Source: https://vanarellilaw.com/new-jersey-improperly-denies-medicaid-benefits-to-veterans-by-incorrectly-including-va-pensions-as-countable-income/
Timestamp: 2020-03-31 15:23:28
Document Index: 408272804

Matched Legal Cases: ['§ 1541', '§ 1503', '§ 1503', '§ 416', '§ 416', '§ 416', '§ 416', '§ 1541', '§ 416', '§ 416']

New Jersey Improperly Denies Medicaid Benefits To Veterans By Incorrectly Including VA Pension Benefits As "Countable Income" | Donald D. Vanarelli, Esq. Blog
New Jersey Improperly Denies Medicaid Benefits To Veterans By Incorrectly Including VA Pension Benefits As “Countable Income”
In recent years, applicants for Medicaid benefits in New Jersey have been incorrectly denied eligibility as a result of including as “countable income” the applicants’ Veterans Administration Improved Pension (“VAIP”) benefits awarded pursuant to 38 U.S.C. § 1541(d)(1) for unreimbursed medical expenses (“UMEs”). New Jersey’s Medicaid agency, the Department of Medical and Health Services (“DMAHS”), has adopted a faulty methodology which results in an inflated calculation of income that incorrectly counts benefits from the Department of Veterans Affairs (“DVA”) that are specifically earmarked for medical expenses and thus do not constitute income under federal Medicaid regulations. Although the State is aware that the methodology it uses in computing “countable income” is faulty when VAIP benefits are involved, and although it has even agreed to correct the methodology in various lawsuits brought by aggrieved Medicaid applicants who are veterans, DMAHS inexplicably continues to improperly deny benefits in the majority of Medicaid applications involving VAIP benefits filed at the present time.
How the DVA computes eligibility for Improved Pensions
VAIP benefits have historically been a means of providing additional disability benefits to veterans and their dependents who require assistance with activities of daily living. The VAIP monthly benefit consists of two parts: a “pension” portion and a “supplement” which is categorized as either “Homebound” or “Aid and Attendance,” depending on the level of care needed by the applicant. For example, an applicant requiring “Aid and Attendance” is paid the supplement based on evidence showing that the veteran is entitled to “special monthly pension because of the need for aid and attendance” and, further, that he/she is “in need of assistance of another person in performing routine activities of daily living.”
In computing the VAIP benefit, all non-VA income is subtracted from the applicable benefit amount, and the resulting difference, if any, is the amount of the VAIP award. 38 U.S.C. § 1503(a)(8). However, amounts paid for UMEs are deducted from non-VA income dollar-for-dollar. 38 U.S.C. § 1503(a)(8). In most cases, especially those in which the applicant resides in an assisted living facility or lives at home with high care costs, countable income is reduced to $0.00 due to the UMEs. As a result, the monthly benefit amount the applicant receives as VAIP are attributable to the exclusion of UMEs, and therefore constitute reimbursements for using non-VA income to pay medical expenses.
Medicaid should not treat VAIP as “countable income” because the benefit is a third-party payment for out of pocket medical expenses
Under federal law, “assistance provided in cash or in kind (including food or shelter) under a Federal, State or local government Program whose purpose is to provide medical care or medical services” is not to be considered income for Medicaid eligibility. 20 C.F.R. § 416.1103(a)(3). Further, Medicaid regulations make clear that “[p]ayments from the Department of Veterans Affairs resulting from unusual medical expenses” are not to be considered income for eligibility purposes. 20 C.F.R. § 416.1103(a)(7). Therefore, VIAP benefits paid to a Medicaid applicant because non-VA income was used to pay UMEs is not to be considered as income in determining Medicaid eligibility.
However, in processing a Medicaid applicant’s claim, New Jersey has repeatedly failed to apply what federal courts and federal regulations have consistently held – that a veteran’s pension for UMEs is not income because it is a third-party payment for out of pocket medical expenses. See Summy v. Schweiker, 688 F.2d 1233, 1235 (9th Cir. 1982); Peffers v. Bowman, 599 F. Supp. 353, 355 (D. Idaho 1984); Mitson v. Coler, 670 F. Supp. 1568, 1575 (S.D. Fla. 1987); Sherman v. Griepentrog, 775 F. Supp. 1383, 1393 (D. Nev. 1991); Buchanan v. Whiteman, 877 F. Supp. 571, 575 (D. Kan. 1995). As discussed in Mitson, UMEs are excluded from income under 20 C.F.R. § 416.1103(a)(3) as “assistance provided … under a Federal, State, or local government program, whose purpose is to provide medical care or services” just as they would have been excludable under 20 C.F.R. § 416.1109(a) as “third party payment for medical care of medical services.” Mitson, 670 F. Supp. at 1575.
DMAHS utilizes an improper method to determine whether a Medicaid applicant’s IVAP benefit is countable as “income”
During Medicaid’s application process, DMAHS now requires the applicant to obtain a letter from the DVA indicating how much of the pension is categorized as “pension” and how much is categorized as “aid and attendance.” In the usual case, upon request the DVA will issue a letter setting forth the gross benefit amount of the VAIP benefit, and breaking down the gross benefit amount as consisting of the “Pension Amount” and “Aid and Attendance” portion. Based on the letter, DMAHS typically counts the “Pension Amount” of the DVA pension as income which, in the usual case, puts the applicant over Medicaid’s income limit, resulting in a denial of Medicaid benefits.
However, the DVA letter which DMAHS relies upon to deny Medicaid benefits is merely a breakdown showing how the DVA arrives at the correct payment amount as per the statute (38 U.S.C. § 1541(d)(1)). The letter does not and is not intended to advise Medicaid whether the pension is the result of UMEs. Indeed, that question is never posed to the DVA, and the applicant is never asked to obtain that information. Moreover, DMAHS could have learned that the applicant is entitled to a DVA pension as a result of UMEs had the agency simply reviewed the applicant’s DVA award letter. Thus, the fundamental error being made by DMHAS is its reliance on the so called DVA allocation letter. In doing so, DMHAS places the burden on the applicant to contact the DVA and obtain an allocation letter that has the precise language and allocation sought by DMHAS.
More importantly, DMHAS should not rely on an allocation letter from DVA because neither Medicaid applicants nor the DMHAS has any control over how the DVA drafts these letters. Instead of asking the applicant to obtain a letter that may or may not correctly characterize the VAIP benefit, DMAHS should analyze the applicant’s DVA pension and determine, as instructed by Mitson, whether the applicant is receiving the pension as a result of UMEs, which makes the payments excludable from income under 20 C.F.R. § 416.1103(a)(3) as “assistance provided … under a Federal, State, or local government program, whose purpose is to provide medical care or services” just as they would have been excludable under 20 C.F.R. § 416.1109(a) as “third party payment for medical care of medical services.” Mitson, 670 F. Supp. at 1575. By looking at the applicant’s DVA award letter, one can quickly determine whether or not the VAIP is based on an applicant’s UMEs. Rather than access readily available information as to the basis of the DVA pension, however, DMAHS instead has abdicated its responsibility to assist applicants and has placed the burden on the applicant to obtain an unnecessary allocation letter from the DVA.
(This blog post was adapted from a brief written by Alan H. Sklarsky, Esq., a partner in the law firm of Williams Cuker Berezofsky, and filed today in the United States District Court for the District of New Jersey, Camden Vicinage. I am co-counseling with Alan in a federal class action lawsuit challenging, among other things, DMAHS’s improper denial of Medicaid benefits to a veteran’s widow as a result of incorrectly including the widow’s VAIP benefits as “countable income” in determining Medicaid eligibility.)