Aid & Attendance Handbook for Professionals & Consultants
Information for ALL Long Term Care Benefits for Veterans
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The attorney helps Frank prepare VA Form 21-526 -- Veteran’s Application for Compensation and/or Aid and attendance pension benefit, Parts A, C, & D. Frank submits this form along with all of the other collected documentation listed above. VA reports back to Frank that the receipt date is April 22. This will become the effective date if the claim is awarded. After five months and several requests from the regional office for more information, the claim is denied based on too much in assets. Here is the reason why. The service representative has determined that the difference in cost between Frank's current income of $2,800 a month and the facility at $3,500 a month is $700. The service representative looks up Frank's life expectancy in VA's table and finds Frank is expected to live about another seven years. A quick calculation indicates that Frank's $75,000 in savings can easily cover the difference in cost over the next seven years and still leave some money behind. The service representative does not see any reason why Frank needs VA aid and attendance pension benefit. But what if Frank lives longer than seven years? VA's position is if the money runs out Frank can reapply for aid and attendance pension benefit.Here is a strategy for solving the problem. Frank should convert his entire $75,000 into an immediate income annuity. Based on current rates, $75,000 would purchase an annuity for $705 a month that would pay the balance of 10 years worth of payments to one of Frank's children should he die before 10 years. In other words, he could possibly pass on some of the $75,000 to his family. Frank's income is now $3,505 a month. Based on his prospective medical expenses his countable income is still negative, and he will qualify for the maximum aid and attendance pension benefit benefit of $1,520 a month.Using a financial advisor who works with the attorney and with the attorney’s help, Frank does the conversion to an annuity and reapplies to VA with the new evidence of his assets. His case is reopened and since he now has no assets and there is no additional income test for aid and attendance pension benefit, VA grants his award of $1,520 a month. This money is not really needed for his care, and he could put it back into savings, except that he must report to VA every calendar year what his income and assets are. If assets start growing again, he could be denied a continuing benefit. The reason for converting the money to an income instead of putting it into the trust is because Frank has more income and thus more choices with his life. He might want to purchase things for his grandchildren or provide money for his children. If the money is tied up in an irrevocable trust, it is not useful to Frank or the family. Or, with extra income he may want to enhance his current living arrangement or even move to a more upscale community. The income annuity strategy also avoids issues with the look back penalty should he ever apply for Medicaid.Below is a copy of the completed worksheet and the software screen that was used to estimate the aid and attendance pension benefit benefit.
Planning Case #3Grace, age 80, is the surviving widow of a World War II veteran. She lives alone in her own home, but she has two daughters who live close by who help her with her needs. One daughter helps her with shopping and doctors appointments and managing her finances. Her daughters are both employed full time and cannot help her during the day. Both daughters trade off helping her in the evenings and on weekends with her physical, emotional, and financial needs.Grace developed late onset diabetes about 20 years ago. She is overweight and does not take good care of herself, and her diabetes has begun worsening in the last few years. She has developed diabetic neuropathy in her feet which makes it difficult to walk. She must also keep her legs elevated to control edema in her feet which carries the risk of blood clots. The neuropathy and her weight require her to use a walker in her home. Because of her physical condition, she also has difficulty getting out of bed, dressing, using the bathroom, bathing, and preparing her meals.Grace is adamant about remaining in her home, and she refuses her daughters’ suggestion to live in assisted living where she could receive more care. As an alternative the daughters have found a home care agency that will help Grace in the mornings with getting out of bed, dressing, and bathing. The agency will also come at noon to help with her lunch and likewise at dinner. Her daughters will come in the evening to help her get ready for bed and to keep her company. They will also provide for her needs on the weekends. The daughters agree to 20 hours a week of home care that will cost $18 an hour. This amounts to $1,440 a month in home care costs.The home care provider is familiar with VA aid and attendance pension benefit and has agreed to help Grace, free of charge, file an application for a claim. The availability of aid and attendance pension benefit is one reason the daughters feel comfortable agreeing to the cost of home care. Grace’s income is $1,200 a month from Social Security and she has $50,000 in liquid investments. According to the VA life expectancy chart, Grace has an expected life span of about 8 more years. Her cash savings would cover less than 3 years worth of home care costs, assuming that the balance of her income needs to go towards maintaining the costs of her home. Besides, she may need some of the cash for other unforeseen expenses. Based on this reasoning, the VA specialist with the home care company decides that VA will most likely allow her to keep the $50,000 if VA were to award a benefit for