Citation Nr: 20021946 Decision Date: 03/30/20 Archive Date: 03/30/20 DOCKET NO. 15-02 220 DATE: March 30, 2020 ORDER Entitlement to a higher rate of payment of nonservice-connected (NSC) pension based on the Veteran’s countable income from January 2008 to March 2008 is denied. Entitlement to higher rates of payment of NSC pension based on the Veteran’s countable income from April 2008 to December 2008 is granted. FINDINGS OF FACT 1. From January 2008 to March 2008, the Veteran’s countable income exceeded the applicable maximum annual pension rate (MAPR). 2. From April 2008 to July 2008, the Veteran had a countable income of $6,762.00. 3. From August 2008 to November 2008, the Veteran had a countable income of $938.00. 4. In December 2008, the Veteran had a countable income of $971.00. CONCLUSIONS OF LAW 1. The criteria for entitlement to a higher rate payment of nonservice-connected disability pension from January 2008 to March 2008 have not been met. 38 U.S.C. § 1521; 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272, 3.273. 2. The criteria for entitlement to higher rates of payment of nonservice-connected pension from April 2008 to December 2008 have been met. 38 U.S.C. § 1521; 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272, 3.273. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS The matter comes on appeal before the Board of Veterans’ Appeals from a December 2013 administrative decision of the Department of Veteran’s Affairs Regional Office. In a September 2018 decision, the Board denied entitlement to a higher rate of NSC pension from 2009 to 2013 and granted a higher rate of pension for 2014. Therefore, those issues are no longer on appeal. The issue of whether VA properly counted income and medical expenses in calculating the Veteran’s entitlement to NSC pension for 2008 was remanded to the Agency of Original Jurisdiction to clarify the source of unreimbursed medical expenses the RO allowed for 2008. The AOJ substantially complied with the Boards remand order in providing an explanation in May 2019 user calculations. The appeal as to entitlement to a higher rate of payment of NSC pension for the 2008 calendar year is once again before the Board. Entitlement to a higher rate of NSC pension for 2008 The Veteran contends that pension benefits were not properly calculated based on his 2008 income. Basic entitlement to pension exists if, among other things, the claimant’s income is not in excess of the maximum annual pension rate (MAPR) specified in 38 C.F.R. § 3.23. 38 U.S.C. § 1521; 38 C.F.R. § 3.3(a)(3). The MAPR is revised every December 1st and is applicable for the following 12-month period. The MAPR shall be reduced by the amount of the countable annual income of the claimant. 38 U.S.C. §§ 1503, 1521; 38 C.F.R. §§ 3.3, 3.23(b). In determining annual income, all payments of any kind or from any source (including salary, retirement or annuity payments, or similar income, which has been waived) shall be included during the 12-month annualization period in which received, except for listed exclusions. 38 U.S.C. § 1503(a); 38 C.F.R. § 3.271(a). Income from the Social Security Administration (SSA) is not specifically excluded under 38 C.F.R. § 3.272. Such income is therefore included as countable income. For purposes of calculating pension benefits, total income may be reduced by amounts equal to amounts paid by a claimant for unreimbursed medical expenses that were “in excess of 5 percent of the applicable maximum annual pension rate or rates... as in effect during the 12-month annualization period in which the medical expenses were paid.” 38 C.F.R. § 3.272 (g)(1)(iii). In order to be excluded from income, these medical expenses must be paid during the time period at issue, regardless of when they were incurred. In addition, they must be out-of-pocket expenses, for which the surviving spouse received no reimbursement, such as through an insurance company. However, the medical insurance premiums themselves, as well as the Medicare deduction, may be applied to reduce countable income. For the purpose of determining initial entitlement, or resuming payments on an award that was previously discontinued, the monthly rate of pension shall be computed by reducing the applicable maximum pension rate by the countable income on the effective date of entitlement and dividing the remainder by twelve. 38 C.F.R. § 3.273(a). In essence, VA subtracts the total amount of countable income in one year, less excluded income, from the MAPR for that year; then, if a positive amount remains, the rest is divided by twelve to determine the monthly pension benefit. When a change in the MAPR occurs, the Board repeats the calculation with the new MAPR as the starting amount. 38 C.F.R. § 3.273(b)(1). When a change in income occurs, the MAPR will be reduced by the new annualized income effective on the date that the increased income began. 38 C.F.R. § 3.273(b)(2). VA reduced the Veteran’s pension benefits based on unreported income identified on an Income Verification Match (IVM) with the Internal Revenue Service (IRS). Evidence submitted by the Veteran, which includes December 2011 and November 2017 statements, 2008 Tax Forms, and a letter from Pacific West Property Inspections, and an Unemployment Insurance Claim Status and History from the Employment Development Department of the State of California verify that Veteran received $3,168.00 in 2008 from Pacific West Property Inspections from January 2008 to March 2008 and he was paid a total of $1,455.00 for unemployment, at a rate of $112.00 a week from April 2008 to July 2008. Tax documents also show that the Veteran received $945.00 from Gavilan Collage in non-employee compensation in 2008. Because it is not clear when this payment was made, the Board will count it as non-recurring income for the full 12-month annualization period beginning on January 2008. The Veteran disputed receiving interest income from J.P. Morgan Chase, and submitted a letter from J.P. Morgan Chase showing that he did not hold an interest-bearing account with them. However, 2008 tax documents confirm that the Veteran received a $50.00 American Express gift card from his bank. The Board finds that as such a cash gift is not listed under exclusions from income, 