Citation Nr: 20046777 Decision Date: 07/13/20 Archive Date: 07/13/20 DOCKET NO. 15-20 681 DATE: July 13, 2020 ORDER Entitlement to VA survivor's pension benefits is denied. FINDING OF FACT The surviving child’s countable income exceeds the Maximum Annual Pension Rate (MAPR) effective September 1, 2013. CONCLUSION OF LAW The criteria for entitlement to payment of VA survivor’s pension benefits based on the surviving child’s countable income have not been met. 38 U.S.C. § 1541; 38 C.F.R. §§ 3.3, 3.23, 3.271, 3.272, 3.273. REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran had honorable active military service from December 1993 to December 1997. The Veteran is deceased having died in August 2008. The appellant is the mother and custodian of the Veteran’s minor surviving child and is seeking VA survivor’s pension benefits on his behalf. This matter comes before the Board of Veterans’ Appeals (Board) on appeal from a Department of Veterans Affairs (VA)’s July 2014 decision that denied the Veteran’s surviving child entitlement to VA survivor’s pension due to excessive income. The appellant testified at a video hearing before the undersigned Veterans Law Judge in October 2019, and the hearing transcript is associated with the claims file. Entitlement to VA survivor's pension benefits The appellant essentially contends that her son, the Veteran’s surviving child, should be entitled to VA survivor’s pension benefits. At the October 2019 hearing, she testified that she was told multiple times by representatives of the Social Security Administration (SSA) that her son was entitled to VA benefits because his father was a Marine, but VA has told her that he does not qualify. She said she appealed because she is being told by SSA that VA has a death pension that her son is entitled to and then VA is telling her that he does not qualify because he is receiving Social Security but she is being told that they are not the same thing and she does not understand why, if there is a death pension from the military from her son’s father, why her son cannot have that. She explained that her son has living costs and the money he receives from SSA is not covering everything it is supposed to. The Board understands the appellant’s arguments and believes that the testimony she provided is credible and accurate. In addition, the Board is sympathetic to her desire to provide better financially for her son. Unfortunately, however, the law does not provide a means for VA to award survivor’s pension benefits to her son because of the income he receives. 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. By law VA must reduce pension benefits by the gross amount of countable income received. 38 C.F.R. § 3.271 and 3.273. VA survivor’s pension (also known as death pension) is a benefit payable in certain circumstances to a surviving spouse or child because of a veteran’s nonservice-connected death. Basic entitlement exists if (i) the veteran (as defined in 38 C.F.R. § 3.1(d)(1) and (d)(2)) had qualifying service as specified in 38 C.F.R. § 3.3(a)(3)(i), (ii), (iii), or (iv); or (ii) was, at the time of death, receiving or entitled to receive compensation or retirement pay for a service-connected disability based on service during a period of war (as specified in paragraph (a)(3) of this section); and (iii) the surviving spouse or child meets the net worth requirements and has an annual income not in excess of the maximum annual pension rate. 38 C.F.R. §§ 3.3(b)(4); see also 38 U.S.C. §§ 101 (8), 1521(j), 1541(a); 38 C.F.R. §§ 3.23(a)(5), (d)(5). In the present case, there is no question that basic eligibility to VA survivor’s pension benefits is established as the service requirements are met given the Veteran served more than 90 days during the Persian Gulf War, which began on August 2, 1990 and continues through today. See 38 C.F.R. § 3.2(i). Rather, the issue in this case is whether the income provision is met. Also, not at issue here is the question of paternity as the appellant submitted court documents from July 2013 showing that the Veteran was adjudged to be her son’s father. See Court Order received in July 2014. 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 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 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, 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). With regard to minor surviving children, pension shall be paid to a child in the custody of a person legally responsible for the child’s support at an annual rate equal to the difference between the MAPR for a surviving spouse and one child and the sum of the annual income of such child and the annual income of legal custodian or the MAPR for the child alone, whichever is less. 38 C.F.R. § 3.24(c). In other words, pension is paid at the rate of the lesser of the following: (1) the child alone MAPR reduced by the child’s countable income only, or (2) the surviving spouse and child MAPR reduced by the combined income of the child, the person having custody of the child, and the spouse of the person having custody of the child if the child is in the custody of a biological or adoptive parent. The income of the spouse of a nonparent legal guardian is not to be considered. In her July 2014 Eligibility Verification Report (EVR), the appellant reported that the Veteran’s surviving child, her son, was receiving $809.00 a month in Social Security benefits and that