Citation Nr: 21027085
Decision Date: 05/04/21	Archive Date: 05/04/21

DOCKET NO. 17-05 158
DATE: May 4, 2021

ORDER

As the reduction and termination of the Veteran's nonservice-connected pension benefits, effective December 1, 2006, was proper, the appeal is denied.

FINDING OF FACT

Effective December 1, 2006, the Veteran's countable family income exceeded the applicable maximum annual pension rate (MAPR) for a veteran with two dependents. 

CONCLUSION OF LAW

The termination and reduction of nonservice-connected pension benefits was proper.  38 U.S.C. §§ 1502, 1503, 1521; 38 C.F.R. §§ 3.3, 3.23, 3.262, 3.271, 3.272, 3.274, 3.275.

REASONS AND BASES FOR FINDING AND CONCLUSION

The Veteran served on active duty in the United States Air Force from May 1970 to February 1974.  During his period of service, he earned the National Defense Service Medal. 

Propriety of reduction and termination of the Veteran's nonservice-connected pension benefits

The record shows that the Veteran's nonservice-connected pension benefits were reduced and terminated based on the Veteran's receipt of unreported family Social Security Administration (SSA) benefits.  The Board notes that the reduction and termination of nonservice-connected pension benefits created an overpayment debt in the amount of $20,321.00.  While a September 2017 determination by the Debt Management Center, Committee on Waivers and Compromises granted a waiver of the overpayment debt, the question with regard to whether the reduction and termination of benefits was proper is still before the Board.

The Veteran was awarded entitlement to nonservice-connected pension benefits, effective March 12, 2003, by an October 2003 rating decision.  The Veteran was paid at the rate of a Veteran with two dependents and SSA benefits as the only source of family income.

By a September 2013 letter, VA proposed to reduce and terminate the Veteran's nonservice-connected pension benefits, effective December 1, 2006, based on an adjustment to his family countable income.  Specifically, VA received evidence that the Veteran's family was receiving more SSA income than previously reported.  The Veteran was informed that he had 60 days within which to submit additional information or evidence to show that the proposed action should not be taken, and that if he continued to accept payments at the present rate during this period, he would have to repay all or part of those benefits as well if it were determined that the proposed adjustment was proper.  He was further notified of his right to a personal hearing, and that if he requested such a hearing within 30 days, the payments would continue at the then-present rate until the hearing was held.  Finally, he was notified of his right to representation.

By a July 2015 determination, the Pension Management Center (PMC) terminated the Veteran's nonservice-connected pension benefits, effective December 1, 2006, based on an adjustment to his countable family income.

All procedural due process requirements for reduction and termination of nonservice-connected pension benefits, effective December 1, 2006, were satisfied.  See 38 U.S.C. § 5112; 38 C.F.R. §§ 3.103, 3.105(h).  The Veteran was notified of the proposed pension reduction in a letter dated in September 2013.  VA took final action to reduce and terminate benefits in July 2015 determination, more than 60 days from the time of notice of the proposed action.  Thus, VA properly carried out the procedural requirements under 38 C.F.R. § 3.105(h) for reduction and termination of the Veteran's nonservice-connected pension benefits.  The Veteran does not otherwise contend that VA failed to follow proper procedural requirements.

Having found that VA afforded the Veteran all procedural due process, the remaining question is whether the reduction and termination of the Veteran's nonservice-connected pension benefits was proper.  After a review of all the evidence, the preponderance of the evidence demonstrates that the reduction and termination is proper.

Pertinent to the claim, VA law provides that 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. 

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 death 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).

Effective December 1, 2006, the MAPR for a veteran with two dependents was $16,552.00.

A January 2007 SSA Inquiry shows that benefits in the amount of $950.00 per month (or $11,400.00 annually) were paid to the Veteran in 2007.  Social Security Benefit statements associated with the claims file in May 2014 show that the Veteran's minor child, H.M., received SSA benefits in the amount of $2,844.00, and his minor child, M.M., received SSA benefits in the amount of $2,844.00.  The Veteran did not report any unreimbursed medical expenses.  Accordingly, the Veteran's countable family income was $17,088.00, which exceeded the MAPR for a Veteran with two dependents. 

