November 10, 2016
How to qualify for Veterans Benefits when moving into American House or another Assisted Living
Many of my clients are moving from their home into independent or assisted living. In the Metro Detroit area American House is just one of a number of independent or assisted living communities in the area many of the clients moving into America house are moving into an independent versus living could potentially qualify for a little-known, often misunderstood, governmental benefits called with the veterans benefit for aid and attendance.
This is an example case study, with the names changed, of how we qualified a family for Michigan veterans benefits and an extra $1149 per month as mother moved into American House.
How we qualified Teresa’s mother for the VA benefit and brought in an extra $1149 per month, tax-free.
Teresa called her office after being referred by a financial planner. The financial planner was aware that we are certified alone attorneys and that we are accredited by the VA. Most importantly, the financial planner new that we could get Teresa’s mom qualified for the veterans benefit.
After contacting our office, Teresa scheduled an appointment for her and her mom Patty to have a vision meeting with them elder care attorney. Our office sent out a personal information form together more information about Patty’s situation.
In the vision meeting we reviewed the information that Teresa brought and discussed with Patty and Teresa the different options.
Patty, like many of our clients, have been a good saver her whole life and had some assets earmarked for retirement. Her husband Don had been a World War II veteran. Don passed away five years ago. Patty had been living on her own the past five years, but due to some health concerns and the frailties of aging, she knew that she needed to leave her home and move into independent or assisted living. Teresa, her lone daughter, also agreed that it was time for mom to look into independent or assisted living and they had found an American House that was very close to where Teresa lived so that she could visit her mother regularly.
Patty’s only income was from social security and a pension from her husband. She received $1100 per month from so security and $400 per month from her deceased husband’s board pension. The cost at American House was going to be $2400 per month. Thereby exceeding her income each month.
In terms of assets, Patty had the proceeds of the sale of her house, which was $100,000 plus another $160,000 in brokerage accounts plus a little bit and checking and savings.
Patty and Teresa were concerned about the monthly income deficit and having the spend down all of Patty’s assets on long-term care. They understood that the way the system is set up the more money you have and the more resources you have more choices you have, and better quality of life.
Ways to pay for long-term care
As an elder care attorney, my job is to help families navigate the eldercare journey. One of the ways that we assist our families is by educating them on the six ways to pay for long-term care which include private pay, the kids paying, long-term care insurance, Medicare, Veterans Benefits, and Medicaid.
Choosing between these different ways to pay for long-term care is like putting together a puzzle. Each way to pay for long-term care is different puzzle piece, each family is different as well. It is a matter of matching the appropriate source of pay with the client situation.
How the VA Benefit (Aid and Attendance) can help pay for long-term care
The Aid and Attendance benefit, which is technically termed non-service connected pension, is a veterans benefits that is available to veterans and surviving spouses of veterans. To qualify for the VA Benefit, there are five requirements:
- 90 days active duty
- one day during the period of conflict
- cannot be dishonorably discharged
- more long-term care costs than income coming in from social security pension
- less than $60,000 in assets of married or $30,000 if widowed
If the veteran or surviving spouse of veteran meets those requirements then they can receive up to $2120 per month tax-free if we are planning for a married veteran. If we are planning for the surviving spouse of a veteran the maximum VA benefit in 2016 is $1149 per month.
How a veteran or surviving spouse can qualify for the VA benefit if over in assets
In Patty’s situation, she is obviously over an assets. So, is a VA accredited eldercare attorney, we set up a veterans asset protection trust for Patty and Teresa. By doing so, because currently the VA does not have any look back period, we were able to move $230,000 into the trust and the following month qualify for the VA benefit.
The benefit of doing this veterans benefits planning was twofold. First, we were able to bring in an extra $1149 per month, tax-free, to help pay for Patty’s long-term care. Adding the veterans benefits to her so security and pension, we were able to the erase her income deficit. That meant that she would not have to continue to drain down her assets and her assets could be used to pay for or additional services in the future or any of her other needs.
her other assets protected in the veterans asset protection trust, could be accessed at any time to replenish the $30,000 she kept in her checking and savings account. Think of the veterans asset protection trust like a piggyback. You can always unscrew the bottom of the piggy bank and get the money out.
Protecting against nursing home or Medicaid spend down in Michigan
The secondary benefit of the planning that we did for Teresa and her mother Patty, was that by setting up the veterans asset protection trust now and getting her qualified for the VA benefit, we also started the five-year clock ticking for Medicaid look back.
Medicaid is a governmental program that will help pay nursing home costs. To qualify for Medicaid a single individual or widow can only have $2000 worth of countable assets in their name. Medicaid also has a five-year look back period, where the state of Michigan will look back five years to see if you gifted any money away and if you have they will penalize you.
By Patty setting up the trust today, she had started the five-year look back period for Medicaid. Meaning, if she can make it five years from the time that she set up the veterans asset protection trust before she needs nursing home care, everything inside of the trust would be protected and wouldn’t have to be spent down.
So the goal of this, is Patty moves into American House, and now has long-term care costs, is to bring in additional resources to pay for her care now and also protect herself in the future from nursing home or Medicaid spend down.
The next step to protect you and your family
If you find yourself or loved ones in a similar situation to Teresa and Patty, then you should give our eldercare offices they call to schedule a meeting to review your situation. If you’d like more information on this type of planning, please attend one of our upcoming LifeCare planning workshops. At her life care planning workshops and elder care attorney will review the planning strategies we utilized with Teresa and her mother Patty, as well as other strategies to avoid probate protect against long-term care costs and to pass your legacy down to the next generation.