If you are a business or organization serving aging or disabled Hoosiers, knowing a few basic principles about Medicaid and VA benefits can provide a lot of value to your clients and set you apart from your competition. Also if you have an aging parent or may be concerned about how to pay for long term care yourself, knowing a bit about these programs can save you and your family in the long run and avoid future anxiety and headaches over paying for such care. Because we believe it is important for individuals to know a little about these programs, we put together the following list of basic principles about Medicaid and VA pension benefits to know.
1. VA Pension versus Medicaid Benefits, Which is Better?
While one benefit is not necessarily “better” than the other, the best fit will depend on the individual’s situation. VA pension is a cash benefit that can pay a veteran or a surviving spouse. For a single veteran the maximum benefit is $1,911 per month (2020) and for a single surviving spouse, the maximum benefit is $1,228 month (2020). Medicaid, on the other hand, operates similar to health insurance, paying health care providers directly. VA pension is typically a good fit for those in need of and seeking home and community based alternatives to nursing home care. Medicaid tends to be a better fit for those in need of more extensive care, such as care in a nursing facility. For an individual requiring extensive care in the community, he or she can typically qualify for both benefits.
2. Impoverishment Not Required
While both programs have an income and asset limit, expending all excess funds on care is not required. The key to protecting assets and meeting income and asset qualifications is a good legal plan. Not all assets count toward these limits. So, sometimes legal planning will involve “reinvesting” countable assets into those that are exempt under a program.
In situations where exempt planning is not applicable, an individual will protect assets through strategic transfers of assets, typically to a trust for the family of the individual. Some transfers are exempt under the rules of the VA Pension or Medicaid program. However, even those transfers that are not exempt can provide protection of some of the family assets. Whether the best approach is purchasing exempt assets or making transfers, assets can be protected while also qualifying for benefits without being completely destitute.
3. Speaking of Transfers, Exercise Care before Making Them
Both VA pension and Medicaid have penalties in place when transferring assets to get below an asset eligibility limit. The transfer penalty is essentially a period in which the program refuses to provide assistance to the individual over a period of time. The length of the penalty depends on the amount of assets transferred.
Transfers can be more than just a gift. For example, certain financial transactions like purchasing certain types of annuities or making non-conforming loans can also be transfers. Also, selling something for less than what it is worth (i.e. selling the $10,000 car for $1) can also be a transfer. Furthermore, all financial transactions between family members are presumed to be transfers. It is up to the applicant to prove a transaction is not a transfer. When in doubt about how a financial transaction will affect the individual’s future , it is good idea to review the transaction with legal counsel before completing it.
While the eligibility rules for VA pension and Medicaid are complex and ever-changing, knowing a few basics can provide a lot of value to your clients or family members. The Stinson Law Firm has years of experience assisting individuals to determine their best approach to financing long term care and protecting assets. Please do not hesitate to contact us at 317-622-8181 or www.stinsonelderlaw.com to review VA Pension or Medicaid eligibility for you or your loved one today.
Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.