Tax Free Benefit Dollars

Tax-Free Benefit Dollars

The benefit dollar amounts awarded from either Improved Pension or death pension as well as their add-ons of Housebound and Aid and Attendance are paid directly to the Veteran, Surviving Spouse or their fiduciary. The Veteran or Surviving Spouse is free to spend the awarded dollars as they choose.

It is very misleading to characterize the benefit as long term care insurance and the VA does not recognize it as such. The awarded dollars are NOT long term care insurance benefits nor are they necessarily intended to be spent as such although they could be if the Veteran or Surviving Spouse so chooses.

In summary fashion, the Maximum Annual Pension Rates (MAPR) for 2017 are:

CLAIMANT IMPROVED PENSION BENEFIT With HOUSEBOUND With AID & ATTENDANCE
SINGLE VETERAN $12,907 $15,773 $21,531
MARRIED VETERAN $16,902 $19,770 $25,525
SURVIVING SPOUSE $ 8,656 $10,580 $13,836

NOTE: To illustrate the value of these benefits to you; in concept…for example, if you are a married Veteran, and you had $1,701,000, earning 2% interest that would give you annual earnings of $32,300. Then if you were paying taxes on those earnings of $34,020 in a 25% tax bracket, your taxes would be $8,505. That would leave you $25,515 or nearly the same as the tax free dollars ($25,525) you may receive from your Improved Pension Benefit with Aid & Attendance if you are eligible.

INTEREST EARNINGS    TAXES = NET DOLLARS
$1,701,000 $34,020 $34.020
x          2% x    25% –  8,505
$    34,020 $  8,505 $25,515

Or if you are a Surviving Spouse, to illustrate the value of these benefits to you in concept…for example, if you had $875,000, earning 2% interest that would give you annual earnings of $17,500. Then if you were paying taxes on those earnings of $17,500 in a 25% tax bracket, your taxes would be $4,375. That would leave you $13,125, nearly the same as the tax free dollars ($13,836) you may receive from your Improved Death Pension Benefit with Aid & Attendance, if you are eligible.

INTEREST EARNINGS    TAXES = NET DOLLARS
$875,000 $17,500 $17,500
x       2% x    25% –  4,375
$ 17,500 $ 4,375 $13,125

 

Disclaimer –We will make every effort to keep this Internet Site current and accurate, but there will surely be times when this site will not be current. These pages are for general information only; your best source of current information is to contact the managers of the VA benefits programs.