Comparison of Medicaid and VA Pensions Long Term Care Benefits and Eligibility Requirements

Summary
Military veterans with limited financial means and long term health care needs may be eligible for both Medicaid Long Term Care and Pensions from the Department of Veterans Affairs such as Aid & Attendance. However, accepting assistance from one program may disqualify them for the other and vice versa. Which program might be best for any individual veteran is a difficult decision but there are rules of thumb one can follow that will help.

 

Which Is Better for Long Term Care: Medicaid or VA Pensions?

Medicaid Long Term Care benefits, eligibility and programs vary by state, and every individual case has its own unique nuances, so there is no definitive answer to this question. Each veteran should determine what their specific needs are and then it is recommended they meet with a Certified Medicaid Planner or a VA Pension advisor to determine which program is best for them. It’s possible for one person to use both programs, but that adds an extra layer of complexity to the process. All that being said, there are some general rules of thumb to follow when it comes to choosing one of these two programs.

• When a veteran needs to live and receive care in a nursing home, Medicaid Long Term Care coverage is generally the best option.
• When a veteran is best-suited for in-home care, VA Pension will usually be the best option.
• When a veteran needs to live in an assisted living that is not a nursing home, the choice is not clear cut.

 This article is about VA Pensions such as the Basic Pension, Aid & Attendance and Housebound. It does not address VA Health Care which is a different program and has different eligibility criteria.

 

For Nursing Home Care

For veterans who need to live and receive care in a nursing home, the choice between Medicaid Long Term Care and VA Pension is fairly clear. Nursing homes are so expensive, averaging around $8,000 / month in 2022, that VA Pension, which typically ranges from $1,000 – $2,000 / month, won’t cover the costs. Medicaid Long Term Care, on the other hand, will cover the entire cost of the nursing home for eligible veterans. Medicaid eligibility details are discussed below.

 

For In-Home Care

Many people would prefer to live at home or with a family member to receive long term care. If this is a viable and desired option for a veteran, they are probably better off using their VA Pension.

Veterans who have higher care needs are eligible for an Aid & Attendance Pension or a Housebound Pension on top of their Basic Pension. The extra money from these pensions can be used however the veteran or their family sees fit, like paying for in-home health services, adult day care, respite care for caregivers or home modifications. Make note, veterans may be eligible for Aid & Attendance or Housebound Pensions, but not both. Also, veterans will not receive a separate payment for their Aid & Attendance Pension or Housebound Pension and their Basic Pension. Instead, whatever pensions a veteran qualifies for will be totaled up and paid in one lump sum each month that is simply referred to as VA Pension.

 While both Medicaid and VA Pensions can be used for in-home care, VA Pensions do not have waitlists and provide greater flexibility.

Medicaid Long Term Care, for the most part, covers in-home care with its Home and Community Based Services (HCBS) Waivers. All Medicaid applicants, including veterans, need to apply for specific HCBS Waivers which will then cover specific in-home health care needs. If those needs change, the veteran Medicaid recipient might have to apply for a new Waiver to cover the new need. Not only is that inconvenient, but it takes time, which could lead to a lapse in coverage. With a VA Pension, the veteran can simply pay for the new need with the money from the pension without having to reapply or wait for anything.

Furthermore, HCBS Waivers can have restrictions on the brands or types of medical equipment or home modifications that are covered. Those restrictions don’t apply to the cash budget a VA Pension provides. Plus, HCBS Waivers are not an entitlement, which means that even if a veteran qualifies for an HCBS Waiver, they may not get the benefits right away if that particular Waiver program is already full. Instead, the veteran could get put on a wait list and might have to wait weeks or years before receiving the benefits. But if a veteran qualifies for any of their pensions, they are guaranteed to receive those pensions.

 

For Assisted Living

There is no rule of thumb when deciding between Medicaid Long Term Care and VA Pension for veterans who need to live and receive care in an assisted living residence that is not a nursing home.

In most states, Medicaid will pay for services at assisted living facilities, but in no states will Medicaid pay for room and board. A VA Pension, on the other hand, can be used to pay for both services and room and board. So, a veteran and their family, with help from a Certified Medicaid Planner or VA Pension advisor, must figure out which option makes the most sense based on the individual’s care needs, their state of residence and their income level. If the services are very expensive, which may be the case, then the Medicaid benefits might outweigh the VA Pension. If the main expense is the room and board, the VA Pension may prove more valuable than the Medicaid Long Term Care benefits.

Veterans who require an assisted living facility may be best served by using both programs. As mentioned above, this is a complex process and seeking the help of a Certified Medicaid Planner or VA Pension advisor or both is highly recommended. More common is to use the programs in succession, utilizing VA Pensions until care needs costs exceed the budget then moving to Medicaid. Working with a professional planner can make this process more seamless and ideally without the veteran having to change residences.