Effective December 1, 2007, the MAPR for a veteran with two dependents was $16,179.00.

Social Security Benefit statements associated with the claims file in May 2014 show that SSA benefits in the amount of $11,664.00 were paid to the Veteran in 2008.  The Veteran's minor child, H.M., received SSA benefits in the amount of $2,916.00, and his minor child, M.M., received SSA benefits in the amount of $2,916.00.  The Veteran did not report any unreimbursed medical expenses.  Accordingly, the Veteran's countable family income was $17,496.00, which exceeded the MAPR for a Veteran with two dependents.

Effective December 1, 2008, the MAPR for a veteran with two dependents was $17,513.00.  Effective December 1, 2009, the MAPR for a veteran with two dependents was $17,513.00.  The MAPR did not increase again until December 1, 2012.

SSA benefits in the amount of $12,348.00 were paid to the Veteran in 2009, 2010, and 2011.  The Veteran's minor child, H.M., received SSA benefits in the amount of $3,084.00, and his minor child, M.M., received SSA benefits in the amount of $3,084.00.  The Veteran did not report any unreimbursed medical expenses.  Accordingly, the Veteran's countable family income was $18,516.00, which exceeded the MAPR for a Veteran with two dependents in 2009, 2010, and 2011. 

Effective December 1, 2012, the MAPR for a veteran with two dependents was $18,453.00.

SSA benefits in the amount of $13,690.80 were paid to the Veteran in 2013.  The Veteran's minor child, H.M., received SSA benefits in the amount of $3,252.00, and his minor child, M.M., received SSA benefits in the amount of $3,252.00.  The Veteran did not report any unreimbursed medical expenses.  Accordingly, the Veteran's countable family income was $20,194.80, which exceeded the MAPR for a Veteran with two dependents.

Effective December 1, 2013, the MAPR for a veteran with two dependents was $18,730.00.

A March 2014 SSA Inquiry shows that benefits in the amount of $1,100.00 per month (or $13,200.00 annually) were paid to the Veteran in 2014.  A July 2015 SSA Inquiry shows that benefits in the amount of $275.00 per month (or $3,300.00 annually) to the Veteran's minor child, H.M.; and $275.00 per month (or $3,300.00 annually) to his minor child, M.M.  The Veteran did not report any unreimbursed medical expenses.  Accordingly, the Veteran's countable family income was $19,800.00, which exceeded the MAPR for a Veteran with two dependents. 

Effective December 1, 2014, the MAPR for a veteran with two dependents was $19,049.00.

A March 2014 SSA Inquiry shows that benefits in the amount of $1,119.00 per month (or $13,428.00 annually) were paid to the Veteran in 2015.  A July 2015 SSA Inquiry shows that benefits in the amount of $279.00 per month (or $3,348.00 annually) to the Veteran's minor child, H.M.; and $279.00 per month (or $3,348.00 annually) to his minor child, M.M.  The Veteran did not report any unreimbursed medical expenses.  Accordingly, the Veteran's countable family income was $20,124.00, which exceeded the MAPR for a Veteran with two dependents.

As VA is required by law to adjust pension payments whenever a Veteran's income changes, the adjustment in his pension payment because of the increase in his Social Security income was appropriate as a matter of law.

Therefore, the Board finds that his countable annual income, effective December 1, 2006, exceeded the pertinent MAPR for the award of VA nonservice-connected pension benefits for a veteran without two dependents.  As his countable family income exceeded the statutory limits, the reduction and termination of nonservice-connected pension benefits was proper, and the Veteran's claim must be denied as a matter of law.  Sabonis v. Brown, 6 Vet. App. 426 (1994).

 

A. S. CARACCIOLO

Veterans Law Judge

Board of Veterans' Appeals

Attorney for the Board	Tracy O. Joseph, Counsel

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.