Citation Nr: 22046099 Decision Date: 08/15/22 Archive Date: 08/15/22 DOCKET NO. 16-50 286 DATE: August 15, 2022 ORDER Entitlement to pension with special monthly pension (SMP) for accrued benefits purposes is denied. FINDING OF FACT For the entire appeal period, the Veteran's family income exceeded applicable maximum annual pension rates. CONCLUSION OF LAW The criteria for entitlement to payment of pension benefits with special monthly pension based on countable income have not 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 FINDING AND CONCLUSION The Veteran served on active duty in the Air Force from December 1949 to September 1953 and from August 1955 to August 1963. He died in January 2015. The appellant is his surviving spouse. In July 2016, she was substituted to complete the claim on appeal that was pending at the time of the Veteran's death. The case is on appeal to the Board of Veterans' Appeals (Board) from a September 2014 Department of Veterans Affairs (VA) Regional Office (RO) decision. In November 2021, the appellant testified at a Board video conference hearing at the RO before the undersigned Veterans Law Judge (VLJ). A transcript of that testimony is of record. The Board remanded the appeal in April 2022 so that the Agency of Original Jurisdiction (AOJ or RO) could request from the appellant accurate Medical Expense Reports for 2013 and 2014 with expenses listed in date order and documentation of payment for each claimed expense. The AOJ substantially complied with the Board's remand directive by requesting such evidence in April 2022 letter. Entitlement to pension with special monthly pension (SMP) for accrued benefits purposes Periodic monetary benefits under laws administered by VA, to which a payee was entitled at his or her death under existing ratings or decisions or those based on evidence in the file at date of death and due and unpaid, will, upon the death of such person, be paid as follows: In pertinent part, upon the death of a Veteran, to his or her spouse; then to his or her children. 38 U.S.C. § 5121; 38 C.F.R. § 3.1000(a), (1). The appellant was the Veteran's spouse at the time of his death. Thus, she is eligible to receive any available accrued benefits, and has been substituted in his appeal for 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. § 1521. 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. 38 C.F.R. § 3.278(c)(1)-(7) identifies in detail what medical expenses may be deductible from countable income for pension purposes. Generally, medical expenses for VA pension purposes are defined as payments for items or services that are medically necessary; that improve a disabled individual's functioning; or that prevent, slow, or ease an individual's functional decline. VA provided the following list of seven categories of medical expenses of which unreimbursed payments will be deducted from countable income: (1) care by a health care provider; (2) medications, medical supplies, medical equipment, and medical food, vitamins, and supplements; (3) adaptive equipment; (4) transportation expenses; (5) health insurance premiums; (6) smoking cessation products; and (7) institutional forms of care and in-home care. VA also specified what does not constitute a medical expense payment for maintenance of general health, cosmetic procedures, meals and lodgings and assistance for instrumental activities of daily living. 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). The Veteran filed a Veteran's Application for Compensation and/or Pension on February 28, 2013, but, he did not specify whether he was applying for compensation or pension. He reported receiving income from the SSA and Civil Service Retirement and that the appellant received SSA income. In April 2013, he submitted a list of his current disabilities, and in June 2013, he submitted an Examination for Housebound Status or Permanent Need for Regular Aid and Attendance. In a November 2013 rating decision, the RO granted basic eligibility for SMP based on the need for regular aid and attendance effective April 22, 2013. However, the RO denied payment of pension benefits because the Veteran's household income exceeded the applicable pension rate. See 38 U.S.C. § 1521; 38 C.F.R. § 3.3(a)(3). While the RO granted eligibility for SMP effective April 22, 2013, the eligibility should have been granted effective the date of the February 28, 2013 claim. Thus, the appeal period runs from February 28, 2013 to December 31, 2014, the last day of the month prior to the Veteran's January 2015 death. In December 2013, the Veteran reported unreimbursed monthly medical expenses of $285.42 for a medical insurance premium for BlueCross BlueShield as well as monthly Medicare expenses of $104.00 for both himself and the appellant. In the September 2014 decision on appeal, the RO denied SMP because the Veteran's countable income was excessive. The Veteran filed a timely notice of disagreement. Prior to the Veteran's death, a statement of the case was not issued for this claim. Subsequently, the appellant filed a claim for accrued benefits in January 2015. In July 2016, she was substituted in the pending claim. The appellant has not accurately reported her unreimbursed medical expenses over the course of the appeal period. In April 2022 the Board remanded the claim to afford the appellant another opportunity to provide accurate Medical Expense Reports for 2013 and 2014 in date order, with each claimed expense claimed only once, and with documentation of payment for each claimed expense. In that regard, while the Appellant had previously