Understanding Deductible Medical Expenses and Reporting Periods

Deductible Medical Expenses Pension and Fiduciary Service (P&FS) June 2022

Lesson Objectives At the end of this lesson, you will be able to: Learn what qualifies as an unreimbursed medical expense (UME) Understand the key definitions regarding the types of care and medical expenses Recognize the requirements for medical expense deductions Demonstrate how to breakdown medical expense reporting periods and when to count them on a beneficiary s award Exhibit how to calculate medical expenses 2

References 38 CFR 3.31 38 CFR 3.272(g) M21-1 Part IX.iii.1.A M21-1 Part IX.iii.1.G 3

Unreimbursed Medical Expenses (UMEs) UMEs are paid by a claimant (or claimant s dependent(s) for VA purposes) and may be used to reduce the claimant's countable income. 4

Unreimbursed Medical Expenses (UMEs) All the following conditions must exist: Expenses actually paid by a claimant or dependent(s) for VA purposes Expenses are unreimbursed Expenses for claimant or relative who is a member of the household Paid on or after date of pension entitlement or date of Veteran s death Expenses exceed 5% deductible 5

Time Limit for Reporting UMEs Previous underpayment the evidence must be received within the same or next calendar year Previous overpayment the evidence must show the expenses were incurred during the appropriate reporting period and there is no time limit for submission 6

Common Allowable Medical Expenses Adaptive equipment Care by a health care provider Health insurance premiums Institutional forms or care and in-home care Medications, medical supplies/equipment/food, vitamins, and supplements (restrictions may apply) Smoking cessation products Transportation expenses 7

Common definitions Nursing Home Medical Foster Home Care Facility Other Than a Nursing Home Licensed Health Care Provider 8

Nursing Home Any extended care facility which is licensed by a State to provide skilled or intermediate-level nursing care, or A nursing home care unit in a State Veterans home which is approved for payment in 38 U.S.C.1742 9

Medical Foster Home A privately owned residence, recognized and approved by VA, that offers a non-institutional alternative to nursing home care for veterans who are unable to live alone safely due to chronic or terminal illness For pension purposes, An MFH that VA has recognized and approved under the MFH Program is equivalent to a nursing home 10

Care Facility Other Than a Nursing Home Facility in which a disabled individual receives health care or custodial care Must be licensed if facilities of that type are required to be licensed in the State or county in which the facility is located Residential facilities must be staffed 24 hours per day with care providers 11

Licensed Health Care Provider A person licensed to furnish health services by the state or county in which the services are provided, such as: A physician Physician assistant Psychologist Chiropractor Registered nurse Licensed vocational/practical nurse Physical or occupational therapist 12

Custodial Care Must be reviewed if claimant claims room and board in a facility other than a nursing home Regular supervision because a person with a physical, mental, developmental, or cognitive disorder requires care or assistance on a regular basis to be protected from hazards or dangers to his or her daily environment Assistance with two or more Activities of Daily Living (ADLs) 13

ADL and IADL Activities of daily living (ADLs) are basic self-care activities Instrumental activities of daily living (IADLs) are activities other than basic self-care that are needed for independent living 14

Aid and Attendance (A&A) and Housebound Benefits (HB) Veterans and surviving spouses may be eligible for A&A or HB benefits If a medical expense deduction requires a claimant to be in need of A&A or HB, then VA may deduct the expense during the initial year or calendar year in which VA determined the claimant to be in need of A&A or HB 15

Nursing Home Expenses Allow a medical expense deduction if a responsible official of the nursing home certifies the claimant or relative is a patient. VA Form 21-0779 Documented call on VA Form 27-0820b Official statement provided by the nursing home Financial statements showing proof of monthly payment 16

Expenses at Care Facilities Other Than a Nursing Home Payments for health care provided by a health care provider are medical expenses Payments to anyone assisting with ADL and IADLs are medical expenses if the person is rated A&A/HB or protected environment statement Payments for meals and lodging are medical expenses if the facility provides health or custodial care or a medical professional states must reside in the facility to receive the care 17

In-Home Attendants Attendant provides health or custodial care Payments must commensurate with the number of hours the provider attends to the disabled person Attendant must be a licensed health care provider unless: The disabled individual is rated for A&A or HB A medical professional states in writing the individual requires the health or custodial care the in-home attendant provides 18

In-Home Attendant Fees Documentation is required, such as: A receipt bill Statement on the provider s letterhead Computer summary W-2 Ledger Bank statement Evidence must show: Amount paid Date payment was made Purpose of the payment Name of the person to whom the product or service was provided Identification of the provider to whom payment was made 19

Medical Insurance Premiums Premiums paid by the claimant or spouse for health, medical, long-term care, or hospitalization insurance are allowable medical expenses Example Social Security Medicare premiums 20

Medicare Premiums Premiums for Medicare Parts A, B, and D and long-term care insurance are medical expenses Allow a deduction for Medicare Part B premiums as a continuing medical expense without a specific claim from the claimant, if information from a Share SSA inquiry or submitted by the claimant indicates the claimant pays the premium 21

