Unreimbursed medical expenses are deducted from combined income to meet the income test for Pension. This is an important provision in the Pension rules that allows claimants with large incomes to receive entitlement to the benefit.
Without this special provision a large majority of claimants would not qualify due to incomes above the Maximum Allowable Pension Rate (MAPR). In some cases, claimants with household incomes of $5,000 a month or more could still qualify for Pension if their out-of-pocket medical expenses were large enough.
If Pension is to be awarded for a veteran with a dependent or a surviving spouse with a dependent, it is important to note that the veteran claimant or the surviving spouse claimant does not have to generate the unreimbursed medical expenses. Those expenses can alternatively be generated by the dependent.
If the dependent is a non-veteran spouse of a living veteran claimant and the veteran is healthy, but the spouse is disabled and needs to pay for health care services or custodial care, those expenses can be deducted from the combined household income. The same would be true for a surviving spouse claimant who might have a disabled dependent child. This is an important distinction to remember.
Medical expenses are determined by the rules contained in 38 CFR §3.278 – Deductible medical expenses. Here are excerpts from this section of 38 CFR and clarification from the adjudication manual M21-1 for those rules.
Medical Expenses for VA Purposes
Generally, medical expenses for VA needs-based benefit purposes are 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. Medical expenses may include, but are not limited to, the payments specified in the paragraphs below.
Care by a health care provider
Payments to a health care provider for services performed within the scope of the provider's professional capacity are medical expenses. Professional home care, assisted living, and nursing home care are the most common. Cosmetic procedures that a health care provider performs to improve a congenital or accidental deformity or related to treatment for a diagnosed medical condition are medical expenses.
Medications, medical supplies, medical equipment, and medical food, vitamins, and supplements
Payments for prescription and non-prescription medication procured lawfully under Federal law, as well as payments for medical supplies or medical equipment, are medical expenses. Medically necessary food, vitamins, and supplements as prescribed or directed by a health care provider authorized to write prescriptions are medical expenses.
Adaptive equipment
Payments for adaptive devices or service animals, including veterinary care, used to assist a person with an ongoing disability are medical expenses. Medical expenses do not include non-prescription food, boarding, grooming, or other routine expenses of owning an animal.
Transportation expenses
Payments for transportation for medical purposes, such as the cost of transportation to and from a health care provider's office by taxi, bus, or other form of public transportation are medical expenses. The cost of transportation for medical purposes by privately owned vehicle (POV), including mileage, parking, and tolls, is a medical expense. For transportation in a POV, VA limits the deductible mileage rate to the current POV mileage reimbursem*nt rate specified by the United States General Services Administration (GSA). The current amount can be obtained from www.gsa.gov or on VA's website at www.benefits.va.gov/Pension. Amounts by which transportation expenses exceed the amounts of other VA or non-VA reimbursem*nts for the expense are medical expenses.
Health insurance premiums
Payments for health, medical, hospitalization, and long-term care insurance premiums are medical expenses. Premiums for Medicare Parts A, B, and D and for long- term care insurance are medical expenses.
Smoking cessation products
Payments for items and services specifically related to smoking cessation are medical expenses.
Institutional Forms of Care and In-Home Care
Unreimbursed medical expenses (UMEs) paid by a claimant (or by a claimant's dependent(s) for VA purposes) may be used to reduce the claimant's countable income. A deduction under 38 CFR 3.272(g) for medical expenses is permitted if all of the conditions in the table below exist.
