Veterans who served during a period of war (as defined by Congress), who were discharged other than dishonorably, and who are over 65 or permanently and totally disabled may be eligible for pension benefits. Pension benefits are awarded based both on disability and income, as well as the net worth of the veteran. Additional allowances to the basic pension, known as Housebound and Aid and Attendance, can increase the monthly pension amount paid.
Unlike Medicaid, there is no set income limit for VA Pension eligibility. If a veteran’s income, after deducting unreimbursed medical expenses, is less than the Maximum Annual Pension Rate, the VA will make up the difference. For example, a single veteran has gross monthly income of $2100 and unreimbursed medical expenses of $1200/ month. If his disability qualified him for Aid and Attendance, the Monthly Maximum Annual Pension Rate would be $1732. Subtracting his unreimbursed medical expenses of $1200/ month from his gross monthly income of $2100 generates an “Income for VA Purposes (IVAP)” of $900/month. Since this is less than the Monthly Maximum Annual Pension Rate of $1732, the VA will make up the difference and pay the veteran $832. If his medical expenses were higher, the VA would reimburse him up to the maximum of $1732.
The implications of this are significant. Suppose the veteran in the example above needs home health care but does not think he can afford it on his income of $2100. In fact, he may be able to afford medical expenses equal to his entire income of $2100/ month, because the VA would reimburse $1732, or 82% of it.
The example given is simplified, but the basic takeaway is that veterans, or their surviving spouses, may be able to afford more heath care than they think.