Va Insurance: Strategies For Over-Income Veterans

If you're a veteran wondering whether you're eligible for VA health benefits, you'll need to meet certain requirements. These include serving in the active military, naval, or air service and being separated under any condition other than dishonorable discharge. Additionally, current and former members of the Reserves or National Guard who were called to active duty by a Federal Order may also be eligible. Minimum duty requirements typically involve serving 24 continuous months of active duty or the full period for which you were called. However, there are exceptions for veterans discharged due to disability or hardship. The VA also has a priority group system that determines benefits and copayments based on factors like military service history, disability rating, income level, and other benefits received. Understanding your eligibility can be complex, and not all eligible veterans receive identical benefits packages.

Priority groups and income thresholds

When you apply for VA health care, you’ll be assigned 1 of 8 priority groups. This system helps ensure that veterans who need immediate care can get signed up quickly. Your priority group may affect how soon you're signed up for health care benefits and how much (if anything) you’ll have to pay toward the cost of your care.

Veterans with service-connected disabilities are placed in the highest priority group, while veterans with a high income and no service-connected disabilities are placed in the lowest priority group. If you qualify for multiple priority groups, you’ll be assigned to the highest group.

Here’s an overview of the VA priority groups and who’s assigned to each:

Priority Group 1:

You may be assigned to priority group 1 if you have a service-connected disability that the VA has rated as 50% or more disabling, or if you have a service-connected disability that makes you unable to work. Medal of Honor recipients may also be assigned to priority group 1.

Priority Group 2:

You may be assigned to priority group 2 if you have a service-connected disability that the VA has rated as 30% or 40% disabling.

Priority Group 3:

You may be assigned to priority group 3 if you’re a former prisoner of war, have received the Purple Heart medal, if you were discharged for a disability caused or worsened by your active service, have a service-connected disability rated 10% or 20% disabling by the VA, or if you were awarded special eligibility classification under Title 38, U.S.C § 1151, “benefits for individuals disabled by treatment or vocational rehabilitation”.

Priority Group 4:

You may be assigned to priority group 4 if you’re receiving VA aid and attendance or household benefits, or if you’ve received a VA determination of being catastrophically disabled.

Priority Group 5:

You may be assigned to priority group 5 if you don’t have a service-connected disability or have a non-compensable service-connected disability rated as 0% and have an annual income level below the VA’s adjusted income limits. You may also be assigned to this priority group if you’re receiving VA pension benefits or are eligible for Medicaid.

Priority Group 6:

You may be assigned to priority group 6 if you’re currently or recently enrolled in VA health care, if you served in a theater of combat operation after November 11, 1998, if you were discharged less than 10 years ago, and if you agree to pay some copays. Other criteria for priority group 6 include a compensable service-connected disability rated as 0% disabling, exposure to ionizing radiation during the occupation of Hiroshima and Nagasaki, participation in Project 112/SHAD, and service during select periods from 1941-1998 listed by the VA.

Priority Group 7:

You may be assigned to priority group 7 if your gross household income is below the adjusted income limits for where you live, and if you agree to pay copays.

Priority Group 8:

You may be assigned to priority group 8 if your gross household income is above the VA income limits for where you live, and you agree to pay copays.

Your priority group may change over time if your income changes, which could put you above or below the VA income thresholds. Your priority group could also change if your service-connected disability gets worse in the future.

What counts as income?

The US Department of Veterans Affairs (VA) defines income as the combined household gross income, before deductions, of a claimant and their spouse and dependent children, if applicable. This includes:

• Gross income from any jobs (before subtracting taxes and any deductions)
• Net annual income from a farm, property, or business (after subtracting taxes and any deductions)
• Other sources of income that don't come from a job, such as VA benefit compensation, money from the sale of a house, and interest from investments
• Retirement or survivors' programs
• Unemployment compensation
• Business income
• Life insurance proceeds received before December 10, 2004, due to the death of a veteran
• Alimony payments
• Workers' compensation
• Pensions
• Social Security benefits
• Interest
• Dividends
• IRA distributions
• Gambling winnings
• Timber sales
• Royalties
• Revocable trust payments

Some important exclusions from countable income include:

• Caregiver payments
• FEMA payments
• Casualty insurance proceeds
• Scholarships
• Relocation expenses
• VA pension payments
• Welfare
• Supplemental Security Income
• Withheld Social Security overpayments
• Income tax refunds, including the Federal Earned Income Credit
• Social Security or similar benefits withheld to recoup a prior overpayment
• Royalties received for extracting minerals
• Insurance dividends
• Proceeds of cashed-in life insurance policies
• Proceeds of cashed-in savings bonds
• Reimbursement income received from an insurance company, other than for personal injury

Additionally, the VA allows deductions for certain medical expenses, such as Medicare premiums, doctor visits, prescription drugs, and dental work, if they exceed 5% of the VA Maximum Annual Pension Rate (MAPR) for the previous year.

