The 2012 Aid and Attendance maximum benefit amounts are as follows:

• $2,019 per month for a married veteran
• $1,703 per month for a veteran who is unmarried or who is widowed or a widower
• $1,094 per month for the surviving spouse of a veteran who has not remarried.

The income requirement can be confusing because the VA’s Maximum Annual Pension Rate, which is the maximum benefit amount the VA will pay, is also an income limit. 

The VA considers income from all sources to be income for Aid and Attendance purposes, including Social Security, pension, annuity payments, IRA distributions, and interest and dividends.

Illustration:  Ted, age 77 and his wife, Lois, age 74, have $2,800 in combined pension and Social Security income.  Ted is a veteran of the Korean War.  Their $2,800 in monthly income, along with their savings, provided for a nice retirement, including occasional travel, until Ted was diagnosed with Alzheimer’s disease and Lois subsequently suffered a stroke.  Ted is in the earlier stages of the disease, but needs assistance with medication management, meal preparation, and transportation to medical appointments. In addition, his physician has recommended that he not live alone due to occasional periods of confusion.  Lois still has her mind after her stroke, but has slowed down and can no long drive.  Anything other than simple meal preparation is hard for her, and she also needs help with medication management.  Initially, it would appear that Ted and Lois will not qualify for Aid and Attendance because their $2,800 in monthly income exceeds the $2,019 maximum annual pension rate. 

However, there is another rule that helps many veterans and their spouses qualify in this situation.  The VA will deduct certain regular and reoccurring unreimbursed medical expenses from the veteran and spouse’s income.  By regular and reoccurring, I mean that the amount paid is almost the same each month and the expenses are paid monthly.  The result of this equation is called IVAP, or income for VA purposes.  The regular and reoccurring medical expenses that help in this situation are:

1. Medicare Part B and D premiums that are withheld from Social Security
2. Monthly premiums for supplemental health insurance and prescription drug coverage
3. Home care expenses, including payments to a family member who is providing care or a home health care company
4. The costs of assisted living
5. The costs of nursing home care
6. The costs of other senior living facilities, including “independent living,” provided the facility is providing a protective environment and the need for such an environment is documented by the veteran or spouse’s physician.

By unreimbursed, the VA means that the medical expenses will not count if they are reimbursed from another source, such as health care insurance.

In Ted and Lois’ case, they have the following unreimbursed medical expenses:

• $99.90 is withheld from Ted’s Social Security for Medicare Part B
• $99.90 is withheld from Lois’ Social Security for Medicare Part B
• Ted and Lois pay $242.00 per month for supplemental health insurance coverage for both of them
• They are paying $5,000 per month to their assisted living facility, which includes room and board, daily meals, wellness checks, and medication management.

These unreimbursed medical expenses total $5,441.80.  As such, Ted and Lois’ income for VA purposes (IVAP) is negative $2,641.80.  Since their IVAP is negative, Ted will receive the maximum monthly Aid and Attendance benefit for a married veteran of $2,019.00.  This $2,019.00 in Aid and Attendance, along with their Social Security and pension income of $2,800, will result in a total monthly income of $4,819.00.  Ted and Lois will have to cover the remaining shortfall between their total income and total costs of care from their savings, but the receipt of the Aid and Attendance will go a long way in slowing down the depletion of their assets.

There are other medical expenses that the VA considers unreimbursed medical expenses, such as prescription drug and physician co-pays, incontinence supplies, dental and optical expenses, hearing aids, medical mileage reimbursement, and medical supplies.  Anyone who has had a spouse or elderly parent who needs long term care knows that these miscellanies expenses can be substantial.  However, such expenses are rarely allowed by the VA to qualify for Aid and Attendance on the initial application because they are not considered regular and reoccurring enough.  For instance, Ted and Lois spend substantial amounts on doctor co-pays and incontinence supplies, but the amounts vary quite a bit each month.  For that reasons, the VA may not count them in the IVAP formula. 

In my elder law practice, I often review VA award letters where the veteran was only awarded a small amount, such as $50, or was denied completely because these miscellaneous, irregular expenses were relied on to obtain the benefit.  This occurs when the family submits the application themselves and is not aware of the VA’s practice not to count such expenses on the initial application.  Then, after 4 to 6 months, the veteran receives a small award letter or denial even though there are high unreimbursed medical expenses.  This is surely a frustrating situation.  It is true that you can add all of these unreimbursed medical expenses up at the end of the year, provided that you keep documentation and all receipts, and submit them to the VA on a medical expense report (VA Form 21P-8416).  Then, assuming a qualifying case is otherwise in place, the VA is supposed to reimburse the veteran/surviving spouse for such miscellaneous expenses.  However, that is a lot of paperwork and takes a long time.  If you have them, it is better to rely on the major long-term care related unreimbursed medical expenses I outlined above.  If you or your elderly loved one is not yet paying home care or facility expenses, it is best to meet with a VA accredited elder law attorney before submitting an application for benefits to review the income and medical expenses.  There may be other regular and reoccurring unreimbursed medical expenses that are being paid that would count.

