Citation Nr: 20022751 Decision Date: 04/01/20 Archive Date: 04/01/20 DOCKET NO. 18-42 880 DATE: April 1, 2020 ORDER Entitlement to VA survivor's pension benefits is denied. FINDING OF FACT The appellant’s countable income exceeds the applicable maximum annual pension rates. CONCLUSION OF LAW The criteria for entitlement to payment of VA survivor’s pension benefits have not been met. 38 U.S.C. § 1541; 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272. REASONS AND BASES FOR FINDING AND CONCLUSION The Veteran had honorable active military service from January 1953 to December 1956. He passed away in April 2017. The appellant is his surviving spouse. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from a Department of Veterans Affairs (VA) Regional Office (RO)’s October 2017 decision denying the appellant’s claim for VA survivor’s benefits. The appellant only appealed the denial of pension benefits. The Board notes that § 501 of the Camp Lejeune Act of 2012 provides an automatic waiver of evidence submitted by a claimant, or his or her representative, with or after a Substantive Appeal received on or after February 2, 2013. The appellant’s VA Form 9 was received in July 2018. Therefore, the Board may consider the evidence she submitted in December 2018 after the certification of her appeal to the Board without requiring a waiver of AOJ consideration. Entitlement to VA survivor's pension benefits The appellant contends that she is entitled to VA survivor’s pension benefits, especially after she stopped receiving rental income from her duplex in April 2018. In its Informal Hearing Presentation, the appellant’s representative argued that, if all the appellant’s reported unreimbursed medical expenses for 2018 are taken into consideration (those reported in March 2018 and December 2018), she would be entitled to $2,054.00 in pension benefits. Unfortunately, the Board finds error in the representative’s calculation and disagrees finding that the appellant is not entitled to VA survivor’s pension benefits because her income is excessive. Generally, VA death benefits are payable to a veteran’s surviving spouse, child, or dependent parent. See 38 C.F.R. §§ 3.3, 3.5 and 3.1000. Basic entitlement to survivor’s pension exists if (1) the veteran had qualifying service, (2) the veteran was, at the time of death, receiving or entitled to receive compensation or retired pay for a service-connected disability based on service during a period of war and, (3) the claimant meets the net worth and income requirements. 38 C.F.R. § 3.3(b)(4). In the present case, there is no issue that the Veteran had qualifying service as he served during the Korean war. Rather, the appellant has been denied VA survivor’s pension benefits because she does not meet the income requirements. VA’s pension program is set up to assist certain veterans and their survivors who are in need. It is an income-based program only intended to give beneficiaries a minimum level of financial security. It is not intended to protect substantial gains in income or assets. By law VA must reduce pension benefits by the gross amount of countable family income received. 38 C.F.R. § 3.271 and 3.273. A claimant meets the income requirements if his or her income is not in excess of the maximum annual pension rate (MAPR) specified in 38 C.F.R. § 3.23. 38 U.S.C. § 1541; 38 C.F.R. § 3.3(b)(4)(iii). The MAPR is published in Appendix B of the VA Adjudication Procedures Manual M21-1 and is given the same force and effect as if published in VA regulations. 38 C.F.R. § 3.21. 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 a claimant’s countable annual income. 38 U.S.C. §§ 1503, 1541; 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, one-time lump sum payments or similar income, even if waived) shall be included during the 12-month annualization period in which received, except for income specifically excluded. 38 U.S.C. § 1503(a); 38 C.F.R. §§ 3.271(a), 3.272. Gross income received is counted rather than the amount of the payment a beneficiary receives, except where certain expenses are allowed to be deducted (e.g., necessary operating expenses are deductible from business, farm or professional income and medical, legal or other expenses incident to an injury or death or expenses incident to the collection or recovery of the amount of an award or settlement for an injury or death are deductible from compensation received for an injury or death). The amount of recurring and irregular income anticipated or received by a beneficiary shall be added to determine the beneficiary’s annual rate of income for a 12-month annualization period commencing at the beginning of the 12-month annualization. 38 C.F.R. § 3.273(d). The amount of nonrecurring income (e.g., an inheritance) received by a beneficiary shall be added to the beneficiary’s annual rate of income for a 12-month annualization period commencing on the effective date on which the nonrecurring income is countable. 