Non-Service Connected Pension VFW Basic Training September 2022

Non-Service Connected Pension VFW Basic Training September 2022

VA Forms Relating to Pension Intent to File 21-0966 Initial Veterans Pension 21P-527EZ Supplemental Veterans Pension 21P-527EZ 21P-0516 / 21P-0517 Initial Survivors Claim 21P-534EZ 21P-535 21P-601 Supplemental Survivors Claim 21P-534EZ 21P-601 21P-0518 / 21P-0519 / 21P-0514 Income Adjustments 21P-0516/0518 21P-8416 21P-4185 21P-4165 Income and Assets/AO 73 21P-0969 Burial Benefits 21P-530 Special Monthly Pension 21-2680 21-0779 Dependency Change 21-686c 21-674 AMA 20-0995 20-0996 10182 2

Non-Service Connected Pension Needs-based benefit Provides supplemental income to a wartime veteran or their survivor Tax-free Paid monthly (unless amount is small) A.K.A. “Improved Pension” since 1979 – some recipients are on prior pension programs 38 CFR 3.3 (Service Pension; Spanish-American War, Section 306 Pension, Improved Pension) 3

Maximum Annual Pension Rate The Maximum Annual Pension Rate (MAPR) is the maximum pension benefit someone can receive from VA per year If income minus medical expenses exceeds the MAPR, veteran will not be paid pension If income minus medical expenses is less than the MAPR, veteran will receive difference between income and the MAPR The MAPR varies based on number of dependents or if there is entitlement to Special Monthly Pension (SMP) (38 CFR 3.271-3.273) 4

Improved Pension Eligibility - Veterans Character of discharge Wartime service Qualifying period of service (duration) Permanent and Total Disability rating or advanced age Meet income and net worth guidelines Which of these criteria differ from compensation? 5

Character of Discharge Discharge must be: Honorable, General Under honorable conditions, or Determined to be Honorable for VA Purposes If Veteran has an Other than Honorable Discharge or less, VA will conduct an Admin Review/Decision to determine eligibility of benefits. (38 CFR 3.12) 6

Wartime Service Dates For pension eligibility, the veteran must have at least 1 day of service during wartime. Mexican Border Period – May 9, 1916 – April 5, 1917 World War I – April 6, 1917 – November 11, 1918 World War II - December 7, 1941 – December 31, 1946 Korean War – June 27, 1950 – January 31, 1955 Vietnam – November 1, 1955 – May 7, 1975 (for veterans who served in country) otherwise – August 5, 1964 – May 7, 1975 Gulf War – August 2, 1990 through a date TBD (38 CFR 3.2 and 3.3) 7

Period of Active Service In addition to wartime service, prior to 1980, a veteran must have 90 days or more of active service to be eligible for pension Exception: If discharged before 90 days due to serviceconnected disability eligibility is established (38 CFR 3.3, 38 CFR 3.6) 8

Period of Active Service In addition to wartime service, for veterans entering service after September 7, 1980 (or October 16, 1981 for officers), to be eligible for pension, the veteran must also complete at least 24 months of continuous active duty OR the entire period called to active duty Exceptions to 24 month rule: Discharged due to early out/hardship Discharged due to service connected disability Holds a 10 % disability rating for anything 38 CFR 3.12a 9

Total Disability The veteran must be Permanently and Totally Disabled to receive pension*. Ways to determine total disability for pension purposes: Age 65 or older Patient in a nursing home for long-term care Receiving Social Security Disability benefits Receiving Supplemental Security Income Exam/Medical evidence *Includes both service connected and NSC disabilities 38 CFR 3.3 10

Disability Decisions VA must complete a disability rating if: Veteran is under 65 yrs and not already receiving SSD or SSI, or a long-term patient in a nursing home OR There is a claim for or indication of special monthly pension OR Competency is an issue (from VA Form 21-2680) The decision is made to determine if veteran is permanently and totally disabled, meaning unable to adjust to substantially gainful employment This decision includes both service connected and NSC conditions 11

Qualifications for Special Monthly Pension (Higher Rates of Pension) Housebound : 38 CFR 3.351(d) Must have a single permanent disability rated at 100% , and Substantially confined to the home by reason of their disabilities, or Have other disabilities independently ratable at 60% or more Aid and Attendance: 38 CFR 3.351(b) 3.352(a) Beneficiary is blind or nearly blind, or So helpless as to require the aid of another person to perform the personal functions required in everyday living, or Is a patient in a licensed nursing home receiving skilled or intermediate care Notes: Medical evidence needs to include diagnosis and description of severity of each disability (VA Form 21-2680 must be signed by a physician) 12

