What is the Income Limit for Aid and Attendance Pension?
A claimant's gross household income cannot exceed the Maximum Annual Pension Rate for the category of application, such as veteran claimant, survivor claimant, marriage and a rating. There are ways around this income limit.
Pension is based on a maximum yearly income amount called the "Maximum Annual Pension Rate" (MAPR), shown in the tables under section #3 in the selection below. A claimant's household income – the combined income of husband, wife and dependent residents where applicable – must be less than the applicable MAPR for that particular type of claim in order to qualify for a benefit.
The actual benefit paid to the claimant is the difference between the applicable MAPR and the combined gross household income reduced for medical costs and adjusted by a 5% deductible. This income reduced for medical costs is called "Income for VA Purposes" or IVAP by VA. If the veteran or spouse has a need for the aid and attendance of another person the MAPR is increased to adjust for care costs of the household.
If a claimant's income is above the income limit, that does not necessarily mean that claimant is barred from receiving any benefit. We discuss in various other sections in the table of contents at the right how income can be reduced by deductible out-of-pocket medical costs and this reduced income, if below the income limit, will then allow entitlement to pension.
If a claimant's calculation for IVAP is a negative amount, the IVAP is considered to be zero dollars. This is important because this concept of a negative calculation for IVAP being zero income applies to the new net worth limit, which for 2020 is $129,094.00.
The medical deductible is calculated by multiplying .05 times the basic MAPR for the application category. The basic MAPR is that amount that does not include any allowances for aid and attendance or housebound. For example, for a single veteran applicant, the basic annual MAPR in 2020 is $13,752 and the deductible is $687. For a veteran applicant with one dependent the basic MAPR in 2020 is $18.008 and the deductible is $900. For a single surviving spouse the basic MAPR in 2020 is $9,224 and the deductible is $461.
Claimants, qualifying on income alone without a rating for aid and attendance or housebound, typically need to make such little money they are likely below the poverty level. You should make application for low income veterans even when the benefit might only be a few hundred dollars.
For example, if a single veteran is healthy and his gross household income is $700/month, he would qualify for the difference between the Basic Pension Rate of $1,146/month less the $700 and the 5% deductible. The benefit for him in this situation would be (($1,146 - $700) - $57) = $389/mo benefit. As mentioned above, combined household income of the claimant and a dependent such as a spouse cannot exceed the Maximum Annual Pension Rate (MAPR) for that category of application. For example, using rates for 2020, a husband and spouse with no medical rating cannot have a combined income of more than $18,008/year or $1,500/month from all sources. Fortunately, the household income can be reduced by ongoing care and medical costs to meet the income test under certain conditions which we will discuss below. Households earning as much as $5,000 a month or more might still qualify even though this current income is greater than the MAPR.
VA considers income to be anything that comes through the door as cash or the equivalent of cash in a given year. Withdrawals from IRAs, 401(k)s and other retirement accounts are considered income. The cash left in the IRA is considered an asset. Gross Social Security income and monthly retirement from employer pensions are considered income. Long Term Care Insurance, gifts, winnings from gambling, and inheritances are also considered income in a given year. We discuss inclusions in income for VA Pension in more detail below.
Some Important Examples of What Is Included As Income
Following are some important examples of inclusive income from a larger list found in the Adjudication Manual M21-1, Part V, Subpart iii, Chapter 1, Section I
REMEMBER that income is the combined household GROSS income – before deductions – to include a spouse and a dependent child under certain circumstances.
Income from VA Disability Compensation IS considered income when applying for Pension. You cannot ignore compensation income for application.
The following types of income are all countable income for Pension purposes:
- retirement or survivors' programs
- unemployment compensation
- operation of a business, and
- life insurance proceeds received before December 10, 2004, because of the death of a Veteran
If a claimant's benefits, such as Social Security, are subject to involuntary withholding due to legal action initiated by a third party, count the entire amount even though the claimant does not receive it all.
