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Court Rules Veterans Benefits Income Not Countable in Medicaid Eligibility Determination

On June 3, 2014, The U.S. District Court for the District of New Jersey has enjoined the state from counting any Veterans Administration (VA) improved pension income in determining Medicaid eligibility of an applicant for Medicaid. In this case, the Medicaid applicant was about to be evicted from an assisted living facility when she requested a preliminary injunction. The court ruled (in a summary judgment motion) that Veteran’s benefits may not be counted as income if the benefit is the result of unusual medical expenses. To get a non-service connection pension benefit, the veteran (or his or her surviving spouse) must prove that their unreimbursed medical expenses exceed their income (to get the full benefit). The VA pension benefit is often broken down to two parts – base pension and “aid and attendance”. In this case, New Jersey (similar to how Texas interprets) excluded the “aid and attendance” portion of the VA income – but not the base pension. The base pension income in this case put the Medicaid applicant over the Medicaid income cap in determining Medicaid eligibility. The court ruled that in cases where the claimant wouldn’t get any pension benefit if not for unreimbursed medical expenses, then the entire VA pension benefit income (not just the “aid and attendance” income) should be excluded for Medicaid eligibility purposes.

In Texas, the VA aid and attendance allowance, housebound allowances and payment adjustment for unusual medical expenses are exempt from both eligibility and co-payment. So, it appears that Medicaid applicants may need to take the position that all unreimbursed medical expenses are unusual medical expenses and should be excluded (which is contrary to the state’s current position that presently allows an exclusion for aid and attendance, but not for the base pension). It should also be noted that in Texas if VA payments are deposited into a qualified income trust (QIT – which is often used when income exceeds the Medicaid income cap to get Medicaid eligibility), they are countable for co-payment.

For help with medicaid or VA benefits, call our Dallas office at 214-720-0102.

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