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A Better Partnership


Jan 2012
January 01, 2012

Estate Planning Tip: Veteran’s Benefits

Veteran’s Benefits or Medicaid – Usually It’s Either/Or

Usually an elderly married veteran in need of assisted living or nursing home care must choose between qualifying for Veteran’s Benefits or Medicaid.  The rules that govern qualification for the two programs make it difficult to qualify for Veteran’s Benefits without potentially running afoul of the Medicaid qualification rules.  Similarly, Veteran’s Benefits are of little utility if nursing home care is required because they will not come close to covering the full cost of care.  In that situation, it will be necessary to opt for Medicaid qualification.  However, sometimes it is possible and useful to qualify for both programs simultaneously.

Simultaneous Qualification for VA Benefit and Medicaid Waiver

I recently worked with a couple that had moved into an assisted living apartment that cost nearly $4,000  per month.  He was a World War II veteran.  They had savings of just under $80,000 and monthly social security income of $1,200.  Based on his service record and need for assistance, he was able to qualify for a Veteran’s benefit of nearly $2,000 per month.  However, they still were not able to cover the full cost of care without depleting their savings.  By moving assets into a trust for the Veteran’s sole benefit, we were able to allow the wife to qualify for Medicaid Waiver assistance.  “Waiver” is a program that allows limited Medicaid assistance in a non-nursing home setting, such as at-home or an assisted living apartment.  By combining Waiver assistance with the VA benefit, the couple was able to completely cover the cost of care out of current income.  

Continued Qualification After Death of First Spouse to Die

Without advance planning, it is difficult for a person to remain eligible for Medicaid after the death of their spouse.  That’s because a single person may only retain $2,000 (in addition to the homestead and a few other “exempt” assets).  However, in this case, after the veteran died, the surviving spouse was able to continue receiving both VA benefits and Medicaid.  That’s because the trust was set up to pass the majority of the assets to a Medicaid exempt “testamentary trust” for the benefit of the surviving spouse upon the veteran’s death.  The remainder of the assets were annuitized to provide a stream of monthly income payments to the surviving spouse.  The spouse was able to continue to receive a Veteran’s benefit under her husband’s service record for assisted living, albeit at a reduced level.  The VA benefit was not countable for Medicaid purposes and the annuity income was within Medicaid limits.  With creative planning, sometimes it’s possible to qualify for both VA benefits and Medicaid.


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