It is possible to be dual eligible for both Medicaid and VA benefits and to receive financial and care help for long term care associated with Alzheimer’s / dementia. However, for most individuals a decision must be made on which program to pursue as there are so many contributing factors, the rules are state specific, and the application processes complicated.
For the purposes of this specific article, we provide a comparison of long-term care Medicaid and the VA’s enhanced pensions (Aid & Attendance and Housebound) and offer insight as to when one program might be a better option over the other. However, before we dive into this, let’s quickly define long-term care Medicaid and the VA’s Aid & Attendance and Housebound pensions.
Long-Term Care Medicaid
Long-term care Medicaid is a state and federal health care program for persons, including those with dementia, with low income and assets who require a specific level of care (generally a nursing home level of care). Long-term care encompasses skilled nursing home care, as well as home and community based services and supports to prevent and / or delay unnecessary nursing home placements.
VA’s Aid & Attendance / Housebound Pensions
The VA’s Aid & Attendance (A&A) pension is a monthly cash benefit for aged and / or disabled veterans and surviving spouses with limited income and assets who require assistance with their daily living activities (i.e. eating, mobility, toiletry, dressing, and transitioning). The Housebound pension is also a monetary benefit, but is for veterans and surviving spouses who are permanently disabled and cannot leave their homes without great difficulty. While the cash assistance can be used as seen fit, it is intended to help cover the cost of long-term care, including dementia care. A&A and Housebound pensions are an added monetary benefit to the basic VA pension.
When considering long-term care options, it is important to determine which type of care best fits the needs of the person with dementia. Based on the progression of the disease, some types of long-term care might be better than others. For instance, a person with dementia might require only minimal supervision and prompts to complete daily living activities, or he / she might need assistance with several to many of their activities of daily living, or he / she might not be able to function at all without help. Therefore, for some persons with dementia, companion care, in-home personal care assistance, or adult day care is appropriate, for others, assisted living or Alzheimer’s care (memory care) is needed, and still for others, skilled nursing home care is the best option. That said, the question remains, “Is long-term care Medicaid or VA pension benefits the better option”?
As a general rule of thumb, Medicaid is the best option for persons with dementia who require nursing home care. This is because Medicaid will cover 100% of the cost for all persons who meet the eligibility criteria. Nursing home Medicaid is an entitlement, which means if one meets the eligibility criteria, he / she will receive benefits.
For the Aid & Attendance pension, the maximum annual pension rate (MAPR) for a veteran is approximately $23,000, which means it will only cover a portion of the cost of nursing home care. As of 2019, the average monthly cost of nursing home care is approximately $7,500 / month, or put differently, $90,000 / year. This amount is significantly higher than the maximum annual pension rate of approximately $23,000. Therefore, there is no way the pension could cover the entire cost of nursing home care.
Generally speaking, for persons with dementia who require long-term care and live in their homes, the VA Aid & Attendance or Housebound pension is a better option. These pensions provide a cash benefit (vs. the care services provided by Medicaid in most states). The cash benefit provides a family with greater flexibility. For example, the family can easily switch between in-home care and adult day care as the beneficiary’s dementia progresses and their needs change. With Medicaid, this would be difficult to do as benefits are approved for a specific need.
Furthermore, many in-home services provided by Medicaid are provided through HCBS Medicaid waivers. HCBS Medicaid waivers are not entitlement programs. This means that there are a limited number of participant slots and meeting the eligibility requirements does not ensure one will receive benefits. Instead, if all of the participant slots are filled, waitlists exist. VA pensions, on the other hand, do not have wait-lists. If one meets the eligibility criteria, they immediately receive the cash benefit.
Whether to seek assistance from Medicaid or VA Pensions for assisted living or memory care is less black and white than in-home or nursing home care. As VA Pensions are a cash benefit, they can easily be put towards the cost of assisted living. Medicaid does provide memory care / assisted living as a benefit, but not in all states. Furthermore, Medicaid will not pay for room and board in assisted living, only for care services. Finally, as mentioned, Medicaid if provided through a HCBS Waiver may have wait-lists and VA Pensions will not. However, there is a maximum benefit for VA pensions and memory care can be quite expensive. Even if Medicaid is only paying for care services, this might exceed the VA Pension benefit. Learn more about Medicaid’s assisted living waivers.
The eligibility rules for both VA Pensions and Medicaid are complicated. While these are discussed in detail below, an easier method to determine eligibility is to take our Medicaid Eligibility Test and the VA Pension Eligibility Test that we have developed with our partner, Veterans Financial. Both tests take about 5 minutes to complete and there is no charge associated with either test.
For nursing home Medicaid and home and community based services via HCBS Medicaid waivers, a nursing home level of care is commonly required. For the VA Aid & Attendance pension, the person with dementia must require assistance with their activities of daily living, and those applying for the VA Housebound pension, must be unable to leave the home without difficulty. Simply having a diagnosis of Alzheimer’s does not mean that an individual will meet the functional eligibility criteria.
