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Updated Mar 04, 2025

In This Section
This section contains the following topics:

1.  Overview of Deductible Expenses

Introduction
This topic contains an overview of deductible expenses for income for Department of Veterans Affairs (VA) purposes (IVAP) in current-law pension cases, including

Change Date
April 16, 2021

IX.iii.1.G.1.a.  Two Types of Deductible Expenses
There are two types of deductible expenses, those that are allowed
  • as deductions from total countable income, and
  • only as deductions from specific income.
Reference:  For more information on deductions from specific income, see M21-1, Part IX, Subpart iii, 1.K.6.

IX.iii.1.G.1.b.  Reporting Deductible Expenses to Reduce Overpayment
There is no time limit for submitting a report of deductible expenses to reduce or eliminate an overpayment in a pension account.  However, the deductible expenses must have been paid during the same reporting period in which the overpayment was created.
It makes no difference whether the overpayment was created because of a change in income or a change in the maximum annual pension rate (MAPR).  If the overpayment was previously repaid or recouped, deductible expenses can be used to issue a retroactive payment if the retroactive amount does not exceed the amount repaid or recouped.  Otherwise, apply the time limits in 38 CFR 3.660(b) if the report of deductible expenses is submitted for the purpose of receiving retroactive benefits.

IX.iii.1.G.1.c.  Example 1:  Deductible Expenses
Example:
  • A Veteran was paid pension during the initial period June 16, 2011, through June 30, 2012, based on reported income for Department of Veterans Affairs (VA) purposes (IVAP) of $0.
  • In 2013, an overpayment is created because the Veteran actually earned $9,000 during the initial period.
  • In 2015, the Veteran submits a report of medical expenses paid during the initial period.
Result:  Accept the report of medical expenses solely for the purpose of reducing the overpayment.  No retroactive benefits can be paid because the medical expense report was not submitted within 38 CFR 3.660(b) time limits.  (The time limit in this situation was December 31, 2013.)

IX.iii.1.G.1.d.  Example 2:  Deductible Expenses
Example:
  • VA discontinued a Veteran’s pension award in 2010 and overpaid the Veteran $2,000 during 2010.
  • VA later recoups $1,000 of the $2,000 pension overpayment when the Veteran started receiving compensation from which the overpayment was recovered.
  • During 2015, the Veteran reports payment of previously unreported 2010 medical expenses.  If accepted, these expenses would eliminate the $1,000 overpayment and generate a $500 retroactive payment.
Result:  Use the medical expenses to eliminate the overpayment and issue a $500 retroactive payment because the amount of the retroactive payment will be less than the amount previously recovered.

2.  UME Deductions

Introduction
This topic contains information on medical expense deductions, including

Change Date
March 4, 2025

IX.iii.1.G.2.a.  Rules for Deductibility of UMEs
38 CFR 3.278(c) defines medical expenses for VA purposes as payments for items or services that are medically necessary; that improve a disabled individual’s functioning; or that prevent, slow, or ease an individual’s functional decline.  Refer to M21-1, Part IX, Subpart iii, 1.G.2.c for a list of common allowable medical expenses.
Unreimbursed medical expenses (UMEs) paid by a claimant (or by a claimant’s dependent(s) for VA purposes) may be used to reduce the claimant’s countable income.  A deduction under 38 CFR 3.272(g) for medical expenses is permitted if all the conditions in the table below exist.
Condition
Description
Expenses actually paid by a claimant or dependent(s) for VA purposes
The claimant or claimant’s dependent(s) for VA purposes has actually paid the expenses.  Unless medical expenses can be allowed prospectively, no deduction is allowed for expenses which are due, but not yet actually paid.
Expenses are unreimbursed
The claimant or claimant’s dependent(s) for VA purposes paid out-of-pocket and has not received or will not receive reimbursement for the medical expenses from insurance or any other source.
Expenses for claimant or relative who is a member of household
The expenses were incurred on behalf of the claimant or a relative of the claimant (not necessarily a dependent for VA purposes) who is a member or constructive member of the claimant’s household.
Note:  Constructive member means that the expenses can be for a spouse in a nursing home, a child away at school, or a similar situation.
Paid on or after date of pension entitlement or date of Veteran’s death (if after date of pension entitlement)
The expenses were paid on or after
  • the effective date of entitlement to pension, or
  • the date of the Veteran’s death, when the date of the Veteran’s death is later than the date of pension entitlement.
Expenses exceed the 5 percent deductible
The unreimbursed expenses must exceed the 5 percent of the applicable MAPR.  This is also called the “5 percent deductible.” When VA calculates the 5 percent deductible, it
  • adds additional amounts for dependents to the applicable MAPR, but
  • does not add additional amounts for aid and attendance (A&A) or housebound.
Reference:  For more information on the applicable MAPR, see the pension rate tables.

