By skyforbes 
ElderCounsel is interested in sharing pertinent case information with our members and the entire elder law community to support you in staying abreast of changes that are relevant to this area of your elder law practice. Below is a case summary that analyzed the Supplemental Security Income (SSI) and federal rules to explain the interplay between improved pension and how it impacts Medicaid eligibility in New Jersey. This is something that comes up frequently in elder law in all states, and looking at this specific case can provide some valuable takeaways for Medicaid planning strategies within your practice.
As an elder law attorney, you probably know well how confusing the interplay between benefits from the Department of Veterans Affairs (the “DVA”) and the Medicaid program can be to both beneficiaries and Medicaid agencies, due in part to the sometimes cryptic notices issued by the DVA. It will come as no surprise to attorneys in New Jersey that its Medicaid program remains “confused” about this, even in the face of several lawsuits. A very clear compendium of the law concerning the interplay between the Veterans Administration Improved Pension (“VAIP”) program, “aid and attendance” benefits from the DVA, and Medicaid, is set out in Galletta v. Velez, 2014 U.S. Dist. LEXIS 75248 (D.N.J. June 3, 2014).
The plaintiffs had applied for a home and community-based waiver program (Global Options for Long Term Care) so Medicaid could cover their care in an assisted living facility. The applications were denied on the grounds that they had income in excess of the income limit for that program. In addition to Social Security, the plaintiffs’ income consisted of a VAIP benefit, as well as an aid and attendance benefit. While the Medicaid agency disregarded the aid and attendance benefit, it counted the VAIP benefit as part of the plaintiffs’ income. Had the VAIP benefit not been counted, the plaintiffs would not have had excess income and would have been eligible for coverage for the Global Options program.
Medicaid Evaluation Aligns With SSI
The Medicaid program is required to use a methodology for evaluating income that is no more restrictive than that used by the SSI program. [42 U.S.C. §§ 1396a(a)(10)©(i)(III) and 1396a(r)(2).] The SSI regulations provide that payments from the DVA “resulting from unusual medical expenses” are not countable income. [20 C.F.R. § 416.1103(a)(7).] The question thus was whether VAIP benefits were payments “resulting from unusual medical expenses.”
The VAIP statute provides that, while generally all non-VA income is deducted from a VAIP benefit, there is an offset for amounts equal to amounts paid for unreimbursed medical expenses, to the extent that those amounts exceed 5 percent of the maximum VAIP payable. [38 U.S.C. 1503(a)(8).] Prior to the enactment of the current SSI regulation, the courts had held that VAIP benefits were medical expense reimbursements that were exempt from being counted as income under SSI. Mitson v. Coler, [670 F. Supp. 1568 (S.D. Fla. 1987).] In response to that line of cases, the current SSI regulation, 20 C.F.R. § 416.1103(a)(7) was adopted. [59 Fed. Reg. 33906–01 (July 1, 1994).]
Court’s Ruling
Between the adoption of that regulation and the New Jersey litigation, one federal court held that the full VAIP benefit should be disregarded in computing Medicaid benefits. [Buchanan v. Whiteman, 877 F. Supp. 571 (D. Kan. 1995).]
In analyzing the regulation, the court in Galletta held that in a case where the VA claimant would not receive any VAIP benefit whatsoever if not for unusual medical expenses, the entire VAIP benefit should be excluded from income for Medicaid eligibility purposes. The court pointed out that, because the plaintiff’s Social Security benefit exceeded the amount of her maximum available VAIP benefit, the VAIP award would have been reduced to zero but for her medical expenses.
The Medicaid agency argued that, because the notices from the DVA listed her benefits separately as “pension” and “aid and attendance,” it could not tell whether the pension should be deducted. The court rejected that argument, holding that if the payments resulted from unusual medical expenses then they should be disregarded, whether they were categorized by the DVA as aid and attendance or a VAIP.
The only authority the Medicaid agency could muster was a provision in the Social Security Program Operations Manual System (the “POMS”), which provided that aid and attendance was not countable as income, [POMS § SI 00830.320,] from which the defendants inferred that because other types of DVA benefits were not mentioned they were countable. The court rejected that argument; just because the POMS expressly excluded aid and attendance did not mean that no other benefits were excludable.
The court did not rule on what documentation the Medicaid agency could require as part of the application in order for the agency to determine how to treat the VA benefits. In this case, however, the VA had issued a letter which should have been sufficient for the agency to make that determination. It stated that the plaintiff’s annual income consisted of $22,841.00 from Social Security and other sources, and that the VA had taken into account medical expenses of $52,944 which reduced the countable income to zero.
As part of the Medicaid application, such a letter from the VA should be submitted if it is available. Along with it, a spreadsheet should be submitted showing how the VAIP award was computed and that it resulted from unreimbursed medical expenses. In this case, the plaintiff’s income of $22,841.00 was substantially more than the maximum VAIP award for 2013 of $13,356. So, unless there had been a deduction for unreimbursed medical expenses, she would not have received any VAIP award. Since she received a maximum VAIP award, simple arithmetic showed that the entire award was attributable to medical expenses.
Anticipating Similar Obstacles for Your Clients
While this is a specific case, it is good fodder for determining some of the obstacles that may come up with your own clients, and how you can address them. It can also help guide you in the types of questions and information you can gather from clients to possibly help mitigate similar occurrences when it comes to Medicaid planning strategies for your own clients.
As always, our goal is to provide tools and updates that support you as you navigate the growth and vitality of your elder law practice. If you are looking for resources to help you with elder law Medicaid planning for your clients, ElderCounsel can help.
From education to document drafting software and practice development systems, we provide tools and resources to help you build efficiencies, gain and retain elder law clients. If you’d like to schedule a brief consultation, call us at (888) 789–9908, or email us at [email protected]. We look forward to hearing from you!