May 7, 2009M21-1MR, Part V, Subpart iii, Chapter 1, Table of Contents

Chapter 1. The Effect of Income and Net Worth on Pension and Parents’ Dependency and Indemnity Compensation (DIC)

Table of Contents

Section A: General Information on the Effect Income and Net Worth Have
on Pension and Parents’ DIC

Overview...... 1-A-1

1.General Information on Pension and Parents’ DIC Programs...... 1-A-2

2.General Information on Concurrent Income and Net Worth Development
in DIC and Death Compensation Claims...... 1-A-9

3.Income Reporting for Pension and Parents’ DIC...... 1-A-12

4.Action to Take When Income for VA Purposes (IVAP) Is Uncertain...... 1-A-14

  1. Denying a Claim Because Income Exceeds the Maximum Annual Pension

Rate (MAPR) or Income Limit and Time Limits for Submitting Amended Income Information 1-A-17

6.Pension and Parent’s DIC Award Effective Dates and Payment Dates...... 1-A-28

  1. General Information on Payment Period Commencement Under 38 CFR 3.31....1-A-29
  2. Specific Exclusions to Payment Period Commencement Under 38 CFR 3.31.....1-A-38

Section B: Social Security Administration (SSA) Benefits Program

Overview...... 1-B-1

9.Overview of the SSA Benefits Program...... 1-B-2

10.Medicare...... 1-B-7

11.Computing Monthly SSA and Medicare Benefits...... 1-B-10

12.Sources for Accessing Social Security (SS) Information...... 1-B-15

13.Terminated Disability SS and Withdrawn SS Applications...... 1-B-17

Section C: Section 306 Pension and Old Law Pension

Overview...... 1-C-1

14.Determination of Countable Income for Section 306 or Old Law Pension...... 1-C-2

15.Counting the Income of a Spouse for Section 306 or Old Law Pension...... 1-C-9

16.Deductible Expenses...... 1-C-16

17.Adjustments Based on Changes in Income...... 1-C-22

18.Changes in Marital and Dependency Status...... 1-C-30

19.Handling Another Beneficiary’s Award When a Surviving Spouse’s or
Child’s Award Is Terminated...... 1-C-39

20.Sale or Transfer of Real Estate or Personal Property...... 1-C-41

Continued on next page

Table of Contents, Continued

Section D: Parents’ DIC

Overview...... 1-D-1

21.Original and Reopened Awards...... 1-D-2

22.Deductible Expenses...... 1-D-9

23.Proportionate Calculation of Income for Veterans Affairs Purposes (IVAP).....1-D-16

24.Adjustments Based on Changes in Income...... 1-D-20

25.Waiver of Retirement Income...... 1-D-26

26.Changes in the Marital or Dependency Status of Parents...... 1-D-32

27.Sale or Transfer of Real Estate or Personal Property...... 1-D-38

Section E: Improved Pension – Basic Rate Determinations

Overview...... 1-E-1

28.Determining the Monthly Rate of Payment...... 1-E-2

29.Determining the Maximum Annual Pension Rate (MAPR)...... 1-E-6

30.Veterans Who Are Married to Each Other...... 1-E-8

31.Surviving Child Entitled to Improved Death Pension in His/Her Own Right....1-E-10

32.Income Classifications...... 1-E-16

33.Counting Income for Department of Veterans Affairs Purposes (IVAP)...... 1-E-19

34.Counting Income During the Initial Period...... 1-E-30

35.Award Notice to Claimant...... 1-E-39

36.Using Special Law (SL) Codes 14 and 18...... 1-E-41

Section F: Improved Pension – Dependents

Overview...... 1-F-1

37.Establishing Dependents for Improved Pension Purposes...... 1-F-2

38.Counting the Income of Dependents...... 1-F-7

39.Removing Dependents From Improved Pension Awards...... 1-F-20

40.Removing the Income of Dependents...... 1-F-25

Continued on next page

Table of Contents, Continued

Section G: Improved Pension – Deductible Expenses

Overview...... 1-G-1

41.Overview of Deductible Expenses...... 1-G-2

42.Medical Expense Deductions...... 1-G-4

43.Sources of Medical Expenses...... 1-G-8

44.Processing Medical Expense Deductions...... 1-G-17

45.Verifying Medical Expenses...... 1-G-32

46.Final Expense Deductions – Overview and Definitions...... 1-G-43

47.Processing Final Expense Deductions...... 1-G-46

48.Educational Expense Deductions...... 1-G-56

49.Child’s Income Deductions...... 1-G-58

50.Hardship Deduction From a Child’s Income...... 1-G-60

51.Specific Deductions for Gross Business Income and Permanent and Total (PT)
Disability or Death Expenses...... 1-G-72

Section H: Improved Pension – Adjustments Based on Changes in Status

Overview...... 1-H-1

52.Adjustments Based on Changes in Income...... 1-H-2

53.Cost-of-Living Adjustments (COLAs)...... 1-H-9

54.Adjustments for the Loss of Disability SS...... 1-H-16

55.Effect of Terminated Death Pension Awards on Other Beneficiaries...... 1-H-18

Section I: Improved Pension – Counting Specific Types of Income

Overview...... 1-I-1

56.Income Inclusions...... 1-I-2

57.Income Inclusions From Government Programs...... 1-I-6

58.Income Exclusions...... 1-I-9

59.Living/Home Income Exclusions...... 1-I-15

60.Disaster Income Exclusions...... 1-I-17

61.Death and Disability Income Exclusions...... 1-I-18

62.Income From Mortgage or Contract for Deed...... 1-I-20

63.Indian Income...... 1-I-22

64.Income From the Sale of Property...... 1-I-26

65.Asset Transfers and Life Estates: Effect on Net Worth and Income...... 1-I-29

  1. Exhibits 1 and 2: Payments Excluded by Federal Statutes in Calculating Income

and/or Net Worth...... 1-I-32

Continued on next page

Table of Contents, Continued

Section J: Net Worth

Overview...... 1-J-1

67.General Information on Net Worth...... 1-J-2

68.Adjusting Improved Pension Awards Based on Changes in Net Worth...... 1-J-6

69.Adjusting Section 306 Pension Awards Based on Changes in Net Worth...... 1-J-10

70.Denial Due to Excessive Net Worth...... 1-J-12

71.Developing the Value of Real Estate...... 1-J-17

72.Exhibit 1: Life Expectancy Table for Net Worth Determinations...... 1-J-20

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