38 C.F.R. § 3.273(c). For purposes of calculating countable income, total income may be reduced by amounts paid by a claimant for unreimbursed medical expenses that are “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 claimant received no reimbursement, such as from an insurance company. However, medical insurance premiums themselves, including Medicare Plan B premiums deducted from Social Security benefits, may be applied to reduce countable income. For the purpose of determining initial entitlement, or for 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 beneficiary’s 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 from the MAPR for that year; then, if a positive amount remains, the rest is divided by 12 to determine the monthly pension benefit. When a change in the MAPR occurs, VA repeats the calculation with the new MAPR as the starting amount on the effective date of the change, typically December 1st. 38 C.F.R. § 3.273(b)(1). Whenever there is a change in a beneficiary’s countable income, VA will repeat the calculation using the beneficiary’s new countable income effective the date of the change in the amount of income. 38 C.F.R. § 3.273(b)(2). The Board comments that, in reviewing the RO’s decisions, it found several errors were made in adjudicating the appellant’s claim, but none of them are material to the extent that they change the underlying decision that the appellant’s income exceeds the MAPR. In the present case, the appellant initially applied for pension benefits in May 2017 shortly after the Veteran’s death. As she filed her claim within one year of the Veteran’s death, the effective date for which her initial counting period starts is the first day of the month of the Veteran’s death or April 1, 2017. See 38 C.F.R. § 3.400(c)(3)(1). However, the first day of the initial year is the date of the Veteran’s death because VA cannot count income and medical expenses of the surviving spouse prior to the Veteran’s death. Therefore, as the RO did, the Board finds the initial annualization period for counting purposes is from April 19, 2017 to May 31, 2018. Initially, the Board notes that the RO was inconsistent in what amount it used for the appellant’s Social Security income during the initial annualization period. The August 2017 decision shows the RO used the monthly amount of $706.60, but it used the amount of $901.60 in the October 2017 decision and $701.60 in the statement of the case. The SSA data match shows the appellant was receiving $706.60 per month starting in December 2016 but that the appellant’s benefits increased to $901.60 in April 2017. It appears this increase was as the result of a change in benefits, not merely a cost of living adjustment (COLA). Typically, recurring income, such as Social Security benefits, is counted on an open-ended bases from the first day of the month after the month during which the recurring income is first received. If there is a change in recurring income, the effective date of any award adjustment is the first day of the month after the change. However, changes in income due to Social Security COLA are treated slightly differently as the effective date of a pension rate reduction resulting therefrom is not the date of the increased Social Security benefits are actually received, but the same date as the MAPR is changed, which is generally December 1st of each year. See VAOPGCPREC 21-90. Since this increase appears to be a change in benefits and not a COLA increase, the Board finds the general rules should apply in this case and, therefore, the Social Security benefits amount to be used as of the appellant’s effective date is $706.60 per month as the increase in benefits noticed to be effective in April 2017 would not be counted until June 1, 2017, the first of the month after she received the new benefit amount for the first time in May 2017. The appellant’s monthly income consists of her Social Security benefits of $706.60 and rents of $620.00 for a total of $1,326.60. Therefore, the appellant’s annualized income for this initial period is $15,919.00. In addition, the Board finds that it must also count the $255.00 death benefit paid by SSA. The RO include this income in its original August 2017 decision but not in any decision subsequent thereto. It is unclear why they removed this income when the appellant neither disagreed with its inclusion nor indicated that she did not receive such benefit as she was advised in the August 2017 decision she needed to do to have it removed. Therefore, the Board finds that such income should be counted for the first annualized period. Hence, the Board finds that the appellant’s yearly income for the first annualized period was $16,174.00. In making this finding, the Board acknowledges the appellant’s statements regarding her rental income having stopped, including the February 2018 statement that her rental income was only $4,000.00. However, the appellant never indicated when her rental income stopped, despite being asked to do so, until her VA form 9, and the February 2018 statement only indicated that the income reported was through December 2017 and, thus, it was not income for the entire annualized period. As shown by her submission with her VA Form 9, she continued to receive rental income through April 2018. Therefore, the Board finds the appropriate means of calculating her rental income for the first annualized period is to do as the RO did and take the monthly