Navigating the complex world of Medicaid eligibility can be daunting, especially when it involves understanding how various income sources are treated. At income-partners.net, we are dedicated to providing clarity and solutions, focusing on strategic partnerships for revenue growth. This article addresses whether VA compensation and benefits count as income for Medicaid eligibility, offering essential insights to help you understand the rules and maximize your opportunities.
1. What VA Payments Are Considered Income for Medicaid?
Generally, VA payments, including pensions and compensation, are considered income for Medicaid eligibility purposes. However, some VA payments are exempt from being counted as income. The treatment of VA payments depends on the nature of the payment, according to the U.S. Department of Veterans Affairs (VA). Understanding which payments are countable and which are not can significantly impact your eligibility for Medicaid.
1.1 Types of VA Payments
Here’s a breakdown of the most common types of VA payments:
- Pension
- Compensation
- Dependency and Indemnity Compensation (DIC)
- Educational Assistance
- Aid and Attendance Allowance
- Housebound Allowance
- Payment Adjustment for Unusual Medical Expenses
- Clothing Allowance
- Payments to Vietnam Veterans’ Children with Spina Bifida
1.2 Countable vs. Non-Countable VA Payments
While many VA payments are considered income, some are exempt. VA aid and attendance allowance, housebound allowances, and payment adjustments for unusual medical expenses are generally exempt from both eligibility and co-payment calculations. However, if these payments are deposited into a Qualifying Income Trust (QIT) account, they become countable for co-payment purposes.
According to a study by the National Bureau of Economic Research, understanding these distinctions is crucial for veterans and their families seeking Medicaid benefits.
1.3 Augmented and Apportioned VA Payments
An augmented VA payment is a VA pension payment that has been increased for dependents. For Medicaid purposes, the augmented benefit includes a designated beneficiary’s portion and one or more dependents’ portions. This is usually issued as a single payment to the veteran or the veteran’s surviving spouse.
An apportioned VA payment is a VA compensation payment made directly to the dependent of a living veteran. The VA decides whether and how much to pay by apportionment on a case-by-case basis.
1.3.1 How Augmented Payments Affect Medicaid Eligibility
When veteran’s benefits are augmented for a dependent, the dependent’s portion is not countable income to the applicant/recipient (the veteran or veteran’s surviving spouse) of the check. If the applicant/recipient is the dependent, the applicant/recipient’s portion is countable income.
1.3.2 How Apportioned Payments Affect Medicaid Eligibility
A portion of a VA benefit paid by apportionment to a dependent spouse or child is VA income to the dependent spouse or child and is not considered a support payment from the designated beneficiary.
2. How Do VA Pensions Affect Medicaid Eligibility?
VA pension payments are generally based on a combination of service and a non-service-connected disability or death, which are usually needs-based and considered unearned income. As such, the $20 general income exclusion does not apply to these payments. However, there are exceptions.
2.1 Needs-Based Pensions
Most VA pension payments are based on need. These payments are usually paid monthly, but when the monthly payment due is less than $19, VA will pay quarterly, biannually, or annually. Pensions are paid to:
- A wartime veteran determined permanently and totally disabled for non-service-related reasons.
- The surviving spouse.
- The child of a veteran because of the non-service-related death of the veteran.
2.2 Exceptions to Needs-Based Pensions
Some pensions are not based on need, including:
-
Pensions based on a special act of Congress.
-
Pensions based on the award of the Medal of Honor.
-
Pensions based on service in the:
- Spanish American War (April 21, 1898, through July 4, 1902)
- Indian Wars (January 1, 1817, through Dec. 31, 1898)
- Civil War (1861-1865)
These pensions are unearned income, and the $20 general exclusion does apply. However, it’s essential to assume that a VA pension is needs-based unless there is evidence to the contrary.
2.3 The 1979 VA Pension Plan
The Jan. 1, 1979, increase in VA pension benefits caused many SSI recipients to become ineligible. Public Law 96-272 provided protection to a person drawing VA pension benefits “grandfathered” from Dec. 31, 1978. A person who has been eligible for a VA pension since before 1979 is not required to apply for an increase in VA payment for medical expenses known as aid and attendance or housebound benefits. These additional payments are for unusual medical expenses and are considered exempt income.
2.4 $90 VA Pension and Institutional Setting
VA law 38 U.S.C. 5503 states that the amount of the VA pension for an institutionalized Medicaid recipient who does not have a spouse or child cannot exceed $90 per month. This cap also applies to a surviving spouse with no child. This reduced pension is considered an aid and attendance allowance in all cases and is not considered income.
2.4.1 Implications for Medicaid Co-Payment
The $90 VA pension may not be used to determine what the person in an institutional living arrangement must pay toward the cost of care. This limited VA pension is not counted as income in the eligibility or co-payment budget.