submitted a large volume of claimed medical expenses, in an August 2019 statement, she reported a list of estimated monthly expenses, including for medications and adult diapers. She did not provide documentation for the claimed expenses. She also submitted credit card transaction lists that include a posting date, but they do not indicate the year of the purchases. The transactions also do not provide details regarding the items purchased. In November 2019, she submitted a list of payments for restaurant meals, which are not qualifying medical expenses under 38 C.F.R. § 3.278. In November 2019 and December 2021, the appellant submitted forms claiming amounts for unreimbursed medical expenses for 2013 and 2014, including miles driven to medical appointments. However, these forms include items that are not considered medical expenses for purposes of calculating VA pension benefits, including nonmedical household items, nonmedical food, and restaurant meals. See 38 C.F.R. § 3.278. The appellant also listed some itemized amounts that include both qualifying medical expenses and items that are not considered medical expenses in a manner that the amounts paid for these items cannot be separated. In addition, these forms include instances where the same mileage for the same date is reported on more than one form. Furthermore, the appellant claimed mileage for multiple trips to the same treatment provider on the same date, for example by noting "x 4" or "x 6" beside entries for a single date. For these reasons, the medical expense submissions received prior to the date of the April 2022 Board remand cannot be used to accurately calculate countable income. On remand in April 2022, the Board specifically requested that the appellant resubmit an accurate list of unreimbursed medical expenses for 2013 and 2014, which each expense claimed only once, along with adequate documentation showing that each of the claimed expense was paid by the Veteran or herself to establish that the expenses were unreimbursed. See 38 C.F.R. § 3.277. The Medical Expense Reports submitted after the April 2022 Board remand continue to include discrepancies, inaccuracies, and duplication of expenses and, thus, they cannot be used to calculate countable income. However, the medical expenses which have been verified with proof of payment may be still be considered to reduce income. In April 2022, the appellant submitted a statement stating that she and the Veteran spent $1,918.00 plus $800.00 for materials and labor for the construction of a wheelchair ramp. Adaptive equipment under 38 C.F.R. § 3.278(c)(3) is defined as including payments for adaptive devices or service animals used to assist a person with an ongoing disability. While the construction of a ramp may be considered a special home adaptation as opposed to adaptive equipment, because the regulations do not clearly define adaptive devices and because a June 2014 VA aid and attendance examination shows that the Veteran was unable to walk without assistance, the Board has allowed the expense, only insomuch as payment for the expense has been verified. Labor costs were reported, however, no receipt or proof of payment for the claimed labor cost was attached. Attached receipts from Home Depot and Ace Hardware showed a combined payment of $473.00 for construction materials. Notably, the amounts and total paid on one Home Depot receipt was illegible and cannot be counted, another receipt covered the cost of an unrelated kitchen faucet and was not counted, nor was a receipt for a refund considered. Thus, $473.00 is counted from the construction of the ramp toward unreimbursed medical expenses, shown to have been paid in July 2014 and August 2014. In June 2022, the appellant submitted duplicates of a December 2021 medical expense report which cannot be counted. It included vastly different accounts of milage for travel to the same location, included non-medical cleaning supplies, clothing, and did not include an accurate account of dates of payment. She submitted additional medical expense reports. Some were copies of prior medical expense reports with items crossed out and amended travel miles. The reports continued to include non-medical items such as cleaning supplies, a vacuum cleaner, and air freshener. 38 C.F.R. § 3.278 specifies that payments made for maintenance of general health, cosmetic procedures, meals and lodgings and assistance for instrumental activities of daily living do not qualify as a medical expense. Some items reported in the June 2022 Medical Expense Reports were duplicated several times. For example, on the first page on one medical expense report, the appellant reported payment for prescription Xarelto in the amounts of $231.00 in September 2013, $461.00 in September 2013, $461.00 in November 2013, and on the third page of the report, she reported payment for Xarelto in the amount of $461.00 in September 2013, and $461.00 again in September 2013. Taken at face value, the appellant reportedly paid of a total of $2,075.00 for Xarelto in 2013. In April 2022, however, the appellant submitted a printed prescription drug summery report from Mayhugh's Drugs. While the summary also included duplicate pages, all of the purchases and payments were dated, and the amount covered by her insurance versus payments made in cash or by the Federal Employee Health Savings Account were reported. The prescription drug summery shows that the appellant paid $231.00 for Xarelto, after insurance, with two payments in September 2013 and one in November 2013, for a total of $693.00. This total differs