1]

Assets that are counted toward the “sufficient means” fluid figure of $80,000 include bank accounts, certificates of deposit, money market accounts, investment accounts, annuities, retirement accounts, life insurance cash surrender values, etc.

  1. Survivor Benefits Program – Military Benefits

Service members who retire from the military receive a retirement “annuity”

in the form of a monthly pension payment. While in the service, the service member can elect to have the monthly annuity payments reduced so that, upon death, a surviving spouse, dependent child, or an insurable interest can receive payments. The election is made at the time the military person retires. If no election is made, the full SBP benefit will automatically take effect for a spouse and the children. SBP elections cannot be canceled or changed after retirement, with the exception of divorce or death of a beneficiary.[1] The typical election is for the survivor to receive up to 55% of the retiree’s pay. SBP income is taxable.

When the veteran has a child with disabilities, it may be tempting to elect SBP for the child to ensure the child has an income stream for support. However, this income stream can prevent SSI eligibility, thus, denying the child from being able to receive Medicaid. The services provided for through Medicaid may be more beneficial than the income from SBP.

Children who are eligible for SBP must be unmarried, under the age of 18 (under 22 if in school), or disabled prior to the age of 18 (under 22 if in school).[2]

SBP payments cannot be paid directly to a trust. Thus, the income will count toward SSI eligibility and any VA pension program that is needs based.

Terminating or re-starting SBP payments are not easy tasks and can be done only for specific circumstances. To learn more, go to

  1. Health Care for Veterans

The Veteran Health Administration provides health care services through

VA clinics as well as extended care services (i.e. inpatient and outpatient care, Geriatric Evaluations, nursing home care, domiciliary, home health, adult day, residential/ respite care programs).[1] To be eligible for health care services, the veteran must have served in the military for 24 continuous months of active duty service (some exceptions may apply). These services may require co-payments.

Enrollment in the health care system is set up by Priority Groups. There are 8 priority groups to which a veteran can be assigned.[5] Assignment is based on the veteran’s service record. Priority Group 1 is the highest level of priority; whereas, priority group 8 is the lowest level.

Prescriptions provided by the VA are one of the most beneficial services the VA provides. Veterans who are “in the system” can obtain their prescriptions from the VA clinic. The veteran can provide a prescription to the VA clinic by a VA physician or a private physician. The co-payment for the prescriptions range from $0.00 to $8.00 per 30 day supply per prescription.

  1. VA’s Position on Special Needs Trusts

There is nothing in the statute or the VA adjudication manual, M21-1, with regard to the treatment of trusts. However, there is a published Office of General Counsel opinion and a Board of Veterans Appeals decision that can give guidance.

For the purpose of this discussion, I will note that the Office of General Counsel treats first party special needs trusts as countable resources. See, 1997 VAOPGCPREC LEXIS 656. The Board of Veterans claims cited to the Office of General Counsel opinion to hold that a support and maintenance trust is a countable resource. See, Citation Nr.: 0513555, Docket No. 01-04 801, 5/18/05.

An in depth critique of both of the cases cited above will be discussed at the Academy of Special Needs Planners Conference in San Diego in March 2009.

Other trusts of note that will be discussed at the Conference include:

  1. VAOPGCPREC LEXIS 1632, July 18, 1990 – Testamentary

Trust for benefit of surviving spouse;

  1. VAOPGCPREC LEXIS 1220, August 9, 1991 – Irrevocable Income

Only Trust;

  1. Conclusion

As with VA Benefits, special needs planning is a fairly new, but quickly

emerging area of practice. When a client is disabled and under the age of 65 or has a child with disabilities, it is the duty of the attorney to have sufficient knowledge of all potentially available benefits. Moreover, it is incumbent upon the attorney to be able to advise which benefits may be helpful, harmful, or inconsequential to the planning process of preserving health and resources. When planning for special needs, VA benefits may supplement other government assistance, or it may hinder the receipt of other assistance. Further, planning for possible Medicaid benefits through traditional special needs planning may prevent the ability to obtain VA pension benefits.

[1]38 U.S.C.S. § 101(13); 38 C.F.R. § 3.4 (1979).

[2]38 U.S.C.S. § 101(2); 38 C.F.R. § 3.12(a) (1997).

[3] 38 U.S.C.S. §§ 1110, 1131; 38 C.F.R. § 3.4(b)(1) (1979).

[4]Id.; 38 C.F.R. § 3.301 (1995).

[1]38 C.F.R. 3.4(c) (1979).

[2]38 U.S.C.S. § 101, et. seq.

[1] 38 U.S.C.S. § 1521(j).

[2] 38 U.S.C.S § 1521.

[3] 38 U.S.C.S § 1522.

[4] 38 U.S.C.S § 1521(a).

[5] 38 U.S.C.S § 1502(a).

[6] For 2008 rates, see

[7] 38 U.S.C.S §§ 1502(c).

[8] 38 U.S.C.S § 1521(e).

[9] 38 U.S.C.S §§ 1502(c).

[0]10 See

[1]11 For 2008 rates, see

[2]12 38 U.S.C.S. § 1502(b).

[3]13 For 2008 rates, see

[4]14 M21-1MR, Part V, Subpart i, Chapter 3, Section A, 1.a.

[5]15 38 U.S.C.S. § 1521(c),(h).

[6]16 38 U.S.C.S. § 1521.

[7]17 M21-1MR, Part V, Subpart i, Chapter 3, Section A, 1.d.

[8]18M21-1MR, Part V, Subpart iii, Chapter 1, Section J, 68c.

[9]19 M21-1MR, Part V, Subpart iii, Chapter 1, Section J, 70a.

[0]20 M21-1MR, Part V, Subpart i, Chapter 3, Section A, 4.c.; M21-1MR, Part V, Subpart iii, Chapter 1, Section J, 70 b-c.

[1]21 M21-1MR, Part V, Subpart iii, Chapter 1, Section J, 70a.; M21-1MR, Part V, Subpart iii, Chapter 1, Section J, 72a.

[1] (12/5/2008).

[2] (12/5/2008).

[1] M21-1, Chapter 1, 1.03; 38 CFR 17.111

[5] VA Health Care Fact Sheet 164-2, January 2008.