Income verification

The VA defines income as money from jobs, farms, properties, businesses, and other sources such as VA benefit compensation, money from the sale of a house, and interest from investments. The income of everyone in the household is considered, including the veteran, their spouse, and any dependents. The VA also takes into account certain deductible expenses, such as non-reimbursable medical, educational, and funeral or burial expenses, to lower the total countable income.

If an applicant's income information indicates that they are eligible for VA health care, the VA will verify this information with the Internal Revenue Service (IRS) and the Social Security Administration (SSA). This verification process typically begins in July of the year following the income reporting year. For example, if an applicant provides income information for 2022, the verification will occur in July 2023.

If the information received from the IRS and SSA shows that an applicant's income is above the VA's limits, the VA will send a letter notifying them of this determination. Applicants have the right to dispute this information and work with an income verification case manager to find deductions that may reduce their income below the limits. If the VA upholds its decision, applicants will receive a final letter explaining their eligibility or copay status and their right to appeal.

It is important to note that income is not the sole factor in determining eligibility for VA health care benefits. The VA also considers factors such as military service history, disability rating, and other benefits received when assigning applicants to one of eight priority groups. These priority groups influence the benefits an applicant can receive and their copayment responsibilities.

Income limits and copayments

When assessing your income, the VA considers the gross income of everyone in your household, including yourself, your spouse, and any dependents. This includes income from jobs, farms, properties, businesses, and other sources, such as VA benefit compensation, investments, and money from the sale of assets. Additionally, the VA allows for certain deductions, such as non-reimbursable medical, educational, and funeral expenses, which can lower your countable income.

If your income falls below the VA's income limits, you may be eligible for free or reduced-cost VA health care. Your income level also influences your placement in one of the eight priority groups. Veterans with service-connected disabilities are given the highest priority, while those with higher incomes and no service-connected disabilities are placed in the lowest priority group. Your priority group affects your copayments, with higher priority groups having lower or no copayments.

It is important to note that income limits change annually and are based on your location to account for different costs of living. Therefore, it is recommended to use the VA's income limit calculator to determine the specific income thresholds for your area. Additionally, your priority group can change over time if your income or service-connected disability status changes.

If you disagree with the VA's determination of your income level, you have the right to dispute it. The VA will assign an income verification case manager to work with you, and you can bring your representative to assist you. The VA aims to resolve these cases within 75 days.

Eligibility for free VA health care

To be eligible for free VA health care, veterans must meet the basic service and discharge requirements, and have been exposed to toxins or other hazards while serving in the military. This includes veterans who served in the Vietnam War, Gulf War, Iraq, Afghanistan, or any other combat zone after 9/11.

Veterans who served in the active military, naval, or air service and were separated under any condition other than dishonorable may qualify for VA health care benefits. Current and former members of the Reserves or National Guard who were called to active duty (not for training purposes) by a Federal Order and completed the full period of active duty may also be eligible for VA health care.

Most veterans who enlisted after September 7, 1980, or entered active duty after October 16, 1981, must have served 24 continuous months or the full period for which they were called to active duty to be eligible. This minimum duty requirement may not apply to veterans who were discharged for a disability incurred or aggravated in the line of duty, were discharged for a hardship, or received an "early out." Since there are many other exceptions to the minimum duty requirements, the VA encourages all veterans to apply to determine their enrollment eligibility.

Veterans who served in a theater of combat operations after November 11, 1998, are eligible for an extended period of eligibility for health care for five years after their discharge. In the case of multiple call-ups, the five-year enrollment period begins on the most recent discharge date. This special eligibility includes cost-free health care services and nursing home care for conditions possibly related to military service and enrollment in PG 6 or higher for five years from their date of discharge or release from active duty, unless they are eligible for enrollment in a higher priority group.

The VA has a priority group system that determines what benefits a veteran can receive and what their copayments will be. There are eight priority groups, and veterans are assigned to one of them based on factors such as their military service history, disability rating, whether they qualify for Medicaid, and any other benefits they are receiving. Veterans with service-related disabilities are placed in the highest priority group, while veterans with a high income and no service-connected disabilities are placed in the lowest priority group. If a veteran qualifies for multiple priority groups, they will be assigned to the highest group.

Veterans with a service-connected disability rating of 50% or more, or who have been deemed unable to work due to their disability, or who have received a Medal of Honor, will be assigned to priority group 1 and will not have to pay copays for any types of care, tests, or medications.

Some veterans are eligible for free care for non-service-connected conditions based on their VA disability rating, pension payments, or other factors (like receiving the Medal of Honor). If a veteran is not eligible for free care based on these factors, they may still be eligible if their income falls below the VA's current income limits for their location. The VA publishes annual income limits for VA health care, which may affect a veteran's eligibility and costs. Income limits change each year and depend on factors such as whether the veteran has a spouse or other dependents and if they have certain deductible expenses.

Frequently asked questions