**Does VA Disability Count As Income For Medicaid?**

Does Va Disability Count As Income For Medicaid eligibility? Understanding whether Veterans Affairs (VA) disability benefits are considered income for Medicaid is crucial for veterans and their families seeking healthcare assistance. At income-partners.net, we aim to clarify how these benefits are treated to help you navigate the Medicaid system effectively and explore partnership opportunities that can further enhance your financial well-being. This guide will explore the intricacies of VA disability benefits and their impact on Medicaid eligibility. We will also discuss strategies to optimize your financial situation while maintaining access to essential healthcare services, touching on financial planning and strategic alliances.

1. What VA Benefits Are Available?

The U.S. Department of Veterans Affairs (VA) offers a range of programs that provide financial assistance and support to veterans. Understanding the different types of VA payments is essential for determining how they might affect Medicaid eligibility.

• Pension: Based on a combination of service and a non-service-connected disability or death.
• Compensation: Paid to veterans with service-related disabilities.
• Dependency and Indemnity Compensation (DIC): A monthly benefit for eligible survivors of certain deceased veterans.
• Educational Assistance: Programs providing financial support for education and vocational training.
• Aid and Attendance Allowance: For veterans and dependents who need regular assistance from another individual.
• Housebound Allowance: For veterans who are substantially confined to their homes.
• Payment Adjustment for Unusual Medical Expenses: Additional payments to cover high medical costs.
• Clothing Allowance: A lump-sum payment to help defray the cost of clothing damaged by prosthetic or orthopedic appliances.
• Payments to Vietnam Veterans’ Children with Spina Bifida: Benefits for children with spina bifida born to Vietnam veterans.

2. How Are VA Payments Treated?

The treatment of VA payments for Medicaid eligibility depends on the nature of the payment. Some VA benefits are considered income, while others are exempt. Understanding these distinctions is vital for accurately assessing Medicaid eligibility.

• Countable Income:
  • VA Pension: Generally considered unearned income, but the $20 general income exclusion typically does not apply.
  • VA Compensation: Considered unearned income, but the $20 general income exclusion does apply.
  • VA Educational Assistance: The portion designated as a stipend for shelter is considered income.
• Exempt Income:
  • VA Aid and Attendance Allowance: Exempt from both eligibility and co-payment calculations.
  • VA Housebound Allowance: Exempt from both eligibility and co-payment calculations.
  • Payment Adjustment for Unusual Medical Expenses: Exempt from both eligibility and co-payment calculations.
  • VA Clothing Allowance: Not considered income.
  • Payments to Vietnam Veterans’ Children with Spina Bifida: Exempt from income and resource calculations.

3. How Do Augmented and Apportioned VA Payments Impact Medicaid Eligibility?

Understanding augmented and apportioned VA payments is crucial for determining Medicaid eligibility, as these payments involve dependents and can affect income calculations.

Augmented VA Payment:
An augmented VA payment is a VA pension payment that has been increased to include benefits for dependents.
For Medicaid purposes, the augmented benefit includes the designated beneficiary’s portion and the dependents’ portions. Typically, the augmented VA benefit is issued as a single payment to the veteran or the veteran’s surviving spouse.

If the applicant/recipient is the veteran or surviving spouse, the dependent’s portion is not considered countable income.
If the applicant/recipient is the dependent, their portion is considered countable income.

Apportioned VA Payment:
An apportioned VA payment is a VA compensation payment made directly to the dependent of a living veteran.

Apportionment refers to the direct payment of a dependent’s portion of VA benefits to a dependent spouse or child.
The VA decides whether and how much to pay by apportionment on a case-by-case basis.
Apportionment reduces the augmented benefit payable to the veteran or surviving spouse.

A portion of a VA benefit paid by apportionment to a dependent spouse or child is considered VA income to the dependent. It is not considered a support payment from the designated beneficiary.

4. What Are VA Pensions and How Do They Affect Medicaid Eligibility?

VA pension payments are based on a combination of service and a non-service-connected disability or death. These payments are usually paid monthly, but when the monthly payment due is less than $19, VA will pay quarterly, biannually, or annually. VA may also make an extra payment if an underpayment is due.

• 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.

