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Long-term care costs can add up quickly. For veterans and the surviving spouses of veterans who need in-home care or are in a nursing home, help may be available.

The Veterans Administration (VA) has an underused pension benefit called Aid and Attendance that provides money to those who need assistance performing everyday tasks. Even veterans whose income is above the legal limit for a VA pension may qualify for the Aid and Attendance benefit if they have large medical expenses for which they do not receive reimbursement.

Aid and Attendance is a pension benefit, which means it is available to veterans who served at least 90 days, with at least one day during wartime. The veteran does not have to have service-related disabilities to qualify. Veterans or surviving spouses are eligible if they require the aid of another person to perform an everyday action, such as bathing, feeding, dressing, or going to the bathroom. This includes individuals who are bedridden, blind, or residing in a nursing home.

To qualify a veteran (or spouse) must have a net worth limit of $130,773 (in 2021), which will increase each year with cost-of-living adjustments. But in the case of the VA, this number will include both the applicant’s assets and income. It will be indexed to inflation in the same way that Social Security increases. An applicant’s house (up to a two-acre lot) will not count as an asset even if the applicant is currently living in a nursing home. Applicants will also be able to deduct medical expenses from their income. This can include Medicare, Medigap, and long-term care insurance premiums; over-the-counter medications taken at a doctor’s recommendation; long-term care costs, such as nursing home fees; the cost of an in-home attendant that provides some medical or nursing services; and the cost of an assisted living facility. These expenses must be unreimbursed (in other words, insurance must not pay the expenses). The expenses should also be recurring, meaning that they should recur every month.

There is also a three-year look-back to determine if the veteran transferred assets in order to qualify for benefits. Applicants will have to disclose all financial transactions they were involved in for three years before the application. Applicants who transferred assets to put themselves below the net worth limit within three years of applying for benefits will be subject to a penalty period that can last as long as five years. This penalty is a period of time during which the person who transferred assets is not eligible for VA benefits. There are exceptions to the penalty period for fraudulent transfers and for transfers to a trust for a child who is unable to “self-support.”

The VA will determine a penalty period in months by dividing the amount transferred that would have put the applicant over the net worth limit by the maximum annual pension rate (MAPR) for a veteran with one dependent in need of aid and attendance. For example, assume the net worth limit is $130,773 and an applicant has a net worth of $117,773. The applicant transferred $30,000 to a friend during the look-back period. If the applicant had not transferred the $30,000, his net worth would have been $147,773, which exceeds the net worth limit by $17,000. The penalty period will be calculated based on $17,000, the amount the applicant transferred that put his assets over the net worth limit (147,773-130,773).

Annual Pension Rate (MAPR). Following are the MAPRs for 2021:

Single veteran	$23,238
Veteran with one dependent	$27,549
Single surviving spouse	$14,934
Surviving spouse with one dependent	$17,815

 

How it works. The amount a person receives depends on his or her income. The VA pays the difference between the veteran’s income and the MAPR. John, a single veteran, has income from Social Security of $16,500 a year and a pension of $12,000 a year, so his total income is $28,500 a year. He pays $20,000 a year for home health care, $1,122 a year for Medicare, and $1,788 a year for supplemental insurance, so his total medical expenses are $22,910. Subtracting his medical expenses from his income ($28,500 – $22,910), John’s countable income is $5,590. John could qualify for $17,648 ($23,238 – $5,590) in Aid and Attendance benefits.

To find out if you are eligible for Aid & Attendance benefits, contact your attorney.

To apply, contact a VA office near you.

What Are Ugma & Utma Accounts?

The Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) are sometimes called the “granddaddies” of college savings accounts. Both allow parents to establish custodial accounts for a minor child, and a grandparent can then make gifts to the account.

Because the account is in the name of the child, the tax liability is often shifted to the child, who presumably is in a lower tax bracket than the grandparent or the grandchild’s parents. Gifts to such accounts are irrevocable, but the gift-giver retains control of the money and decides how it will be invested.

Need help planning your estate? Reach out to our experienced Texas estate planning attorneys at Rainey & Rainey by filling out our online contact form today.

UGMA VS. UTMA Account

UGMA and UTMA differ in the type of property they permit a person to transfer.

States usually restrict UGMA investments to:

• Life insurance
• Cash
• And certificates of deposit

While UTMA allows a wider variety of investments, including:

• Mutual funds
• Stocks
• Bonds
• Real estate
• And even artwork

Banking institutions and brokerage firms offer UGMA and UTMA accounts.

Account Management And Taxes

Either type of account should be managed by someone other than the parent; otherwise, the parent will be responsible for taxes on the account income.

For children, or students under age 24, income up to $1,100 is not taxed, income from $1,100 through $2,100 is taxed at the child’s rate, and income over $2,100 is taxed at the grandparent’s rate (figures for 2020).

What Is The Ugma & Utma Age Of Majority In Texas?

The major downside of these accounts is that custodians must turn the money over to the child when he or she reaches the age of majority (18 or 21, depending on the state). The child may then do as he or she wishes with the money — and it may not be what you would prefer.

In addition, as with custodial accounts, the child’s sudden ownership of the account funds could jeopardize his or her eligibility for financial aid for college. However, the account could be liquidated and the proceeds transferred to a custodial 529 account.

Related Reading:

• For more on UGMA and UTMA accounts.
• For more articles on gifts to grandchildren.