The income requirement is just one of the requirements that must be met to obtain Aid and Attendance.  While there are more details, I hope this overview was helpful.  You are welcome to contact me if you have any questions.

Long-term care insurance can be a great solution when an older person needs elder care assistance.  Unfortunately, when assisting my clients with long-term care planning, few of them have long-term care insurance.

Reports of recent turmoil in the long-term care insurance market is not good news and may lead to people not obtaining long-term care insurance when they should.

One area of concern that’s been in the news is that insurance companies continue to leave the long-term care insurance market.  First, it was CNA Insurance and then, last year, MetLife stopped selling new polices to individuals.  Now Prudential has announced that they will stop issuing new polices to individuals.  While these insurance companies have to continue to service their existing policyholders, you can imagine that people who own these policies become unsettled when their insurance company “gets out of the business.” People have a legitimate concern about how well a company who is no longer selling new policies will be in honestly paying claims and devoting company resources to service policy holders when they are getting out of the business.  After all, if a company is not worried about selling new long-term care insurance policies, they do not have to worry about their current policyholder’s complaints about bad service or non-payment damaging the company’s reputation, and impacting new sales.

Another area of turmoil is big increases in the cost of the annual premium.  People purchased policies based on it costing $3,500 a month and now, in some cases premiums are being raised to $5,000 a month or more.  Several factors have been reported for the increase in premiums:

More people are using their policies then the insurance companies planned for;

The costs of care have risen faster than what was expected and people are living longer than was projected;

Not as many people let the policies lapse after purchasing it;

The insurance companies’ investment returns have been lower then expected.

All of the above reasons relate to the fact that the long-term care industry is still relatively new and is only now seeing actual usage data which they will use in the future to more accurately price their premiums.  Of course, this means that premiums will be set at a higher amount when people first purchase a policy, but hopefully, this more accurate information may result in premiums not being raised as much year after year.

While it is too late to obtain such insurance after a stroke or diagnoses of Parkinson’s or Alzheimer’s disease, if you are in your late 50’s or in your 60’s, it is still worth looking into long-term care insurance, despite these recent increases in annual premiums.  Even if the annual premium is $6,000, that is still less than the cost of one-month in the nursing home.

As an elder care attorney, I frequently meet with the adult children of a senior who has been hospitalized and is about to be discharged to a nursing home or has recently moved into a nursing home.  In these meetings, a common situation I see is that one of the adult children, frequently a daughter, has been providing  care to her mother or father for quite some time.  Be it dementia or the need for twenty-four hour, custodial care in an elder care facility, the elder’s needs have increased to the point that the caregiver child can no long realistically meet their elderly mother or father’s needs.  Sometimes the adult child had moved into their parent’s home to provide care for their parent after a stroke or the parent may have moved into their son or daughter’s home.   Often the level of care that is being provided is excellent and the elder has benefited by not having to move to an assisted living facility or nursing home sooner. In addition, the elder has benefited financially, because frequently the care has been provided for free.

A common misconception in Michigan is that family caregivers cannot be paid by their parent for the care they provide.  Many people have heard that any payments or transfers of money from a senior to a family member that are made within 5 years of applying for Medicaid are considered  a divestment and that divestments cause problems when mom or dad need to apply for Medicaid nursing home benefits.  While that is true to an extent, there are numerous exceptions to that rule.  One such exception is that Michigan’s Medicaid regulations provide that payments to a family caregiver are not divestment if there is a written obligation (caregiving contract) and payment is made at the time services are rendered.

In order to fit within Michigan’s detailed caregiver payment rules, payment for the services must be made at the time services are rendered and cannot include payment for past care.  For instance, if Jennifer has been providing care for her mother, Mary, for the last 5 years, Mary cannot turn around and pay Jennifer a lump-sum payment of $20,000 in 2012 for the previous care without it being considered a divestment.  The regulation allowing such caregiver contracts also have strict signature and notary requirements that have to be done just right to fall within the exception.  A physician’s evaluation, which documents a certain level of need for care must be obtained before entering into the care contract and must be kept as proof in case there is ever a need to apply for Medicaid later.  The pay also has to be reasonable, which will need to be evaluated on a case-by-case basis based on the elder’s level of care that is needed.

