North Carolina is home to one of the largest veteran populations in the country, anchored by Fort Bragg, Camp Lejeune, Seymour Johnson Air Force Base, and Cherry Point, and many of those veterans and their surviving spouses reach the age when they need help at home or in a care facility. Department of Veterans Affairs benefits can make a significant difference in paying for that care, but the rules are complex and have changed in important ways since 2018. As a North Carolina veterans benefits attorney, Michael Holmes helps veterans and their families understand VA pension with Aid and Attendance, how it differs from disability compensation, how it interacts with NC Medicaid, and the state benefits North Carolina offers its veterans. Holmes Law is a remote practice, so consultations take place by phone or video anywhere in the state.
Veterans benefits planning is part of elder law because the same care needs that qualify a veteran for Aid and Attendance often lead, later, to a Medicaid application. A move that helps with one program can hurt with the other if it is not planned carefully. This page explains the federal programs, the net worth and lookback rules, accreditation requirements for anyone who helps with a VA claim, and the North Carolina state benefits available to veterans and surviving spouses. It is part of Holmes Law’s North Carolina elder law practice.
Pension Versus Compensation: Two Different Programs
Families often confuse VA pension and VA disability compensation, but they are separate programs with different eligibility rules.
Disability Compensation
Compensation is a tax-free monthly payment to veterans with disabilities caused or aggravated by military service. It is not needs-based: income and assets do not matter. The amount depends on the combined disability rating and number of dependents. Veterans rated for service-connected conditions may also receive special monthly compensation for Aid and Attendance or housebound status. Surviving spouses of veterans who died from service-connected causes may qualify for Dependency and Indemnity Compensation (DIC). For veterans exposed to contaminated water at Camp Lejeune or to burn pits and other toxins covered by the PACT Act, service connection may be presumed for certain conditions, which is especially relevant in eastern North Carolina.
Veterans Pension
Pension is a needs-based benefit for wartime veterans with limited income and net worth who are 65 or older or permanently and totally disabled. The veteran generally must have served at least 90 days of active duty, with at least one day during a recognized wartime period, and received a discharge other than dishonorable; service beginning after September 7, 1980 generally requires 24 months or the full period for which the veteran was called to active duty. Surviving spouses of wartime veterans may qualify for Survivors Pension. The disability that creates the need for care does not have to be connected to service.
Aid and Attendance and Housebound Benefits
Pension can be increased by Aid and Attendance when the veteran or surviving spouse needs the help of another person with activities of daily living such as bathing, dressing, eating, or toileting, is bedridden, is in a nursing home because of mental or physical incapacity, or has severely limited eyesight. A lower Housebound increase is available for those substantially confined to their home because of permanent disability.
Pension is calculated by subtracting countable income from the maximum annual pension rate. Recurring unreimbursed medical expenses, including payments to home care agencies, adult care homes, and nursing homes, can reduce countable income. For many North Carolina families paying privately for care, that deduction is what makes pension with Aid and Attendance available despite Social Security and retirement income.
The Net Worth Limit and the 36-Month Lookback
On October 18, 2018, VA replaced its informal asset review with a bright-line net worth limit and a lookback rule. Net worth is the sum of assets and annual income. The primary residence, including a lot area up to two acres, generally is not counted, nor are a vehicle or ordinary household goods. The net worth limit is adjusted annually.
VA now reviews asset transfers made during the 36 months before the pension claim. Transferring assets for less than fair market value to reduce net worth below the limit during that period results in a penalty period of up to five years, calculated from the amount transferred that would have exceeded the limit. Transfers to certain trusts for a child who became unable to support themselves before age 18 are excepted.
The VA lookback is shorter than NC Medicaid’s 60-month lookback, and the rules for what counts are different. A transfer that is penalty-free for VA may still be penalized by Medicaid, and a trust designed for Medicaid may not produce the intended result for VA. Coordinating the two programs is essential; see NC Medicaid planning.
