Citation Nr: A20008945 Decision Date: 05/20/20 Archive Date: 05/20/20 DOCKET NO. 191209-48513 DATE: May 20, 2020 ORDER Entitlement to death pension with special monthly pension is granted. FINDINGS OF FACT 1. The appellant’s countable income did not exceed applicable maximum annual pension rates. 2. The appellant’s net worth at the time she filed her claim was $111,222.00. CONCLUSIONS OF LAW 1. The criteria for entitlement to payment of death pension benefits based on the appellant’s countable income have been met. 38 U.S.C. § 1541; 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272, 3.273. 2. The criteria for entitlement to payment of death pension benefits based on net worth have been met. 38 U.S.C. § 1522; 38 C.F.R. §§ 3.23, 3.274, 3.275, 3.276. REASONS AND BASES FOR FINDING AND CONCLUSION The Board notes that the rating decision on appeal was issued in May 2019. In December 2019, the appellant elected the modernized review system. 38 C.F.R. § 19.2(d). Entitlement to death pension with special monthly pension The appellant contends that pension benefits are warranted and has submitted care costs for an in-home attendant who assists her with her activities of daily living. A February 2019 rating decision shows that the appellant that the need for regular aid and attendance for the appellant was established effective September 21, 2018, the date of an intent to file a claim for death pension benefits. 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. § 1541; 38 C.F.R. § 3.3(a)(3). 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 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. Effective October 18, 2018, VA amended some of its regulations regarding net worth, asset transfers, and income exclusion as they pertain to nonservice-connected pensions. See 83 Fed. Reg. 47246 (Sep. 18, 2018). Relevant to the present case are revisions to 38 C.F.R. § 3.274 (a), which now dictates that, for purposes of entitlement to nonservice-connected pension benefits, the net worth limit effective October 18, 2018, is $123,600. 38 C.F.R. § 3.274 (a). This limit will be increased by the same percentage as the Social Security increase whenever there is a cost of living increase in benefit amounts payable under section 215(i) of title II of the Social Security Act (42 U.S.C. 415 (i)). Furthermore, VA will deny or discontinue pension if a claimant's or beneficiary's net worth exceeds the net worth limit. Net worth means the sum of a claimant's or beneficiary's assets and annual income. Under 38 C.F.R. § 3.275 (a)(1), assets mean the fair market value of all property an individual owns, including all real and personal property, unless excluded. The claimant’s primary residence is not included as part of the value of the assets. See 38 C.F.R. § 3.275 (b)(1). The MAPR for a surviving spouse at the aid and attendance rate in September 2018 was $21,962.00. The MAPR was increased to $22,577.00 effective December 1, 2018. A November 2018 Application for death pension shows that the appellant was in receipt of income from SSA in the amount of $1,325.00 a month, and pension from Kaiser S. in the amount of $331.00 a month. An SSA inquiry shows that the appellant was in receipt of $1,459.00 a month prior to the deduction of Medicare premiums. Because medical expenses are separately deducted, the Board will use the figure reported by SSA in calculating the appellant’s annualized income. The appellant, therefore, had an annualized income of $21,480.00. A February 2019 notice letter and May 2019 decision show that a 2017 Income Verification Match (IVM) with the IRS identified unreported income from interest, dividends, saving bonds, and distributions in the year prior to application which not reported on the appellant’s application. The appellant was asked to verify amounts and sources of funds identified on the IVM. In February 2016, the appellant verified the receipt of $60.00 in annual dividends from MetLife for 2017, which she indicated that she had forgotten to report. The Board finds that this is countable toward income. The appellant indicated $415.00 was received from an Emigrant Direct account which had been closed. The Board finds that because the account was closed in 2017, the $415.00 is not countable toward 2018 income. The appellant verified that she did not own any property. A statement from EmergentDirect shows that $50,000.00 was withdrawn in September 2018, and $20,540.00 was withdrawn in November 2018. A February 2016 statement shows that the amounts were transferred to the appellant’s daughter. The Board finds that the $70,540.00 in assets are countable toward net worth, but not income, as they were transferred to a family member with whom the appellant