When an individual retirement account (IRA) or similar instrument (401(k), 403(b), etc.) starts paying benefits, count the entire amount even though it represents a partial return of principal.
Count, on an annual basis, only the amount of interest received from a non-retirement annuity or similar instrument if the beneficiary purchased the annuity using funds the Department of Veterans Affairs (VA) already considered as a part of net worth, or conversion of assets from a property sale. In all other situations, count the entire amount received as income.
If a claimant receives a distribution of retirement benefits, count the entire amount received. This is the case, even though all or part of the distribution might represent a return of withheld wages which were previously counted as IVAP as part of the claimant's gross wages.
Count gifts and inheritances of property or cash as received. The value of a gift or inheritance of property is the fair market value of the property at the time it is received, and the value of a financial instrument, such as a stock certificate or bond, is the amount it would bring if it were cashed on receipt, even though this might be less than its face value.
Regular cash contributions for the purpose of paying for the claimant's maintenance are not considered countable gifts. If a third party pays for medical expenses, those same medical expenses cannot be allowed as deductions from the claimant's or beneficiary's income.
If a beneficiary is entitled to receive income, such as a retirement benefit, but waives the income, the amount that would be received if not for the waiver still counts as income as described in 38 CFR 3.276(b). The intent of this provision is to prevent a person from creating a need for Pension.
Count net winnings from gambling as income. Gambling losses may be deducted from gross winnings during the same year to arrive at net gambling income.
Count the following as income
- United States Government Life Insurance (USGLI) proceeds
- National Service Life Insurance (NSLI) proceeds, and
- Total Disability Insurance Payments (TDIP).
Count income from joint bank accounts or from other jointly owned property in proportion to the claimant's ownership share,
Count child support payments as income of the custodial parent if they are payable to the custodial parent.
Count VA education or Disability Compensation benefits, including Dependency and Indemnity Compensation (DIC), and benefits paid to a claimant as accrued amounts based on the entitlement and death of another beneficiary.
Generally, do not count VA Pension benefits. Also do not count Pension benefits paid as an accrued amount, or burial benefits. However, the amount of VA burial benefits paid by VA cannot be allowed as a deduction from a claimant's income.
There is some confusion as to how to account for insurance payments that reimburse for those medical expenses that would ordinarily qualify for a deduction to calculate IVAP. It is important to note that medical expenses are called "Unreimbursed Medical Expenses." Thus any expenses that are paid by insurance are obviously not deductible as they have been reimbursed. On the other hand, for purposes of application, the Pension Management Centers often compensate for the confusion between reimbursed medical expenses and unreimbursed medical expenses by counting recurring insurance reimbursements such as monthly reimbursement from long-term care insurance as income.
Some Important Examples of What Is Excluded as Income As Well As Other Income Issues
Following are some important examples of exclusions from income from a larger list found in the Adjudication Manual M21-1, Part V, Subpart iii, Chapter 1, Section I
VA will not count payments if Federal law requires that they be excluded from income and/or net worth for purposes of VA benefit calculations, regardless of whether the payment or program is specified in M21-1, Part V, Subpart iii, 1.I.3, or M21-1, Part V, Subpart iii, 1.I.11.
In general, do not count any type of benefit for which eligibility is based on the claimant's financial need, such as Welfare, Supplemental Security Income (SSI), and savings from prescription drug discounts received under the Medicare Prescription Medication, Improvement, and Modernization Act (MMA). This also applies to any SSI Windfall income that is received. SSI Windfall occurs when an individual receives SSI payments, and the income from other sources as well as SSI exceeds the SSI limit.
Social Security Administration (SSA) subsequently determines that the individual was actually entitled to regular Social Security benefits. SSA converts the SSI payments to regular Social Security payments and lists the income as SSI Windfall.
Do not count income tax refunds, including the Federal Earned Income Credit.
