VA Pension Planning: Myths & Truth

James Swain JD, MBA
January 11, 2013 — 1,523 views  

There is a special benefit for war period veterans and their widow(er)s to help pay for long term care medical expenses.  The benefit’s real name is “Improved Pension”, but it more commonly known as “Aid and Attendance Pension”.  The benefit pays the claimant a cash payment to use as the claimant desires.  These payments can significantly improve their quality of life.



Married veteran           $2,019 per month = $24,228 per year

Single veteran             $1,704 per month = $20,448 per year

Widow                         $1,094 per month = $13,128 per year

Maximum Allowable Pension Resource (MAPR) is the maximum amount of pension that could be paid to a claimant.


The veteran must have served at least one day in the military (or one of the special groups that worked with the military) during a war period (they did not have to serve in the war zone), had 90 days of consecutive service and received a better than dishonorable discharge.  The widow must have been married to the veteran at the time of the veteran’s death, must have been married at least 12 months unless they had a child, and cannot have remarried.

The VA provides incorrect and misleading information on the VA web site and from their employees.  It is our duty to get the correct information to Veterans and their families. 

The amount of the benefit is dependent upon the claimant’s health (the veteran is the claimant during the veteran’s life, the widow is the claimant after the veteran’s death), their income and medical expenses.


INCORRECT INFORMATION: The VA web site stills tells Veterans and their spouses that there is an income limit to qualify for the VA Pension.  The web site states that if a:

  • Married veteran has more than $24,228 in income;
  • Single veteran has more than $20,448 in income; or
  • Widow of a veteran has more than $13,128 in income

they cannot qualify for VA Pension.

This information will cause many Veterans or widows that could qualify for VA Pension from trying to qualify.  The Truth is there is no absolute income limit.  The VA is not telling the veterans or their widows that their income left after subtracting their unreimbursed medical expenses is what the  VA web site means when the VA is talking about income.  In reality a claimant could have $40,000 of income or more and still qualify for VA Pension if their medical expenses are higher enough.

THE TRUTH: To determine if the claimant qualifies for Pension, the VA must first calculate “Income for VA Purposes (IVAP)’. To arrive at IVAP, the unreimbursed medical expenses UME) is subtracted from the Gross Income.  The result is IVAP.  If IVAP is less than zero, zero is used.  IVAP is them subtracted from the MAPR.  The result is the maximum pension the claimant will be paid prospectively.  The benefit payments can be adjusted at year end if there are any additional unreimbursed medical expenses or the UME was not as high as projected.

Gross income for VA purposes can include payments that are not taxable for income tax purposes such as gifts from children or income from tax-free bonds.

UME is the recurring unreimbursed medical expenses reduced by 5% of the basic pension benefit.

Example:         Married Veteran

























Net Pension Payments






All of the Veteran’s and their spouse’s medical expenses, such as assisted living expenses, medical co-pays, insurance premiums, and supplies are counted.  However, in calculating the prospective monthly payments only the recurring unreimbursed medical expenses will be used in calculating the monthly payments.  The remaining expenses can be claimed at the end of the year if all of the pension has not been paid.

Problem:  When a claimant is being cared for in the home of one of their children, they generally will not have enough medical expenses to qualify for Pension. The VA will not tell the claimants that they can pay their family members for any care they provide.  The care must be something that an outside care giver would have been hired to provide if the family member was not willing are able to provide the care.  Accredited attorneys can make sure that the claimants know their rights and how to fully document these expenses in order to qualify the claimant for VA Pension.


The VA does not count all of the Claimant’s assets when determining if the Claimant can qualify for the VA Pension.  The VA does not count the residence, autos, burial policies or small life insurance policies.

There is a misconception that the claimant can have up to $80,000 of countable assets.  There is no specific amount stated anywhere in the regulations.  In fact, the regulations give the VA substantial discretion in determining the appropriate amount of assets that will be allowed.

