VA Pension Aid and Attendance is a complex program that provides non-service-connected disability benefits to qualifying wartime veterans. Some of those veterans have long-term care insurance, and the question inevitably arises how the long-term care insurance works with VA Pension.
There are three general aspects to qualifying for VA Pension with Aid & Attendance: (1) service during a time of war with a better than dishonorable discharge; (2) the need for a protective environment or personal assistance from another individual to live; and (3) income and assets within VA guidelines.
Under current law, the VA treats income and assets entirely separately. True long-term care insurance has no cash value and is therefore never considered an asset. However, some people have annuities or life insurance policies with special long-term care benefits. These policies generally do have cash value and the analysis is much more complex.
For true long-term care insurance with no cash value, financial eligibility is dependent only on income. Receipt of benefits under a long-term care insurance policy is considered income in the month the money is received. Whether the individual remains eligible for VA Pension Aid & Attendance in addition to long-term care insurance benefits depends on the individual’s gross monthly income and total unreimbursed medical expenses.
It is also helpful to know the provisions of the long-term care insurance policy, including the daily benefit amount and how long the policy will pay. Some policies permit the beneficiary to reduce the benefit they receive or suspend payment of the benefit. Some policies also permit the owner to assign the policy or benefit payments to another person or trust.
Deciding how to proceed regarding VA Pension with Aid & Attendance and long-term care insurance, whether you have true long-term care insurance or some form of annuity or life insurance with long-term care benefits, requires complex financial and legal analysis. Our office has considerable expertise to help you discover your options and decide what option will give you the best financial outcome.