aid and attendance pension benefit. Based on recurring home care costs, she could qualify for the maximum aid and attendance pension benefit allowance which is $976 a month. This would pay for almost 70% of the cost of the home care, and she would only have to draw another $470 a month from her savings.The homecare provider specialist does not charge to help Grace submit the application. The provider is reimbursed by getting a contract for home care that probably would not have been awarded unless there was a aid and attendance pension benefit benefit.There is no need to use the worksheet or software because the annualized, unreimbursed medical costs exceed her income,and we have already determined that we think her assets are allowable. We do not have to do any asset transfers. She would be entitled to the maximum benefit of $976 a month for a surviving spouse needing aid and attendance. If she were rated for housebound she could receive $746 a month. In the case of receiving care at home, she can also receive a benefit without a housebound or aid and attendance rating as long as the provider is licensed for health care. This benefit would be $611 a month.As outlined in the cases above, the medical report and other pertinent documentation are collected. If for some reason the aid and attendance pension benefit is denied, the contract with the home care agency allows for cancellation of services and the daughters will probably have to persuade their mother to look for some other living arrangement and sell the home.The benefits specialist helps Grace prepare VA Form 21-534 -- Application for Dependency and Indemnity Compensation, Death Aid and attendance pension benefit and Accrued Benefits by a Surviving Spouse or Child (Including Death Compensation If Applicable) The following documents are also submitted with the form:Form WD discharge record for her husband, the veteran
Form 1 -- Statement of Attending Physician (used to determine rating for A&A or HB)
Form 2 -- Care Provider Report (used to provide evidence of recurring medical expenses)
Form 3 -- Health Insurance Premiums (used to provide evidence of recurring medical expenses)
Form 4 -- Claimant's Certification (verifies out-of-pocket costs for unreimbursed medical expenses)
Copies of invoices and receipts used to substantiate actual costs incurred are submitted as well.If the aid and attendance pension benefit is granted as anticipated, Grace can remain in her home for as long as possible before her condition gets to a point where she must move on to a facility. If the aid and attendance pension benefit is not awarded, Grace may have to go to a nursing home under Medicaid.
Planning Case #4Mary, age 66, is a veteran of Vietnam. She is single and never married. About six years ago Mary developed a disorder that affects her motor nerves. The disease reduces the ability of her muscles to receive nerve impulses. It is slowly progressive and is producing increasing demands on her ability to cope. As a result of the disorder, she has a difficult time walking and is especially challenged in getting in and out of chairs and climbing stairs. Her arms and hands are very weak and she has also developed an intention tremor which causes her fingers and hands to flap uncontrollably when she tries to perform delicate tasks such as tying a bow or buttoning her clothing. Her legs also wobble and sometimes buckle when she has to stand for a long time or when she has to walk long distances.She can handle tasks that allow her to grip firmly whatever she is using, but she is totally disabled in her ability to write, use a keyboard, or perform any sort of handiwork or creative endeavors that require dexterity. She cannot even pick something small off the floor or table or handle a piece of paper without dropping it.She has adjusted to her disability and is able to use a button hook, special eating utensils, and other adaptive devices to help her function. But lately, she is afraid to bathe or shower for fear of not being able to get out of the tub, and she is finding it difficult to use the toilet for the same reason. She is also finding it difficult or almost impossible to prepare meals for herself. Feeding herself has become a very difficult task as well. And finally, after her most recent driver's license renewal, she was told she would not be allowed to drive anymore.Three years ago she decided she could no longer work, and she applied for early Social Security benefits and at the same time applied for Social Security disability. Social Security checks for $1,300 started arriving 45 days after her application. Seven months after application, she received a check for $10,000 for additional compensation from the date of her disability and a month later she received her first disability check for $1,700 which replaced the $1,300 a month. Because she was only 63, she had to forgo Medicare for two years from the date of application until she was eligible at age 65. She was able to cope for 17 months without any medical care. About the same time she stopped employment, she also sold her home for $240,000 and bought a small single level condominium for $180,000 and put the balance of $60,000 in the bank. Along with the $10,000 from Social Security she has $70,000 in savings.She has enough money to meet her needs and friends sometimes provide transportation for her and help her with small maintenance jobs in her home. But it has come to a point where she requires someone to help her bathe, prepare her meals, clean the house, buy groceries and other necessities, do the laundry, and do other tasks she has difficulty performing.She contacts a home care company that agrees to provide her care needs for $1,900 a month. The agency also has a specialist who will help her apply for a VA aid and attendance pension benefit benefit, and based on her unreimbursed, annualized