In addition, Michigan’s Medicaid regulations provide that care can only be provided in the home, be it the elder’s home or the caregiver child’s home.  This means that payment for care coordination provided by a caregiving child in a nursing home, adult foster care, or assisted living facility do not fall within the rules and such payments in those circumstances would be considered a divestment.

It should also be noted that payments to the caregiver child are considered taxable income and must be reported on the caregiver’s annual income tax return.

To ensure compliance with Michigan’s Medicaid regulations, the care contract should be prepared by an experienced elder law attorney.  The above items I noted are just some of the requirements and if the arrangement is not done just right in conformity with Michigan’s Medicaid regulations, all such payments could be considered a Medicaid divestment.  In addition, whether an elderly parent should pay their adult child for care is a question that should be considered in the context of a broader long-term care planning evaluation, which considers the elder’s entire financial and health situation.  In the right situation, paying a family member for caregiving can be an excellent solution for the elder and will also help the adult child who may have quit their job in order to take care of mom or dad.

Consider again the hypothetical case of  Mary and Don, a married couple who have lived in Troy Michigan since 1971.  Don is 71 and Mary is 68.  They have both been retired for several years and started traveling a few times each year to “see the world while they can,” when they’re both still in good health.  While discussing their plans for their next trip with their daughter, Linda and her husband, Rick, in his usual blunt manner, asked if they should be spending so much money traveling at their age and then suggested that they add Rick’s names to all of their bank accounts so he could manage them if something ever happened to Don and Mary.

Don was incensed at his son-in-law’s suggestion, but Mary told him just to ignore him.  Rick has developed quite the reputation as a know-it-all in the family, but nobody took him seriously anymore.  However, Rick’s comment did give Don and Mary food for thought.  They hadn’t updated their Last Wills and Testaments since the early ‘70’s, when their children were young.  Mary’s sister had to get a guardianship and conservatorship for her husband when he needed nursing home care, and Mary remembered what a hassle that had been for her sister.  She and Don decided they better get their affairs in order before they took their next trip.

Don and Mary own their home in Troy and they have checking, savings and CD accounts totaling $225,000.  They both worked most of their adult lives, carefully watching their expenses and saved every month so they could enjoy a comfortable retirement.

Don and Mary called the attorney who drew up their Last Wills and Testaments many years ago.  He told them that he himself was in semi-retirement and was only handling the probate work for all of the Wills he had created through the years.  The attorney said since people are living longer and longer with modern medicine, they should consider meeting with an elder care attorney to review their estate plan.  Elder care attorneys are also known as elder law attorneys.

Don and Mary met with the elder law attorney.  Before the meeting, they thought they would just update their Wills and perhaps get powers of attorney.  At the meeting, they were surprised and pleased to learn that they could acutely plan now to avoid running out of money in the future should they need long term care.  With the help of their elder law attorney, they created a Medicaid Asset Protection Trust and placed their home and $75,000 of their savings in the trust.

A Medicaid Asset Protection Trust is an irrevocable, living trust that senior can create for asset protection and long-term care planning.  The assets placed into this type of trust are protected from long-term care and the Medicaid spend-down process.  While the term “irrevocable” is of concern to some people, the trust is actually quite flexible in that Mary and Don can change who the trustee is and who the ultimate beneficiaries of the trust are at any time.  The trustee can also change how the assets in the trust are invested at any time.

Mary and Don made their daughters the beneficiaries of the trust.  If needed, their daughters would be able to take a distribution from the trust rather than using their own money for Don and Mary’s needs.  Even though they signed a deed transferring title to their home to the Medicaid Asset Protection Trust, they continued to reside there as usual and their real estate taxes did not increase.

The remaining $150,000 of their savings would be kept in a revocable living trust that Don and Mary created at the same time.  They would use their Social Security and pension income for their living and travel expenses and can also access the $150,000 in their living trust for any other needs they might have at any time.  Mary would apply for a long-term care insurance policy to provide further protection for them should her health fail (Don had previously applied, but had been denied to do his high cholesterol and a coronary artery angioplasty procedure he had a few years ago).  The $75,000 placed into the Medicaid Asset Protection Trust would not be counted against them after 5 years, should either of them need long-term care and to need qualify for Medicaid to pay for the monthly nursing home cost ($6,800 per month).

Sadly, Don had a heart attack several years later and died at age 79.  The family was sad about this, but were glad Don never had to move to an assisted living facility or nursing home.  Mary adjusted and started traveling again after a year, this time with a group of older friends.  She did well until her late ‘70’s when she suffered a series of mini strokes and Linda and Jennifer started to assist her more and more, as detailed in my last post.  At age 81, Mary had to move to a nursing home.