38 C.F.R. § 3.232, it is countable as non-recurring income for the full 12-month annualization period. The Veteran has submitted statements disputing how income was counted. The Board notes that for calculating countable income, recurring payments are counted for a 12-month annualization period. When a change in income occurs, the MAPR is reduced by the new annualized income. See 38 C.F.R. § 3.273(b)(2). From January 2008 to March 2008, the Veteran was in receipt of wages from Pacific West Property Inspections in the amount of $3,168.00. Thus, he had an average monthly income of $1,056.00 based on his three-months wages, or an annualized income of $12,672.00 ($1,056.00 a month x 12). The $945.00 received from Galvilan Collage and $50.00 from his bank are countable for the 12-month period beginning January 2008. Therefore, the Veteran had an annualized income of $13,667.00. In a March 2010 Medical Expense Report, the Veteran identified unreimbursed medical expenses paid in 2008 totalling $616.00. The Board notes that expenses that were identified as being paid in 2007 are not countable to reduce income. The RO calculated the $1,000.00 for unreimbursed medical expenses in an October 2014 decision which granted benefits in part. In September 2014, along with his Notice of Disagreement, the Veteran provided a statement of medical expenses on which he reported paying $1,000.00 in January 2008. However, the invoice he submitted from the medical provider as documentation of this expense indicates that the $1,000.00 was an estimated insurance payment, not a payment by the Veteran. The Board remanded the appeal in September 2018 to clarify the source of the $1,000.00 in unreimbursed medical expenses used in the RO’s calculations. A note from the RO included in their May 2019 user calculations confirmed that the expenses were based on the Veteran’s self-report on the September 2014 statement and notice of disagreement. Because the $1,000.00 payment was not verified as being paid by the Veteran, but was instead paid by his insurer, the Board finds that it is not countable as an unreimbursed medical expense. Thus, the Veteran had a total of $616.00 in unreimbursed medical expenses for 2008. Total income may be reduced by amounts equal to amounts paid by a claimant for unreimbursed medical expenses that were in excess of five percent of the applicable MAPR. The MAPR for a Veteran without dependents in January 2008 was $11,181.00. Thus, unreimbursed medical expenses in excess of $559.00, or $57.00 in this case, may be counted to reduce income. The Board finds that from January 2008 to March 2008, the Veteran had a countable income of $13,610.00 ($13,667.00 - $57.00). The Veteran’s income exceeded the applicable MAPR of $11,181.00 and was a bar to the receipt of pension benefits. The Board finds, therefore, that from January 2008 to March 2008, a higher rate of payment of pension benefits is not warranted. The Veteran submitted evidence showing that he lost his job at Pacific West Property Inspections in March 2008 and he began receiving unemployment benefits beginning in April 2008 until July 2008 when benefits were exhausted. Unemployment benefits were paid at a rate of $112.00 a week, or $5,824.00 annually ($112.00 x 52). The $945.00 from Gavilan Collage and $50.00 from the Veteran’s bank continued to be countable for the 12-month annualized period from January 1, 2008. Therefore, the Veteran had an annualized income of $6,819.00. Unreimbursed medical expenses in excess of $559.00, or $57.00, may be counted to reduce income. Therefore, from April 2008 to July 2008, the Veteran had a countable income of $6,762.00. This was lower than the income the RO used in calculating benefits for 2008 in their October 2014 decision. Therefore, from April 2008 to July 2008, a higher rate of payment of pension benefits is warranted. The Veteran stopped receiving unemployment benefits in July 2008. No additional sources of income were identified in the Veteran’s 2008 tax documents. The $945.00 from Gavilan Collage and $50.00 from the Veteran’s bank continued to be countable for the 12-month annualized period from January 1, 2008. Therefore, from August 2008, the Veteran had an annualized income of $995.00. Unreimbursed medical expenses in the amount of $57.00 may be counted to reduce income. Therefore, from August 2008 to November 2008, the Veteran had a countable income of $938.00. This was lower than the income the RO used in calculating benefits for 2008 in their October 2014 decision. Therefore, from August 2008 to November 2008, a higher rate of payment of pension benefits is warranted. (Continued on the next page)   From December 1, 2008, the MAPR was increased to $11,830.00. There was no change to income or medical expenses. Thus, the Veteran had an annualized income of $995.00. Unreimbursed medical expenses that were in excess of five percent of the new MAPR of $11,830.00 may be counted to reduce income. The Veteran continued to have $616.00 in unreimbursed medical expenses for 2008. Thus, unreimbursed medical expenses in excess of $592.00, or $24.00, may be counted to reduce income. For December 2008, the Veteran had a countable income of $971.00. This was lower than the income the RO used in calculating benefits for 2008 in their October 2014 decision. Therefore, for December 2008, a higher rate of payment of pension benefits is warranted. In summary, the record shows that from January 2008 to March 2008, the Veteran’s countable income exceeded the applicable MAPR. Therefore, a higher rate of pension was not payable to the Veteran. From April 2008 to July 2008, the Veteran had a countable income of $6,762.00, from August 2008 to November 2008, the Veteran had a countable income of $938.00, and from December 2008, the Veteran had a countable income of $971.00. Because countable income from April 2008 to December 2008 was lower than the amount the RO used to calculate benefits, a higher rate of payment of pension benefits is granted. K. Parakkal Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board Christine C. Kung The Board’s decision in this case is binding only with respect to the instant matter decided. This decision is not precedential and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.