Modern Estate Planning Blog

I was featured as an expert on ElderCareMatters.com this week. Below is my answer to a reader submitted question. Enjoy!

Question: “My step-Dad, who is in a convalescent home, is having to pay off some medical bills. He has a long-term care (LTC) policy that we’re hoping will pay; it is currently in claims review. If he receives the LTC benefit from the policy, will that benefit he receives from the policy be included in the VA’s calculation as income?“

Answer: I presume that when you refer to VA benefits you are referring to the Aid & Attendance benefit. In that case, the VA does not consider the Long-Tern Care insurance payments as income.

However, the payments will reduce the reimbursed medical expenses and depending on your father’s income, may impact his eligibility for VA benefits.

For example, if dad’s income is $2,000 /month and his care costs (unreimbursed medical expenses) are $4,000, then he will be entitled to the full A&A benefit (presuming he is single) of $1,703 /month because his income for VA purposes will be negative $2,000/month.

If the Long-term care insurance pays $2,000/month, then his care costs (unreimbursed medical expenses) will be reduced to $2,000/month. In this case dad will still receive the full benefit, because his income for VA purposes is now zero. BUT if his care costs total $3,000 and the insurance pays $2,000 his income for VA purposes will be $1,000 and his benefit will drop to $703.

As you can see this can be a complicated issue. The VA will want to know about any changes to dad’s income or medical expenses. A consultation with an elder law attorney who is well versed in VA benefits would be useful in this situation.

Heather R. Chubb, Esq.
Life Transitions Lawyer
The Chubb Law Firm
Fair Oaks, California
916-241-9661
Member of the national ElderCare Matters Alliance, California chapter