Linda and Jennifer went back to see the elder law attorney for help.  He told them because Mary and Don had planned ahead by setting up the Medicaid Asset Protection Trust, the $75,000 that had been transferred to this trust was protected and did not have to be spent down to $2,000.  The home was also protected from Michigan’s estate recovery law, and since it had been titled in the Medicaid Asset Protection Trust, Jennifer had the authority to sell the home as trustee.  She listed it for sale and the $95,000 sale proceeds were automatically protected and deposited into the bank account in the trust.  Under the Medicaid law, since the home had been titled in the trust, the cash proceeds received from its sale are also protected.  Jennifer and Linda did not have to worry about keeping the house and how they would pay for the real estate taxes and maintenance on the home, but then having the state pursue estate recovery against the house after Mary passed away.  Also, they did not have to worry about selling the house and then having all of the $95,000 that Mary would have received having to be spent down to $2,000.

As the $150,000 that had been placed in Don and Mary’s living trust had been spent down to $65,000 in the years after Don’s death, the elder law attorney advised Jennifer to purchase any items Mary needed and to establish a Medicaid-compliant funeral contract.  Jennifer used the remaining funds in the living trust to pay for Mary’s care until they were spent down to $2,000 and then she qualified for Medicaid.  The elder law attorney did the application for them and interacted with the Department of Human Services, so everything went smoothly and the application was approved quickly.

Linda and Jennifer were relieved they would not have decide between carrying the house (but then having the state get it in estate recovery when Mary passed away) or having to sell the house but losing Mary’s sale proceeds to Medicaid. The planning Don and Mary had done earlier protected what they had worked so hard for all their lives.  Linda and Jennifer did not have to worry about these financial issues and could instead focus on visiting Mary and making sure she got good care in the nursing home.  Even though Mary had dementia, they hoped she still got some peace of mind from the planning she and Don had completed with their elder law attorney.

This scenario illustrates the importance of seniors and their families planning early for the possibility of needing long-term care and Medicaid eligibility.  In addition to the financial benefits, there are also numerous non-financial benefits to such planning, including reduced stress on the family and peace of mind knowing that the older person’s needs are taken care of regardless of the need for long-term care that will occur in the future.

As an illustration, consider the hypothetical example of Mary, a widow who is age 81.  Mary and her late husband, Don, purchased their home in Troy, Michigan in 1971 and Mary always wanted to stay in the home where she and Don raised their family and happily spent their retirement years together. 

Mary was doing well until her late 70’s, when she suffered what her doctor believes what a series of mini strokes, or transiet ischemic attacks.  Mary no longer is able to handle her finances, drive, or cook for herself.  Her daughter, Linda, has been paying her bills for the last several years.  Her other daughter, Jennifer, helps more with Mary’s personal care and has to remind her to take a shower and help Mary with bathing.  Mary was always good about taking her medication in the past but then Mary started to complain about not being able to find her medication and her family would find her prescription bottles in strange places like the freezer and under the kitchen sink.  As a result, Jennifer started to stop by in the morning and on her way home from work in the evening to make sure that Mary was taking her pills. 

In the next few months, Jennifer and Linda noticed that Mary would occasionally have slurred speech and then she became incontinent.  While she had always been an outgoing person in the past, Mary had become quite withdrawn and Linda and Jennifer felt like her personality had changed.  Her short-term memory was also terrible.  Finally, her doctor diagnosed her with vascular dementia and advised Linda and Jennifer that Mary really should not be living on her own any more.  Mary did not want to move to assisted living and Jennifer and Linda thought they would continue to try to handle her care at home for as long as they could, though the situation made them uncomfortable.

A few months later, Mary suffered a more serious stroke and was hospitalized for 5 days and then discharged to a nursing home for physical therapy.  After only 15 days of rehab., the nursing home staff recommended that Mary really needed full-time custodial nursing home care, so Linda and Jennifer made the difficult decision that Mary would need to remain in the nursing home.

During the last several months, Linda had become overwhelmed with paying Mary’s bills and in dealing with her mother’s health crisis, so her husband, Rick, suggested she lighten her load by selling the house.  After all, Mary had not lived there for six months now, so what was the point in paying the real estate taxes, insurance, and for someone to cut the grass and shovel the snow in the winter?

Jennifer was not sure if selling the home was such a good idea, because she heard that Mary could continue to own the home if she needed to qualify for Medicaid.  However, her brother-in-law Rick thought of himself as a financial guru and had a way taking over in these situations.  With everything going on with Mary, Jennifer did not want to rock the boat with Rick and Linda, so she agreed that they should sell the home.  The home was listed for $115,000 and, after being on the market for 9 months, was sold for $95,000.

