Social Security COLA Increase and Your VA Aid and Attendance

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How the Annual Social Security COLA Can Affect Your VA Pension

Each year, the Social Security Administration announces a Cost-of-Living Adjustment (COLA) to account for inflation. While this increase in your monthly Social Security check is welcome, it can have an unintended consequence for those receiving a VA Pension with Aid & Attendance: it can trigger a reduction or even termination of your VA benefits.

If you’ve received a letter from the VA proposing to reduce your pension, it’s important to understand why this happens and what steps you need to take.

Why Your VA Benefits Might Be Reduced

The amount of your VA Pension is based on a calculation that considers your income and your medical expenses. The goal is to determine your “Income for VA Purposes,” or IVAP.

The basic formula is: Gross Household Income – Unreimbursed Medical Expenses = IVAP

Your VA benefit is the difference between your IVAP and the maximum pension rate you are eligible for. When your Social Security income goes up due to the COLA, your Gross Household Income increases. If your medical expenses have not also increased by a similar amount, your IVAP will be higher, and your corresponding VA benefit will be lower.

What to Do if You Receive a Letter from the VA

The letter you receive is a proposal, not a final decision. It is your opportunity to provide the VA with updated financial information to justify your continued benefit amount. Do not ignore it.

  • Gather Your Income Documents: Collect proof of all sources of income, including your new Social Security benefit statement showing the COLA increase, pensions, interest, and dividends.
  • Document All Medical Expenses: This is the most critical step. Compile proof of all recurring, unreimbursed medical expenses. This includes facility or in-home caregiver costs, health insurance premiums (including Medicare), prescription co-pays, and long-term care insurance premiums.
  • Respond Promptly: The VA will give you a deadline to respond, typically 60 days. It is essential that you submit your updated information within this timeframe.

The Importance of a Complete Financial Picture

The key to preserving your maximum VA benefit is ensuring the VA has a complete and accurate picture of your unreimbursed medical expenses. These expenses offset the increase in your income from the COLA. For many of our clients, payments made under a formal Care Contract are a primary medical expense that must be properly documented for the VA.

If you have received a letter from the VA or need assistance understanding how to qualify for veterans benefits, our attorneys can help you navigate the process. Call our office at (919) 256-7000 to schedule a consultation.