VA Pension Math Demystified

I promise it’s not this difficult.


Believe it or not, VA Pension math is not a dark art or some kind of obscure black magic. Is it easy? Not really, but nor is it impossible. You, as a Veteran, spouse, caregiver, or VSO can do the math to see if your Pension application stands a good chance to get approved. There are always caveats and maybes and exceptions, so this is not a guarantee of anything related to receipt of benefits. The one thing I can say for sure is that your income being above the MAPR is not a denial waiting to happen; Pension is an equation and it has two sides. You have to remember to work the medical side and the income side to reach the right answer. Pension is based on income and net worth; this post only covers income. Net worth will be discussed when we show you how to fill out Pension forms in an upcoming post.

***Side note: it is unlawful for a third party to guarantee an award of benefits  – VA is the ultimate adjudicator. If you see an ad for a service that guarantees VA Pension acceptance, run like hell in another direction and tell everyone you know to do the same.***

I’ll do an easy example – all numbers here are monthly or annual where indicated and the Veteran’s pension claim is assumed to be submitted in December 2016 for an effective date of January 1, 2017…that keeps everything on a calendar-year schedule. There are cases that do not run on a calendar-year assumption; that will get covered during the in-depth discussion on medical expenses. I also don’t factor in taxes and the possibility that some medical expenses could not be used.

Scenario:

Tarzan is married to Jane; Tarzan served in World War II. Jane is not a Veteran. They live together with no one else in the home. Tarzan and Jane both collect Social Security; Tarzan’s monthly check is $1,427.90. Jane’s check is $491.00. These are net amounts.

They each pay $107.00 per month for Medicare Part B and $42.00 per month for Medicare Part D. They have no other insurances and no other sources of income. Tarzan takes prescription medication which totals $172 per month out of pocket, and he spent $327 on office visits last year. Jane had $3,742 in out of pocket medical expenses: $1,000 for a surgery, $1,000 in prescriptions, $742 for a new wheelchair, $500 for vitamins, and $500 for a medical alert service.

Explanation: 

Tarzan and Jane are married with no other dependents. They fall under the MAPR for Veteran with Spouse. Their income for VA purposes (IVAP) cannot exceed $16,902.

Tarzan’s income: check net + Part B + Part D = check gross. Incomes are counted as gross amounts, and medical expenses are used to reduce income, so the Parts B and D count on both sides of the equation. This is the same for Jane. Income is annualized and then rounded down; Pension only works in whole dollars. See below.

Income: 

Tarzan: $1427.9 + $107.0 + $42.0 = $1676.90, and $1676.90 * 12 = $20,122.80. Tarzan’s income is 20,122.

Jane: $491.0 + $107.0 + $42.0 = $640.0,  and $640.0 * 12 = 7,680. Jane’s income is 7,680.

$20, 122 + $7,680 = $27,802 for total income.

Medical Expenses: 

Tarzan: $107 * 12 = $1,084,  and $42 * 12 = $504. 172* 12 = $2,064. Add the $327 in copays: $1,084 + $504 + $2,064 + $327 = $3,979.

Jane: $107 * 12 = 1,084,  and $42 * 12 = $504. Add the $3,472 in expenses. $3,472 + $504 = $3,977.

Since the combined medical expenses for Veteran and spouse are greater than the 5% deductible amount of $845, add the two amounts and subtract the deductible. $3979 + $3977 = $7,956, then $7,956 – $845 = $7,111.

$27,802 – $7,111 = $20,691 in IVAP.

Is $20,691 (IVAP) higher than $16,902 (MAPR)? Yes, so this claim as submitted would be denied.

Any questions? Please feel free to comment.

-TPG

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