Last week, I wrote about a Veterans benefit commonly known as aid and attendance.  Aid and attendance is a cash-assistance Veterans Benefit that will pay anywhere from $1,100 to $2,100 a month to a veteran or his surviving spouse.

While aid and attendance sounds like a terrific program, it can have a big drawback, namely the manner in which it may negatively impact an individual’s eligibility for certain programs of Medicaid.  As I wrote, aid and attendance could put a Medicaid applicant over the income limit for the Medicaid program that will pay for care at home or in an assisted living residence.

Aid and attendance is actually comprised of two parts—aid and attendance and a pension.  After an individual qualifies for Medicaid, the aid and attendance benefit is eliminated and the veteran’s pension is reduced to $90 a month.

In order to qualify for Medicaid at home or in an assisted living residence, the Medicaid applicant must have gross, monthly income of $2,130 a month.  So, if the applicant has $2,000 a month in Social Security income he will qualify for Medicaid in these settings; however, if the applicant has $2,000 a month in Social Security income and $2,000 a month in aid and attendance, he will not qualify for Medicaid because his gross, monthly income is $4,000.

His aid and attendance will not be reduced to $90 a month until after he qualified for Medicaid, which causes a chicken-or-the-egg situation.  The Medicaid applicant’s income will be reduced to $2,090 a month once he qualifies for Medicaid but he cannot qualify for Medicaid because his income is too high to qualify for Medicaid.

There is a section of the Veterans Benefit Manual that instructs Veterans Administration workers to inform state Medicaid agencies that the entire monthly payment is to be treated as aid and attendance, and not aid and attendance and a pension, if the person would not be receiving the pension but for the fact that he is receiving aid and attendance.  This section of the VA manual is very helpful, because most of the veterans (or spouses of veterans) with whom I deal are only receiving the pension as a result of receiving aid and attendance; accordingly, the entire payment the veteran receives should be treated as aid and attendance by the VA and the state Medicaid agency, which means the entire payment should be disregarded for purposes of the Medicaid income cap.

So, if Mr. Smith is receiving $2,000 a month from Social Security and $2,000 from aid and attendance and a veterans pension but would not be receiving the veterans pension but for his receipt of aid and attendance, then for purposes of determining his eligibility for Medicaid, Mr. Smith only receives $2,000 a month.  Since $2,000 a month is less than $2,130 a month, Mr. Smith would qualify for Medicaid at home or in an assisted living residence.

The problem is, even though the VA manual specifically instructs the workers at the Veterans Administration to write a letter to the state Medicaid agency stating that the entire aid and attendance/pension payment is to be treated as aid and attendance, I have been informed that the VA has informally changed its policy and will not write such a letter.  Instead the VA has instructed its workers to write letters to state Medicaid agencies breaking out the aid and attendance and pension portion of the payment.  In other words, the letter might state:  Mr. Smith receives $1,500 as aid and attendance and $500 as a Veterans pension.

Why the VA has chosen to ignore its own manual is unknown to me, but for now, this informal and improper change could impact a person’s eligibility for Medicaid benefits in certain circumstances.  In the near future, New Jersey’s Medicaid Only program is changing, eliminating the income cap, but until that happens, some applicants could be in big trouble.  Such an applicant’s solution may be a federal lawsuit against the VA to force them to comply with their own manual.