Do not count Social Security or similar benefits withheld to recoup a prior overpayment from SSA or other non-VA organization. Count the check amount received, if any, plus any Medicare deduction. If the withholding is due to legal action by a third party, such as a garnishment order, count the entire gross income benefit and not the net amount left after garnishment.
Chore Services Payments Do not count amounts paid by a governmental entity to an individual to care for a disabled VA claimant in the claimant's home, provided eligibility for the payments is based on the disabled VA claimant's financial need. Payments are not countable if they are paid to a dependent of the disabled VA claimant where counting the payments would reduce the disabled VA beneficiary's rate of Pension, and eligibility for the payments is based on the VA beneficiary's financial need.
Example 1: A spouse of a Veteran beneficiary is paid by the State to take care of the Veteran in their home under a chore services program. The income is not countable. It makes no difference whether the State pays the spouse directly or pays the Veteran.
Example 2: A surviving spouse beneficiary is paid by the State to take care of a neighbor in the neighbor's home under a chore services program. The chore services payments are countable earned income since eligibility for the payments derives from the neighbor's financial need and not the financial need of the VA beneficiary.
Do not count royalties received for extracting minerals. Royalties are considered to be a conversion of assets. The claimant is deemed to be exchanging mineral assets for cash assets. Count the estimated lifetime value of the royalty as an asset for the net worth limit.
In general, do not count interest on IRAs if it cannot be withdrawn without incurring a substantial penalty. However, when the claimant starts drawing down his/her IRA, all payments, including interest and principal, are countable income.
Loans, Including Reverse Mortgages. Do not count loans to a claimant as long as the claimant incurs a legally binding obligation to repay the loan. Do not count funds received from a reverse mortgage. A reverse mortgage is considered a home equity loan that must be repaid when the homeowner no longer lives in the home. Loans must be distinguished from gifts. A gift disguised as a loan is countable.
Do not count VA Pension that is paid as an accrued benefit.
Do not count insurance dividends, as they are considered to be a return of excess premium payments. However, if insurance dividends are left on deposit, count any interest earned. Count TDIP (cash payments to totally disabled policyholders) as income.
If a joint owner of property, such as a bank account, acquires the other joint owner's share because of the death of that person, do not count the amount acquired, per 38 CFR 3.272(f). However, if one joint owner transfers his/her share of property to another joint owner (Pension claimant) during the transferor's lifetime, the amount acquired is countable as a gift of property.
Do not count withdrawals from regular bank accounts and certificates of deposit, as they do not constitute income events because the interest is counted as it accrues, and withdrawal is merely a conversion of assets. However, if the assets are in an IRA or other retirement account, apply the provisions as outlined above.
Do not count the proceeds of cashed-in life insurance policies as income. Such proceeds are considered profit realized from the disposition of real or personal property, which is excluded under 38 CFR 3.272(e).
Under Public Law 108-454, do not count the lump sum proceeds of a life insurance policy on a Veteran who dies after December 9, 2004.
Do not count the proceeds of cashed-in savings bonds as income. Such proceeds are considered profit realized from the disposition of real or personal property, which is excluded under 38 CFR 3.272(e). Some savings bonds, such as Series HH U.S. Savings Bonds and some State or municipal bonds, pay interest to the holder without requiring the holder to redeem the bond. If interest is paid without redemption of the bond, the interest is countable income.
Exclude up to $5,000.00 per year of income from a State or municipality that is paid to the Veteran as a Veterans' benefit due to injury or disease when determining annual income for Veterans Pension benefits. This applies to determinations of annual income for calendar years beginning January 1, 2012.
If a claimant enters into an occasional sale of property, do not count the income unless it is an installment sale, even if the amount received exceeds the value of the property. However, profit from sale of property is countable if the claimant sells the property as part of a regular business. An installment sale, for Pension purposes, is any sale in which the seller receives more than the sales price over the course of the transaction. The actual number of installments is irrelevant.