Nonprescription Drugs, Medical Supplies, Vitamins, Food Supplements, ect. Nonprescription drugs, medical supplies, vitamins, food supplements, and herbal remedies are allowable expenses without a prescription up to $1,500 per household per calendar year. After $1,500, development to the claimant for proof that a health care provider instructed the claimant or relative to purchase the items If no response is received, only count $1,500 22

Adaptive Equipment Payments for adaptive devices or service animals, including veterinary care, used to assist a person with an ongoing disability are medical expenses Do not allow a medical expense deduction for equipment that would normally be used by a nondisabled person 23

Medical Expense Deductions A standard form must be used for claims that will result in increased benefit payments Must provide all required information Medical Expenses may be allowed prospectively if recurring and reasonably predictable Deduct the estimated actual amount from the beginning of the reporting period in which the expenses began Allow the annualized amount as a CME from the beginning of the following calendar year 24

Adjusting Award If prospective medical expenses were allowed from the payment date of an original or new award or from the beginning of a reporting year then adjust for the initial year based on the amount of actual medical expenses paid during the year If they were allowed from a date after the end of the initial year, adjust at the end of a calendar year based on the amount of actual medical expenses paid during that calendar year 25

Medical Expense Reporting Medical expense reporting generally coincides with the calendar year Initial year for a pension award extends from the date of the award (or date of the Veteran s death) to 12 months after the payment date The first calendar year is from the first of the year after entitlement to the end of the calendar year 26

Overlapping Periods Overlapping periods are when the initial year overlaps the first calendar year If an overlapping period is involved: calculate medical expenses for each reporting period separately, and allow the greater amount of medical expenses during the overlap 27

Overlapping Periods When allowing the greater amount of medical expenses during the overlapping period, claims processors must take into consideration The Omnibus Budget Reconciliation Act of 1982 If an overlapping period increases a pension award, then the increase will be effective the first of the month after the start of the overlapping period Commonly omnibus periods are effective February 1st of a given year 28

A, B and C Periods Initial and calendar year can be separated into three periods - A, B and C periods Example- Veteran is entitled to Pension benefits effective July 7, 2019 A period - July 7, 2019 - December 31, 2019 B period - January 1, 2020 - July 31, 2020 C period - August 1, 2020 - December 31, 2020 Overlapping period is January 1, 2020 - July 31, 2020 29

A, B and C Periods A surviving spouse applied for pension benefits on July 6, 2020. The veteran passed away on August 24, 2019. The application was processed, and survivors pension benefits were awarded. The A, B and C periods are below: A - August 24, 2019 - December 31, 2019 B - January 1, 2020 - August 31, 2020 C - September 1, 2020 - December 31, 2020 30

Counting the A, B and C Periods A - August 24, 2019 - December 31, 2019 $500 B - January 1, 2020- August 31, 2020 $1,000 C - September 1, 2020- December 31, 2020 $700 Count $1,500 - from the effective date of the award Count $1,700 - from February 1, 2020, because Omnibus applies 31

Medical Expense Reporting For a claimant s initial year, the claimant has through the end of the calendar year that follows the end of the initial calendar year to submit medical expenses Example- Entitlement began August 24, 2019 Claimant has until December 31, 2021, to submit medical expenses Claimant has until the end of the calendar year that follows any given calendar year 32

Reconsidering Excess Income Claims Calculate IVAP based on income and expenses projected from the effective date of the award to the date that is 12 months from the first of the month after the effective date if the basis for reconsidering the claim is anticipated payment of prospective medical expenses If medical expenses were paid after the effective date of the award, then adjust the IVAP 12 months from the payment date of the award or from February of the next calendar year 33

Adjusting Awards for a Reduction in CMEs If a beneficiary reports a reduction in the level of continuing medical expenses, adjust the award effective the beginning of the reporting period based on the actual medical expenses paid during that reporting period 34

Nonrecurring Medical Expenses Medical expenses that are not allowed prospectively are nonrecurring medical expenses Apply nonrecurring medical expenses against otherwise countable income for the reporting period (initial or calendar year) during which the expenses were paid 35

Notice to Claimants When recurring medical expenses are first allowed: Inform the claimant of the basis of the award Advise that failure to report a reduction in unreimbursed expenses or an increase in income will result in an overpayment When recurring medical expenses are disallowed: Inform the claimant of the basis of disallowance Advise that VA will consider all reported actual medical expenses at the end of the reporting period if claimed on a prescribed form 36

Summary The objectives of the lesson were addressed through the following topics: Unreimbursed Medical Expenses (UMEs) Time Limit for Reporting UME s Common definitions Aid and Attendance (A&A) and Housebound Benefits (HB) Nursing Home Expenses Expenses at Care Facilities Other Than a Nursing Home In-Home Attendants Medical Insurance Premiums Medicare Premiums Nonprescription Drugs, Medical Supplies, Vitamins, Food Supplements, ect. Adaptive Equipment Medical Expense Deductions Adjusting Award Medical Expense Reporting Overlapping Periods A, B, and C Periods Reconsidering Excess Income Claims Adjusting Awards for a Reduction in CMEs Nonrecurring Medical Expenses Notice to Claimants 37

31. Questions? Questions about this training may be directed to the P&FS Training, Quality and Oversight inbox PFTNGQUALOVRST.VBACO@va.gov

TMS Satisfaction Survey Complete the Deductible Medical Expenses course survey: TMS ID# 4564559 39