Eligibility vs. Entitlement Now that we know how a veteran can become eligible for NSC Pension, we must look at how they can become entitled to actual benefits 13

Pension Entitlement Net worth limitations (savings/property) Annual income limitations (what is coming in every year) Unreimbursed medical expenses (what is being paid out-of-pocket) 14

Net Worth Pension is intended to maintain a minimum level of security, not to protect substantial assets or build up an estate VA’s evaluation of net worth is based on the date of claim, not the date of entitlement. The term net worth is the sum of the claimant’s: Assets and Income for VA purposes, including the income of dependents While subtracting prospective annual unreimbursed (out-of-pocket) medical expenses 15

Net Worth Assets do not include the following: The value of a claimants primary residence under 2 acres If a veteran is residing in an institution, the value of their primary residence, if they still own a home, is still excluded from net worth. However, if they are renting out the property, the rental income is included as part of countable income. The value of personal effects suitable to and consistent with a reasonable mode of life, such as appliances and family transportation vehicle 10% of a claimant’s IRA if under the age of 59.5 16

Net Worth Net worth limitations and how they are calculated were changed by the VA on October 18, 2018. Prior to the change, the net worth limitation for pension was 80,000. Under the new procedures, the net worth limits are: Effective December 1, 2019 129,094 Effective December 1, 2020 130,773 17

Net Worth 18

Net Worth VA will calculate net worth when they receive any of the following: An original pension claim A supplemental pension claim after a period of non-entitlement A request to establish a new dependent Information that a veteran’s, surviving spouse’s or child’s net worth has increased or decreased. 19

Net Worth VA has implemented a 36-month look back period immediately preceding the date of claim. However, it will not include a look back for any transfers prior to October 18, 2018. Only transfers for less than fair market value will be considered for a penalty period Transfers for less than fair market value means: Selling, conveying, gifting or exchanging an asset for an amount less than fair market value, or A voluntary asset transfer to, or purchase of, any financial instrument that reduces net worth unless the entire balance of the asset can be liquidated for the claimant’s benefit 20

Net Worth Covered Asset is an asset that: Was part of the claimant’s net worth Was transferred for less than fair market value during the look-back period, and If not transferred, would have caused or partially caused the claimant’s net worth to exceed the net worth limit Covered Asset amount is the monetary value by which a claimant’s net worth would have exceeded the limit due to covered assets alone if the uncompensated value of the covered asset had been included in net worth. This amount is used to calculate the Penalty Period. 21

Net Worth Penalty period: A period of non-entitlement due to the transfer of a covered asset during the look back period Cannot exceed 5 years Begins on the first day of the month following the date of the last transfer, and Is calculated by dividing the total covered asset amount by the monthly penalty rate and rounding down. Monthly penalty rate is the MAPR for a Veteran at the A&A rate with one dependent on the effective date of payment, divided by 12 and rounded down to the nearest dollar This is the same for all pension claimants 22

Net Worth – What counts? Veteran’s spouse Always considered in total family net worth This includes separate property Dependent child Evaluate net worth of child independently of net worth of Veteran If the child’s net worth is excessive, deny or remove child from the award Trusts Revocable and Irrevocable (may still be countable net worth even if it is called irrevocable) Need a copy of: the trust, schedule of assets (current values of assets held in trust) Life Estates The life tenant is the owner of the property during his/her life and is entitled to exclusive possession and control of the property (still considered for net worth) Need a copy of Life estate 23

Countable Income The general rule set is that all income is countable for pension unless specifically excluded. Examples of common countable income: Gross earnings Gross Social Security disability benefits Gross retirement income Interest/Dividends Unemployment compensation Net business or rental income Gross withdrawals from IRAs Examples of common excluded income: VA Pension Profit from sale of primary residence (net worth issue) Welfare or Supplemental Security Income Income Tax Refunds Conversion of assets Withdrawals from bank accounts and CD’s Cashed in life insurance on death of Veteran Potentially mineral royalties (Depends on land ownership) 24