drastically from her self-report of paying $2,075.00 for the same prescription drug in 2013. Due to the many discrepancies, inaccuracies, and duplication of expenses in the appellant's report, the appellant's reporting of her medical expenses is considered neither accurate nor credible. Accordingly, the medical expense reports submitted by the appellant to calculate countable income cannot be relied upon, and this includes consideration of over-the-counter items and medical mileage, where they are not accompanied by the proof of payment as requested on remand. That notwithstanding, and in a light most favorable to the appellant, the expenses shown to have been paid by the appellant or her husband in the Mayhugh's Drugs prescription drug summery submitted in April 2022 have been used to reduce income. The appellant has reported having purchased all of their prescription medications from Mayhugh's Drugs in her Medical Expense Reports and has testified as to making copayments for prescription medications in her hearing testimony. Additionally, VA Medical Center payments which were submitted in the same document have also been used to reduce income, but only insofar as those shown to have been posted in the VA Medical Center bills, and not balances due. While the appellant reported in June 2022 Medical Expense Reports that she paid $325.00 a month for BlueCross BlueShield monthly premiums, and $135.00 a month for Medicare, the amounts used to reduce income here are the original amounts of $285.00 for BlueCross BlueShield originally reported by the Veteran in a December 2013 Application for Pension as well as monthly Medicare expenses of $105.00 each, for he and his spouse. The $285.00 figure was provided contemporaneous to the appeal period at issue and is therefore considered more accurate than more recent figures which have been overreported by the appellant. Moreover, the two $105.00 monthly Medicare payments have been verified by SSA Inquiries. As to countable income, the MAPR for a Veteran at the aid and attendance rate with one dependent was $20,795.00 in February 2013. The MAPR was increased to $21,207.00 effective December 1, 2013. Countable income is computed by using annualized income. See 38 C.F.R. § 3.273(b)(2). In the Veteran's claim, he reported receiving $2,300.00 a month from U.S. Civil Service Retirement and he reported receiving SSA benefits for he and his spouse. An SSA Inquiry shows that he was receiving $428.00 a month, and the appellant was receiving $674.00 a month. Thus, he had an annualized income of $40,824.00. Unreimbursed medical expenses are counted from the one-year period beginning February 28, 2013. This included $3,420.00 ($285 x 12) annually for BlueCross BlueShield, and $2,520.00 (105.00 x 2 x 12) annually for Medicare. VA Medical Center records show a $230.00 payment in February 2013. A prescription drug summery for Mayhugh's Drugs shows that the appellant and Veteran paid a total of $2,221.00 in unreimbursed prescription drug payments for the one-year period beginning on February 28, 2013. See Mayhugh's Drugs, Patient Prescription Summary, pages 14-15, 34-37 (pages labeled on the summary). Unreimbursed medical expenses totaled $8,391.00. Unreimbursed medical expenses in excess of 5 percent of the applicable MAPR may be used to reduce countable income. From February 28, 2013, medical expenses in excess of $1,040.00 can be used to reduce the annualized income of $40,824.00. Thus, the Veteran had a countable income of $33,473.00 well in excess of the MAPR of $20,795.00. Because the Veteran's countable income exceeded the maximum annual pension rate, it was a bar to the receipt of pension benefits. When a change in income occurs, the countable income is recalculated with the new annualized income. See 38 C.F.R. § 3.273(b)(2). The MAPR increased to $21,207.00 effective December 1, 2013. In a December 2013 Application for Pension, the Veteran reported receiving an increased $2,387.00 a month from U.S. Civil Service Retirement. An SSA Inquiry shows that he was receiving $435.00 a month, and the appellant was receiving $684.00 a month. Thus, he had an annualized family income of $42,072.00. From December 1, 2013, unreimbursed medical expenses included $473.00 for the wheelchair ramp with payments shown in July 2014 and August 2014, $3,420.00 annually for BlueCross BlueShield and $2,520.00 annually for Medicare. VA Medical Center records show a $183.00 payment in June 2014. A prescription drug summery for Mayhugh's Drugs shows that the appellant and Veteran paid a total of $2,147.00 in unreimbursed prescription drug payments for the one-year period beginning on December 1, 2013. See Mayhugh's Drugs, Patient Prescription Summary, pages 15-18, 36-38. Unreimbursed medical expenses totaled $8,743.00. From December 1, 2013, medical expenses in excess of $1,060.00 can be used to reduce the annualized income of $42,072.00. Thus, the Veteran had a countable income of $34,389.00. The Veteran's countable income continued to exceed the maximum annual pension rate of $21,207.00 and was a bar to the receipt of pension benefits. The evidence shows that for the entire appeal period, the Veteran's countable income exceeded applicable maximum annual pension rates and was a bar to the receipt of payment of pension benefits with special monthly pension. Therefore, pension benefits were not payable to the Veteran, there were no benefits due an unpaid at the time of his death, and the appellant's claim of entitlement to accrued benefits is denied. L. B. CRYAN 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.