Building a Strong Aid and Attendance Claim
Pension claims are often delayed or denied not because the veteran is ineligible, but because the file is incomplete. A well-prepared claim typically includes:
- Proof of service: the veteran’s DD-214 or other separation documents showing dates of service and character of discharge
- Medical evidence of need: an examination report completed by the treating physician on VA Form 21-2680, describing the help the claimant needs with daily activities
- Facility certification: for a claimant in a nursing home or adult care home, a statement from the facility on VA Form 21-0779 or a similar form confirming the level of care provided
- Care expense documentation: contracts and invoices from home care agencies, adult care homes, or private caregivers, together with proof of payment
- Income and net worth records: Social Security award letters, pension statements, and account statements
- Marriage and death records: for a surviving spouse claim, the marriage certificate and the veteran’s death certificate
Submitting an Intent to File notice to VA can preserve an earlier effective date while the full claim is being assembled, provided the completed application is filed within one year. Because pension is paid from the effective date, that step alone can be worth several months of benefits.
Surviving spouses deserve particular attention. Many widows and widowers of Korea-era, Vietnam-era, and Gulf War veterans do not realize they may qualify for Survivors Pension with Aid and Attendance on their own, based on the veteran’s wartime service and their own current care needs and finances.
Accreditation: Who Can Help With a VA Claim
Federal law requires that anyone who prepares, presents, or prosecutes a VA benefits claim be accredited by VA, whether as an attorney, a claims agent, or a representative of a recognized veterans service organization. Under federal rules, accredited attorneys and agents generally may not charge a fee for helping with an initial claim; fees may be charged only after an initial decision, subject to VA’s rules.
Families should be cautious of anyone offering to “guarantee” Aid and Attendance, selling annuities or trusts as a way to qualify, or charging for help filing an initial application. Free help is available through county veterans service officers across North Carolina and through veterans service organizations. Holmes Law’s role in veterans matters is legal planning: structuring assets, trusts, and estate documents so that VA and Medicaid benefits work together, and advising on the legal consequences of transfers before they are made.
North Carolina State Veterans Homes
The North Carolina Department of Military and Veterans Affairs (DMVA) operates State Veterans Homes that provide skilled nursing care, including homes in Black Mountain, Kernersville, Kinston, and Salisbury. DMVA has closed its Fayetteville home because of significant repair needs and structural deficiencies and has helped its residents relocate. State Veterans Homes are an important option for eligible veterans who need nursing care, and VA per diem payments and, where the veteran qualifies, VA payments for veterans with high service-connected ratings help cover the cost. Admission criteria, waiting lists, and the resident’s share of the cost are set by DMVA, so contact DMVA or the home directly for current information.
Veterans may also receive nursing home care through VA medical centers in North Carolina, such as those in Asheville, Durham, Fayetteville, and Salisbury, and through VA community care contracts, depending on service-connected status and priority group.
North Carolina Property Tax Relief for Veterans
North Carolina offers the Disabled Veteran Property Tax Homestead Exclusion under G.S. 105-277.1C. It excludes the first $45,000 of the appraised value of the permanent residence of a qualifying owner. To qualify, the veteran must have received an honorable discharge and must either have a VA certification of a service-connected permanent and total disability, have received benefits for specially adapted housing under 38 U.S.C. § 2101, or have died from a service-connected condition. An unremarried surviving spouse of a qualifying veteran can also claim the exclusion. The application is filed with the county tax assessor.
The exclusion cannot be combined with North Carolina’s other homestead relief programs on the same property, such as the elderly or disabled exclusion or the circuit breaker deferral, so households that qualify for more than one should compare which produces the greater benefit.
Other North Carolina Benefits for Veterans
State Income Tax on Military Retirement Pay
For tax years beginning on or after January 1, 2022, North Carolina allows a deduction for military retirement pay received by members who served at least 20 years in the uniformed services or were medically retired under 10 U.S.C. Chapter 61, and for Survivor Benefit Plan payments to their beneficiaries. Certain federal, state, and local retirement benefits are also protected under the Bailey settlement for those with qualifying vested service before August 12, 1989.
