VA Pension not Income for Medicaid Purposes (An Update)

                Last year I wrote about an important court ruling in a case that impacts Medicaid and VA Aid and Attendance benefits.  Several elder law attorneys filed a lawsuit against the State of New Jersey which, despite being in clear violation of federal law, insisted on counting VA Aid and Attendance benefits as income for purposes of determining eligibility for Medicaid.

                This impacted many applicants who were denied Medicaid because, with the VA benefit, their income exceeded Medicaid’s income cap .  The judge in that case, Galletta v. Velez, agreed that the State of New Jersey was flat out wrong.

                Last month came word that New Jersey has agreed to issue a Medicaid Communication to all its county agencies advising them that they may not count the Aid and Attendance as income for eligibility purposes.  In addition, the State agreed to pay the plaintiffs’ attorney  fees and costs .

                As I have always explained to my clients about Medicaid, the State often takes a position that is blatantly wrong because it knows that it can get away with it.  The high cost of appealing a decision and fighting it out in court makes it impractical and in many cases just plain impossible for applicants and their families to challenge the decision.

                In at least one case, however, not only did justice prevail but the State has paid the cost of litigation that should have been unnecessary had it followed the law.  Of course, in the end it cost all of us, since the $100,000 the State paid to the plaintiffs was with tax dollars.  Still, the hope is that maybe next time the State will think twice before  taking an unreasonable position.