rental income of $620.00 and multiple it by 12 months as the Board has done here. As for unreimbursed medical expenses, the appellant reported on her initial application that she paid unreimbursed medical expenses of $50.00 on May 1, 2017, which the RO has overlooked. The Board acknowledges that the appellant did not identify the provider or type of expense this was except to say it was medical, but the Board is willing to give her the benefit of the doubt and award her this expense. On a February 2018 VA Form 21-4138, the appellant submitted a written statement indicating that she paid $2,812.00 in medical expenses paid for co-pays to hospital and doctor, medicine and rehab after surgery stating that she was in the hospital for three days in January 2018. Despite those expenses not being reported on a VA Form 21P-8416, Medical Expense Report, the RO accepted the appellant’s reported expenses. In addition, the SSA data match shows that the appellant was paying $10.60 per month, or $127.00 annually, for Medicare Part B premiums, which the RO allowed as an unreimbursed medical expense. As the RO accepted these medical expenses, the Board will accept them as well. In addition, in April 2018, the appellant filed another written statement in which she listed medical expenses in the amount of $960.00 from January to March of 2018 from various providers and then another $1,020.00 that she stated she still owed. Along with this statement she provided statements (Explanations of Benefits, aka EOBs) from her insurance company showing what they paid on her bills and one receipt showing she paid the provider, FH Tampa, $150.00. The RO denied her all but the $150.00 because none of the other expenses were verified as having been paid. The Board agrees. The appellant did not report these medical expenses on an approved form as required. Moreover, she did not specifically state that she had paid any of the expenses listed and she did not provide any verification that the amounts she listed and shown on the EOBs as her responsibility were paid by her except for the $150.00 to FH Tampa. Also, on the list she provided, the dates she gave were for when the expenses were incurred (i.e., the date of service) as shown on the EOBs she provided. Thus, it is not clear when such expenses were paid or even if they were paid. The Board cannot count expenses that have not been paid. The appellant also submitted in April 2018 another VA Form 21-534 on which she reported unreimbursed medical expenses totalling $230.00 that were paid on April 1, 2018. The RO allowed those expenses and the Board agrees as these expenses have been provided on an appropriate form in the appropriate format. Consequently, the Board finds that the appellant’s unreimbursed medical expenses for the initial annualization period total $3,369.00 ($50.00 + $2,812.00 + $127.00 + $150.00 + $230.00). However, only expenses in excess of five percent of the MAPR, or $432.00, can be deducted from the appellant’s income. Thus, her deductible unreimbursed medical expenses are $2,937.00. Therefore, the appellant’s countable income for the first annualization period is $13,237.00 ($16,174.00 annual income less $2,937.00 deductible medical expenses). The MAPR for a surviving spouse with no dependents in effect as of April 2017 was $8,656.00. Hence, the appellant’s income exceeded the MAPR, and she is not entitled to VA survivor’s pension benefits during the first annualization period because her income for VA purposes is excessive. Based on the appellant’s report in her VA Form 9 that her income had changed as of May 2018, in the September SSOC, the RO reconsidered her pension entitlement as of May 1, 2018. As of May 1, 2018, the evidence shows that the appellant’s only income was from her Social Security benefits, which according to a September 2018 SSA data match was $920.10 per month as of December 2017. Thus, the appellant’s annual income was $11,041.00. The SSA data match also showed the appellant’s Medicare Part B insurance premium had increased to $20.10 per month, or $241.20 annually. In the September 2018 SSOC, the RO only considered the appellant’s Medicare premiums as unreimbursed medical expenses because the appellant had not submitted any additional medical expenses for 2018 despite being asked to do so. However, in December 2018, after certification of her appeal to the Board, she submitted a VA Form 21P-8416, Medical Expense Report, on which she reported having paid unreimbursed medical expenses for doctor and hospital co-pays in the amount of $2,039.00 from June to November of 2018. Thus, her unreimbursed medical expenses would be $2,280.00, but she can only deduct from her income $1,838.00 (her expenses less 5 percent of the MAPR or $442.00). The MAPR in effect in May 2018 for a surviving spouse with no dependents was $8,830.00. The appellant’s countable income is $9,203.00 and still exceeds the   applicable MAPR. Therefore, despite the reduction in the appellant’s income, she still is not entitled to VA survivor’s pension benefits because her income is excessive. M. C. GRAHAM Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board S. M. Kreitlow 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.