 

Comparing Eligibility Criteria for Medicaid Long Term Care and VA Pensions

To be eligible for either Medicaid Long Term Care or VA Pension, including the Aid & Assistance or Housebound Pensions, a veteran must meet certain financial and functional (aka medical) requirements. In addition, a veteran must also meet military service requirements (time served and discharge status) to qualify for VA Pension.

There are three types of Medicaid Long Term Care – Nursing Home Medicaid, Home and Community Based (HCBS) Waivers and Aged Blind and Disabled (ABD) Medicaid. Nursing Home Medicaid, as the name implies, is for people who need to live and receive care in a nursing home. HCBS Waivers are primarily used for people who require a Nursing Home Level Of Care (NHLOC) but live at home. ABD Medicaid, also known as Regular Medicaid, is for anyone of limited financial means who is over age 65, or blind, or disabled. There are no other functional or medical requirements for ABD Medicaid.

 

Financial Criteria

The rules do vary by state and can change on a yearly basis, but generally speaking for 2022 an individual must have less than $2,000 in assets as part of the financial requirements to be eligible for all three Medicaid Long Term Care programs. Married couples with both spouses applying are generally allowed $4,000 in assets. For married couples with only one spouse applying, the applicant spouse is allowed to have $2,000 in assets but the non-applicant spouse is allowed to have up $137,400 in assets.

 Medicaid Home Exemptions: A home will not count against the asset limit as long as: (A) The Medicaid recipient, their spouse or another qualifying individual lives there, or an Intent to Return Home is filed, and (B) the home’s equity value is under the state’s limits. The home equity value is the fair market value of the home minus any money owed on the home (a mortgage, for example), and the state limits for 2022 are $636,00 in most states, and $955,000 for states with higher property values. California is the lone exception and has no home equity limit.

The other half of the financial requirements for Medicaid Long Term Care coverage is an income limit. Most states in 2022 require an individual to have an income below $2,523 / month to be eligible for Nursing Home Medicaid or HCBS Waivers. For married couples with both spouses applying, each spouse is allowed $2,523 / month in income. For married couples with only spouse applying, the income of the non-applicant spouse is not counted. Plus, if the non-applicant spouse has limited income, the applicant spouse is allowed to have an income of $3,435 / month as long as they share part of that income with the non-applicant spouse (this provision is known as the Monthly Maintenance Needs Allowance). It should be noted that Nursing Home Medicaid recipients are only allowed to keep a small portion of their monthly income (usually between $30-$150 as a “personal needs allowance”) and must use the rest to help offset the nursing home costs.

There are also financial requirements and limits when it comes to VA benefits and pensions. To be eligible for VA Pensions in 2022, a veteran must have a net worth of less than $138,489. It’s important to note that if the applying veteran is married, their net worth total will include the net worth (aka assets) of their spouse. In these cases, the VA Pension net worth limit of $138,489 is comparable to the Medicaid limit for a married applicant with a non-applicant spouse who can use the Community Spouse Resource Allowance to keep $137,400 of the couples’ assets and keep the applicant eligible.

 VA Pension Home Exemption: The VA will not consider the home an asset as long as the property is less than two acres in size.

There is no income limit when it comes to eligibility for VA pensions, but the income of the veteran, and their spouse, will determine the amount of the pension. To start, each veteran’s Maximum Annual Pension Rate (MAPR) is calculated using a number of factors – if the veteran is married, has a child dependent, medically qualifies for Housebound Pension or medically qualifies for Aid & Assistance Pension. In 2022, the MAPR can range from $14,752 for a single veteran with no dependents and no qualifying long term health care needs, to over $40,000 for two veterans married to each other who both qualify for Aid & Assistance Pension and have two or more dependent children. The annual income of the veteran (which includes their spouse’s income if they are married) is then subtracted from their MAPR and the difference is the amount of their annual pension.

For example, a single veteran with no child dependents who qualifies for Aid & Assistance Pension has a $24,610 MAPR for 2022. If that veteran has an annual income of $10,000, their total annual VA Pension would be $14,610.

Monetary amounts in the following chart are all applicable IN MOST STATES. Please note there are exceptions, and one should do their research, consult their state website, or speak with a Medicaid planner or a VA advisor to know what the rules are in their state of residence.

