H.R. 3123 would require the Department of Veterans Affairs (VA) to pay accrued pension benefits to a deceased veteran’s estate in cases where that veteran’s eligible survivor does not claim such benefits. The bill also would extend the reduction of VA pension payments for veterans and survivors who reside in Medicaid nursing homes. In total, enacting H.R. 3123 would reduce net direct spending by $3 million over the 2026-2035 period (see Table 1). The costs of the legislation fall within budget functions 550 (health) and 700 (veterans benefits and services).
Accrued Benefits. Section 2 would require VA to pay a deceased veteran’s accrued pension benefit to that veteran’s estate if no eligible survivor claims it. Under current law, pension benefits that have been awarded but not yet paid at the time of a veteran’s death are payable only to that veteran’s surviving spouse, children, or parents. If none of those survivors claim the pension within a year of the veteran’s death, the veteran’s estate or another individual can only receive reimbursement for funeral expenses. Using information from VA on the number of veterans who die before receiving their pension and the frequency with which eligible survivors claim those accrued benefits, CBO estimates that the department would pay accrued benefits to veterans’ estates about 20 times each year. From 2019-2024, accrued benefit payments have averaged about $3,000; thus, CBO estimates enacting section 2 would increase direct spending by $1 million over the 2026-2035 period.
Pensions and Medicaid. Under current law, VA reduces pension payments to veterans and survivors who reside in Medicaid nursing homes to $90 per month. That required reduction expires November 30, 2031. Section 3 would extend that reduction for one month, through December 31, 2031. CBO estimates that extending that requirement would reduce VA benefits by $10 million per month. As a result of that reduction in beneficiaries’ income, Medicaid would pay more of the cost of their care, increasing spending for that program by $6 million per month. Thus, enacting section 3 would reduce net direct spending by $4 million over the 2026-2035 period.
Table 1.
Changes in Direct Spending Under H.R. 3123
By Fiscal Year, Millions of Dollars
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2026-2030
2026-2035
Accrued Benefits
Estimated Budget Authority
*
*
*
*
*
*
*
*
*
1
*
1
Estimated Outlays
*
*
*
*
*
*
*
*
*
1
*
1
Pensions and Medicaid
Estimated Budget Authority
0
0
0
0
0
0
-4
0
0
0
0
-4
Estimated Outlays
0
0
0
0
0
0
-4
0
0
0
0
-4
Total Changes
Estimated Budget Authority
*
*
*
*
*
*
-4
*
*
1
*
-3
Estimated Outlays
*
*
*
*
*
*
-4
*
*
1
*
-3
* = between zero and $500,000.
The CBO staff contacts for this estimate are David Rafferty and Logan Smith. The estimate was reviewed by Christina Hawley Anthony, Deputy Director of Budget Analysis.
