VA Pension is not Income for Medicaid Purposes

An important decision by federal court judge two weeks ago will have a big impact on many New Jersey assisted living residents – in a positive way.  The case, Galletta v. Velez,  directly addresses the relationship between VA and Medicaid benefits, which don’t always work well together.

Some Medicaid programs have a strict income limit of $2163 per month, including New Jersey’s assisted living and home based Medicaid program under its Global Options program.  Certain wartime veterans and the widowed spouses of wartime veterans can qualify for a special pension under the Veterans Administration’s Aid and Attendance program, using the cost of long term care – whether at home with aides or in an assisted living facility – to qualify.

The problem arises when that pension is counted as income for Medicaid eligibility purposes.  If Mom has $2000 per month of income from Social Security and a pension but then collects an $1130 per month VA Aid and Attendance pension, does that push her over the $2163 per month income cap for assisted living Medicaid?

The State of New Jersey has for many years insisted that part or all of that VA pension counts as income.  Only the part that is for “aid and attendance” does not count but the “base” pension is income for Medicaid purposes.  And if that part pushes Mom over the Medicaid income cap then her application will be denied.

Federal court Judge Robert Kugler found that New Jersey’s position is not supported by any law or regulation.  Instead, he stated that the test is whether the VA pension eligibility is based on the applicant’s unreimbursed medical expenses, which of course, it always is.  Our clients are able to qualify for the VA pension only when they have sufficient expenses from long term care that approach or exceed their income.  Without those expenses they would not qualify at all, which should then make the entire VA pension not countable.    And that’s exactly the conclusion Judge Kugler has drawn.

This decision will have a huge impact on many of our clients.  We have always had to be very careful in advising clients that plugging in VA benefits now could cause a loss in Medicaid assisted living and home based benefits later, although nursing home Medicaid is still an option.  For families hoping to keep their loved one in an assisted living setting when private funds run out, this decision has made it just a little easier.