It is possible to be eligible for both Medicaid and VA benefits simultaneously to help pay for long-term care because of Alzheimer’s or dementia. Most people who qualify must decide what is better for their individual situation. There are many contributing factors, rules that are state-specific, and an application process that is complicated.
To help demystify this process, we will compare Medicaid’s long-term care with VA’s pensions. That means we will look at the Aid & Attendance and Housebound benefits and explain when one program might be advantageous over another. Before we dive into this, let’s 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 healthcare program for patients with low income and assets who require a specific level of care (generally, a nursing home). Long-term care includes full coverage for nursing homes, as well as home and community-based services and supports to prevent and delay unnecessary nursing home placements. In other words, if it’s possible to remain living in one’s own home or assisted living community with some additional help, rather than move into a nursing home, Medicaid will pay for the extra care (like home modifications or assistance with activities of daily living) through the home and community-based service waivers.
VA’s Aid & Attendance / Housebound Pensions
The VA’s Aid & Attendance (A&A) pension is a monthly cash benefit for elderly and disabled veterans and their surviving spouses who have limited income and assets and require assistance with their activities of daily living (that can include eating, mobility, toiletry, dressing, and transitioning).
The Housebound pension is also a monetary benefit but is specifically for veterans and surviving spouses who are permanently disabled and cannot leave their homes without great difficulty. While cash assistance can be used as seen fit, it is intended to help cover the costs of long-term care, including dementia care. A&A and Housebound pensions are both in addition to the basic VA pension.
When considering long-term care options, one must determine which type of care best fits your loved one. Based on the stage and progression of the disease, some types of long-term care might be better than others.
A person with dementia might require only minimal supervision and prompts to complete activities of daily living, might need assistance with several of these everyday activities, or might not be able to function without round-the-clock help. For some patients with dementia, companion care, in-home personal care assistance, or adult day care is appropriate. For others, assisted living or Alzheimer’s care (also commonly called memory care) is needed; and ultimately for some, 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 patients with dementia who require nursing home care. This is because Medicaid will cover 100% of the cost for everyone who meets the eligibility criteria. Nursing home Medicaid is considered an entitlement, which means eligible applicants must receive benefits and cannot be placed on a waitlist.
The amount of cash benefits paid to veterans is an important reason that VA pensions are not as beneficial as Medicaid for nursing home care. For the Aid & Attendance pension, the maximum annual pension rate for a veteran is $26,751 in 2023, which means it will only cover a portion of the cost of nursing home care. As of 2022, the average monthly cost of nursing home care is approximately $8,000 / month, or put differently, $96,000 / year. Because nursing home care costs are so much higher than the maximum annual pension rate, there is no way the pension could cover the entire cost of nursing home care.
Generally speaking, if your loved one requires long-term care and lives in their homes, the VA Aid & Attendance or Housebound pension is a better option. These pensions provide a cash benefit that offers greater flexibility than Medicaid. In most states, the benefits provided by Medicaid are delivered as specific care services rather than money to spend on care.
Under A&A or Housebound, 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 waivers. Unlike nursing home Medicaid, home and community-based service 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. If all of the participant slots are filled, waitlists exist. VA pensions, on the other hand, do not have wait lists. Anyone who meets the eligibility criteria will 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 with in-home or nursing home care. As VA Pensions are a cash benefit, they can easily be put towards the costs of assisted living, including room and board or rent. Medicaid, on the other hand, will not pay for room and board in assisted living, only for care services.
Medicaid does provide memory care and assisted living as a benefit, but not in all states.
If Medicaid is provided through an home and community-based service waiver, there may be a waitlist, whereas VA Pensions will not put applicants on a waitlist.
Finally, 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, particularly for someone in the middle and later stages of dementia. 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.
Functional eligibility is another way of saying that a recipient must have a physical need for services. This is because of old age or chronic illness. In most states, a professional assessment is performed by a healthcare professional from Medicaid or the VA, who visits and determines exactly which activities of daily living the applicant needs help with and what other assistance (home modifications, for example) is required.
For nursing home, Medicaid and home and community-based services via 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.
Those applying for the VA Housebound pension must be unable to leave their 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. The criteria can get complicated.
For applicants with dementia who have non-applicant spouses, the financial criteria are more restrictive 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’s and their spouse’s annual income and assets.
Here is a comparison of the financial criteria for 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 in 2023 for a single dementia applicant is approximately $2,742 per 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 a portion of the joint assets. In 2023, it is up $148,600 of the couple’s assets. This is in addition to the $2,000 the applicant’s spouse is able to retain.
For additional information on Medicaid eligibility, click here or take a take a Medicaid Eligibility Test.
VA Aid & Attendance
For the Aid & Attendance pension, Veterans and their 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 for eligibility purposes. This household income limit is $31,317 in 2023, 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 toward eligibility.
The VA also has a net worth limit. In 2023, it rose to $150,538 which includes a Veteran’ 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. 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 take into consideration that both the VA and long-term care Medicaid have 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 done in order to get under the program’s asset limit and net worth limits for qualification purposes.
Medicaid’s look-back period is 60 months, with the exception of California and New York, which have 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 do 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. This is where accumulated pension benefits are paid in one lump sum. Normally, eligability to receive benefits is from the date of application until the approval date.
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, 27 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, home and community-based service Medicaid waivers may have waitlists, which means even someone with dementia who is approved for benefits 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.
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.
We strongly suggest contacting a professional Medicaid planner for assistance. If you are unsure your loved one meets the eligibility requirements or are uncertain about the application process, they are experts who can guide you.
For more information about applying for long-term care Medicaid, click here.
For additional information about applying for VA pensions, click here.