County Veterans Service Officers and DMVA
DMVA supports veterans service officers throughout the state who help veterans and survivors apply for federal and state benefits at no charge. DMVA also administers state programs such as scholarships for children of certain wartime veterans and North Carolina’s state veterans cemeteries.
Medicaid and Veterans Benefits Together
When a veteran or surviving spouse on VA pension enters a nursing home and qualifies for NC Medicaid, the pension may be reduced, and VA income generally counts toward the patient monthly liability, with certain exceptions. Understanding which payments count, and when to notify VA of a change in medical expenses or residence, prevents overpayments that VA later seeks to recover.
VA Fiduciaries and Powers of Attorney
VA does not automatically recognize an agent under a North Carolina power of attorney as the person entitled to receive and manage VA benefits. When VA determines that a beneficiary cannot manage their own VA funds, it appoints a VA fiduciary through its Fiduciary Program, often a family member, who must account to VA for how the benefits are used. Families should know that the fiduciary process runs separately from the state guardianship system under Chapter 35A, and that a well-drafted power of attorney remains important for managing everything else, including Social Security, bank accounts, and the home. Planning ahead for both avoids confusion when a veteran’s capacity declines.
Planning Strategies for Veterans and Surviving Spouses
- Reviewing discharge records and service dates to confirm wartime service and eligibility
- Documenting recurring medical and care expenses to maximize the unreimbursed medical expense deduction
- Evaluating whether assets are within VA’s net worth limit and whether any transfers fall within the 36-month lookback
- Coordinating VA planning with NC Medicaid eligibility, including the longer 60-month lookback
- Using trusts where appropriate, including NC special needs trusts for a disabled child
- Updating powers of attorney so an agent can manage VA claims and benefits; see NC incapacity and powers of attorney
- Integrating veterans benefits into the long-term care plan; see NC long-term care
Frequently Asked Questions
What is the difference between VA pension and VA compensation?
Compensation pays veterans for disabilities connected to their service regardless of income or assets. Pension is a needs-based benefit for wartime veterans and surviving spouses with limited income and net worth, and it does not require a service-connected disability.
Does VA have a lookback period like Medicaid?
Yes. Since October 18, 2018, VA reviews transfers made in the 36 months before a pension claim. Transfers that reduce net worth below the limit can result in a penalty of up to five years. NC Medicaid uses a separate 60-month lookback.
Is my home counted toward VA’s net worth limit?
Generally no. The primary residence, with a lot of up to two acres in most cases, is excluded. However, if the home is sold, the proceeds become countable.
Do North Carolina disabled veterans get a property tax break?
Yes. G.S. 105-277.1C excludes the first $45,000 of appraised value of the permanent residence of a veteran with a service-connected permanent and total disability, or of an unremarried surviving spouse, if the requirements are met.
Can someone charge me to file an Aid and Attendance application?
Accredited attorneys and agents generally may not charge fees for preparing an initial VA claim. Free help is available from county veterans service officers and veterans service organizations.
Can a surviving spouse get Aid and Attendance?
Yes. A surviving spouse of a wartime veteran may qualify for Survivors Pension, increased by Aid and Attendance if the spouse needs help with daily activities, provided the spouse meets VA’s income and net worth rules and the marriage requirements.
Where are North Carolina’s State Veterans Homes?
DMVA operates State Veterans Homes providing skilled nursing care in Black Mountain, Kernersville, Kinston, and Salisbury. The Fayetteville home has closed. Contact DMVA for current admission information.
Speak With a North Carolina Veterans Benefits Attorney
Veterans and surviving spouses have earned these benefits, and careful planning helps ensure they receive them without jeopardizing Medicaid or other programs. Michael Holmes can review your situation and coordinate VA benefits with your long-term care and estate plan. Contact Holmes Law to schedule a consultation by phone or video.