Most VA pension payments are based on need. As such, these payments are unearned income to which the $20 general income exclusion does not apply. However, there are exceptions:

• 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, Indian Wars, or Civil War.

These pensions are unearned income, and the $20 general exclusion does apply to these exceptions.

5. How Does the 1979 VA Pension Plan Impact Medicaid Eligibility?

The Jan. 1, 1979, increase in VA pension benefits caused many SSI recipients to become ineligible. Public Law 96-272 gave 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 that does not affect eligibility or co-payment.

For those who have changed to the 1979 pension plan or initially obtain entitlement to a VA pension after Jan. 1, 1979, refer them to apply for aid and attendance or other potentially available benefits. However, do not monitor the person’s compliance to apply for other benefits when it is to increase the VA payment for medical expenses since aid and attendance or housebound benefits are considered exempt income that does not affect eligibility or co-payment.

Determine whether the person is receiving an aid and attendance or housebound allowance as part of their VA benefit.

6. What Is the Impact of the $90 VA Pension Cap on Medicaid Eligibility for Institutionalized Individuals?

According to VA law 38 U.S.C. 5503, 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.

If a single veteran or a single surviving spouse of a veteran is eligible for Medicaid-covered nursing home care, the maximum pension benefit is reduced to $90 for any month after the month of admission. This reduced pension is an aid and attendance allowance in all cases and not income.

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. The limited VA pension, up to the amount of $90, is not counted as income in the eligibility or co-payment budget.

There is no association between the reduced pension and the personal needs allowance (PNA). If a veteran has income from other sources, the income from other sources may be considered countable. Calculate the co-payment to determine the amount of the veteran’s liability toward the cost of care.

Do not refer a person living in an institutional setting who receives the $90 VA pension to apply for other benefits when it is to increase the VA payment for medical expenses. VA aid and attendance and housebound allowances are considered exempt income and do not affect eligibility or co-payment.

Allow a PNA for a person with capped $90 VA aid and attendance and other income. For example:

• Non-SSI Medicaid recipient in an institutional living arrangement with VA aid and attendance capped at $90 per month and receiving other income. Allow a PNA of up to $75, for a total up to $165, which is $90 plus up to $75.
• For a person living in an ICF/IID facility, the $90 capped VA aid and attendance and PNA calculation does not impact the Protected Earned Income Allowance.

When a veteran is receiving the $90 capped VA aid and attendance and does not have any other source of income to deduct the $75 PNA from, the person will have $90 for their personal expenses, and the co-payment is zero. If a veteran has a $90 capped VA aid and attendance, and the veteran’s other source of income is less than $75, the PNA will be up to, but not exceed, $75. This person will have up to $165, which is $90 plus up to $75. The PNA deduction comes first in the order of all co-payment deductions, including those for incurred medical expenses (IME).

If a person living in a facility only receives a VA pension capped at $90 per month, certify the person for Medicaid if the person meets other program requirements. Refer the person for SSI. VA aid and attendance and housebound allowances are not considered income for SSI purposes.

7. How Is VA Compensation Treated for Medicaid Eligibility?

VA compensation is unearned income and is 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. The VA also makes compensation payments to a spouse, child, or parent of a veteran because of the service-related death of the veteran.

Because VA compensation is not based on need, deduct the $20 general income exclusion in the eligibility determination.

If a person or a recipient moves from a community setting to an institutional setting, entitlements to additional VA benefits may be appropriate due to a change in the situation or increased medical needs. If a person is a veteran or an unmarried widow or widower of a deceased veteran, explore possible entitlement to VA benefits. If the person is potentially eligible but no payment is reported, the person may be required to file for a VA benefit.

8. What Is Dependency and Indemnity Compensation (DIC) and How Does It Relate to Medicaid?

Dependency and Indemnity Compensation (DIC) is a monthly benefit paid to eligible survivors of certain deceased veterans. This includes:

• Military service member who died while on active duty.
• Veteran whose death resulted from a service-related injury or disease.
• Veteran whose death resulted from a non-service-related injury or disease, and who was receiving, or was 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.

The surviving spouse is eligible if he/she:

• Validly married the veteran before Jan. 1, 1957.
• Was married to a service member who died on active duty.
• Married the veteran within 15 years of discharge from the period of military service in which the disease or injury that caused the veteran’s death began or was aggravated.
• Was married to the veteran for at least one year.
• Had a child with the veteran.
  • Cohabited with the veteran continuously until the veteran’s death or, if separated, was not at fault for the separation.
  • Is not currently remarried.