 Medicaid Eligibility Criteria Search Tool: The most current state, marital status and Medicaid program specific financial eligibility criteria can be found using our search tool.
Comparing VA Pension and Medicaid Long Term Care Financial Eligibility Criteria – Updated May 2022
Type of Long Term Care Coverage Marital Status / Number of Applicants Asset Limit Income Limit
Nursing Home Medicaid Single $2,000 $2,523 / month
Married with 1 applicant $2,000 for the applicant, up to $137,400 for the non-applicant $3,435 / month for applicant, non-applicant income is exempt
Married with 2 applicants $2,000 for each applicant $2,523 / month for each applicant
HCBS Waivers Single $2,000 $2,523 / month
Married with 1 applicant $2,000 for the applicant, up to $137,400 for the non-applicant $3,435 / month for applicant, non-applicant income is exempt
Married with 2 applicants $2,000 for each applicant $2,523 / month for each applicant
ABD Medicaid Single $2,000 $841 – $1,564 / month
Married with 1 applicant $3,000 combined for the couple $841 – $1,564 / month for each applicant
Married with 2 applicants $3,000 combined for the couple $841 – $1,564 / month for each applicant
VA Pension Single $138,489 (aka net worth limit) No income limit, but veteran’s income determines Pension rate
Married with 1 applicant $138,389 combined for the couple No income limit, but veteran’s income determines Pension rate

Functional Criteria

To be eligible for Nursing Home Medicaid or Home and Community Based Service Waivers, an individual must need a Nursing Home Level of Care (NHLOC). Each state has their own way of determining NHLOC, but usually it includes a physician’s assessment and how well the applicant can perform Activities of Daily Living (ADLs), which fall under five general categories – eating, bathing, dressing, toileting and movement. There is no similar functional requirement for ABD Medicaid.

There are also functional requirements for VA Pensions which differ with age. For those under 65 they must show evidence of a permanent and total disability, or reside in a nursing home, or receive Social Security disability benefits. There is no functional requirement for the Basic Pension for those 65 and older, but there are for the Housebound and Aid & Attendance pensions. Respectively, a veteran must be substantially confined to their home due to a permanent disability or they must require assistance with their Activities of Daily Living.

Comparing VA Pension and Medicaid Long Term Care Functional / Medical Eligibility Criteria – Updated May 2022
Type of Coverage Nursing Home Medicaid HCBS Waivers ABD Medicaid Basic VA Pension VA Housebound Pension VA Aid & Assistance
Functional / medical requirements Nursing Home Level of Care Nursing Home Level of Care None None Permanent, 100% disability that keeps veteran housebound State assessment based on Activities of Daily Living functionality

 

Military Service

A veteran must meet the following service requirements to be eligible for any part of the VA Pension.
• The veteran must not have received a dishonorable discharge.
• For veterans who began active duty before Sept. 8, 1980, they must have served at least 90 days on active duty with at least one day during these wartime periods: World War II (Dec. 7, 1941 – Dec. 31, 1946), Korean conflict (June 27, 1950 – Jan. 31, 1955), Vietnam War era (Feb. 28, 1961 – May 7, 1975).
• For veterans who began active duty after Sept. 8, 1980, they must have served at least 24 months OR the full period for which they were called up to active duty including one day during the Gulf War (Aug. 2, 1990 through a future date to be set by law or presidential proclamation).

Medicaid does not require beneficiaries to have any military service.

Other Considerations When Deciding Between Medicaid and VA Pensions

Look Back Period

Both Medicaid and the VA employ a “look-back” rule when it comes to financial eligibility for their programs. This means that program officials “look back” into the financial records of applicants to make sure they did not make any financial transactions that would have violated program rules, such as giving away assets (like a second home, a car, cash, etc.) or selling them at less than market value in an attempt to get under the asset (or net worth) limit.

Medicaid looks back into 60 months (five years) into the financial records of its applicants, except in California, where the look-back period is 30 months. The VA has a 36-month look-back period.

 It’s important to remember here that using both Medicaid Long Term Care and VA Pension is possible, and even advisable, for many veterans. So, someone may give away assets or conduct other financial transactions to help get under the VA Pension net worth limit that won’t violate the VA Pension 36-month look-back period, but those transactions could violate the 60-month Medicaid look-back period. Bottom line, veterans should do not conduct any transactions that could make them ineligible for either Medicaid or VA Pension, and they should be sure any advisors or planners they are using are taking both programs into consideration.

 

Retroactive Coverage

The VA Pension offers retroactive benefits, which are also called “back pay.” This is the amount of money a veteran was eligible to receive from their VA Pension from the date of application to approval date. The full amount of the retroactive benefits is paid to the veteran in one lump sum. It can take as long as 9-12 months to be approved for a VA Pension.

Medicaid Long Term Care also offers retroactive benefits. Medicaid Long Term Care recipients are eligible for retroactive coverage for up to three months prior to their application date. Medicaid will cover any unpaid but eligible expenses from that time frame. Some states only allow for 30 days of retroactive Medicaid coverage. It can take anywhere from 15 – 90 days to get approved for Medicaid Long Term Care benefits.