Does VA Service Connected Compensation or DIC Count as Income? Compensation and DIC are counted as income Veteran will be paid either compensation or pension Survivor will be paid either DIC or pension If entitled to both, whichever is the greater benefit at the time of filing will be paid Veteran/survivor may elect to switch programs at any time 38 CFR 3.701 25

Medical Expense Deductions A deduction for medical expenses is permitted if all of the following conditions exist: Expenses are actually paid by the beneficiary or beneficiary’s spouse Expenses are unreimbursed Expenses are for a beneficiary or relative who is a constructive member of the household Expenses are paid on or after the date of pension entitlement Expenses exceed the five percent medical deductible (the 5% figure can be found in the pension rate chart on the VA website). 26

Medical Expense Deductions Examples of common medical deductions: Medicare Part B and D premiums Private medical insurance (Life insurance and burial insurance do not count) Prescriptions and co-pays Non-prescription drugs (OTC), medical supplies, vitamins, herbal remedies, and food supplements (M21-1 IX.iii.1.G.3.r.) ( 1,500/year limit per household member) Medical supplies include incontinence supplies Adaptive equipment Care facilities or in-home care providers for beneficiaries entitled to A&A or HB benefits Reimbursement for travel to medical appointments 27

Counting Care Facility Expenses Nursing home costs Count all facility and medical service fees if a responsible official of the nursing home certifies that the claimant or relative is a patient in the nursing home Use the 21-0779 for this 28

Counting Care Facility Expenses Other types of facilities (Assisted Living, Independent, Senior Living, Residential Care for the Elderly, Group Homes, etc.) Count room and board if the facility provides health care or custodial care. Custodial care includes: Providing assistance with 2 Activities of Daily Living or Supervision due to physical, mental, developmental or cognitive disorder Facility must be licensed if required by the State or county in which the facility is located. The facility must be staffed 24 hours per day with care providers. 29

Counting In-Home Fees Rated Special Monthly Pension (primary beneficiaries) Provides medical or nursing services, or provides custodial care Does not have to be a licensed health care provider Count all charges Not Rated SMP (primary beneficiaries or dependents) If the provider is a licensed health professional Not Rated SMP and Not a Licensed Provider (dependents) Signed statement from a physician that the person (dependent) requires the medical/nursing care provided by an in-home care attendant 30

Counting In-Home Fees Payments must be commensurate with the number of hours that the provider attends to the disabled person. Receipts or other documentation of payment of this expense is required. The evidence submitted must show: Amount paid Date payment was made Purpose of the payment Name of the person services were provided for Identification of the provider 31

Counting Medical Expenses Prediction of future expenses Amount and frequency of payment is easily predictable Common continuing medical expenses: Nursing home, assisted living, in-home care Private medical insurance Medicare Part B and D Incontinence supplies Diabetic supplies 32

Reporting Medical Expenses Medical expenses can be reported directly on Form 21p-527ez / 21p-534ez If additional medical expenses need to be reported, report on VA Form 21p-8416 Report in year paid, not year incurred Be sure to calculate roundtrip mileage if you used your own car No mileage if using taxi/public transportation, just fare For self, spouse, child Have veteran keep receipts for at least 3 years: VA may ask to verify 33

Reporting Medical Expenses VA Form 21p-8416 Form was last updated: October 2018 34

Education Expenses Education expenses paid for veteran or surviving spouse may be deducted on a dollar for dollar basis Tuition Fees Books 38 CFR 3.272(i) 35

Veterans Pension Rate Table and Survivors Pension Rate Table – Effective 12/1/2019 See Larger Print-Outs of the Veterans Pension Rate Table and Survivors Pension Rate Table at the end of your slides. Veterans Pension Rate Table: https://www.benefits.va.gov/pension/current rates veteran pen.asp Survivors Pension Rate Table: https://www.benefits.va.gov/pension/current rates survivor pen.asp 36

Reading Pension Rate Tables Two different Rate Tables: Veterans and Survivors Annual COLA tied to SSA: may increase each year MAPR based on dependents and disability level Medical expense deduction (5%) is based on if the veteran has dependents Two veterans married to each other? Child earned income exclusion 37

How to Calculate Pension Fractions of dollars are rounded down for both income and monthly pension rate Single vet, MAPR is 13,752 per year If zero income, veteran would receive 13,752 per year, or 1,146/mo in VA pension. Veteran’s income is SSDI of 850/mo. Or 10,200/year MAPR of 13,752 minus income of 10,200 3552 annual pension 3335 12 monthly pension of 296 Total of SSDI VA Pension 13,752 38