IX.iii.1.G.2.b.  Example:  Rules for UME Deductibility
Example:
  • A married Veteran who is entitled to A&A claims payment of UMEs of $3,000.
  • Effective December 1, 2014, the MAPR for a Veteran with one dependent is $16,851.  The Veteran’s entitlement to A&A is disregarded.
Calculation:  The table below outlines the calculation for determining the deductible medical expenses.
Step
Calculation
Description
1
$16,851
x 0.05
$842
MAPR
5 percent
5 percent deductible (rounded down)
2
$3,000
– $842
$2,158
Gross medical expenses
5 percent deductible
Deductible medical expenses
Important:  It is rarely necessary to go through the process outlined in the example above.  When gross medical expenses are entered in the MEDICAL EXPENSE tab found in the FINANCIAL screen of the Veterans Benefits Management System (VBMS)-Awards (VBMS-A), the system performs the necessary calculations.

IX.iii.1.G.2.c. List of Common Allowable Medical Expenses
The list below shows some of the common allowable medical expenses.
  • adaptive equipment
  • care by a health care provider for services performed within the scope of the provider’s professional capacity
  • cosmetic procedures that a health care provider performs to improve a congenital or accidental deformity or related to treatment for a diagnosed medical condition
  • health insurance premiums
  • institutional forms of care and in-home care
  • medications (to include prescription and non-prescription), medical supplies, medical equipment
  • medical food, vitamins, and supplements – certain requirements may apply as noted by M21-1, Part IX, Subpart iii, 1.G.3.r
  • smoking cessation products, and
  • transportation expenses for medical purposes.
Important:  This list is not all-inclusive.  Allow all expenses that are directly related to medical care.
Notes:
  • Medical supplies include items such as incontinence supplies, bandages, thermometers, heating pads, back braces, compression stockings, and first aid kits.
  • The mileage reimbursement rates for medical purposes are:
    • 70 cents per mile from January 1, 2025
    • 67 cents per mile from January 1, 2024
    • 65.5 cents per mile from January 1, 2023
    • 62.5 cents per mile from July 1, 2022, through December 31, 2022
    • 58.5 cents per mile from January 1, 2022, through June 30, 2022
    • 56 cents per mile from January 1, 2021
    • 57.5 cents per mile from January 1, 2020
    • 58 cents per mile from January 1, 2019
    • 54.5 cents per mile from January 1, 2018
    • 53.5 cents per mile from January 1, 2017
    • 54 cents per mile from January 1, 2016
    • 57.5 cents per mile from January 1, 2015
    • 41.5 cents per mile from January 1, 2009, through December 31, 2014
    • 28.5 cents per mile from January 1, 2008, through December 31, 2008, and
    • 20 cents per mile before January 1, 2008.
References:  For more information on

3.  Sources of Medical Expenses

Introduction
This topic contains information on the sources of medical expenses, including

Change Date
August 17, 2022

IX.iii.1.G.3.a.  Definition:  Nursing Home
For the purposes of the medical expense deduction, a nursing home means:
  • 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 under 38 U.S.C. 1742.
Reference:  For more information on nursing homes, see

IX.iii.1.G.3.b. Definition:  MFH
A medical foster home (MFH) means 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.
Reference:  For more information on the MFH Program, see

IX.iii.1.G.3.c.  Definition:  Care Facility Other Than a Nursing Home
Care facility other than a nursing home means a facility in which a disabled individual receives health care or custodial care.  A facility must be licensed if facilities of that type are required to be licensed in the State or country in which the facility is located.  A facility that is residential must be staffed 24 hours per day with care providers.
References:  For more information on

IX.iii.1.G.3.d.  Definition:  Licensed Health Care Provider
For the purposes of the medical expense deduction, a licensed health care provider refers to a person licensed to furnish health services by the State or country in which the services are provided.  Licensed health care providers may include, but are not limited to
  • a physician
  • physician assistants
  • psychologist
  • chiropractor
  • registered nurse
  • licensed vocational nurse
  • licensed practical nurse, and
  • physical or occupational therapist.
Reference:  For more information on licensed health care providers see 38 CFR 3.278(b)(1).

