Understanding the Special Case of Long Term Care Medical Costs

The Special Case of Long Term Care, Recurring Medical Expenses

A special provision for calculating Pension income, allows household income to be reduced by 12 months worth of future, recurring medical expenses. Normally, income is only reduced by medical expenses incurred in the immediate months prior to application. These allowable, annualized medical expenses are such things as insurance premiums, the cost of home care, the cost of paying any person to provide care, the cost of adult day care, the cost of assisted living and the cost of a nursing home facility.

This special provision can allow veteran households earning more than the annual MAPR to qualify for Pension. As an example, a veteran household earning $6,000 a month could still qualify for Pension if the veteran is paying $4,500 to $6,000 a month for nursing home costs. The applicant must submit appropriate evidence for a rating and for recurring costs in order to qualify for this special provision.
VA normally does not tell applicants about this special treatment of medical expenses or how to qualify for it. Our book provides ample information on this special treatment and provides appropriate forms to present medical and cost evidence in the most favorable manner. VA does not have standard forms for this purpose.

Rationale for Allowing Future, Annualized Deductions
The following is quoted from VA manual 21-1:

"The basic theory underlying improved Pension is that during any given month a beneficiary's IVAP plus VA Pension benefits will establish a given level of income (the MAPR). To make the program conform more closely to its basic theory, certain expenses paid by a beneficiary are taken into consideration in arriving at the individual's IVAP. Most deductible expenses are allowed as deductions from otherwise net countable income. However, certain deductible expenses are allowed only as deductions from specific income. See paragraph 16.35."

" Then unreimbursed medical expenses that exceed 5 percent of the applicable maximum annual Pension rate (MAPR) are deductible. Note: In determining the 5 percent deductible, include additional benefits for dependents and the WWI/MBP supplement in the MAPR. Do not include additional benefits for Aid and Attendance or Housebound status in the MAPR. ..."

"In most instances, the medical expense deduction is allowed after the fact. However, if a claimant has consistently recurring unreimbursed medical expenses (for example, a nursing home patient), it may be possible to allow the medical expense deduction on a continuing basis."
(This means certain recurring expenses can be counted for the 12-month future benefit period.)

Authority for Allowing Prospective, Annualized, Recurring Medical Expenses

38 CFR 3.272 (g) Exclusions from income; Medical Expenses. Within the provisions of the following paragraphs, there will be excluded from the amount of an individual’s annual income any unreimbursed amounts which have been paid within the 12-month annualization period for medical expenses regardless of when the indebtedness was incurred. An estimate based on a clear and reasonable expectation that unusual medical expenditure will be realized may be accepted for the purpose of authorizing prospective payments of benefits subject to necessary adjustment in the award upon receipt of an amended estimate, or after the end of the 12-month annualization period upon receipt of an eligibility verification report.

In order to receive a deduction for unreimbursed medical expenses and to adjust the claimant's countable income the following must apply.


Evidence of Medical Expenses

Proof of all medical expenses including recurring expenses to be annualized for the 12 month future benefit period must be submitted to the regional office. Photocopies of invoices or statements on the provider's letterhead are acceptable, but copies of canceled checks are not.
Evidence of payment should include the following:


The application form for Pension provides only a few lines for detailing medical costs. The form suggests adding a separate page if more detail is required. In actuality, the application form provides no information and no hints that certain medical costs can be annualized to calculate the Pension benefit. One simply has to know that this is the case and how to do it. This is one of the well-kept secrets of applying for Pension.

A number of veterans service organizations feel it is important for the claimant and other members in the claimant's household--who are claiming medical expenses--to sign a statement verifying those out-of-pocket costs. We have included in our book, a form that could be used for this purpose entitled "Form 4 -- Claimant's Certification (verifies out-of-pocket costs for unreimbursed medical expenses)." We highly recommend that this form or one similar to it be submitted with the application.

In Most Cases, Medical Expenses Are Only Annualized if There Is Also a Rating.

If the claimant is a patient in a nursing home, VA will automatically grant the aid and attendance allowance, and it will not have to be reviewed by a rating service representative. Evidence is required from the nursing home that the claimant is a patient.

For information on ratings please go to the article entitled "Who is eligible for the aid and attendance Pension benefit?"

It is important to differentiate between a "patient" in a nursing home and a "resident" in a nursing home. It is very rare these days for someone to be in a nursing home and not need help with activities of daily living, medical attention, or supervision because of mental incapacity. But it sometimes happens. The person who is only receiving room and board in a nursing home cannot deduct expenses of the nursing home nor receive an aid and attendance rating.

We include in our book a copy of VA Form 21-0779 -- Request for Nursing Home Information in Connection with Claim for Aid and Attendance.

Medical evidence for a rating for "aid and attendance" or "housebound" for living arrangements other than a nursing home should be submitted with the application to avoid a delay in the approval process. Waiting for the regional office to order medical records is a time-consuming process, mainly because doctors offices don't respond quickly to these kinds of requests.

VA has a form for this purpose -- VA Form 21-2680

Ratings are requested by checking the appropriate box for aid and attendance or housebound on VA Form 21-527ez or VA Form 21-534ez.

As a restatement of the requirements above:  In addition to medical evidence submitted for a rating, applicants must also submit evidence of actually paying for care in assisted living or at home and for the recurring costs of insurance premiums. In other words, arrangements for providing care or insurance costs must already be implemented and contract for payment or actual payment must have been arranged before the regional office will consider allowing claims for unreimbursed medical expenses.

Most families make the mistake of applying too soon -- before care arrangements have been made -- and may end up with a denial of the claim or drag out the process many months longer than it should take.

Pension -- Maximum Annual Pension Rates (MAPR) 2016-17

These amounts increased by .3% on 12 / 01 / 2016

For a Living Veteran

 

Yearly

Monthly

Without Spouse or Child

 

$12,907

$1,075

Medical Deduction

 

$645

$54

With One Dependent

 

$16,902

$1,408

Medical Deduction

 

$845

$70

Housebound Without Dependents

 

$15,773

$1,314

Medical Deduction

 

$645

$54

Housebound With One Dependent

 

$19,770

$1,647

Medical Deduction

 

$645

$70

Aid and Attendance Without Dependents

 

$21,531

$1,794

Medical Deduction

 

$645

$54

Aid and Attendance With One Dependent

 

$25,525

$2,127

Medical Deduction

 

$845

$70

Add for Each Additional Child

 

$2,205

$183

 

Death Pension -- Maximum Annual Pension Rates (MAPR) 2016-17

For a Survivng Spouse

 

Yearly

Monthly

Without Dependent Child

 

$8,656

$721

Medical Deduction

 

$433

$36

With One Dependent Child

 

$11,330

$944

Medical Deduction

 

$566

$47

Housebound Without Dependents

 

$10,580

$881

Medical Deduction

 

$566

$47

Housebound With One Dependent

 

$13,249

$1,104

Medical Deduction

 

$566

$47

Aid and Attendance Without Dependents

 

$13,836

$1,153

Medical Deduction

 

$566

$36

Aid and Attendance With One Dependent

 

$16,506

$1,417

Medical Deduction

 

$566

$47

Add for Each Additional Child

 

$2,205

 

MAPR FOR CHILD ALONE

 

$2,205