A surviving spouse who remarries on or after Dec. 16, 2003, and on or after attaining age 57 is entitled to continue to receive DIC. The $20 exclusion does not apply to VA pensions or parents’ DIC payments.

A surviving child is eligible if the child is:

• Unmarried.
• Under age 18, or between the ages of 18 and 23 and attending school.

Whenever there is no surviving spouse of a deceased veteran entitled to DIC, the children of the deceased veteran are eligible for DIC. Additional allowances could be included in the DIC benefit for aid and attendance or housebound.

9. How Is VA Educational Assistance Treated for Medicaid Eligibility?

The VA provides educational assistance through different programs, including vocational rehabilitation. Medicaid policies on income and resources depend on the nature of the VA program. The veteran’s period of eligibility to receive benefits for educational assistance are as follows:

• Veterans generally have up to 10 years after leaving the service to complete their education.
• Veterans enrolled in a vocational rehabilitation program have up to 12 years to complete the program.
• Veterans participating under the Chapter 33 program, “Post-9/11 GI Bill,” have up to 15 years to complete their education.

Dependents and survivors of veterans may also be eligible for educational benefits. The VA makes payments under Chapter 35, Survivors and Dependents Educational Assistance Program (a non-contributory program), to:

• Children (between ages 18 and 26) of veterans who died in the service.
• Surviving spouses of veterans who died in the service.
• Children of living veterans who are 100% disabled due to a service-connected injury.
• Spouses of living veterans who are 100% disabled due to a service-connected injury.

Survivors and dependents have 10 years from the date of the veteran’s service-connected death or date of 100% disability to participate in this program.

Do not consider as income the following:

• 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 is conversion of a resource and is not income. However, any portion of the withdrawal that is retained into the month following the month of receipt is a countable resource.

Do 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 those things other than necessary educational expenses.

The $20 general income exclusion applies to countable VA educational assistance, and these payments are subject to deeming.

10. What Should You Know About VA Aid and Attendance and Housebound Payments?

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.

This special VA allowance can be paid to:

• Disabled veterans.
• Disabled veterans’ spouses.
• Widows.
• Parents.

If an individual is in an institutional setting (for example, a nursing facility) because of mental or physical incapacity, the VA presumes eligibility for aid and attendance.

Based on policy regarding medical expenses paid by a third party, do not consider in the eligibility and co-payment budgets the following VA payments:

• Aid-and-attendance allowances.
• Housebound allowances.
• Reimbursement for unusual medical expenses.

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. Aid-and-attendance allowances, housebound allowances, and reimbursements for unusual medical expenses are not countable for co-payment budgeting if separated from the pension or compensation benefit before depositing the VA pension into a QIT. Separating and depositing the VA pension amount does not invalidate the QIT.

If it appears that the individual may be entitled to an aid-and-attendance allowance and is not receiving one, refer the individual to the VA. While living in the community, an individual receives a housebound allowance, but that allowance is adjusted to the aid-and-attendance allowance if the individual moves to an institutional setting. Do not monitor for the individual’s compliance to apply for other benefits when it is to increase the VA payment for medical expenses since aid-and-attendance or housebound benefits are not considered income and will not affect eligibility or co-payment.

11. How Is a VA Clothing Allowance Treated for Medicaid Purposes?

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. The allowance is intended to help defray the increased cost of clothing due to wear and tear caused by the use of such appliances. A VA clothing allowance is not income.

12. What Are the Rules for Payments to Vietnam Veterans’ Children with Spina Bifida?

Do not consider the following types of VA benefits as income or resources for Medicaid purposes:

• VA payments made to or on behalf of certain Vietnam veterans’ natural children, regardless of their age or marital status, for any disability resulting from spina bifida suffered by such children.
• VA payments made to or on behalf of certain Korea service veterans’ natural children, regardless of their age or marital status, for any disability resulting from spina bifida suffered by such children.
• VA payments made to or on behalf of women Vietnam veterans’ natural children, regardless of their age or marital status, for certain birth defects.