IX.iii.1.G.3.e.  Facility Type and Medical Expenses
The medical expense deduction should be contingent on the sort of care the disabled individual is receiving in the facility and the necessity for the individual to be there, not the name of the facility.  However, if the facility type is unclear or the facility contains different housing options and it is unclear in which part the claimant or relative resides, call the facility to verify facility type.  Document the call on VA Form 27-0820, Report of General Information or VA Form 27-0820b, Report of Nursing Home or Assisted Living Information, if more information is needed.
Note:  If unable to reach the facility, send the claimant a 30-day development letter requesting proof of facility type.

IX.iii.1.G.3.f.  Custodial Care vs. Skilled Nursing Care
If a claimant claims room and board expenses in a facility other than a nursing home, or another facility that does not qualify as a nursing home or MFH, then custodial care must be reviewed.
Custodial care means 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 incident to their daily environment, or
  • assistance with two or more activities of daily living (ADLs).
Custodial care differs from skilled nursing care.  Skilled nursing care is the provision of services and supplies that can only be given by or under the supervision of a skilled or licensed health care provider.
Note:  Mental, developmental, or cognitive disorders encompass a wide range of mental health conditions that affect thinking and behavior.  Examples include schizophrenia, Alzheimer’s disease, and dementia.
Reference:  For more information on custodial care, see 38 CFR 3.278(b)(4).

IX.iii.1.G.3.g.  ADL and IADL
ADLs are basic self-care activities, consisting of
  • bathing or showering
  • dressing
  • eating
  • getting in or out of bed or a chair (transferring)
  • toileting, and
  • ambulating within the home or living area.
ADLs do not include instrumental ADLs (IADLs).  IADLs are activities other than basic self-care that are needed for independent living.  Examples of IADL include
  • shopping
  • food preparation
  • housekeeping
  • laundering
  • handling medication
  • managing finances
  • using the telephone, and
  • transportation for non-medical purposes.
Note:  Pull cords, 24-hour staffing, and locked exterior doors are not considered either ADL or IADL, although they may be indicative of a protected environment.

IX.iii.1.G.3.h.  Eligibility for A&A and Housebound for Medical Expense Deduction Purposes
Certain medical expense deductions require distinguishing persons who are and who are not eligible to be rated for A&A or housebound.
For pension, the following persons
  • may be rated for A&A or housebound
    • Veterans, and
    • surviving spouses, and
  • may not be rated for A&A or housebound
    • spouses of living Veterans
    • children, or
    • any other relative who is a member or constructive member of the Veteran’s or surviving spouse’s household.
Exception:  A living Veteran’s spouse may be rated for A&A (but not housebound) if the Veteran is dually entitled to compensation of at least 30 percent.
Note:  For Parents’ Dependency and Indemnity Compensation (DIC), parents may be rated for A&A, but not housebound.

IX.iii.1.G.3.i.  A&A or Housebound Effective Date vs. IVAP
A decision regarding the IVAP amount is separate from a decision regarding the effective date from which the A&A or housebound rate is payable.
If a medical expense deduction requires a claimant (or spouse) to be in need of A&A or housebound, then VA may deduct the expense during the initial year or calendar year in which VA determined the claimant (or spouse) to be in need of A&A or housebound.
Note:  This block generally applies to claimants who are in a care facility or who are receiving in-home care.