cost of care, she should qualify for the maximum benefit of $1,520 a month. The balance of her care cost can come from her income or her savings.The home care company also recommends she install a special walk-in, sit down shower and a raised toilet that will help her with her bathing and toileting challenges. Additionally they recommend replacing doorknobs with levers, installing railings along hallways and grab bars in appropriate places. Difficult to use knobs or plumbing fixtures are to be replaced with controls that are more disability friendly. The specialist also recommends that after receiving aid and attendance pension benefit, she will be eligible for a priority 5 application for veterans health benefits, which means automatic acceptance and no copays for medical care, an $8 copay for prescriptions, and a cap of $960 a year on all medications. She takes expensive medications to control her condition, and the drug benefit would be a real blessing. The VA pharmacy will even honor prescriptions from her nonveteran physician. Even though the closest veterans medical center is over 200 miles away, there is a local outpatient clinic in her area that she can use to establish a primary care physician. Her medical care and possibly even medically necessary home care or nursing care could be totally free. Because she is receiving aid and attendance pension benefit, she can also apply for a HISA grant from her Regional Medical Center which will cover up to $1,200 of the home improvements she needs to make. And finally, she will be eligible for free, ankle-foot-orthotics from the prosthetics department of the regional center that will help her walk better. Prosthetics and orthotics are also a service of veterans health care.Mary signs a contract and provides money for the first month of services with the home care provider company.As with the details in case #3 above, the home care provider specialist is more than happy to help Mary fill out the application for free. Based on her condition, it is almost a foregone conclusion that she will receive an aid and attendance rating. In this case the specialist does not need to use the worksheet or the software. Mary's annualized unreimbursed medical expenses will exceed her income and because of her age and the need to maintain her household, VA should allow her to keep all of her savings. Mary's maximum benefit with an aid and attendance allowance is $1,520 a month. If for some reason she is granted housebound rating instead of aid and attendance, the maximum benefit is $1,113 a month. It would be inconceivable that she would not receive a rating, but with home care she is still entitled to a maximum benefit of $911 a month as long as the homecare provider is licensed.The benefits specialist helps Mary prepare VA Form 21-526 -- Veteran’s Application for Compensation and/or Aid and attendance pension benefit, Parts A, C, & DThe following documents are also submitted with the form:DD 214 discharge record (or a certified copy)
Form 1 -- Statement of Attending Physician (used to determine rating for A&A or HB)
Form 2 -- Care Provider Report (used to provide evidence of recurring medical expenses)
Form 3 -- Health Insurance Premiums (used to provide evidence of recurring medical expenses)
Form 4 -- Claimant's Certification (verifies out-of-pocket costs for unreimbursed medical expenses)
Copies of invoices and receipts used to substantiate actual costs incurred are also submitted.
After seven months the claim for aid and attendance pension benefit with aid and attendance is awarded, and VA provides six months of retroactive payments from the first day of the month following the date the regional office received the claim.After the rating is in place, the home care specialist helps Mary fill out VA Form 10-10EZ -- Application for Health Benefits. She is approved the following month and is now entitled to free health benefits and pharmacy benefits and possibly free medically needed home care or nursing care.While Mary has been going through the process of applying for aid and attendance pension benefit, she has also found a contractor who will install the disability features discussed above. After receiving the aid and attendance pension benefit benefit, she also submits a claim for a HISA grant to the prosthetics department at her VA Regional Medical Center. The grant is allowed and Mary has the contractor sign the appropriate documents and begin work. The total cost of work will be around $3,000, but VA will pay $1,200 of it. Following are the documents Mary submitted for the HISA grant:• Verification the veteran is receiving aid and attendance pension benefit with aid and attendance or housebound allowance• A copy of the completed rating request form such as "Form 1 -- Statement of Attending Physician (used to determine rating for A&A or HB)". This form or a form like it should have been used to request a rating from the regional office for aid and attendance or housebound. In lieu of this form, she may have had an appointment at the regional medical center for a complete examination and a HISA committee could use this instead of her doctor’s document.• A certified statement from a home health agency, area agency on aging case manager, private care manager, or other experienced care adviser recommending the required alterations or improvements• A written prescription from her doctor or the VA doctor requesting the specific alterations or improvements• VA Form 10-0103 -- Veteran's Application for Assistance in Acquiring Home Improvement and Structural Alterations (HISA)• A copy of a bid from a contractor approved by VA for the work to be accomplished. (Please note the contract may call for more than $1,200 in work. VA does not care about a more expensive cost but will only pay up to a maximum lifetime benefit of $1,200 for this type of project.)