The regulations state that the claimant is only allowed to have enough assets as would be reasonably expected to be utilized during the claimant’s lifetime.  We have seen cases where the VA has disqualified claimants with less than $30,000 of countable assets.  An Accredited attorney will do an age weighted analysis to determine what they think is a defendable amount of countable assets to retain.  They must use what the VA declares is income.  The VA includes payments that are not taxable for income tax purposes such as gifts from children, inheritances, proceeds from life insurance policies, annuity distributions and income from tax-free bonds.


            Single veteran with 3 year life expectancy (based on table rates)





Total Income


Less UME


Net Income


Times life expectancy (years)


Allowable Countable Assets



Problem:  There is no guarantee that the VA will come to the same result. Also, the VA will not tell the claimant that there is no penalty for transferring assets out of the name or adding other names to the assets to lower their net worth to qualify for VA Pension.

RESIDENCE: The VA does not count the residence as part of the countable assets used in determining the claimant’s qualification for VA Pension.  If the Residence has significant acreage attached only a reasonable amount of the acreage will be treated as part of the residence.  The amount that is allowed will be determined by the VA.  The VA does not have any limits on the value of the residence, so a claimant could have a house worth $1,000,000 and still qualify for VA Pension.

Problem: What the VA does not tell the claimant is that if the house is sold the proceeds will be added to their countable assets (the claimant cannot change ownership of the proceeds after the application is filed).  If the proceeds are significant it could cause the claimant to have excessive countable assets which would disqualify them from receiving the VA Pension.

The future plans for the house must be taken into consideration when planning for applying for VA Pension.  There are several options:

  • Gift away the house
  • Sell the house
  • Keep the house
  • Put the house in a Veteran’s Asset Protection Trust (this is a special trust irrevocable trust designed to comply with the VA rules)

To make a complete analysis the accredited attorney will have to consider the income tax consequences and what the family intends to do with the house.  If there is a lot of gain in the value of the house changing ownership could result in unnecessary income taxes.

Before any decisions are made the family needs to confer with a knowledgeable attorney to make sure all issues are addressed.


Every VA office should be able to help claimants with their application, except many have not received any significant training (don’t even know the benefit exists) on this benefit, and if they know about the benefit they are not allowed to give any financial advice or advise them on changes that would help their claim.

Be aware that there are many organizations that appear to be a non-profit veteran organization. They claim their only purpose is to provide free help to veterans to qualify for the pension.  Generally, these organizations are front for annuity sales people.  They offer free application preparation to the residents of assisted living facilities and retirement communities.  NOTHING IS FREE.  This gives them access to seniors to sell them inappropriate annuities.  They do not understand that VA pension planning must consider many different legal and personal issues, such as VA pension, Medicaid qualification, inheritance, family dynamics, cash flow needs, and income taxes.  NOTE they have no legal obligation to act in the best interest of their clients.  If they cause problems for the senior or family it is unlikely that they will be held liable for the damage.  An attorney has a legal obligation to act in the client’s best interest, they must consider all of the effects of any proposed actions and they can be held liable for any harm they cause.

In order to get this information out, I have founded two companies, Swain Law Firm and the Academy of VA Pension Planners.  I will continue to work with clients through Swain Law Firm to provide them counsel and assistance to qualify them for the VA Pension.  Under the Academy of VA Pension Planners (AVAPP), I train attorneys and Financial Planners to assist Veterans and their spouse’s in qualifying for the VA Pension.  AVAPP requires that all members, attorneys and Financial Planners, attend an advanced training program, maintain their accreditation with the VA and are willing to adhere to our ethical standards.  This will assure the public and senior advisors that they can trust these advisors to take care of the claimants.

James Swain JD, MBA

James Swain is the founder and CEO of the Academy of VA Pension Planners and Swain Law Firm. He is a co-presenter at the ElderCounsel VA Pension Course. He is a frequent speaker on VA Pension, Wealth Preservation and Estate Planning to Financial Planners, Attorneys and Public Forums.