This decision was a mistake from an asset protection perspective.  In Michigan, you can own a home and still qualify for Medicaid nursing home benefits.  However, the law does not allow one to sell the home and keep the cash proceeds while qualifying for Medicaid, so the only other option for a person receiving Medicaid is to keep the home.   The result of selling Mary’s home is that the cash proceed received from the sale are then considered countable assets for Medicaid qualification purposes and a single person cannot qualify for Medicaid if they have more than $2,000 in countable assets.   Mary will either have to spend the $95,000 down to $2,000 or do some crisis Medicaid planning, described below.

Since Mary had never done any estate and long-term care planning in the past, there would still be some issues even if Rick had not insisted that her home be sold.  For instance, under Michigan’s new estate recovery law that took effect in 2011, the State of Michigan will seek to recover expenses paid for long-term care.  It’s called estate recovery because the state seeks to be reimbursed from the assets owned by the person receiving Medicaid benefits when they pass away.  Since you can only have $2,000, a vehicle, and the home while qualifying for Medicaid, for all intents and purposes, the home is the asset the state will be seeking to recover against.  What could have been done instead of selling Mary’s home and spending all of the $95,000 before Mary qualified for Medicaid or just keeping it but having the state get everything in estate recovery after Mary passes away?

One option would have been to just keep the home and to do some estate recovery planning.  The law allows people in Mary’s situation to execute certain deeds, which will have the effect of avoiding estate recovery.  That means the home could be kept, and if the deed was done properly, the home could be sold by Linda and Jennifer when Mary passed away, and they would get to keep the funds.  This makes sense, because Mary always said she and Don wanted their children to have anything that was left when they were both gone and Linda and Jennifer had really helped Mary out with her care in the last several years before she moved to a nursing home.  These special deeds have to be done just right, so they should really consult with an elder law attorney to draft the deed.  However, as a practical matter, under this plan, Linda and Jennifer will still have to pay for the real estate taxes, insurance and home maintenance out of their own funds, since Mary can only have $2,000 and all but $60 of her income is paid to the nursing home each month.  This may work for many families in a similar situation because the family will ultimately receive the cash sale proceeds when the home is sold.

Despite that option, sometime people find that keeping the house is too overwhelming, so they want to sell it or they have already sold it before knowing the Medicaid implications.  In that case, we can still protect at least 50% of the cash sale proceeds that were received, if not more.  Sometimes this is referred to as a half-a-loaf plan or a crisis Medicaid plan.  These plans work, but they are complex and it’s something an elder law attorney would have to design and execute on behalf of Mary.

Planning to avoid estate recovery and crisis Medicaid planning are legal and my plans work.  Some people are critical of this type of planning, but they often have not been in the position of writing a check for $7,000 to a nursing home month after month.  Mary and her late husband, Don, worked and paid taxes year after year for these programs, so it seems fair that they should be able to keep some of their assets.  Plus, Mary is paying all but $60 of her Social Security and pension income to the nursing home each month, so she will still be paying quite a bit for her care even when she ultimately qualifies for Medicaid.

Also, some families may have a belief that they should spend all funds on deposit in banks, stocks, bonds, mutual funds, and other assets for care, and that may be appropriate in some circumstances.  A major factor in this school of thought was that the family would ultimately inherit the home, so that would be enough.  However, with the advent of estate recovery in Michigan, that is no longer automatically the case, so families with this belief may now want to consider estate recovery planning or crisis Medicaid planning. 

There is also a third option:  planning ahead for long-term care.  In a future post, I will discuss the proactive planning that Mary could have done in advance to easily avoid these problems and to automatically protect her home (and the cash sale proceeds if the home is sold), by the use of a Medicaid Asset Protection Trust.

Long term care is expensive, and the receipt of these veterans services can help avoid the high costs of nursing home care, assisted living, or home care in depleting an older person’s assets.  That’s important because, once an older person is out of money, their only care option is to apply for Medicaid. 

One of the most positive features of this VA benefit is that once a veteran or their surviving spouse qualifies, they receive a deposit in their checking account each month from the VA.  Since the veteran or widow receives this special monthly pension directly, they have the flexibility of using the funds to pay for either home care, senior living residences, assisted living, or a nursing home as their individual needs may require.  A married veteran can receive $2,019.00 per month and a widow can receive $1,094.00 per month.

In my elder law practice in Auburn Hills, I frequently meet with the adult children of seniors who are applying for Medicaid nursing home benefits on behalf of their elderly parent.  The older person may have Alzheimers, be unable to care for themselves due to the effects of a stroke, or they may just be frail and elderly and need a great deal of assistance.  All too often, this elderly person is a war time veteran or widow of a wartime veteran and they are not receiving any veterans services.

