Monday, February 17, 2014

Income for VA Purposes - IVAP

Unreimbursed Medical Expenses

The VA terminology is confusing, to say the least.  We’ve discussed what a Pension is, but you may be wondering how the VA figures out Income for VA Purposes, or IVAP. 

The definition of IVAP means all of the income received by the individual applying for the benefit, and all of the income of the spouse as well.  That income may include Social Security, Pension, mandatory IRA distributions, annuity payments, and interest income.  This list is not exhaustive, but basically any money that the veteran, spouse, or surviving spouse receive may be considered income.  However, for IVAP purposes, the term income actually means all the money received, minus unreimbursed medical expenses – or “UME’s” in VA-speak.  In other words, medical expenses that are not paid for by insurance, Medicare, long-term care insurance, or another program or party may be considered to be unreimbursed medical expenses.

So what kinds of expenses are unreimbursed medical expense?

The answer, like the answer to so many other legal questions is, that depends.

If the veteran, spouse, or surviving spouse is in a nursing home or an assisted living that provides custodial care and assistance with the activities of daily living, the room and board at the facility may be considered to be an unreimbursed medical expense. 

A recent “fast letter” issued by the VA outlines the circumstances under which the room and board may be deducted from income.  The letter, which is an explanation to those VA employees trying to determine which medical expenses qualify, states that

“The cost of room and board at a residential facility is a UME if the facility provides custodial care to the individual, or the individual’s physician states in writing that the claimant must reside in that facility to separately contract for custodial care with a third-party provider.

A facility provides custodial care if it assists the individual with two or more ADL’s.

If the facility does not provide the claimant custodial care, or the claimant’s physician does not prescribe care by a third-party provider in that facility, VA will not deduct the cost of any medical or nursing services obtained from a third-party provider.

So you can see that if a claimant is deficient in Activities of Daily Living (ADL’s), and the facility provides assistance with those ADL’s, the money paid for rent and food at the facility will be deducted from the income.  If, however, the claimant is at facility that is better characterized as an independent living facility, and the claimant is only there because they need assistance with meal preparation and transportation, the room and board will not be considered to be a medical expense and cannot be counted to offset income.

Can room and board ever be considered as a UME if the resident is in an Independent Living Facility?  If a physician prescribes third-party custodial care that can only be provided in the facility, the room and board can be used as a medical expense.  Most ILF’s contract with home-care companies to provide assistance with ADL’s to their residents.  The facilities themselves are not licensed to provide such care, so they make arrangements with other companies to send their employees in to provide the care.

So, in addition to room and board, what other medical expenses can be deducted?

For an initial application, the VA considers what they characterize as prospective, recurring expenses that are likely to continue for the twelve months following the initial application.  Home care provided by an in-home attendant may be deducted from income if the veteran or spouse has been rated as housebound or in need of Aid & Attendance.  In that case, the attendant need not be a licensed healthcare professional.  If the veteran or spouse has not been rated as housebound or in need of the Aid & Attendance of another person, the in-home attendant must be a licensed healthcare professional in order for the expenses to count as unreimbursed.

The VA considers health or hospitalization insurance premiums for both the veteran and the spouse to be unreimbursed medical expenses.  The monthly Medicare insurance premiums deducted from Social Security are considered unreimbursed medical expenses.

For the most part, the VA does not count payment for prescription medications as unreimbursed medical expenses on the initial application.  However, prescription expenses may be claimed as additional expenses after the first year.  

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