Long-term care Medicaid, VA Aid & Attendance, and VA Housebound pensions all have financial eligibility requirements. For applicants with dementia who have non-applicant spouses, the financial criteria is more restricted for VA pension benefits than it is for Medicaid. This is because the VA counts the income of the non-applicant spouse, while Medicaid does not. Medicaid also allows non-applicant spouses to retain a higher amount of the couple’s assets. Furthermore, the VA’s net worth limit combines a Veteran and his / her spouse’s (if applicable) annual income, plus their assets. Below, we compare the financial criteria of long-term care Medicaid versus the VA Aid & Attendance pension.
Long-Term Care Medicaid
To be financially eligible for long-term care Medicaid, the income limit for a single dementia applicant is approximately $2,300 / month and the asset limit is $2,000. (To see state specific criteria, click here). For married applicants with dementia who have non-applicant spouses, spousal impoverishment rules prevent non-applicant spouses from having insufficient income and resources from which to live. In fact, the income of the non-applicant spouse is not calculated towards the applicant spouse’s eligibility at all. Furthermore, in some cases, a portion of the applicant’s income can even be allocated to his / her non-applicant spouse. This is known as the minimum monthly needs allowance. Unlike income, the assets of the couple are considered jointly owned. However, there is a community spouse resource allowance, which generally speaking, allows a non-applicant spouse to keep up to about $126,400 of the couple’s assets. This is in addition to the $2,000 the applicant spouse is able to retain. For additional information on Medicaid eligibility, click here or take a Medicaid Eligibility Test.
VA Aid & Attendance
For the Aid & Attendance pension, Veterans and their widows / widowers with dementia must have income under the maximum annual benefit amount. For a Veteran, this amount is very close to Medicaid’s income limit, but for surviving spouses, this amount is approximately $10,000 less per year. For married Veterans, the income of both the applicant with dementia and his / her non-applicant spouse is calculated towards eligibility purposes. This household income limit is approximately $27,000, which means as a couple, the allowable amount of income is much lower than it is for Medicaid. Remember, for long-term Medicaid, the non-applicant spouse’s income is not calculated towards eligibility. The VA also has a net worth limit of approximately $129,000, which includes a Veterans’ countable assets plus their (and their spouse’s) annual income. This limit is the same for single and married Veterans. For additional information on VA Aid & Attendance and Housebound pension eligibility, click here. (Please note that the Housebound pension allows Veterans and surviving spouses less income than does the Aid & Attendance pension, but for both pensions, recurring unreimbursed Medicaid expenses over 5% of the maximum annual pension rate can be deducted from their countable income). A 5-minute, free, VA Pension Eligibility Test is available here.
It is important to mention that both the VA and long-term care Medicaid has a look back rule. This is a period of time in which Medicaid and the VA “look back” on all past asset transfers to ensure assets weren’t gifted or sold under fair market value. If this rule has been violated, it is assumed it was to done in order meet the program’s asset limit / net worth limit for qualification purposes. Medicaid’s look back period is 60-months with the exception of California, which has a 30-month look back period. The VA has a 36-month look back period. Violating the look back rule is cause for a period of program ineligibility. The VA limits the period of penalization to 5 years, while Medicaid does not limit the period of penalization. As a side note, the VA only implemented a look back rule as of 10/18/18. Therefore, any transfers made prior to this date does not violate the look back period. To learn more about Medicaid’s look back rule, click here. Additional information about the VA’s look back rule can be found here.
The VA offers retroactive benefits, also called “back pay”, which is the accumulation of pension benefits from the date of application (in most cases) until the approval date. Retroactive benefits are received as one lump sum.
While Medicaid does not provide a lump sum of cash to Medicaid recipients, there is retroactive eligibility. Federal law states that persons who are found eligible for Medicaid can be retroactively eligible for Medicaid up to 3 months prior to the date of one’s application. What this means is that if the person with dementia is approved for Medicaid and is found to have been “retroactively” eligible, Medicaid will cover their Medicaid approved expenses, such as nursing home care, for up to 3 months prior to application. However, several states have filed 1115 Demonstration waivers, which limit the period of Medicaid ineligibility. Some states now only allow 1-30 days of retroactive eligibility. Learn more here.
On average, it takes approximately 2-3 months to be approved for long-term care Medicaid. Remember, HCBS Medicaid waivers may have waitlists, which means even if a person with dementia is approved for benefits, he / she may have to wait for a participant slot to be available. In some cases, this wait could be as long as a couple of years.
VA pension approval can take as long as 9-12 months. Since the VA offers “back pay” on VA pensions, it is possible for a Veteran or surviving spouse with dementia to get a loan to pay for long-term care until the pension benefit starts and “back pay” is received.
As mentioned previously, the application processes for long-term care Medicaid and VA pension benefits can be complicated, particularly if one plans to apply for both programs. In addition, it’s important to mention that being over the income / and or asset limit(s) does not mean one cannot still qualify for benefits. Therefore, we highly suggest persons with dementia who are unsure if they meet eligibility requirements or are uncertain about the application process(es), contact a professional Medicaid planner for assistance. Find one here.
For more information about applying for long-term care Medicaid, click here.
For additional information about applying for VA pensions, click here.