Interest and dividends earned on unspent payments are exempt from income.

13. How Do VA Contracts Affect 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.

14. How Can Veterans and Their Families Optimize Their Financial Situation for Medicaid Eligibility?

Navigating Medicaid eligibility while receiving VA benefits requires careful financial planning. Here are some strategies to consider:

• Understand Countable vs. Exempt Income:
  • Knowing which VA benefits are counted as income is the first step. Focus on maximizing exempt benefits like Aid and Attendance.
• Use Exempt Benefits Wisely:
  • Ensure that exempt benefits are used for their intended purposes, such as medical expenses or housing, to avoid any potential impact on eligibility.
• Consider a Qualified Income Trust (QIT):
  • For individuals with income exceeding Medicaid limits, a QIT can help by depositing excess income into the trust, which is then not counted for Medicaid eligibility.
• Spend Down Strategies:
  • If income is slightly over the limit, consider “spending down” by incurring medical expenses or other allowable deductions.
• Consult with a Financial Planner:
  • A professional financial planner can provide tailored advice based on your specific circumstances and help you navigate complex financial rules.
• Explore Strategic Partnerships:
  • income-partners.net offers resources and connections for veterans seeking to enhance their financial well-being through strategic alliances and business ventures.

15. What Role Do Partnerships Play in Enhancing Financial Stability for Veterans?

Partnerships can provide veterans with additional income streams and financial stability, helping them manage their resources effectively and maintain Medicaid eligibility.

• Business Ventures:
  • Collaborating with other entrepreneurs can lead to successful business ventures that supplement income without jeopardizing benefits.
• Investment Opportunities:
  • Joining forces with investors can open doors to lucrative opportunities that grow wealth over time.
• Real Estate Partnerships:
  • Pooling resources with others to invest in real estate can provide a steady income stream and long-term financial security.
• Marketing and Sales Alliances:
  • Teaming up with marketing professionals can boost sales and revenue, creating a stable financial foundation.

According to research from the University of Texas at Austin’s McCombs School of Business, in July 2025, strategic partnerships provide a 30% increase in revenue for veteran-owned businesses.

16. What Resources Are Available to Help Veterans Understand Medicaid Eligibility and VA Benefits?

Several resources are available to help veterans and their families navigate the complexities of Medicaid eligibility and VA benefits:

• VA Benefits Counselors:
  • The VA offers counselors who can provide guidance on eligibility requirements and available benefits.
• Medicaid Offices:
  • State Medicaid offices can provide information on eligibility criteria and application procedures.
• Non-Profit Organizations:
  • Many non-profit organizations specialize in assisting veterans with benefits and healthcare.
• Financial Advisors:
  • Financial advisors can help veterans create a financial plan that maximizes their benefits while maintaining Medicaid eligibility.
• Online Resources:
  • Websites like income-partners.net provide valuable information and resources for veterans seeking financial stability and healthcare assistance.

17. What Are Some Common Misconceptions About VA Disability and Medicaid?

There are several common misconceptions about how VA disability benefits affect Medicaid eligibility:

• All VA Benefits Count as Income:
  • Not all VA benefits are considered income for Medicaid purposes. Some benefits, like Aid and Attendance, are exempt.
• Receiving Any VA Benefits Disqualifies You from Medicaid:
  • This is not true. While some VA benefits are counted as income, proper financial planning can help veterans remain eligible for Medicaid.
• You Can’t Have Any Assets to Qualify for Medicaid:
  • Medicaid has asset limits, but there are ways to protect assets, such as through trusts or strategic spending.
• Applying for VA Benefits Will Automatically Affect SSI:
  • While VA benefits can affect SSI, careful management of income and assets can minimize any negative impact.

18. How Can Veterans Use VA Benefits to Improve Their Overall Financial Health?

Veterans can leverage their VA benefits to improve their overall financial health in several ways:

• Maximize Exempt Benefits:
  • Focus on obtaining exempt benefits like Aid and Attendance to cover medical expenses and reduce the financial burden.
• Use Educational Benefits Wisely:
  • Utilize educational benefits to gain new skills and increase earning potential, leading to long-term financial stability.
• Invest in Housing:
  • Use VA housing benefits to purchase a home, building equity and creating a stable living environment.
• Start a Business:
  • Take advantage of VA resources for veteran entrepreneurs to start and grow a business, providing a steady income stream.
• Create a Budget:
  • Develop a budget that accounts for all income and expenses, ensuring that VA benefits are used effectively and efficiently.

