Here are the basics: Most federal agencies (as a matter of fact all that I know of), use Social Security rules and definitions for determining what is and what is not considered countable income. This is important because most federal programs are based on assisting low income individuals and are needs based. Essentially, when it comes to VA disability benefits, both Service Connected Compensation and Non-Service Connected Pension ("aid and attendance"), federal agencies regard the basic benefit rates (basic Compensation and basic Pension) as unearned, countable income according to Social Security definitions. The Special Monthly Compensation and Special Monthly Pension program of aid and attendance is considered unearned income due to it being characterized as reimbursement for medical expenses.
So. if an individual is receiving 60% Service Connected Compensation, that monthly Compensation is considered unearned income and must be counted for Medicaid, Section Eight HUD housing, etc. If an individual is receiving the maximum annual pension rate (MAPR) for, let's say, a veteran with no dependents and is also aid and attendance eligible, he or she would be receiving a monthly benefit of $1,758.00. Of that amount, $ 1,054.00 is considered basic Pension and the remainder, $704.00 is for aid and attendance. The $1,054.00 is unearned income; the $704.00 for aid and attendance is exempt income. You can call the VA at 1-800-827-1000 to request a breakdown of your benefits.
This rule is not clearly understood by local county or state agency personnel, so don't take their word, make them do a little research. The VA will be happy to provide a breakdown of benefits is asked for documenting what is and what is not considered unearned or countable income.
Medicaid: If a non-married benefit claimant becomes a resident in a facility that is Medicaid approved and they are eligible for Medicaid, their VA benefit is reduced to a stipend of $90.00. This stipend cannot be taken by the state. It is important to notify the VA if this happens in order to prevent an overpayment. A married beneficiary may continue to receive benefits but will have to count the basic Compensation or Pension rate as unearned income when applying for Medicaid. This additional income very often makes the individual ineligible for Medicaid benefits, unfortunately.
Military Retirement: Up until several years ago, it was not possible to receive the full amounts of military retirement and VA disability benefits simultaneously. If you were due VA disability benefits, you could choose to take the VA benefit in place of a corresponding amount of the military retirement. The advantage to the individual was that VA benefits are not taxable whereas military retirement was and is. However, Congress under pressure from veterans advocates changed this law and now allows full receipt of both benefits. Technically this is called "concurrent receipt." You can read the details by clicking here (38 C.F.R. 3.750).
Social Security. There are no issues with receiving Social Security and VA disability benefits simultaneously.
HUD Section Eight Housing: Again, the same basics apply. The basic rate for Compensation and Pension benefits is considered unearned income and must be counted. The additional special aid and attendance benefit is exempt. Again, ask the VA for a breakdown by calling them at 1-800-817-1000.