Do not count the value of maintenance. For example, if someone furnishes a claimant free room and board, or pays the claimant's bills, the value of room and board or the amount of the extinguished debt is not countable. Regular cash contributions can be considered maintenance, and not be counted as income, if the evidence establishes that the donor has assumed all or part of the burden of regular maintenance of the claimant, and cash contributions are used by the claimant to pay for basic necessities, such as food or housing. However, cash contributions which are sporadic or in amounts in excess of what is required for regular maintenance should be considered gifts which are countable for Pension purposes.
Do not count the amount received from an insurance policy when a claimant loses property due to fire, flood, theft, or other casualty loss as long as it does not exceed the value of the lost property.
In general, do not count any reimbursement income received from an insurance company, other than for personal injury. This exclusion applies only to loss or damage to property and does not apply to personal injury. See the treatment for long-term care insurance.
Exclude proceeds of casualty insurance from net worth unless evidence of record shows that the beneficiary has no intention of using the money received as reimbursement for property loss to repair or replace that property. Request documentation showing the beneficiary's commitment to replace or repair the property if needed.
Do not count VA burial benefits. If a beneficiary claims a final expense deduction and subsequently receives VA burial benefits as reimbursement for paying those same expenses, adjust the award.
Income received from the sale of property is viewed as a conversion of assets and is not countable income for Pension purposes, unless the property is sold in the course of operating a business, or income from the sale of property is received by the claimant in installments. Only the interest received from a conversion of assets is considered income for Pension purposes; however, VA includes the entire amount from the sale of property when determining the net worth of a Pension beneficiary. An installment sale, for Pension purposes, is any sale in which the seller receives more than the sales price over the course of the transaction. The actual number of installments is irrelevant.
If a beneficiary who operates a business sells property or merchandise in connection with the business, add any profit received from the sale of the property to the other income of the business. For information on deductions from gross business income, see M21-1, Part V, Subpart iii, 1.G.11.a.
Counting Income from Installment Sales. If a claimant or dependent sells property and receives payment in installments, count as income any amounts received over and above the sales price, but not until an amount equal to the sales price has been received by the seller. This principle applies regardless of whether the sale occurred before or after the date of entitlement to Pension. It is not necessary to distinguish between payment of principal and interest in the installment sale context. As soon as the down payment and installment payments received by the beneficiary equal the sales price, all subsequent installment payments count as income.
Please refer to the table of contents in the top right column of this page for more topics on Pension with Aid and Attendance.
TABLE OF CONTENTS
Pension – The
So-Called Aid and Attendance Benefit
- What is Pension
- Who is eligible
- What are the incomes
- How is it calculated
- What are the ratings
- Deductible medical costs
- Pay family caregivers
- Pay home care
- Pay independent living
- Pay assisted living
- Pay nursing home
- Additional benefits
- Medicaid and Pension
- The income limit
- The net worth limit
- Penalty for gifting
- Meeting net worth
- Application process
- Submitting a claim
- Locating claims forms
- Claims help not needed
- Claims help needed
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- About Accreditation & Fees
- Accreditation Study Materials
- CLE to Maintain VA Accreditation
- Correcting Your Military Discharge
- Find Home Care / Assisted Living
- Find Hospice Care
- Find Medical Alert
- Help finding a LTC Facility
- Help with Care Management
- Help with Elder Law
- Help with Estate Planning
- Help with Disputes / Mediation
- Help with Financial Planning
- Help with Medicaid Planning
- Help with Tax Planning
- Informal Claims / Effective Dates
- Service Connected Disabilities
- State VA Nursing Homes
- VA Aid and Attendance Benefit
- VA Burial Benefits
- VA Healthcare System
- VA Help - Surviving Spouse
- VA Home Renovation Grants
- VA Long Term Care Benefits
- VA Pays Family for Eldercare
- VA Regional Offices