Does VA Aid and Attendance Pension Count as Income for Medicare Savings Programs?

Veterans and surviving spouses receiving Department of Veterans Affairs benefits often fear that an increased pension will disqualify them from Medicare Savings Programs. Federal law and Social Security Administration regulations explicitly exempt VA Aid and Attendance, Housebound allowances, and pension amounts resulting from unreimbursed medical expenses from countable income for QMB, SLMB, and QI.

Federal rules governing VA pension exclusions

Under federal regulation POMS SI 00830.320 and federal Medicaid guidelines, VA pension payments are separated into basic pension amounts and medical expense supplements. Portions of a VA monthly check paid for Aid and Attendance, Housebound status, or unusual medical expenses do not count as income for Medicare Savings Programs.

• Aid and Attendance allowance: 100% exempt from countable income calculations.
• Housebound allowance: 100% exempt from countable income calculations.
• Pension increases resulting from unreimbursed medical expenses: 100% exempt from countable income calculations.
• Basic service-connected disability compensation: Excluded from need-based pension caps but evaluated under general state unearned income rules.
• Basic non-service-connected pension: The base portion without medical allowances counts as unearned income.

How caseworkers calculate countable veteran income

Consider a single veteran receiving a total monthly VA pension of $2,300, consisting of an $800 basic pension rate and a $1,500 Aid and Attendance medical supplement. When applying for QMB in a state with a $1,350 income limit, the state caseworker must exclude the $1,500 supplement. The veteran countable monthly income is only $800, qualifying them cleanly for QMB benefits.

Preventing caseworker errors on veteran applications

County Medicaid caseworkers who are unfamiliar with VA benefit structures sometimes mistakenly record the gross monthly deposit as countable income. To prevent improper denials, veterans should request a detailed VA Award Breakdown Letter from their regional VA office before submitting an MSP application. This letter itemizes the exact portion allocated to Aid and Attendance or medical expenses.

How to apply as a veteran

1. Request a formal VA Award Breakdown Letter specifying your base pension rate and Aid and Attendance or UME allowance.
2. Gather your standard Medicare card and recent bank statements.
3. Submit your state Medicare Savings Program application, attaching the VA breakdown letter with references to POMS SI 00830.320.
4. Verify your potential qualifying tier with our free MSP calculator.

To learn how VA health care clinics coordinate with Medicare coverage, read our guide on VA benefits and Medicare Savings Programs and visit the VA Aid and Attendance portal.

Frequently asked questions