For example, a non-SSI Medicaid recipient in an institutional living arrangement with VA aid and attendance capped at $90 per month and receiving other income can have a Personal Needs Allowance (PNA) of up to $75, for a total of up to $165 ($90 plus up to $75).
3. How Does VA Compensation Impact Medicaid Eligibility?
VA compensation is considered unearned income based primarily on service in the armed forces. Payments are made to veterans, dependents, or survivors. The VA makes compensation payments to a veteran because of a service-related disability and to a spouse, child, or parent of a veteran because of the service-related death of the veteran.
3.1 Budgeting Information for VA Compensation
Because VA compensation is not based on need, the $20 general income exclusion can be deducted in the eligibility determination. It’s important to note that the $20 exclusion does not apply to VA pensions or parents’ DIC payments.
3.2 Verifying VA Benefits
Neither the beneficiary’s award letter nor the VA check indicates whether aid and attendance is included in a person’s total VA payment. To verify the type and amount of benefits received, you can contact the VA using Form H1240, Request for Information from Bureau of Veterans Affairs and Client’s Authorization.
Form H1240
3.3 Exclusions from VA Compensation
Do not include aid and attendance allowance, housebound allowance, and VA reimbursement for unusual medical expenses as part of the total VA benefit when determining Medicaid eligibility.
4. What is Dependency and Indemnity Compensation (DIC) and How Does It Affect Medicaid Eligibility?
Dependency and Indemnity Compensation (DIC) is a monthly benefit paid to eligible survivors of certain deceased veterans, including:
-
Military service members who died while on active duty.
-
Veterans whose death resulted from a service-related injury or disease.
-
Veterans whose death resulted from a non-service-related injury or disease and who were receiving, or were entitled to receive, VA compensation for a service-connected disability that was rated as totally disabling:
- For at least 10 years immediately before death.
- Since the veteran’s release from active duty and for at least five years immediately preceding death.
- For at least one year before death if the veteran was a former prisoner of war who died after Sept. 30, 1999.
4.1 Eligibility for Surviving Spouses
The surviving spouse is eligible if they meet certain criteria, such as being validly married to the veteran before Jan. 1, 1957, or meeting specific marriage duration requirements.
4.2 Eligibility for Surviving Children
A surviving child is eligible if the child is unmarried and under age 18, or between the ages of 18 and 23 and attending school.
4.3 Additional Allowances
Additional allowances could be included in the DIC benefit for aid and attendance or housebound needs.
4.4 Verifying DIC Benefits
Similar to VA compensation, neither the beneficiary’s award letter nor the VA check indicates whether aid and attendance is included in a person’s total DIC payment. To verify the type and amount of benefits received, contact the VA using Form H1240.
5. How is VA Educational Assistance Treated for Medicaid Eligibility?
The VA provides educational assistance through various programs, including vocational rehabilitation. Medicaid policies on income and resources depend on the nature of the VA program.
5.1 Veteran’s Eligibility Period
Veterans generally have up to 10 years after leaving the service to complete their education. Those enrolled in a vocational rehabilitation program have up to 12 years, and those participating under the Chapter 33 program, “Post-9/11 GI Bill,” have up to 15 years.
5.2 Dependents and Survivors
Dependents and survivors of veterans may also be eligible for educational benefits under Chapter 35, Survivors and Dependents Educational Assistance Program.
5.3 Non-Countable Educational Assistance
Do not consider the following as income:
- Payments made by VA to pay for tuition, books, fees, tutorial services, or any other necessary educational expenses.
- Payments made as part of a VA program of vocational rehabilitation, including any augmentation for dependents.
- Any portion of a VA educational benefit that is a withdrawal of the veteran’s own contribution, as this is conversion of a resource and not income.
5.4 Countable Educational Assistance
Consider the following as income:
- The portion of the VA educational payment designated as a stipend for shelter.
- Payments made by VA that are used to pay for things other than necessary educational expenses.
The $20 general income exclusion applies to countable VA educational assistance, and these payments are subject to deeming.
6. Understanding VA Aid and Attendance and Housebound Payments for Medicaid
The VA pays an allowance to veterans and dependents who are in regular need of the aid and attendance of another individual or who are housebound. This allowance is combined with the individual’s pension or compensation payment.
6.1 Eligible Recipients
This special VA allowance can be paid to:
- Disabled veterans
- Disabled veterans’ spouses
- Widows
- Parents
6.2 Institutional Setting
If an individual is in an institutional setting (e.g., a nursing facility) because of mental or physical incapacity, the VA presumes eligibility for aid and attendance.
6.3 Exclusions from Eligibility and Co-Payment Budgets
Do not consider the following VA payments in the eligibility and co-payment budgets:
- Aid-and-attendance allowances
- Housebound allowances
- Reimbursement for unusual medical expenses
6.4 Exception: Qualifying Income Trust (QIT)
If aid-and-attendance allowances, housebound allowances, and reimbursements for unusual medical expenses are deposited into a QIT, the amount deposited is countable for co-payment budgeting. However, these allowances are not countable for co-payment budgeting if separated from the pension or compensation benefit before depositing the VA pension into a QIT.
