Part 05, Subpart 03, Chapter 01 - Income and Net Worth

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)

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

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

General Information on Payment Period Commencement Under 38 CFR 3.31....1-A-29
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13.Terminated Disability SS and Withdrawn SS Applications...... 1-B-17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

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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