Veterans’ benefits have a long and storied history in this country. While the area of law is unique, it is a deeply fulfilling practice that aims to deliver earned benefits to veterans and their family members.
This article provides a short introduction of common veterans’ benefits delivered by the US Department of Veterans Affairs (VA), such as healthcare and compensation benefits. It will also discuss a few common intersections between veterans’ benefits and other legal practices that might make you ask: “Is my client a veteran?”
As a disclaimer, the word “generally” is used quite a bit in this article. As with most areas of law, for every rule there are exceptions, limitations, or other special circumstances, the nuances of which would drastically bog down this article. In addition, there are a plethora of other veterans’ benefits that are not discussed here but are worthy of further inquiry.
CLAIMS FOR DISABILITY COMPENSATION AND PENSION
Broadly speaking, before engaging in a conversation about eligibility for any VA benefits, there is a preliminary inquiry: Is the claimant a “veteran”?
The Code of Federal Regulations defines a veteran as “a person who served in the active military, naval, air, or space service and who was discharged or released under conditions other than dishonorable.”1
Within this definition are two elements: (i) whether the period of service can be categorized as “active” service; and (ii) the character of the veteran’s discharge. Without engaging in a larger discussion on the nuances of these two elements, generally speaking, before applying for benefits, the veteran should have a DD-214 (discharge document from a period of active duty) that does not say “dishonorable.”2
The VA has two primary monetary benefit programs: (i) service-connected disability compensation; and (ii) pension benefits. In short, service-connected disability compensation provides a monthly monetary benefit for disabilities incurred in service. Pension benefits are monthly benefits payable to low-income wartime veterans. Disability compensation and pension are both tax-free benefits.
In the adjudication of any benefit, the VA is duty-bound to administer benefits to veterans in a non-adversarial and paternalistic manner. To do so, the VA uses a reduced burden of proof standard, known as the “benefit of the doubt” standard.
If a “preponderance of the evidence” standard is 51 percent—tipping the scales just enough to allow one party to prevail—the benefit of the doubt doctrine is arguably less. Akin to a 50/50 standard, the scales must only be approximately balanced, and if that is the case, the benefit of the doubt doctrine applies and the veteran prevails in her claim. This concept was best described in Gilbert v. Derwinski as “similar to the rule deeply embedded in sandlot baseball folklore that ‘the tie goes to the runner.’”3
Service-connected disability compensation
A claim for injuries or disabilities “incurred coincident with service in the Armed Forces,”4 is known as a claim for service-connected disability compensation.5 There are three elements of service connection: (i) an in-service event; (ii) a current diagnosed condition; and (iii) a medical “nexus” between the in-service event and the current condition.
The nexus builds a bridge between what happened in service and the disability affecting the veteran today. It is usually the most difficult element to prove (even with the tie going to the runner), except in cases where the VA has made a “presumptive” connection between the event and the resulting disability.
Service-connection claims can be as straightforward as an injury to the knee on active duty that later turns into arthritis or as complex as rare forms of cancer caused by toxic exposures.
Once the VA awards service connection for a particular condition, it must then assign a rating, a percentage that is synonymous with severity. For any ratable disability, the VA has a series of rating criteria describing different levels of severity. For example, diabetes mellitus managed only with restricted diet is evaluated as 10 percent disabling, whereas diabetes treated with an oral hypoglycemic agent and restricted diet would be evaluated as 20 percent disabling.6
Once the VA has assigned each service-connected disability the appropriate rating, it then combines each individual rating using the Combined Ratings Table.7 As the maximum schedular rating is 100 percent, the combined rating cannot merely be the sum of all the individual ratings. Thus, the Combined Ratings Table acts more as a limiting mechanism, such that disabilities may be added together without prematurely exceeding 100 percent. This math can best be visualized by thinking of a pie chart with each disability taking a smaller slice of the residual functional capacity as they continue to add together.
The resulting combined rating ultimately corresponds to the veteran’s payment rate. Payment rates for each level of compensation are set by the VA and generally receive cost-of-living increases each year.8 These benefits can range from approximately $150 to over $3,300 per month, tax-free.9
Pension benefits are needs-based benefits provided to low-income wartime veterans who have been deemed totally disabled due to age or non-service connected disability.10 The first inquiry to establish entitlement to pension benefits generally requires that a veteran have served at least 90 days on active duty, with at least one day during a period of war.11 Next, the veteran must either be over the age of 65 or be deemed totally disabled due to a non-service connected disability.12 Additionally, the veteran’s income must fall under the maximum annual pension rate.13 Finally, the veteran must have an overall net worth (including income) less than the net worth limit set by the VA.14
For pension purposes, income from any source must be counted, unless specifically excluded by the VA. Included income is any recurring or irregular income from salary or other wages (e.g., retirement or investment income, business or farm income, etc.).15 Excluded income includes donations from public or private relief, including charitable organizations, maintenance furnished by a relative or friend, any benefits that can be deemed welfare, reimbursement from casualty loss, or amounts contained in a joint account acquired following the death of the joint owner.16
An important aspect of many pension determinations is the ability to subtract out-of-pocket medical costs from countable income.17 These out-of-pocket expenses include co-pays, prescription medications, in-home care, over-the-counter supplies such as dietary supplements, incontinence materials, assistive devices, and even the cost of transportation to and from a health care provider.18 Finally, the veteran must fall under the net worth requirement set by the VA. A veteran’s net worth is the combination of income and assets.19 Generally, the VA has defined assets to include any property owned by the veteran or claimant, including real and personal property, unless expressly excluded by regulation.20 Exclusions include the primary residence, personal effects, and certain other special
payments provided by regulation or statute.21
If the veteran’s assets exceed the net worth limit, particularly if by a slim margin, the veteran’s medical expenses might “spend down” assets or income in a sufficient period of time to create entitlement.22 However, asset transfers (particularly those for less than fair market value designed to bring net worth under the acceptable limits) may come with penalties. 23 The VA will review the veteran’s financial history for a three-year lookback period for disqualifying asset transfers.24
In a highly simplified example of a basic pension benefit calculation, assume the maximum annual pension rate for a single veteran is $15,000.25 If the veteran has a net worth under the VA limit, an income of approximately $8,000 per year, and medical expenses of $6,000 per year, countable income for VA purposes would then equal $2,000. The VA will then pay the difference between the income for VA purposes ($2,000) and the maximum annual pension rate ($15,000), in monthly payments. In this example, that would be approximately $1,083 per month.
In sum, disability compensation and pension benefits are two separate benefit programs that provide monthly, tax-free monetary benefits to veterans. Generally, while a veteran may qualify for benefits under both programs, the VA will pay the veteran the benefit that will result in the maximum payment. Both programs may also create avenues for ancillary benefits, including access to VA health care.
CLICK HERE to read the full article, which was originally published in ALI CLE’s The Practical Lawyer.