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Back in the bad old days, before October 18, 2018, there were guidelines but no hard and fast rules for VA eligibility. People in the same circumstances in different parts of the country experienced different results when they applied. “Pension poachers” sold vets unneeded trusts and annuities, annuities which might disqualify them for Medicaid if they needed it later – and most did.

Threshhold eligibility for VA benefits for a non-service connected disability continue to be based on a discharge other than dishonorable following at least 90 days of active duty, at least one of which was during a period of war.1

Financial eligibility has changed and been clarified.

Net Worth

For VA purposes, “net worth” is assets and annual income received in the name of the applicant individually or jointly. It is calculated when the VA receives an original pension claim, a new pension claim after a period of non-entitlement, a request to establish a new dependent (spouse or child) or information that the previously reported net worth has increased or decreased. This last could result in a change or discontinuance of benefits the last day of the calendar year in which “net worth” exceeds the limit.

Your home will continue to be excluded from assets, together with up to 2 acres (unless the remainder is not marketable.)

Your home will be excluded even if it is rented if you live in a long-term care facility or live with a family member in order to receive care. If your home is sold and the net proceeds are reinvested in another home within a year, those will not be counted. Any amount not so invested will be counted.

The value of personal effects, including vehicles, will be excluded from assets so long as it is consistent with a “reasonable” mode of life.

In addition, a spouse not entering a long-term care facility can now retain assets in the same amount as could be kept if the other spouse were qualifying for nursing home Medicaid. In 2019 that amount is $126,060. It is set to increase with the “chained” Social Security cost of living increases.

“Net worth” can be reduced by buying goods or services for the veteran, the veteran’s spouse or other relatives living in the household. This is a more generous approach than that taken by Medicaid.

It can also be reduced by reducing the income included in calculating “net worth” by the amount of reasonably predictable unreimbursed medical expenses over 5% of the applicable maximum pension rate for a given level of benefits (Basic Service Pension, Housebound or Aid & Attendance).

Medical expenses include goods and services which are medically necessary to improve, prevent or ease someone’s functional decline. These include professional health care, medicine, medical supplies and equipment and medically necessary food, vitamins and supplements directed by a prescription-writing health care provider. They include adaptive equipment and service animals, transportation for medical purposes, health insurance premiums and smoking cessation products. They include care in hospitals, nursing homes, medical foster homes and inpatient treatment centers, including room and board. They include in-home assistance with activities of daily living (ADLS)2 and instrumental activities of daily living (IADLs)3 if the person helping also provides health or custodial care.

An important change would include not only nursing homes and assisted living but also the cost of an independent living facility where the applicant receives assistance with ADLs and IADLs.


Unlike Medicaid, there is no set income ceiling. Income is added to assets to calculate “net worth.”

Look-back period and transfers

Like Medicaid, there is now a look-back period, a period during which asset transfers are presumed to be for the purpose of qualifying. They are penalized. But while the Medicaid look-back period is 5 years, the VA look-back period is only 3.

Transfers to revocable trusts are not penalized because they remain, in essence, the property of the applicant: the applicant can revoke the trust at any time.

Transfers to irrevocable trusts and purchases of annuities are deemed to be transfers for less than fair market value: the applicant cannot revoke them without a penalty. This may help shut down the over 200 veteran’s trust mills and organizations selling annuities which enrich the trust or annuity salesman at the cost of potentially disqualifying the veteran for Medicaid.4

Calculating the penalty period

This is calculated differently from Medicaid, which varies from state to state. For VA benefit purposes, the total value of the transferred asset is divided by the maximum Aid & Attendance rate for a married veteran ($ 2,169 in 2018) and rounded down to determine the number of months before the benefit will be paid.

In no event will the veteran or surviving spouse be penalized for more than five years. This, too, is different from Medicaid. For Medicaid, the penalty period is open-ended.

Before applying, a veteran or surviving spouse might do well to calculate any penalty period and compare that with the look-back period.

Benefit Levels

There are three levels of benefits. A Basic Service Pension helps a veteran or surviving spouse with unreimbursed medical expenses. A Housebound benefit helps a veteran or surviving spouse who also is substantially housebound due to a disability. Aid & Attendance, sometimes called an Improved Service Pension, helps a veteran or surviving spouse who, in addition to qualifying for help with unreimbursed medical expenses, is bedridden, blind, resides in a nursing home or needs assistance with at least two activities of daily living (bathing, dressing and grooming, maintaining continence, using the toilet, getting sufficient nutrition and hydration, moving from one place or position to another.) The amounts for 2018 are below.

Basic Service Pension Housebound Aid & Attendance

Single veteran
Basic Service Pension: $1,097
Housebound: $1,340
Aid & Attendance: $1,830

Married veteran
Basic Service Pension: $1,436
Housebound: $1,680
Aid & Attendance: $2,169

Surviving spouse
Basic Service Pension: $735
Housebound: $899
Aid & Attendance: $1,176

These benefit levels increased with Social Security chained COLA increases. Benefits are paid directly to the veteran or surviving spouse.

You can learn more at www.va.gov. You may be able to apply yourself. Some local Veteran’s Affairs offices have been very helpful. If you need assistance, a list of accredited representatives, agents and attorneys is available at www.va.gov/ogc/apps/accreditation/index.asp.

1 The Mexican Border Period (May 9, 1916 – April 5, 1917) for veterans who served in Mexico, on its borders or in adjacent waters;

  • World War I (April 16, 1917 – November 11, 1918)
  • World War II (December 7, 1941 – December 31, 1946)
  • The Korean Conflict (June 27, 1950 – January 31, 1955)
  • Vietnam era (August 5, 1964 – May 7, 1975, but February 28, 1961 – May 7, 1975 for those who served in the Republic of Vietnam)
  • Gulf War (August 2, 1990 – a future date to be set by law or presidential proclamation)

Note also that those entering active duty after September 7, 1980 must have been on active duty for 24 months or, if less, completed their entire tour of active duty.

2 Activities of Daily Living are bathing, dressing and grooming, maintaining continence, using the toilet, getting sufficient nutrition and hydration, and transferring from one place or position to another.

3 Instrumental Activities of Daily Living include managing finance, grocery shopping, preparing meals, medication management and transportation to medical appointments.

4 U.S. Government Accountability Office at 83 Fed. Reg. 47,246 (Sept. 18, 2018).


Elder law attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is an Approved Guardianship Attorney. She assists people in elder law, estate and special needs planning, guardianship and settling estates. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

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