she received $480.00 each month in Supplemental Security Income (SSI). A data match with the SSA confirmed the appellant’s son began receiving Social Security benefits in February 2013 and that his benefits increased to $809.00 in December 2013. The appellant’s SSI income is not countable income because it is considered to be welfare, which is specifically excluded from income under 38 C.F.R. § 3.272(a). The appellant has not reported that her son has any unreimbursed medical expenses. Rather, in a statement submitted with her July 2014 EVR, she reported that he has no medical expenses because the state pays for his medical care. In addition, at the October 2019 Board hearing, the appellant testified that her son has school costs. Although educational costs may be deducted from a child’s income, such costs can only be deducted from “work income received during the year” and can only be costs incurred for “a course of postsecondary education or vocation rehabilitation or training.” See 38 C.F.R. § 3.272(j). The appellant’s son was born in December 2004. See July 2014 EVR. Therefore, he was only in elementary school when the appellant filed for VA survivor’s pension benefits in July 2014 because he was only nine years old. Thus, any school costs the appellant’s son has paid for are not for postsecondary education. Furthermore, his income is not from “work income” but rather is from unearned income because it is from Social Security benefits. In other words, it is not income he earned from working but is from social service assistance he is receiving due to his father’s death. Therefore, the Board finds that no educational expenses are deductible from the appellant’s son’s income. The appellant also explained at the hearing that her son had other costs of living that must be paid out of the money he receives from Social Security, such as costs for clothes and extracurricular activities. Although this may be true, the only deductions from income allowed are those specified in 38 C.F.R. § 3.272. This section provides that the only types of expenses allowed to be deducted from income are unreimbursed medical expenses (subsection (g)), expenses of last illnesses, burials and just debts (subsection (h)), and educational expenses (subsections (i) and (j)(2)). 38 C.F.R. § 3.272. The remaining items excluded are specific types of income. The Board notes that there is a hardship exclusion of a child’s income in subsection (m) which talks about allowing a deduction for family maintenance expenses, but that provision does not apply here because it only pertains to veterans and surviving spouses’ income and expenses. See 38 C.F.R. § 3.23(d). Since the MAPR is an annual rate, pension benefits are initial calculated on an annual basis before being broken down to a monthly rate. Hence, the Board has multiplied the appellant’s son’s monthly Social Security benefit of $809.00 by 12 to arrive at an annual income of $9,708.00. As there are no deductible unreimbursed medical or educational expenses, $9,708.00 is his countable income as well. The MAPR applicable for a child alone in July 2014 was $2,161.00. Therefore, the appellant’s son’s countable income exceeded this MAPR by $7,547.00 and he would be entitled to zero pension benefit. Alternatively, the MAPR applicable for a surviving spouse with one dependent child in July 2014 was $11,107.00. The Board acknowledges that the appellant’s son’s countable income is less than this MAPR by $1,399.00 and, thus, would appear to result in an award of pension benefits. However, the law provides that pension is paid at the rate of the lesser of the two outcomes. The lesser of the two outcomes is zero because his income exceeds the MAPR of $2,161.00 by $7,547.00 and, therefore, the appellant’s son is not entitled to VA survivor’s pension benefit. The Board is sympathetic to the appellant and the fact that she was improperly advised by SSA that her son was entitled to VA pension benefits. Although he is eligible for benefits based on his father’s military service, VA pension programs are income-based and, therefore, her son’s pension entitlement is reduced on a dollar-for-dollar basis by his income. Unfortunately, the advice she was given by SSA did not inform her about this and, in fact, misled her into incorrectly believing that her son was eligible for VA pension benefits. In addition, it appears the information provided to her by VA did not help her in understanding why her son was denied benefits. The Board understands that the appellant believes that her son is entitled to benefits but the law requires that VA consider the income he receives and can only pay him VA survivor’s pension benefits if his income is less than the allowable MAPR. Unfortunately, at the time that she filed her claim, his income was not. If anything changes in the future (i.e., his income decreases or his unreimbursed medical expenses increase) such that her son’s income would be below the MAPR (which is currently $2,313.00 for a child alone), the appellant should reapply to reopen her son’s pension claim. However, the law prohibits the appellant’s son from receiving VA survivor’s pension benefits in July 2014 because his income exceeded the MAPR allowable for a surviving child of the Veteran, and the Board is bound by the laws and regulations applicable to the benefit sought. See 38 C.F.R. § 19.5. VICTORIA MOSHIASHWILI 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.