Will the VA pay for Independent Living?

VA Pension and Independent Living: What You Need to Know About Deductible Expenses

By Steve Dabbs, CMP™, AIF®
VA Accredited Claims Agent

Why Independent Living Costs Aren’t Always Deductible

Many families assume that if a veteran lives in an Independent Living (IL) facility, the cost can be counted toward VA Pension eligibility. But here’s the truth: Only certain Independent Living expenses qualify—and only under specific conditions.

In a recent discussion with a marketing manager at an IL community, I explained that custodial care must be part of the equation for expenses to be deductible. Her reply surprised me:

“We have residents getting VA Pension who aren’t paying for any custodial services.”

That prompted serious concern—and investigation.

Defining Custodial Care: What the VA Actually Looks For

To deduct room and board from income under the VA Pension program, the veteran must be receiving custodial care, meaning hands-on help with Activities of Daily Living (ADLs) such as:

• Bathing
• Dressing
• Eating
• Using the restroom
• Transferring (e.g., from bed to chair)
• Walking or mobility assistance

These are considered essential for daily functioning, and the VA places great weight on whether such services are being provided.

What Doesn’t Count Toward Deductible Medical Expenses?

Services that fall under Instrumental Activities of Daily Living (IADLs)—which IL communities often provide—don’t qualify by themselves. These include:

• Handling money and bills
• Preparing meals
• Housekeeping
• Running errands or transportation
• Managing medications
• Staying in touch (phone, email, mail)

Unless additional medical need is documented, IADLs do not make room and board deductible.

My Experience: VA Accreditation and Firsthand Insight

I filed my very first Aid & Attendance claim in 2004, with the help of an accredited claims agent. Since then, I’ve worked with veterans and families nationwide, and in 2011, I became an accredited claims agent myself, authorized by the Secretary of Veterans Affairs.

Over the past 26+ years in the long-term care space, I’ve helped with claims across all care types—home care, assisted living, memory care, nursing homes, and yes, independent living.

I Called the VA Pension Center—Here’s What They Said

Because of the IL director’s surprising claim, I contacted the VA Pension Management Center in St. Paul, Minnesota, and asked directly:

“Has the VA changed the rule that custodial care is required for Independent Living expenses to be deductible?”

The answer was no.
Twice, I called. Both times, the VA representatives confirmed—after checking with their supervisors (“Coaches”)—that the rule has not changed.

The Danger of Misleading Advice

If a facility or third-party service implies that VA Pension can be obtained without custodial care, that’s a serious problem.

I do realize that it is entirely possible that the individual is receiving VA benefits; however, those benefits may not be the Veterans Pension (previously known as Aid and Attendance). They could instead be receiving VA Compensation benefits or participating in the Veteran-Directed Care Program, which provides home care assistance to both wartime and non-wartime veterans. While any support is beneficial, it is critically important to ensure that the correct benefit is being claimed and that the claim is properly filed and current. An outdated or misfiled claim can result in significant financial hardship for the veteran and their family—issues that are often preventable with proper guidance and oversight.

I’ve seen what happens when the VA discovers an error: they demand repayment. In one case, a veteran who left assisted living and failed to update the VA received a $56,000 bill.

Make no mistake: the VA collects—often with more intensity than the IRS.

Fast Letter 12-23: The Guiding Policy

The VA issued Fast Letter 12-23 on October 26, 2012, to clarify when room and board can be deducted as Unreimbursed Medical Expenses (UMEs).

Key Takeaways from Fast Letter 12-23:

• Custodial care (2+ ADLs) must be provided for expenses to be deductible.
• If a third-party caregiver is involved, either:
  • A doctor’s statement is needed, or
  • The veteran must be rated Aid & Attendance or Housebound.
• If the facility provides only IADLs (without meeting the above), the room and board do not count.

The 2018 Regulation Update: Stricter Standards

As of October 18, 2018, new regulations went into effect to reinforce and formalize these criteria. For expenses to qualify:

• The facility must have 24-hour staffing, and
• Ensure a safe and secure living environment

This update helps prevent abuse of the system and ensures veterans receive the level of care that warrants benefit support.

✅ Eligibility Summary: What Qualifies for Deduction?

Where the Policy Lives Today: The M21-1 Manual

Fast Letter 12-23 is now embedded in the VA’s Adjudication Procedures Manual, known as M21-1. You’ll find the guidance under:

M21-1, Part IX, Subpart iii, Chapter 1, Section G
Pension Deductible Medical Expenses

This ensures all VA decision-makers apply the same rules regarding Independent Living and custodial care.

Closing Advice: Don’t Assume—Verify

Before submitting a claim or advising a family, verify that all VA requirements are met. Just because a resident receives help with meals or transportation does not mean their IL expenses are deductible.

The safest approach: Work with an VA Accredited Claims Agent who understands these nuances and can help you avoid costly mistakes or repayment demands.