New Medicaid Policy on VA Income

Understanding the way Medicaid programs treat income-like benefits paid by the Veterans Administration have always been confusing (at least to me). Until now, Medicaid policy on the subject was sparse.  Good news, as of April 1, we have a lot more detail.  Bad news, I still don’t understand.

It’s important because people who can combine VA benefits (especially Aid and Attendance) with Medicaid Waiver or PACE benefits, have more options. And it comes up a lot.  But it’s dicey because if a client accesses VA benefits and by doing so receives income that puts them even one dollar over the income cap, they lose the ability to obtain benefits through either Waiver or PACE.

At least part of the confusion stems from the fact that the checks a Veteran (or their spouse) receives from the VA typically represent a composite of pensions and supplemental payments (or as Medicaid calls them “allowances”). The challenge is determining how much, if any, of a check they receive is going to be considered income when applying for Medicaid benefits. (Veterans who were injured in service receive “compensation.”  Compensation is clearly income, and is not the subject of this blog post.)

As of April 1, DHHS issued expanded language in BEM 503 (click here to read the bulletin). The BEM now says:

Bridges counts the gross amount of the pension or compensation as unearned income.

Exceptions:

  • Bridges excludes any portion of a payment resulting from an Aid and Attendance or Housebound allowance; see VA Aid and Attendance and Housebound Allowances in this item.
  • Bridges may exclude augmented benefits; see Augmented Benefits in this item.

Bridges excludes any portion of a payment resulting from unusual medical expenses; see VA Adjustment for Unusual Medical Expenses in this item.

So it clearly says they will exclude “any portion resulting from unusual medical expenses” and “any portion of the payment resulting from Aid and Attendance or Housebound Allowance.”  (emphasis added).

Then it says:

Payments are made to veterans, spouses of disabled veterans, and surviving spouses who are:

      •  Housebound.

      •  In regular need of the aid and attendance of another individual.The payment is included with the pension or compensation payment.Bridges excludes as income and as an asset the portion of a VA pension or compensation that is the aid and attendance or house-bound allowance.

Again “excluded,” but again, that annoying word “portion.”

And it says:

VA increases some pension and compensation payments due to unusual medical expenses.

Bridges excludes the increase due to unusual medical expenses as income and as an asset.

OK, so we have an “Aid and Attendance benefit” and a “housebound benefits.” Both excluded. Likewise, increases resulting from unusual medical expenses are excluded.  But we are told that these payments may only represent aportion of the payment that Veteran or his/her spouse receives, and that it is only this “portion” that is excluded.  So naively, I ask: What portion? How do we calculate it?  How do we prove what it is?

Well, policy says:

These allowances are not identifiable on a check stub or award letter. Accept the client’s statement that the payment does not include any of these additional allowances.

But I’m not asking about how to prove that the payment does not include an excluded “allowance.” I want to show that it does include an allowance, and I want it to be excluded.  Although the VA will, upon request, provide a written explanation of benefits, the process for obtaining that information is slow, unreliable, and often incomplete; especially with respect to unusual medical expenses.

There’s more – and you can read it yourself. I know I can be dense.  So I asked some of the smartest people I know (Thanks Amy and David), yet I remain uncertain.

I believe the changes were intended to make things better. After all, the State clearly understands that every Federal dollar they capture from the Veterans Administration is one less dollar they have to spend; and that forcing people who would otherwise be getting Waiver or PACE services into nursing homes because they went over the income cap doesn’t help anyone.

I don’t like posting information that doesn’t provide guidance – but thought: (1) some of you might not be aware of the changes, and (2) maybe it will make more sense to you. If so, please feel free to drop me a line.

  • Jim Schuster

    Doug,
    As I understand the VA Pension system, the terms “housebound” and “aid and attendance” are “ratings.” These ratings bring a set amount of funds over “basic pension.” If that is accurate, then the base pension is the amount of unearned income and the additional payment for one of the two ratings is not income. In short, determine the base pension for the Vet depending on his or her category (single, married, additional dependent, etc.) and then subtract that from the total received.