When I inquire why the elder is not receiving veterans assistance, sometimes the family just never heard about the benefit.  All too often, however, the family applied for Aid and Attendance but gave up during the application process, so the elder never received the benefit.  Then they spent all of their money down on their care and the only option they have left is to apply for Medicaid to pay for a nursing home. Sadly, it’s not uncommon for me to see people who could have been receiving VA Aid and Attendance for 5 years or more and they have left over $100,000 on the table.  If the older veteran or their widow had been receiving this money all along they would now have a lot more care options and their estate would not have been so depleted.

How does this happen?  As your learn more about the VA Aid and Attendance program, you may see that one of the most frustrating aspects of this is the application process.  I wrote earlier about how applying for Medicaid is not a do-it-yourself project and that may apply even more to veterans Aid and Attendance.  The reasons for this are varied.  One reason is that you can never actually speak to the person who is processing the application at the VA.  All communication is through somewhat confusing letters the VA sends out from time to time.  While there is an 800 telephone number you can call, it often takes 10 to 15 attempts to get through and, after you wait on hold for 10 to 20 minutes, you can only speak to an operator who may look at a database and give you vague information about what is going on with your parent’s VA claim.  This operator is not actually involved in processing the VA application.

Another reason is there are many documents that need to be submitted in addition to the application, but the instructions with the application do not reference these other documents.  For instance, a certain doctor’s form must be submitted and the issues the doctor’s form should address will be different based on if someone is receiving home care, living in independent senior living with some services, or assisted living.  The instructions do not disclose this.  There are also different forms that have to be submitted to document your care expense depending on if you receive home care or care in some type of elder care facility.

In regards to income and assets, you must ensure that a qualifying case is in order before applying.  If an older veteran or widow is not currently eligible due to “excess assets,” an elder law attorney can assist in preserving assets while still qualifying for this additional income from the VA.

Some people, who appear very nice in cordial in our consultation, tell me how they found the process so frustrating that they lost their temper and yelled at and told the VA operator off.  You can imagine that those applications do not go to well after that.

The application process is complex.  Congress, in its infinite wisdom, has passed a law providing that no one can charge to assist in preparing a VA application until such time as the VA has denied the application.  Then an accredited attorney or claimant’s representative can charge to handle the appeal.  You really want to avoid such a situation though because it could be years before the appeal is sorted out and the elder receives any benefit.

However, the process does not have to be so frustrating if you get help.

If is very important that a complete and correct application and all supporting documentation be submitted with the initial application.  It will still take the Department of Veterans Affairs about 4 to 6 months to process the application, but if it is done correctly the first time, the only correspondence you receive from the VA should be the approval letter. The VA will then pay benefits back to the first day of the month of the month after the application was submitted.

The way I help with VA applications is I do the application for free for my clients with whom I have done long-term care planning work.  Between gathering all the information up, preparing the application, and following-up, this may take about 10 hours of time.

Sometimes individuals call me up and ask me to send them all the forms I have referenced in this post so they can file the application for their parent.  I cannot do that because, not only is there a variation in what forms needs to be submitted for each person, how the forms are filled out, i.e., what the forms need to say and contain, will be different for each person's situation.

That’s why applying for VA benefits and Aid and Attendance is not a do-it-yourself project.  The benefit programs, laws, and regulations that affect seniors have become complex in the last 20 years.  That is why the specialty of elder law developed and that is why the Department of Veterans Affairs has required attorneys to be accredited with the VA before an elder law attorney can assist with VA applications.  It’s a complex area that people tend to deal with only once in their lives.  A great deal of money is at stake, money that can really help out the older person. 

If you are considering filing a VA claim or application for a frail older person who has suffered a stroke, has Alzheimer’s disease, or who just needs long term care, be careful.  They are relying on you and they need your help.  Don’t just fill out applications and submit them before knowing the rules and legal process.

Helping an elderly parent who needs long-term care is time consuming and stressful.  Why not consider lighting your load and having a professional help you with one aspect:  the application?   We will still need you to gather up some documents, but you will find the whole process less time confusing and stressful and your parent will receive some much needed money to pay for care.

In Michigan, the spouse or adult child of a nursing home resident can be their “representative” before the Department of Human Services without having to take any formal action to be appointed as representative.  Because almost any family member can prepare and file a Medicaid application for another and because the application form is handed out by people who are seemingly in a position of authority, such as a social workers in a nursing home or the nursing home admissions director, people tend to think they should just fill out the application and submit it.  However, applying for Medicaid is not a do-it-yourself project and if the application is not done correctly, it will result in a Medicaid denial.  This denial can result in a large nursing home bill without a source of funds to pay it. 