How to Calculate Pension with Medical Expenses Single vet, MAPR is 13,752/year Income is SSDI of 10,800/year He pays total medical expenses of 2,687 for 2019 5% of MAPR is 687 (meds above this are deductible) Total expenses minus 687 2000 (allowable medical expense to deduct from income) Countable income is now 10,800 - 2,000 8,800 Veteran will receive MAPR minus countable income 13,752 - 8,800 4,952 4,952 12 monthly pension of 412 39

Reporting Changes in Income and Expenses Recipients are expected to keep VA informed of any change that may affect their pension benefit, including changes to income, net worth, marital status, nursing home patient status, and deductible expenses For those with consistent income, especially receiving SSA, there’s no need to report annually unless there is a change, however expenses must be reported to be deducted 40

VA Matching Programs and Income Verification VA works with SSA and IRS to verify continued eligibility for pension benefits through computer matching programs As a result, VA no longer sends Eligibility Verification Reports (EVR’s) to most beneficiaries But, failure to report changes that affect pension benefits may result in an overpayment (veteran owes to VA) If there is any doubt that a beneficiary’s income or expenses may affect their payments, report it! 41

Qualifications for Liberalizing Law Veterans Pension may be awarded to a Veteran retroactive for up to one year prior to the date of receipt of the claim if any of the following criteria are continuously met from September 17, 2001 until the date of claim: Age 65; or Found disabled by Social Security Administration (SSA) for the purpose of Social Security disability benefits; or a patient in a nursing home for long-term care because of disability No liberalizing law for Survivors Pension. 42

Medicaid 90 Rate 38 CFR 3.551 (i) states VA must limit claimants to 90/month for a veteran, surviving spouse or surviving child who: Has neither spouse nor dependent child, and Is in a Medicaid approved nursing facility, and A Medicaid plan covers in part or all of his or her nursing home care. Note(s): No overpayment is created when reducing to the 90 rate The 90 payment is for personal use and cannot be used to cover nursing home expenses Exception: not reduced to 90 rate if in a State Veterans Home Be sure to include the name and phone number of the facility If claimant has a running award, due process is initiated before 90 rate is set. 43

Hospitalization Adjustments According to CFR 3.551(a), “hospitalization” is defined as when a Veteran resides in a VA hospital – VA medical center. VA domiciliary – longer term residence for Veterans who are economicallydisadvantaged, suffer from mental health, and/or require substance abuse treatment. VA nursing home – nursing home paid for by VA (State Veterans Homes are excluded). Private facility under VA contract – private facility paid for by VA. and care is being provided at VA expense 44

Hospitalization Adjustments When a veteran becomes hospitalized, his/her benefits must be adjusted based on CFR 3.551 and 3.552. Reduction under CFR 3.551 Veterans with no dependents, in receipt of Improved Pension at the basic rate, are reduced to 90.00 when provided with domiciliary or nursing home care at VA expense. Reduction under CFR 3.552 Veterans with A A entitlement are reduced to the housebound rate (A/H) when provided with hospital, domiciliary, or nursing home care at VA expense. 45

Pension Management Centers VA has three Pension Management Centers (PMC): St. Paul, MN Milwaukee, WI Philadelphia, PA The majority of pension claims are processed at these offices. However, VA Regional Offices still handle pension in many cases, such as when the application is for both pension and service connected compensation. 46

Pension Management Centers The Pension Management Centers have established the following dedicated telephone numbers for VSO use ONLY. DO NOT give these numbers to your clients. St. Paul (612) 713-8978 [email protected] Milwaukee (414) 902-5062 Philadelphia (215) 381-3762 VBAPHI [email protected] 47

Pension Processing Tips Use ITF if you can’t submit claim right away If the number of claimable expenses is excessive, have the veteran/family create a list to report to VA Let VA figure out the math – report everything Include other forms/expense statements if applicable If family member assisting, make sure veteran signs/marks claim if possible Remind client to notify VA about income/dependent changes 48

Pension Processing Tips If the veteran/survivor is considered for incompetency (from the VA Form 21-2680), a fiduciary may be assigned (38 CFR 3.850) Explain fiduciary’s role and selection – managed by VA Fiduciary Hub If in receipt of pension, at least Priority Group 5 for VA Health Care Be aware of state and local veterans benefits 49

Questions?