Medicaid Rules Governing Single Premium Immediate AnnuitiesSection of HCFA Transmittal 64 Dealing with Annuities (Medicaid Annuities):
B. Annuities.--Section 1917(d)(6) of the Act provides that the term "trust" includes an annuity to the extent and in such manner as the Secretary specifies. This subsection describes how annuities are treated under the trust/transfer provisions. When an individual purchases an annuity, he or she generally pays to the entity issuing the annuity (e.g., a bank or insurance company) a lump sum of money, in return for which he or she is promised regular payments of income in certain amounts. These payments may continue for a fixed period of time (for example, 10 years) or for as long as the individual (or another designated beneficiary) lives, thus creating an ongoing income stream. The annuity may or may not include a remainder clause under which, if the annuitant dies, the contracting entity converts whatever is remaining in the annuity into a lump sum and pays it to a designated beneficiary. Annuities, although usually purchased in order to provide a source of income for retirement, are occasionally used to shelter assets so that individuals purchasing them can become eligible for Medicaid. In order to avoid penalizing annuities validly purchased as part of a retirement, plan but to capture those annuities which abusively shelter assets, a determination must be made with regard to the ultimate purpose of the annuity (i.e., whether the purchase of the annuity constitutes a transfer of assets for less than fair market value). If the expected return on the annuity is commensurate with a reasonable estimate of the life expectancy of the beneficiary, the annuity can be deemed actuarially sound. To make this determination, use the following life expectancy tables, compiled from information published by the Office of the Actuary of the Social Security Administration.
The average number of years of expected life remaining for the individual must coincide with the life of the annuity. If the individual is not reasonably expected to live longer than the guarantee period of the annuity, the individual will not receive fair market value for the annuity based on the projected return. In this case, the annuity is not actuarially sound and a transfer of assets for less than fair market value has taken place, subjecting the individual to a penalty. The penalty is assessed based on a transfer of assets for less than fair market value that is considered to have occurred at the time the annuity was purchased. For example, if a male at age 65 purchases a $10,000 annuity to be paid over the course of 10 years, his life expectancy according to the table is 14.96 years. Thus, the annuity is actuarially sound. However, if a male at age 80 purchases the same annuity for $10,000 to be paid over the course of 10 years, his life expectancy is only 6.98 years. Thus, a payout of the annuity for approximately 3 years is considered a transfer of assets for less than fair market value, and that amount is subject to penalty.
LIFE EXPECTANCY TABLE - MALES
Age Life Expectancy Age Life Expectancy Age Life Expectancy
0 71.8 40 35.05 80 6.98
1 71.53 41 34.15 81 6.59
2 70.58 42 33.26 82 6.21
3 69.62 43 32.37 83 5.85
4 68.65 44 31.49 84 5.51
5 67.67 45 30.61 85 5.19
6 66.69 46 29.74 86 4.89
7 65.71 47 28.88 87 4.61
8 64.73 48 28.02 88 4.34
9 63.74 49 27.17 89 4.09
10 62.75 50 26.32 90 3.86
11 61.76 51 25.48 91 3.64
12 60.78 52 24.65 92 3.43
13 59.79 53 23.82 93 3.24
14 58.82 54 23.01 94 3.06
15 57.85 55 22.21 95 2.9
16 56.91 56 21.43 96 2.74
17 55.97 57 20.66 97 2.6
18 55.05 58 19.9 98 2.47
19 54.13 59 19.15 99 2.34
20 53.21 60 18.42 100 2.22
21 52.29 61 17.7 101 2.11
22 51.38 62 16.99 102 1.99
23 50.46 63 16.3 103 1.89
24 49.55 64 15.62 104 1.78
25 48.63 65 14.96 105 1.68
26 47.72 66 14.32 106 1.59
27 46.8 67 13.7 107 1.5
28 45.88 68 13.09 108 1.41
29 44.97 69 12.5 109 1.33
30 44.06 70 11.92 110 1.25
31 43.15 71 11.35 111 1.17
32 42.24 72 10.8 112 1.1
33 41.33 73 10.27 113 1.02
34 40.23 74 9.27 114 0.96
35 39.52 75 9.24 115 0.89
36 38.62 76 8.76 116 0.83
37 37.73 77 8.29 117 0.77
38 36.83 78 7.83 118 0.71
39 35.94 79 7.4 119 0.66