A major mistake I see with do-it-yourself Medicaid applications is the failure to realize that qualifying for Medicaid nursing home coverage is not based on fairness or equity.  Often, an adult child will fill out the application and submit it thinking it’s like applying for a grant or scholarship where some committee will review the application to see if it is fair to grant Medicaid eligibility.  After all, Dad worked for all those years, always paid taxes and, now that he needs to live in a nursing home, he should be entitled to something right?  Wrong; Medicaid eligibility is never decided on fairness.  The application is simply reviewed to determine whether the asset situation meets the black letter language of Michigan’s Medicaid regulations.  What do I mean by this?

Consider the hypothetical case of Susan, who applied for Medicaid on behalf of her father Ralph.  Ralph owned a home that he titled in his living trust, as part of his estate plan, many years ago.  Before moving to the nursing home, he had about $85,000 in funds deposited in his checking account and a few certificates of deposit.  Susan had been paying Ralph’s bills for a year and half before he moved to the nursing home, so, after he moved to the nursing home she dutifully paid the $6,800 bill every month out of his income and the $85,000 in the bank.  She did this until his bank balance was down to $2,000 because that’s what she was told she had to do before Ralph would qualify for Medicaid by a volunteer at the area agency on aging. 

Susan then got a copy of the Michigan Medicaid application online, filled it out, disclosing Ralph owned his home and the checking account with less than $2,000 in it.  She filed the application in the last week of November.  Two months after submitting the application, the caseworker at the Department of Human Services requested a copy of the deed to the home and copies of the last three months of Ralph’s bank statement.  Susan got a copy of the deed from the register of deeds and the bank statements and then sent them to the caseworker.  Everything was in order with the bank account, because it only had $1,600 in it.  However, the caseworker denied the application, because Ralph’s home was titled in his living trust.  The Notice of Case action Susan received at the end of February said Ralph was denied Medicaid because his assets exceeded the $2,000 countable asset limit.  Then Susan received a bill from the nursing home for $20,448 for Ralph’s care in December, January, and February.  In addition to being extremely anxious about how she was going to pay the $20,448 nursing home bill, Susan was confused how Medicaid could deny Ralph for having excess countable assets when he only had $1,600 in his checking account.  What a mess.  How did this happen?

Michigan has a detailed set of regulations for the caseworkers who process the applications.  The main set is about 52 pages and then there is another set just on trusts and annuities that is an additional 14 pages.  These regulations detail whether someone will meet the Medicaid requirements based on the combination of assets they own.  Susan’s problem is just one example where noncompliance with the regulations results in Medicaid denials.  In Michigan, a nursing home resident can qualify for Medicaid and still own their home so long as the equity in the home is $506,000 or less.  With today’s real estate market, that’s not a problem for most people.  The home is considered an “excluded” or non-countable asset, which simply means it’s an asset you can own and qualify for Medicaid.  The $506,000 equity limit does not apply if the nursing home resident’s spouse is living in the home or if they have a blind or disabled child living in the home. 

Many people have a revocable living trust and have their home titled in the trust.  That can be an excellent estate planning idea, but it’s a problem for Medicaid, particularly for a single Medicaid applicant.  The problem is that if your home is titled in a living trust when you apply for Medicaid, you will never qualify, even if you only have $1.00 to your name.  Why is this?  Michigan’s Medicaid regulations provide a nursing home resident only qualifies for Medicaid if they have $2,000 or less of “countable assets” in their name.  If your home is titled in a living trust, the rules provide that the home is then considered a countable asset, counting toward that $2,000 limit, instead of being an excluded asset, as the home would be if it was just titled in your name.  However, Susan did not know that and none of the helpers she consulted with were aware that Ralph’s home was titled in the living trust.  Simply because of the way Ralph’s home was titled, he was disqualified for Medicaid.  If Susan had consulted with an elder law attorney and let them do the application, the lawyer would have told her that the home had to be retitled out of the trust into Ralph’s name before the application was submitted.  Since the house was titled in the living trust in December, January and February, this problem cannot be fixed retroactively, so the $20,448 nursing home bill will not be going away and will have to be paid some other way.  Otherwise, the nursing home can evict Ralph.

This is why I say applying for Medicaid is not a do-it-yourself project.  The whole area of Elder law developed in the last twenty years due to the increased complexity of the laws and regulations that impact seniors.  This is a complicated field that most people deal with only once in their lives. Tens of thousands of dollars or more are at stake. It is penny wise and pound foolish not to consult with experts who make their living guiding clients through the process. 

