Most people who have heard about Pension know that it will cover the costs of assisted living and, in some cases, cover nursing home costs as well. But the majority of those receiving long term care in this country are in their homes. Estimates are that approximately 70% to 80% of all long term care is being provided in the home. All of the information available about Pension overlooks the fact that this benefit should be used to pay for home care. Maybe if more people knew this fact, more people would be applying for the benefit.
It also comes as a surprise to most people that VA will allow veterans’ households to deduct the annual cost of paying any person such as family members, friends or hired help for care when calculating the Pension benefit. This annual cost is then used to calculate the benefit based on a new "countable income" and allows families earning more than the pension benefit to receive a disability income from VA
This extra income can be a welcome benefit for families struggling to provide eldercare for loved ones at home. Under the right circumstances, this annualized medical expense for the cost of family members, friends or any other person providing care, could create an additional household income of up to $1,228 a month for a single surviving spouse of a veteran, up to $1,911 a month for a single veteran or up to $2,266 a month for a couple.
If the disabled care recipient has been rated "housebound" or in need of "aid and attendance" by VA, all fees paid to an in-home attendant will be allowed as long as the attendant provides some medical or nursing services for the disabled person. The attendant does not have to be a licensed health professional. Services of licensed home care providers can be deducted without any need for a rating but the pension award is a lesser amount.
It is our understanding that a nonlicensed in-home attendant could be just about anyone receiving pay for providing services. This might be members of the family, friends, or someone hired to live in the home. Examples of medical or nursing services would be help with activities of daily living such as dressing, bathing, toileting, ambulating, feeding, diapering and so on. Other services might include medication reminders or supervision necessary to provide a protective environment for the care recipient -- in the case of dementia or Alzheimer's.
All reasonable fees paid to the individual for personal care of the disabled person and maintenance of the disabled person's immediate environment may be allowed. This includes such services as cooking and housecleaning. It is not necessary to distinguish between "medical" and "nonmedical" services. Services which are beyond the scope of personal care of the disabled person and maintenance of the disabled person's immediate environment may not be allowed. This might include paying the bills, providing transportation for other family members, cooking and cleaning for other family members, providing entertainment, providing transportation for personal needs other than medical and so on.
For a disabled person who has been rated, a family member may be considered an in-home attendant, but that family member has to be paid for services duly rendered. There is potential for fraud here where a family member may move into the home and ostensibly receive payment as a caregiver but not actually provide the level of care paid for. Documentation for this care must be provided to VA, and it is reasonable for VA to question whether the services being purchased from a family member living in the household are legitimate. Such arrangements should be extensively documented and completely arm's-length.
The care arrangements and payment must be made prior to application and there must be evidence that this care is needed on an ongoing and regular basis. We recommend a formal care contract and weekly invoice billing for services. Money must exchange hands and there must be evidence of this. All of this documentation must be provided as proof to VA when making application for the pension benefit. Costs for these services must be unreimbursed; meaning these costs are not paid by insurance, by contributions from the family or from other sources.
Let's look at the following example.
Michelle, who is a divorced mother of two teenagers, moves in with her mother. Michelle's mother, Carla, has recently had a stroke and needs supervision and help. In order to take care of her mother, Michelle cannot maintain full employment outside of the home. She has found a company that will let her work at home on her computer but it is not full time employment and it does not pay well. Michelle has expenses she needs to cover for existing debts and to support her two teenage children. She does not have housing costs but does consume additional food and utilities resources due to her presence and her children being in the home. She also incurs transportation costs for her car, running errands, shopping for the household, taking Carla to doctor’s appointments and transporting her children.
Carla’s household income is $1,400 a month which consists of Social Security and a small Pension. She has about $20,000 in savings in the bank. She owns her home and a car. Michelle's and Carla’s combined income is just not enough to make ends meet for both families.
Carla is the single surviving widow of a Korean veteran. Michelle has heard of a veterans benefit consultant who helps families in this predicament obtain the Pension benefit. Michelle meets with the consultant and he suggests that Michelle and her mother establish a contract for care and that Carla pay her daughter $1,300 a month to provide care. He then suggests submitting a claim for a Death Pension for Carla. The consultant makes sure a legitimate arm's-length agreement is written up and that the care services and payments to Michelle are accurately documented.
In order for these payments to Michelle to count towards a Pension award, Carla must have a rating from the VA for "aid and attendance" or "housebound." The consultant provides forms and advice to guide Michelle and her mother through the application process. He makes sure that all of the required documentation is in place before the application is submitted. He reviews all documentation and the completed form, which Michelle and her mother have filled out, before final submission.
For information on ratings please go to the article entitled Who Is Eligible for the Aid and Attendance Pension Benefit?
If VA allows annualization of the cost of the care contract in calculating the Pension benefit, Michelle's mother should receive an award. In calculating Pension, Michelle's $1,300 a month contract payment should be annualized and subtracted from her annual income. An additional medical deduction is included for Carla's $200 a month payments for Medicare Part B, Medicare Part D and a Medicare supplement policy. This additional amount should be annualized and also subtracted from Carla's income. Both the contract payments and the insurance premiums are adjusted for 5% of MAPR before being subtracted from Carla's income. Her new "countable" income will be negative and subtracting that new income from the MAPR will allow Carla to receive the maximum Pension benefit for her rating category.
For an explanation of the special annualized treatment of unreimbursed long term care costs and insurance premiums please go to the article entitled The special case of long term medical costs
After five months, VA awards Carla $1,228 a month in additional Pension income. Her total income is now $2,376 a month. VA also awards a total of four months of benefit, payable retroactively to the first day of the month following the month in which the application was received in the regional office.
Depending on household income and the amount of the care contract and the amount of VA Pension income, these types of care arrangements could be a welcome addition for families struggling to provide care for their loved ones at home. Family care providers, on contract with their loved ones, do not have to be residing in the home. Caution should be exercised that these are indeed legitimate contracts and care provider arrangements and there are no behind-the-scenes transfers of monies.