7. How Does VA Clothing Allowance Affect Medicaid Eligibility?
A lump sum clothing allowance is payable in August of each year to a veteran with a service-connected disability for which a prosthetic or orthopedic appliance (including a wheelchair) is used. This allowance helps defray the increased cost of clothing due to wear and tear caused by the use of such appliances. A VA clothing allowance is not considered income for Medicaid purposes.
8. VA Payments to Vietnam Veterans’ Children with Spina Bifida
VA payments made to or on behalf of certain Vietnam veterans’ natural children for any disability resulting from spina bifida are not considered income or resources for Medicaid purposes. This also applies to payments made to or on behalf of certain Korea service veterans’ natural children for any disability resulting from spina bifida, and to payments made to or on behalf of women Vietnam veterans’ natural children for certain birth defects.
Interest and dividends earned on unspent payments are also exempt from income.
9. VA Contracts and Medicaid Eligibility
A VA contract for payment of nursing facility services does not affect Medicaid eligibility. If an application is filed, proceed with the eligibility determination. If the person is certified while the contract is still in effect, the VA contract is reported as a third-party resource on Form H1039, Medical Insurance Input.
10. Navigating Medicaid Eligibility with VA Benefits: Key Takeaways
Understanding how VA benefits are treated for Medicaid eligibility is crucial for veterans and their families. While many VA payments are considered income, several exceptions exist. Knowing these distinctions can help you optimize your eligibility and access the healthcare you need.
10.1 Key Considerations
- Type of VA Payment: Determine whether the payment is a pension, compensation, educational assistance, or another type.
- Needs-Based vs. Non-Needs-Based: Identify if the payment is based on need.
- Exempt Allowances: Be aware of exempt allowances like aid and attendance and housebound payments.
- Qualifying Income Trusts (QIT): Understand how depositing VA payments into a QIT can affect co-payment calculations.
- Verification: Verify the type and amount of benefits received by contacting the VA.
10.2 Maximizing Your Opportunities
By understanding the nuances of VA benefits and Medicaid eligibility, you can maximize your opportunities to receive the healthcare services you need. Partnering with experts and staying informed about the latest regulations and guidelines is essential.
FAQ: VA Benefits and Medicaid Eligibility
1. Are all VA benefits considered income for Medicaid?
No, not all VA benefits are considered income. Some, like aid and attendance allowance, housebound allowance, and reimbursements for unusual medical expenses, are typically excluded.
2. Does the $20 general income exclusion apply to all VA payments?
No, the $20 general income exclusion generally does not apply to VA pensions or parents’ DIC payments, as these are usually needs-based.
3. What happens if I deposit my VA aid and attendance allowance into a QIT?
If you deposit your VA aid and attendance allowance into a Qualifying Income Trust (QIT), the amount deposited becomes countable for co-payment budgeting.
4. How do augmented VA payments affect Medicaid eligibility?
When VA benefits are augmented for a dependent, the dependent’s portion is not countable income to the applicant/recipient unless the applicant/recipient is the dependent themselves.
5. How can I verify the type and amount of VA benefits I am receiving?
You can verify the type and amount of VA benefits you are receiving by contacting the VA using Form H1240, Request for Information from Bureau of Veterans Affairs and Client’s Authorization.
6. What VA educational assistance is not considered income for Medicaid?
Payments made by the VA for tuition, books, fees, tutorial services, and payments made as part of a VA program of vocational rehabilitation are not considered income.
7. Is a VA clothing allowance considered income for Medicaid?
No, a VA clothing allowance, which is a lump sum payment to help defray the cost of clothing due to wear and tear from prosthetic or orthopedic appliances, is not considered income.
8. What if I live in a nursing home and receive a VA pension?
If you are a single veteran or a single surviving spouse in a nursing home, your VA pension may be capped at $90 per month, which is considered an aid and attendance allowance and is not counted as income for Medicaid eligibility.
9. Are VA payments made to children with spina bifida considered income?
No, VA payments made to or on behalf of certain Vietnam veterans’ natural children for any disability resulting from spina bifida are not considered income or resources for Medicaid purposes.
10. Does a VA contract for nursing facility services affect Medicaid eligibility?
No, a VA contract for payment of nursing facility services does not affect Medicaid eligibility, but it is reported as a third-party resource on Form H1039.
At income-partners.net, we understand the challenges you face in navigating these complex systems. That’s why we’re here to help you explore partnership opportunities and strategies that can increase your revenue and ensure a stable financial future.
Address: 1 University Station, Austin, TX 78712, United States.
Phone: +1 (512) 471-3434.
Website: income-partners.net.
Ready to discover how strategic partnerships can transform your revenue potential? Visit income-partners.net today to explore opportunities, build relationships, and achieve your financial goals!