A few other problematic assets that cause Medicaid denials, even when people have $2,000 or less in the bank, include funeral plans, small life insurance policies, and jointly owned accounts.  Susan’s story is but one example.

If you or your parent’s home is in a living trust, you should not go and remove it from the trust based on reading this article.  Living trusts remain an excellent estate planning vehicle and for married couples, having the home titled in the living trust on certain key dates can result in the community spouse (the spouse not living in a nursing home) being able to keep more assets.  The point is, due to the complexity of the regulations, each person’s situation must be looked at individually.

If you are acting on behalf of a frail, elderly person who needs nursing home care, please be careful.  We’re all allowed to screw up our own lives, but if you are acting on behalf of another person, especially if you are their trustee or agent under a power of attorney, you have a legal duty to act prudently.  Don’t just fill out forms and submit them before investigating the rules and legal process.  Never apply for Medicaid until you know that the person qualifies.

The U.S. Department of Veterans Affairs has indicated that single veterans receiving Aid and Attendance will receive $1,703.00 per month.  Married veterans receiving Aid and Attendance will receive $2,019.00 per month.  Surviving spouses of veterans receiving Aid and Attendance will receive $1,094.00 per month.

These are the first increases in the VA’s Aid and Attendance program since 2008.

A nursing home provides residents with a room, personal care, nursing care, medical services, and meals.  As to the room, it is often semi-private, meaning the resident has a roommate.  Residents of nursing homes tend to have chronic conditions requiring long-term care and need assistance with multiple activities of daily living, such as bathing, dressing, eating, toileting, transferring in and out of beds or chairs, and help with continence issues.  Moreover, residents of nursing homes often have cognitive and memory problems due to various forms of dementia, such as Alzheimer’s disease.  Medicare does not pay for this long-term custodial care in a nursing home, but Medicaid will pay for nursing home care provided that the asset, income, and medical criteria are met.

Nursing homes also provide care for patients needing shorter-term recovery after a hospitalization.  Medicare may pay for up to 100 days of this type of skilled nursing care per spell of illness, which tends to be physical therapy and rehabilitation services after a stroke or broken bone.

The average cost of a nursing home in Michigan in 2011 is $220 per day, $6,692 per month, or $80,300 per year.

Assisted living residences provide services for people who are not able to live independently, but who do not require the level of care provided in a nursing home.  For instance, assisted living facilities provide housing for those who need help with day-to-day living, but who do not need the 24-hour level of care found in nursing homes.  Residents of assisted living may need help with personal care, assistance with meal preparation, some assistance with some of the activities of daily living, and housekeeping services.  Residents of assisted living facilities tend to have their own private living space, which can range from just a bedroom with a private bathroom, to a small apartment with a living room, bedroom, bathroom, and small kitchen area.  Assisted living facilities tend to have many activities for their residents.  Sometimes they seem like a nice resort with good staff and lots of activities.

Many assisted living facilities have special “memory units” for older people with Alzheimer’s and other forms of dementia who need a great deal of supervision. 

The average cost for assisted living in Michigan is $3,425 per month or $41,100 per year.  However, costs can easily exceed $5,000 a month for assisted living residents living in memory units.  Assisted living facilities in Michigan do not accept Medicare or Medicaid as a payment source for the cost of room and board.

In conclusion, nursing homes tend to be more institutional and hospital like.  They accept Medicaid as a payment source.  Some of the residents tend to be very frail, many others have dementia, and some residents of nursing homes are there because they have inadequate financial resources to live in assisted living or elsewhere.  Assisted living facilities are more home-like, though they can provide a similar level of care as a nursing home.  Assisted living facilities are strictly private pay, meaning the resident or family has to pay the bill out of their own funds or with long-term care insurance or the veteran’s Aid and Attendance benefit.

The MetLife study also cites interesting U.S. Census Bureau statistics that the median age of U.S. nursing home residents is 82.7 years.  Often, people who have not dealt with long-term care in their family think of nursing homes as being places for people in their 90’s or older.  Moreover, many also erroneously think of nursing homes as places people move to when they are quite incapacitated and about to pass away in a few weeks or a month or so.  The survey makes clear that nursing home residents are made up of people ranging in age from their 60’s to their 90’s and older.  While some stays are short term, average stays in a nursing home are about 2 years.    

As such, given the high costs and high chance of living in such a facility for a long time, it is important to plan ahead about how to pay for long-term care.  Long-term care insurance should be considered, but many seniors wait too long to obtain such policies and then feel they cannot afford the $3,000 to $5,000 annual premiums or they may not pass the health underwriting standards for the insurance.  Estate and longevity trusts or Medicaid Asset Protection Trusts should be considered, either alone or in conjunction with long-term care insurance policies.