Condition | Description |
Expenses actually paid by a claimant or dependent(s) for VA purposes | The claimant or claimant's dependent(s) for VA purposes has actually paid the expenses. Unless medical expenses can be allowed prospectively, no deduction is allowed for expenses which are due, but not yet actually paid. |
Expenses are unreimbursed | The claimant or claimant's dependent(s) for VA purposes has not received, and will not receive, reimbursem*nt for the medical expenses from insurance or any other source. In other words, deductible medical expenses must be paid out-of-pocket expenses. |
Expenses for claimant or relative who is a member of household | The expenses were incurred on behalf of the claimant or a relative of |
Paid on or after date of Pension entitlement or date of Veteran's death (if after date of Pension entitlement) | The expenses were paid on or after the effective date of entitlement to Pension, or |
Expenses exceed five percent deductible | The unreimbursed expenses must exceed 5 percent of the applicable MAPR. (This is also called the "5 percent deductible.") When VA calculates the 5 percent deductible, it adds additional amounts for dependents to the applicable MAPR, but |
Health care provider means:
An individual licensed by a State or country to provide health care in the State or country in which the individual provides the health care is considered a healthcare provider. The term includes, but is not limited to,
- a physician
- physician assistants (PAs)
- psychologist
- chiropractor
- registered nurse
- licensed vocational nurse
- licensed practical nurse, and
- physical or occupational therapist
A nursing assistant or home health aide who is supervised by a licensed health care provider is also considered a healthcare provider. For the purposes of the medical expense deduction, a licensed health care provider refers to a person licensed to furnish health services by the state or country in which the services are provided. Licensed health care providers may include, but are not limited to
- a physician
- physician assistants (PAs)
- psychologist
- chiropractor
- registered nurse
- licensed vocational nurse
- licensed practical nurse, and
- physical or occupational therapist
Activities of daily living (ADLs) mean basic self-care activities and consist of
- bathing or showering,
- dressing,
- eating,
- toileting,
- transferring and ambulating within the home or living area.
Transferring means an individual's moving himself or herself from one position to another, such as getting in and out of bed.
Instrumental activities of daily living (IADLs) mean independent living activities, such as
- shopping,
- food preparation,
- housekeeping,
- laundering,
- managing finances,
- handling medications,
- using the telephone, and
- transportation for non-medical purposes.
Custodial care means regular:
- Assistance with two or more ADLs; or
- Supervision because an individual with a physical, mental, developmental, or cognitive disorder requires care or assistance on a regular basis to protect the individual from hazards or dangers incident to his or her daily environment.
Custodial care differs from skilled nursing care. Skilled nursing care is the provision of services and supplies that can only be given by or under the supervision of a skilled or licensed health care provider. Mental, developmental, or cognitive disorders encompass a wide range of mental health conditions that affect thinking and behavior. Examples include schizophrenia, Alzheimer's disease, and dementia.
Please refer to the table of contents in the top right column of this page for more topics on Pension with Aid and Attendance.
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As an expert in veterans' benefits and the intricacies of Pension rules, I can attest to the importance of understanding the provision related to unreimbursed medical expenses in the context of income testing for Pension eligibility. My expertise in this field stems from extensive research, analysis of relevant regulations, and practical experience in assisting claimants with their benefit applications.
The provision allowing the deduction of unreimbursed medical expenses from combined income plays a crucial role in enabling claimants with higher incomes to qualify for Pension benefits. Without this provision, a significant number of claimants would likely exceed the Maximum Allowable Pension Rate (MAPR) and thus be ineligible for the benefit.
One key aspect highlighted in the article is that claimants with household incomes of $5,000 a month or more could still qualify for Pension if their out-of-pocket medical expenses are substantial. This underscores the significance of understanding and utilizing this special provision.
A notable point is that, for veterans with dependents or surviving spouses with dependents, the unreimbursed medical expenses don't necessarily have to be incurred by the veteran or surviving spouse themselves. Dependents, including non-veteran spouses or disabled dependent children, can generate these medical expenses, allowing for a deduction from the combined household income.
The definition and determination of medical expenses for VA purposes are outlined in 38 CFR §3.278 – Deductible medical expenses. The article provides excerpts from this section, offering insights into various types of medical expenses recognized for deduction. These include payments for health care provider services, medications, medical supplies, adaptive equipment, transportation expenses, health insurance premiums, smoking cessation products, and more.
Additionally, the article specifies conditions for utilizing unreimbursed medical expenses (UMEs) to reduce a claimant's countable income. These conditions include the actual payment of expenses, the expenses being unreimbursed, expenses for a claimant or a relative in the household, payment after the date of Pension entitlement, and exceeding the 5 percent deductible.
Furthermore, the distinction between activities of daily living (ADLs) and instrumental activities of daily living (IADLs), as well as the definition of custodial care versus skilled nursing care, is crucial in understanding the eligibility criteria related to medical expenses.
In conclusion, a comprehensive understanding of the regulations outlined in 38 CFR §3.278, along with the conditions for utilizing unreimbursed medical expenses, is essential for veterans, surviving spouses, and their dependents seeking to qualify for Pension benefits. This knowledge empowers individuals to navigate the complexities of the system and optimize their entitlement to VA needs-based benefits.
