A Guide to Federal Veterans Benefits
Presented by Kris Maksimovich, AIF®, CRPC®:
There are two separate agencies overseen by the U.S. Department of Veterans Affairs (VA): The Veterans Health Administration and the Veterans Benefits Administration. The Veterans Health Administration determines eligibility for medical benefits, while the Veterans Benefits Administration determines eligibility for financial benefits. The agencies operate independently and have separate eligibility criteria for their programs. As such, if you qualify for medical benefits, it does not guarantee that you will qualify for financial benefits.
Eligibility for medical and monetary benefits depends on your discharge status. Generally, a veteran will satisfy the discharge requirement if his or her classification is “honorable” or “general under honorable conditions.” A veteran with a discharge classification of “other than honorable conditions,” “bad conduct,” or “dishonorable” may not be eligible for VA benefits.
The Veterans Health Administration provides health care for former service members. All veterans are eligible for VA hospital and outpatient care unless they received a dishonorable discharge from active military service. Congressional funding to the Veterans Health Administration, which changes every year, may affect veteran access to care.
You will be enrolled in one of eight priority groups when you apply for medical benefits. Your assignment to a priority group will be based on several factors, including your service-connected disability rating, status as a combat veteran, and income. Priority Group 1 has the highest priority for enrollment.
Special eligibility for combat veterans
Under the National Defense Authorization Act for Fiscal Year 2008, all veterans who served in a combat theater of operations after November 11, 1998, are entitled to five years of VA health care from the date of separation from military service. Combat veterans are automatically enrolled in Priority Group 6.
Agent Orange exposure. The VA presumes that Agent Orange causes certain cancers (e.g., multiple myeloma) and other diseases (e.g., type 2 diabetes mellitus, ischemic heart disease, and Parkinson’s disease). The full list of diseases presumed to be caused by Agent Orange is available here: www.publichealth.va.gov/exposures/agentorange/conditions/index.asp.
This “presumptive policy” for Agent Orange grants eligibility for medical care to veterans who served in either Vietnam or Korea during certain time periods. If you have a presumptive condition, you do not have to prove a causal connection between your military service and your illness.
For Vietnam, the period begins on January 9, 1962, and ends on May 7, 1975. Service in Vietnam includes duty on a ship that operated on inland waterways. Note, however, that exposure to Agent Orange is not presumed for Blue Water veterans who did not serve aboard ships that operated on inland waterways. For Korea, the period includes service in areas around the Korean demilitarized zone between April 1, 1968, and August 31, 1971.
The TRICARE Plan. Active service members, retired service members, qualified family members, and certain survivors can receive health care through the TRICARE plan. Care may be offered through either military or civilian providers depending on your status, the TRICARE option you choose, and the availability of care at military facilities.
Compensation and pension benefits. The Veterans Benefits Administration oversees financial programs for eligible veterans. Eligibility largely depends on whether you have a service-connected disability or a nonservice-connected disability.
Service-connected compensation. Service-connected compensation is not a pension benefit; rather, it is disability compensation for injuries or diseases that occurred while on active duty or were made worse by active military service. Essentially, it awards you a certain amount of monthly income to compensate for potential loss of income in the private sector due to a disability, injury, or illness incurred in the service. To qualify, your active-duty discharge must be above the dishonorable level.
Service-connected pension. Veterans and their spouses use two types of service-connected pension benefits to pay for long-term care: (1) Aid and Attendance and (2) Housebound. You must be permanently disabled and confined to your home to be eligible for a Housebound pension. The VA assesses your eligibility for Aid and Attendance based on three criteria: (1) wartime service, (2) declining health, and (3) limited financial resources.
The wartime service requirement is specific to the veteran. You must have at least 90 days of active service, including at least one day within a defined wartime period. The VA recognizes the following wartime service periods:
- World War II: December 7, 1941, to December 31, 1946
- Korean conflict: June 27, 1950, to January 31, 1955
- Vietnam era: February 28, 1961, to May 7, 1975 (in country), and August 5, 1964, to May 7, 1975 (generally)
- Gulf War: August 2, 1990, to a date that will be determined by a future law or a presidential proclamation
The need for health care focuses on the condition of the applicant, not the veteran. For example, a healthy veteran may apply for Aid and Attendance to assist his or her spouse. In some cases, a veteran’s surviving spouse may need a personal care assistant. The VA determines the need for health care based on whether the applicant requires help with at least two of the following activities of daily living: (1) bathing, (2) eating, (3) dressing, (4) using the bathroom, and (5) transferring from a chair or bed. The applicant will also meet the health care requirement if he or she needs skilled nursing care or is legally blind.
