If you are a veteran who served during war time, or the surviving spouse of such a deceased veteran, you may be entitled to a veteran’s benefit commonly known as aid and attendance.  Aid and attendance is a cash-assistance benefit designed to help the veteran or his spouse pay for long-term care.  Under the aid and attendance program, the veteran can receive up to $2,054 monthly; his spouse can receive up to $1,113 monthly.

For obvious reasons, this benefit appeals to many people.  For instance, if you are living at home but require the assistance of a home health aide, an extra $2,000 can go a long way.  A live-in aide might cost you $5,500 a month so effectively cutting that amount down to $3,500 a month can permit you to stretch your savings out and stay at home longer.

Similarly, a veteran living in an assisted living residence can also receive aid and attendance.  If the assisted living residence costs $6,500 a month, receiving the extra $2,000 can be very helpful.

The issue that I wanted to point out with aid and attendance is the programs effect on the Medicaid program.  Medicaid is a federal and state cooperative health insurance program for needy individuals.  Unlike most health insurance programs, Medicaid will pay for long-term care in the home (such as a home health aide), in an assisted living residence, or in a nursing home.

There are actually many different programs of Medicaid in the state of New Jersey.  For long-term care services (known as “institutional Medicaid”) there are two programs of Medicaid:  Medicaid Only Medicaid and Medically Needy Medicaid.  Medicaid Only Medicaid will pay for care at home, in an assisted living residence, or in a nursing home.  Medically Needy Medicaid will only pay for care in a nursing home.

The primary defining factor between the two programs is the applicant’s income level.  If the applicant’s gross monthly income is less than $2,130, he can qualify for Medicaid Only.  If his income is one penny above $2,130 on a gross, monthly basis, he can only qualify for Medically Needy Medicaid.

So, if the applicant’s income were, for instance, $2,500 a month, he would only qualify for Medicaid in a nursing home, even if he were residing at home or in an assisted living residence.  He would have to move to a nursing home if he wanted to qualify for Medicaid.  And, if he can no longer afford to pay for his care at home or in the assisted living residence because he has depleted all of his assets, then he has to move to the nursing home.

Effectively being forced to move to a nursing home is not a good thing, particularly when you want to stay at home or in the assisted living residence where, perhaps, you have lived for the past several years.  But situations such as this actually do occur, every day.

Assume the following facts:  Mr. Smith has been residing in an assisted living residence for three years.  He enjoys the assisted living residence and has established many, friendly relationships.  When he first entered the facility, he had a decedent amount of savings.  His Social Security income is $2,000 a month, and he applied for and received aid and attendance from the Veterans Administration of $2,054 a monthly.  With the $4,000 a month he has been receiving, he has been able to stretch his savings out for the past three years.  The facility he resides in currently costs him $7,500 a month.

Now that his savings are depleted, he has to apply for Medicaid benefits.  Mr. Smith’s aid and attendance is actually composed of two parts—a pension and aid and attendance.   Medicaid treats the pension portion as income but disregards the aid and attendance for purposes of the $2,130 a month income cap.

The problem is, if the pension portion of Mr. Smith’s aid and attendance places him over the income cap for Medicaid eligibility when added to his Social Security income, Mr. Smith won’t be able to qualify for Medicaid.   What seems like a boon could become a bane for Mr. Smith.