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VA Benefits and QITs – Part 2

In my post last week, I started to tell you about how tricky it can be when applying for Medicaid benefits while currently receiving VA Aid and Attendance benefits, a non service connected pension available to certain wartime veterans and their widowed spouses.

While it is not taxable income for tax purposes, it is also not countable income when determining the need to use a qualified income trust for cases where an applicant’s income exceeds Medicaid’s strict income cap of $2349 per month (for 2020).  I recently had just such a case.  Without counting the aid and attendance benefit my client was below the income cap so we did not set up a QIT.  Still the caseworker insisted one was necessary and denied our application.

I appealed the decision and after an extended delay due to the shutdown caused by Covid a few weeks ago we had our hearing.  The County cited a state Medicaid Communication it issued in 2012 requiring that applicants provide an in depth award letter from the VA so the State can determine how much if any of the VA pension is countable and how much is exempt and classified as for “aid and attendance”.

Following that MedComm, the VA stopped breaking down the pension amount in its award letters so that complying with New Jersey’s request is now impossible.  In response, I pointed the judge to another Medicaid Communication issued 3 years later acknowledging this change by the VA and providing examples of documents provided by the VA that would be in compliance with the State’s requirement.  The example document attached was exactly what we provided with our original application.

The judge saw immediately that we were in full compliance and asked the caseworker to take another look in light of this MedComm.  She did and the application was finally approved.  The right outcome was reached but this case highlights what I always tell people about Medicaid.  You don’t know what you don’t know and you can’t rely on the State to apply the rules and regulations correctly because they often don’t.