Why Personal Injury Attorneys Need to Know If Your Client Is a Disabled Veteran – Special Report
by: Begley Admin
By Barbara A. Isenhour and Sean R. Bleck
Before you bring any lawsuit on behalf of a disabled client there is an important piece of information you need to know. Is your client a disabled veteran and if so, is she or he receiving or eligible for Veterans Compensation benefits or Veterans Pension benefits? One benefit will not be affected if your client receives a personal injury settlement. The other benefit could be lost or reduced if your client gets a settlement. You and your client need to know what benefits are at risk before deciding whether to proceed with any litigation. Both Compensation and Pension benefits are paid by the Department of Veterans Affairs (VA).
Veterans Disability Compensation. The Veterans Disability Compensation benefit (Compensation) is for disabled veterans in cases where their disease or injury was incurred or aggravated while on active duty in the military. The injury or illness does not have to be combat related however. A soldier who permanently injures his leg in an automobile accident that occurred while on active duty in the Army may qualify for Compensation. Similarly, a marine who is diagnosed with MS while on active duty may qualify for Compensation. Compensation does not require that the veteran establish financial need by showing that assets and income are below a certain amount. Compensation benefits will not be affected if the veteran receives a personal injury settlement, regardless of whether it is a lump sum or a structured settlement.
Veterans receiving Compensation have a rating of disability in percentages. So for example a veteran with a 10% disability rating will receive compensation of about $112 per month. A veteran with a 100% disability rating will receive about $2,400 per month. Surviving spouses and children of a deceased disabled veteran with a service connected illness or injury can also receive compensation called Dependency and Indemnity Compensation (DIC). Again, DIC benefits are not needs based.
Veterans Disability Pension. The Veterans Pension benefit is for low income veterans who are permanently and totally disabled. Unlike Compensation, the Pension benefit does not require that the disability be connected to the time the veteran was on active duty. The Pension benefit is a needs-based benefit, however, similar to the Supplemental Security Income program (SSI). The veteran must establish financial need by showing that assets and income are below the allowed amount. Assets and income of the veteran, spouse and dependents will affect eligibility for the Pension benefit.
Any settlement for a veteran or a dependent of a veteran receiving a Pension benefit will absolutely be affected by a law suit settlement whether it is a lump sum or a structure. There are also Pension benefits for the surviving spouse or dependent children of a low income deceased veteran. The dependent Pension benefits are also needs-based and may be jeopardized if the dependent receives a personal injury settlement.
How Can You Tell Which Benefit Your Client Is Getting. Veterans may not be aware of the difference between the Compensation and Pension programs and may not be able to give you reliable information on which benefit they receive. The best way to document which benefit you veteran client receives is to have you client bring in any notices they receive from the VA about their benefits. If your client has difficulty in obtaining this information there are several veterans’ service organizations that can help the veteran at no charge. For contact information. (here can you set it up to click on “For contact information” and then go to the link below?) http://www.vba.va.gov/BENEFITS/ROcontacts.htm
How Will a Settlement Affect Pension Benefits. Jim is a permanently disabled 58 year old veteran. He served in the military for two years during the Viet Nam war but in 1995 he had a stroke and has been unable to work since then. Because Jim’s disability occurred after he was discharged from the military he is not eligible for Compensation.
Jim did not have sufficient work quarters to qualify for Social Security Disability Income (SSDI). Because he served in the military during a war time period (required for the Pension benefit), and is now totally and permanently disabled, he is eligible for a monthly Pension benefit from the VA.
Jim receives the maximum Pension benefit each month, which is $910.75 in 2007. His wife receives a dependent allowance of $282 per month. Because Jim requires attendant care he receives an additional supplement to his Pension benefit called Aid and Attendance that pays him an additional $600 per month. If Jim received any other income, including SSDI income, it will offset his Pension benefit dollar for dollar. In addition to the cash Pension benefit Jim also gets free medical care at the Veterans Hospital in his area and free prescription drugs from the VA pharmacy.
Jim was recently involved in an auto accident and is likely to receive a settlement of $100,000. He wants to know how a settlement will affect his Pension benefits from the VA. Will he lose his cash benefits and free medical care and is there any way to minimize the loss of these benefits?
In order to qualify for the Pension benefit Jim must show that he is in financial need. The SSI and Medicaid programs have very specific rules about how much an individual can have in assets and what assets are exempt. Those programs very detailed rules about sheltering a settlement in a special needs trust and the consequences of giving away assets in order to qualify for benefits.
The VA, on the other hand, has very few regulations on how it determines financial need to qualify for the Pension benefit. The veteran’s home, personal affects and a vehicle are disregarded in determining eligibility. The veteran’s remaining non-exempt assets must be less than $80,000 to show financial need. This asset limit can be increased or decreased by the VA depending upon the facts of a specific case.
Annualizing a Lump Sum. There are two problems Jim is going to face when he receives his settlement. First, for one year the VA will annualize the lump sum and treat it as “income” not an asset. The VA will treat a lump sum of $100,000 as “income” of $8,333 per month for the next year. Because the Pension benefit is reduced by any other income paid to the veteran, Jim and his wife will lose their Pension benefit for the next year.
Excess Assets. After the twelve month period when the lump sum is annualized Jim can reapply for the Pension benefit but only if his assets are again below the asset limit that the VA agrees establishes financial need (presumably $80,000). Depending upon the amount of the settlement, purchasing exempt assets such as a home, vehicle or personal effects may be a way to reduce countable assets and again establish financial need. It is not clear from the VA regulations whether a special needs trust will protect the excess assets from a settlement.
- If your client is a disabled veteran, confirm whether you client is receiving Compensation or Pension benefits.
- If you client is a disabled veteran but is not currently receiving disability benefits from the VA review whether he or she may now be eligible for VA pension benefits based upon the injuries underlying your lawsuit. If you are not sure about the eligibility rules for VA disability programs there are several Veterans service organizations that can advise your client and help with the application process if warranted.
- If your client is receiving or eligible for Pension benefits, advise the client how any settlement will be annualized for one year.
- If your client is receiving or eligible for Pension benefits, advise the client how a lump sum may disqualify him or her from future benefits and review options to reduce excess assets and re-establish eligibility for benefits. Review how a structured settlement would off-set Pension benefits dollar for dollar.
When you take on the personal injury case for your disabled veteran client you cannot ignore how a settlement may affect your client’s Veterans benefits. In addition to analyzing whether the case has merit and what the value is likely to be for any settlement you need to be sure your client knows how the settlement will potentially affect income and medical benefits paid by the VA and what options are available, if any, to minimize the loss of benefits. Our law firm is available to consult with personal injury attorneys on Veterans benefit issues.