The VA’s new financial eligibility rules for Aid and Attendance took effect on October 18, 2018. Prior to that date, the VA did not specifically limit net worth or consider asset transfers. All Aid and Attendance applications filed on or after October 18, 2018, will be assessed under the VA’s new financial eligibility rules, which include net worth limits and a look-back period. Although the VA’s new rules overlap with Medicaid’s established rules, financial eligibility for Aid and Attendance is separate and distinct. The similarities and variations between financial eligibility for Aid and Attendance and Medicaid are as follows.
- A veteran will be ineligible for Aid and Attendance if his or her net worth exceeds the Medicaid community spouse resource allowance set for that year. In 2018, the community spouse resource allowance is $123,600.
- Net worth includes all the financial assets of the veteran and his or her spouse if they are married. Net worth excludes the veteran’s primary residence and “reasonable” personal effects. A primary residence includes up to two acres of surrounding property.
- The net proceeds from the sale of a primary residence will be included in the client’s net worth, unless the proceeds are used to purchase a new home in the same calendar year.
- The VA’s look-back for asset transfers is three years. Medicaid’s look-back is still five years.
- The VA’s look-back functions the same as Medicaid’s look-back. Asset transfers for less than fair market value (i.e., gifts made within three years of filing an application) will result in a period of ineligibility for Aid and Attendance.
- The VA will calculate the ineligibility period by dividing the veteran’s excess net worth by the amount of the Aid and Attendance benefit. The total length of the penalty, however, cannot exceed five years. Medicaid does not cap the number of years that may result from an asset transfer.
- The VA presumes that the intent of any asset transfer for less than fair market value is a gift and that the transfer’s purpose is to reduce net worth and qualify for Aid and Attendance. The veteran must meet the clear and convincing evidence standard to overcome this presumption.
Other pension benefits
The VA pension programs benefit veterans who have limited income and, in some cases, health problems unrelated to service. Pension benefits are available to you only if you received a discharge other than dishonorable. Currently, veterans receive three types of pensions: Improved, Old Law, and Section 306. Only the Improved Pension is available to new applicants, however.
You are eligible for Improved Pension benefits if you are 65 and older; served at least 90 days of total active service, one day of which was during a wartime period; and have limited income and assets that are not excessive. If you are younger than 65, you may be eligible for Improved Pension benefits if you are permanently and totally disabled.
The amount of Improved Pension benefits you receive depends on your marital status, whether you have dependent children, and whether you are able to care for yourself. Pension benefits are designed to supplement your other sources of income, and the VA pays you the difference between your countable family income and your yearly income limit. Pension benefits are generally paid in 12 equal monthly installments, rounded down to the nearest dollar.
Keep in mind: The VA takes into consideration certain expenses paid by you—such as those related to medical care, education, or the last illness or burial of a dependent—when calculating your countable family income. In addition, some sources of income will not reduce your pension benefit. These include Supplemental Security Income, welfare benefits, and some wages earned by dependent children.
Death pension. A fixed monthly pension is available to qualified survivors of low-income veterans. The monthly benefit amount depends on other sources of income and the number of dependents.
Don’t assume: Apply! Many veterans are not getting benefits because they assume they don’t qualify. No matter your circumstances, it is well worth your while to apply for VA assistance. If your claim is denied, you can appeal the decision and may receive benefits on the second try.
Where to apply
You can apply for federal benefits by going to www.benefits.va.gov/benefits/applying.asp, by calling 800.827.1000, or by visiting your regional Veterans Affairs Office. (Please note: Each state offers Veteran Service Officers who assist with determining eligibility for benefits and the application process. They represent their state’s veterans during the federal and state benefits process.)
Third-party assistance with applications
Applying for benefits can be daunting, and you may find individuals or organizations that charge a fee to advise you on the process. Just remember: only the veteran, an accredited Veterans Service Organization, or an accredited VA attorney may apply for benefits on behalf of a veteran. The rules are strict—no one else can file a claim. Also, neither an accredited VA attorney nor an accredited organization may charge a fee to file an application for veteran benefits.
It’s also important to know that firms unrelated to the VA market financial products to veterans. These products are usually annuities and are sold on the basis that they will facilitate eligibility for benefits. You should discuss the financial product offered with your adviser to determine its tax implications and its impact on your overall financial plan.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Kris Maksimovich is a financial advisor located at Global Wealth Advisors 4400 State Hwy 121, Ste. 200, Lewisville, TX 75056. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (972) 930-1238 or at email@example.com.
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