How Does the Pension Work?

Step One – Military Service

If The Veteran

1. Served on Active Duty at least one day during a Period of War, at least 90 days in total and were other than dishonorably discharged – note that If the veteran entered active duty after September 7, 1980, generally he/she must have served at least 24 months or the full period for which called to active duty

a. Or, in the case of a surviving spouse, you meet the criteria if you were married to someone at the time of their death who met Number 1 and you have not remarried a non-qualifying veteran at anytime after 11/1/1990 unless that non-qualifying marriage was annulled.  In other words, if you were married to a veteran and they died and you married someone else and were in that marriage anytime after 11/1/1990, you must use the service of the person who you were married to after 11/1/1990. Please schedule a call with us if you have concerns, do not assume you are not qualified.

If you meet the Military requirement, it becomes a matter of If and When you will qualify – if you are too healthy or too wealthy do not be sad, no one wants to be sicker or poorer!  But keep your focus on the following criteria, we want to get you the benefit as soon as possible!

Step 1a – Surviving Spouse

1. You must be married to the veteran at the time of their death. Basically, If you divorce the veteran, you divorce the benefit.

2. You must have been married to the veteran for 1 year prior to the veteran’s death unless there was a baby.

3. You must have been living with the veteran the year before their death although physically living in different places for medical reasons is allowed.

Criteria Two – The Medical Requirement

Here we have to determine the level of need – Why? Because this program starts with Basic Pension and depending on your level of physical medical need, the VA gives you a medical rating which can add more dollars to your eventual Pension award.

While the Veteran is alive, only their medical situation determines the rating. If the veteran has passed away, the Surviving Spouse’s medical condition determines the rating. In VA parlance, the claimant is the only one with a rating and if the veteran is alive, the veteran is the claimant.

Ask yourself these questions to determine the Medical rating the claimant is likely to receive from the VA:

• Is the Veteran or Surviving spouse unable to leave his home alone but needs no other assistance? They may be able to get the Pension at the Housebound Level
• Is the Veteran or Surviving spouse in need of the assistance of another person with Activities of Daily Living such as bathing, dressing, eating, getting in or out of bed or a chair (mobility) or personal hygiene such as toileting? If Yes, they may be able to get Pension at the Aid and Attendance level
• Is the Veteran or Surviving spouse in need of regular supervision because a physical, mental, developmental or cognitive disorder requires care or assistance on a regular basis to be protected from the hazards or dangers related to their daily environment? If Yes, they may be able to get Pension at the Basic, Housebound or Aid and Attendance level depending on the level of need.
• Is the Veteran Well but their Spouse is Housebound or in need of the assistance of another person with Activities of Daily Living? They may be able to get Basic Pension

EXCEPTION to Medical Criteria – Is the Veteran well, whether married or not and the household income minus any medical insurance payments less than the annual Basic pension rate? Then we could be looking at Basic Pension. Note that you need to look at the appropriate rate of pension which is dependent on marital status and number of dependents. Surviving Spouse can get Basic Pension too, if your income less medical insurance is less than the annual Basic Pension for a Surviving Spouse, you are leaving money on the table and need to consider filing!

Criteria Three – The Financial Criteria

The Financial Criteria is a two pronged test, Income and Assets –

Income – the Household income of the claimant (that means that a married veteran must include his spouse’s income) must be less than the Pension the claimant is going for – either Basic Pension, Basic pension with Housebound or Basic Pension with Aid and Attendance – BUT and it’s a BIG but – when determining income, you get to deduct regularly occurring medical expenses – what you can deduct depends on the medical rating

No medical rating? Deduct your medical insurance Premiums, including Medicare.

Housebound? Deduct your medical insurance Premiums, including Medicare and the cost of your home care, if any. And if you are housebound because a physical, mental, developmental or cognitive disorder requires regular supervision, you can deduct the cost of your independent or assisted living fees.

Aid and Attendance? Deduct your medical insurance Premiums, including Medicare and the cost of your home care and independent or assist living fees.

The VA regulation requires that Medical expenses equal to the first 5% of the Basic Pension (without looking at amount associated with the Medical rating) be excluded when deducting your medical expenses- very similar to the medical expense amount you can deduct on your taxes.

When you take your income and minus these recurring medical expenses you are left with Income for VA Purposes – if that number is less than the Pension at the Medical Rating you are going for, then you pass the Income Criteria!

Assets – the amount of assets you can is equal to the Maximum Federal Community Spouse Resource Allowance defined by Medicaid – which is $130,773 for 2021. Assets exclude your primary home, family transportation and your normal personal possessions. While you may have more than $130,773 in countable assets,

Knowing If and When you are eligible

is something Every Veteran and Surviving Spouse

should have in their Retirement Tool Box