resides. A May 2019 statement shows that Capitol One National Association and Hancock Whitney Bank accounts were closed. In a July 2019 statement, the appellant also stated that amounts contained in Whitney Bank were transferred to Capitol One Bank, and then were cashed out in November 2018. The appellant submitted tax and banking information to verify her statement. A 2017 Tax Statement confirmed a gross distribution of $34,182.00 from Whitney Bank. A May 2017 Capital One Bank statement shows that the full amount was transferred into a Capitol One IRA CD. A 2017 Tax statement confirms a distribution of $1,247.00 from Capital One. The Board finds that the $1,247.00 distribution is countable toward income. A 2018 Capital One statement shows identifies a gross distribution of $33,641.83 in 2018 and a copy of a cashier’s check shows that the amount was paid jointly to the appellant and her daughter. The appellant reported that the amounts from Capitol One and Whitney Bank were used to pay for the appellant’s in-home care. The Board finds that because the total amount of assets were transferred to the appellant and her daughter for the appellant’s care, they are countable toward net worth, but not income. The appellant also verified that amounts reported on a PBGCQ account was reported on the application as Kaiser S. pension. The Board finds that with the annual MetLife dividend and $1,247.00 distribution from Capitol One, the appellant had an income of $22,787.00. The Board finds that asset transfers from EmergentDirect, and Whitney Bank/Capitol One should be counted toward net worth, as opposed to income, as they were shown to represent transfers of assets rather than income from interest or dividends. Medical expenses in excess of five percent of the applicable MAPR may be deducted from income. The appellant paid $134.00 monthly for Medicare, and paid $2,800.00 a month for in-home care. A November 2018 attendant affidavit shows that services included assistance with bathing, sanding and siting, getting in and out of bed, eating, walking, dressing, and taking medications. The Board finds, therefore, that the in-home care is countable as a qualifying medical expense. In a November 2018 statement, the appellant also identified $68.00 paid monthly for incontinence care supplies, and $70.00 a month for itemized over-the-counter medications and Ensure nutrition supplements. The appellant also provided receipts for $21.00 in prescription copayments for the month of October 2018. Earlier 2018 receipts were not paid during the appeal period and cannot be counted to reduce income. The Board finds that the appellant had qualifying medical expenses totaling $36,885.00. Medical expenses in excess of $1,098.00 can be deducted from countable income. Therefore, medical expenses in the amount of $35,787.00 can be deducted from the appellant’s annualized income of $22,787.00, leaving her with a countable income of $0.00. From December 1, 2018, the appellant had an annualized income of $22,020 ($331.00 a month from Kaiser, $1,499.50 a month from SSA, and $60.00 form MetLife). There was no change to monthly medical expenses in the amount of $36,864.00. Medical expenses in excess of $1,129.00, in this case, $35,735.00, can be deducted from countable income. Again, medical expenses exceeded the appellant’s annualized income. Therefore, she continued to have a countable income of $0.00. The Board finds that for the entire appeal period, the appellant’s countable income did not exceed applicable maximum annual pension rates. Because net worth amounts were identified on an IVM and were confirmed by the appellant, the Board will next address whether net worth is excessive for the receipt of pension benefits. The appellant’s November 2018 Application for Death Pension identified $4,500.00 in cash/non-interest bearing bank account, and $2,000.00 in bonds. A statement from EmergentDirect shows that $50,000.00 was withdrawn in September 2018, and $20,540.00 was withdrawn in November 2018. The Board finds that the $70,540.00 in assets are countable toward net worth as they were transferred to a family member with residing in the same household as the appellant. See 38 C.F.R. § 3.276 (b). A 2017 Tax Statement confirmed a gross distribution of $34,182.00 from Whitney Bank, which was also stated to have been transferred into a Capitol One account prior to being cashed out to be used for the appellant’s care. The Board finds, therefore, that the appellant had a net worth of $111,222.00. The Board finds that the appellant’s net worth was under $123,600.00 and is not a bar to the receipt of pension benefits. See 38 C.F.R. § 3.274 (a). 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.