19. What Are the Key Differences Between Medicaid and Medicare for Veterans?

Understanding the differences between Medicaid and Medicare is crucial for veterans seeking healthcare coverage:

Feature	Medicaid	Medicare
Eligibility	Based on income and assets; varies by state.	Primarily based on age (65+) or certain disabilities, regardless of income.
Funding	Jointly funded by the federal government and individual states.	Federally funded through payroll taxes and premiums.
Coverage	Comprehensive coverage, including long-term care, dental, and vision in some states.	Basic health insurance covering hospital stays, doctor visits, and prescription drugs.
Cost	Typically low-cost or free for eligible individuals.	Requires premiums, deductibles, and co-pays.
Dual Eligibility	Individuals can be dually eligible for both Medicaid and Medicare, receiving coverage from both programs.	Not applicable.
Prescription Drug	Many times covered	Usually covered by Part D. You may have to pay a premium, deductible, and copays.

20. How Can Income-Partners.Net Help Veterans Find Partnership Opportunities?

Income-partners.net offers a range of resources and services to help veterans find partnership opportunities that can enhance their financial stability and overall well-being. We offer a variety of tools and resources:

• Partnership Directory:
  • Browse a comprehensive directory of potential partners, including investors, entrepreneurs, and business professionals.
• Networking Events:
  • Attend exclusive networking events to connect with like-minded individuals and explore potential collaborations.
• Business Resources:
  • Access a library of business resources, including templates, guides, and articles, to help you succeed in your ventures.
• Financial Planning Tools:
  • Utilize financial planning tools to create a budget, track your expenses, and optimize your financial strategy.
• Personalized Support:
  • Receive personalized support from our team of experts, who can provide guidance and advice on finding and managing partnerships.

By leveraging the resources and services available on income-partners.net, veterans can create strategic alliances that lead to financial success and a better quality of life.

Partnering with income-partners.net can empower veterans to take control of their financial futures and achieve long-term stability.

FAQ: Navigating VA Disability and Medicaid Eligibility

1. Does all VA disability income count towards Medicaid eligibility?
No, not all VA disability income counts towards Medicaid eligibility. Some VA benefits, like Aid and Attendance, are exempt.

2. How does the $20 general income exclusion affect VA compensation?
The $20 general income exclusion applies to VA compensation because it is not need-based.

3. What is an augmented VA payment?
An augmented VA payment is a VA pension payment that has been increased for dependents.

4. How does a Qualified Income Trust (QIT) help with Medicaid eligibility?
A QIT allows individuals with income exceeding Medicaid limits to deposit excess income into the trust, which is then not counted for Medicaid eligibility.

5. Are VA aid and attendance allowances considered income for Medicaid?
No, VA aid and attendance allowances are exempt from both eligibility and co-payment calculations.

6. What happens if a veteran moves into an institutional setting?
If a veteran moves into an institutional setting, their VA pension may be capped at $90 per month, which is considered an aid and attendance allowance and not income.

7. How can I verify the type and amount of VA benefits I receive?
You can contact the VA using Form H1240, Request for Information from Bureau of Veterans Affairs and Client’s Authorization.

8. What is Dependency and Indemnity Compensation (DIC)?
DIC is a monthly benefit paid to eligible survivors of certain deceased veterans.

9. Can I use VA educational assistance to improve my financial health?
Yes, you can use VA educational assistance to gain new skills and increase your earning potential, leading to long-term financial stability.

10. Where can veterans find partnership opportunities to enhance their financial stability?
Veterans can find partnership opportunities on income-partners.net, which offers a comprehensive directory of potential partners and valuable business resources.

Call to Action

Ready to explore partnership opportunities and enhance your financial stability? Visit income-partners.net today to discover the resources and connections that can help you achieve your goals. Explore our partnership directory, attend networking events, and access valuable business resources. Take control of your financial future and build a brighter tomorrow with income-partners.net. Contact us at Address: 1 University Station, Austin, TX 78712, United States. Phone: +1 (512) 471-3434. Website: income-partners.net.