How is Pension Income with Aid and Attendance Calculated?

Veterans Pension income is based on subtracting the claimant's adjusted household income from a maximum yearly benefit amount called the "Maximum Annual Pension Rate" (MAPR). The difference is paid to the claimant as income.

A claimant's annual household income – the combined income of husband, wife and dependent residents where applicable – must be less than the applicable MAPR for that particular type of claim in order to generate a benefit. The actual benefit paid to the claimant is the difference between the applicable MAPR and the combined annual gross household income reduced for medical costs and adjusted by a 5% deductible. This calculated annual pension income is then divided by 12 and rounded down and paid as a monthly benefit.

Max Possible Benefit – ((Gross Income – Deductible Medical Expenses) + 5% deductible) = Actual Benefit

Demonstrating Entitlement to Pension by Calculating the Benefit

The graphic example below demonstrates a number of issues associated with applying for Pension. First of all we can demonstrate through this exercise how entitlement for an initial application for Veterans Pension or Survivors Pension is determined. Anytime that an accredited representative is helping a veteran or surviving spouse apply for Pension, that person will have to go through a similar exercise to determine if they are entitled. This calculation is exactly the same for Survivors Pension except that the MAPR options for Survivors Pension are smaller.

Veteran Receiving Paid Long Term Care at Home

This exercise also demonstrates how most individuals qualify for the benefit if their gross household income exceeds the income limit for their particular application category. We can reduce countable income for VA purposes for application by subtracting certain month to month out-of-pocket recurring medical costs.

On the other hand the claimant can also qualify without medical deductions if his or her income is below the MAPR. If the gross household income is below the income limit without subtracting any medical costs, you can deduce from this exercise how that benefit is derived as well. You don't need medical deductions to generate a benefit if the household income is low enough.

Follow below the Numbered Steps as Illustrated in the Graphic

Step 1 is to estimate the anticipated gross household income for the 12 months into the future from the date of application. If there is a dependent child, there are some special rules pertaining to that child's income. In this case the amount is $37,500

Step 2 is to estimate the anticipated allowable and monthly recurring unreimbursed medical expenses for the next 12 months from the month of application. Go to the table of contents for another section of the website – see table of contents on this page – on how to determine allowable medical expenses that are used for this step. Step 2 in our example is $28,104

Step 3 is to adjust the medical deduction by 5% of the basic maximum annual pension rate. In this example the deduction is $886 and is subtracted from the $28,104 of medical expenses.

Step 4 is the medical expenses adjusted for this deduction

Step 5 you will subtract this adjusted medical expense deduction from the 12 months of future income to arrive at an adjusted income that VA calls "Income for VA purposes" or IVAP for short. IVAP is also an important calculation for determining net worth. A negative IVAP is considered by VA to be zero dollars. In this case the medical expenses adjusted for the 5% deduction – which consists primarily of payments to a member of the family for care – are $27,218.

Step 6 is to determine the MAPR for your particular case. In this case it is a married veteran with a rating for aid and attendance. The MAPR in this case is found from the table of contents on this page directed to the income levels and in this case the amount is $26,766

Step 7 is to determine the IVAP which is the difference between the gross household annual income and the medical expenses adjusted for the 5% deductible. In this case IVAP is $10,282.

Step 8 is to subtract IVAP from the MAPR which becomes the annual Pension benefit income. The outcome is $16,483 of annual pension benefit income.

Step 9 is to calculate the actual monthly Pension benefit which is how VA pays out. Divide the yearly benefit income by 12 and round down. You can see from this exercise that the larger the medical deductions the larger the benefit. Medical deductions that are greater than the annual income will only generate the maximum pension benefit equal to the MAPR for that category. Deductions less than gross income will generate a partial benefit as we calculated here. The partial monthly benefit calculated here is $1,373. The maximum available is $2,230 a month.

The Goal with Any Pension Application with Aid and Attendance

The calculation that we performed here resulted in a partial benefit of $1,373 a month. It did not result in the maximum available benefit which would have been $2,230 a month. Any application for Pension with an aid and attendance rating should strive to increase the allowable out-of-pocket medical costs so that they exceed the MAPR for that particular category resulting in the maximum benefit. In our illustration, the MAPR is $26,766 a year or $2,230 a month.

In order to maximize the benefit to this amount, the calculated IVAP must be equal to or greater than $26,766 a year. As you can see, the goal is to find allowable future recurring medical costs to increase the medical deductions and maximize the eventual calculation of the IVAP. If you are anticipating applying for a Pension benefit, contact the Senior Veterans Service Alliance and we will help you understand the various medical deductions in order to be entitled to a benefit.

In this particular example, the couple is paying their entire gross household income to their daughter who is providing care. The veteran has a rating for aid and attendance. The daughter can turn around and use the money she is receiving to pay for her parent's household bills, utilities, food and anything else she desires to use it for their maintenance. She can also keep some of that income for herself.

In this example all we had to do was have the daughter increase the amount of care that she is providing by increasing her non-care activities such as shopping, cooking meals, doing laundry, cleaning the house, transporting her parents to appointments, paying the bills and so forth. This increased amount of care results in a higher cost for her services which will completely offset the income and result in the maximum benefit of $2,230 a month.


Please refer to the table of contents in the top right column of this page for more topics on Pension with Aid and Attendance.