IX.iii.1.G.3.j.  Medical Expense Deduction for Nursing Home Fees
Allow a medical expense deduction for nursing home fees if a responsible official of the nursing home certifies that the claimant or relative is a patient (as opposed to a resident) of the nursing home.
Verify nursing home fees if/when one of the following situations exists:
  • nursing home fees of $5,000 per month or more are first claimed at a particular facility, or
  • the claimed expenses are questionable as defined in M21-1, Part IX, Subpart iii, 1.G.5.a.
Examples of verification include
Notes:
  • Do not request verification of nursing home expenses if written verification of substantially the same nursing home expenses (from the same nursing home) is already of record.
  • If a documented call on VA Form 27-0820b is used to verify expenses, the decision notice to the claimant must make reference to the call.
References:  For more information on

IX.iii.1.G.3.k.  Medical Expense Deduction for Care Facility Other Than Nursing Home Fees
Payments for health care provided by a health care provider are medical expenses for all pension beneficiaries to include those receiving special monthly pension or those that need to be in a protected environment.
Payments for assistance with ADL and IADL are medical expenses, regardless of if the provider is a health care provider, if the disabled individual is receiving health care or custodial care in a facility and either
  • the disabled individual is determined by rating to require A&A or housebound, or
  • a physician, physician assistant, certified nurse practitioner, or clinical nurse specialist states in writing that, due to a physical, mental, developmental, or cognitive disorder, the individual needs to be in a protected environment.
Payments for meals and lodging (and other facility expenses not directly related to health care or custodial care) are medical expenses if
  • the facility provides or contracts for health care or custodial care for the disabled individual, or
  • a physician, physician assistant, certified nurse practitioner, or clinical nurse specialist states in writing that the individual must reside in the facility (or a similar facility) to separately contract with a third-party provider to receive health care or custodial care or to receive (paid or unpaid) health care or custodial care from family or friends.
Verify facility fees if/when one of the following situations exists:
  • facility fees of $5,000 per month or more are first claimed at a particular facility, or
  • the claimed expenses are questionable as defined in M21-1, Part IX, Subpart iii, 1.G.5.a.
Examples of verification include
  • a documented call on VA Form 27-0820b
  • an official statement provided by the facility, or
  • financial statements showing proof of monthly payment.
Notes:
  • Payments to hospitals, nursing homes, MFH, and inpatient treatment centers (including inpatient treatment centers for drug or alcohol addiction), including the cost of meals and lodging charged by such facilities, are medical expenses.
  • If it is established that a claimant or relative in a governmental institution is participating in a program of therapy or rehabilitation supervised by a physician, or a physician, physician assistant, certified nurse practitioner, or clinical nurse specialist states in writing that the claimant or relative has a medical condition that makes such a level of care necessary, allow the entire amount paid as a deductible expense.
  • A physician, physician assistant, certified nurse practitioner, or clinical nurse specialist’s statement specifically addressing the issue of whether an individual who is not entitled to A&A or housebound needs to be in a protected environment must be of record, even if the individual’s diagnosis is known.
References:  For more information on

IX.iii.1.G.3.l.  Example:  Custodial Care for a Dependent
Example:  A child of a Veteran is placed in a State school for those with special needs.  VA has rated the child as incapable of self-support.  The child participates in a program of therapy supervised by a physician.  The Veteran reports that the child’s Social Security goes to the State to pay for the child’s care.  In addition, the Veteran pays the State $200 per month.
Result:  Do not allow a medical expense deduction for the Social Security payments because this money is not paid from the Veteran’s funds.  The child’s Social Security would not be counted as income of the Veteran.  Allow a medical expense deduction for the $200 per month the Veteran pays to the State out of the Veteran’s own funds, because there is evidence that a physician has stated the child needs the level of care that the State school provides.
Reference:  For more information on deducting medical expenses, see M21-1, Part IX, Subpart iii, 1.G.2.a.

IX.iii.1.G.3.m.  In-Home Attendants for a Disabled Person
Payments for assistance with ADL and IADLs by an in-home attendant are medical expenses as long as the attendant provides the disabled individual with health care or custodial care.
Payments must be commensurate with the number of hours that the provider attends to the disabled person.  Monthly rates in excess of $5,000 require verification and documentation.
The attendant must be a licensed health care provider unless
  • the disabled individual is determined by rating to require A&A or housebound, or
  • a physician, physician assistant, certified nurse practitioner, or clinical nurse specialist states in writing that, due to a physical, mental, developmental, or cognitive disorder, the individual requires the health care or custodial care that the in-home attendant provides.
Notes:
  • Examples of medical and nursing services include physical therapy, administration of injections, placement of indwelling catheters, and the changing of sterile dressings.
  • Examples of custodial care include assisting a person with ADL and may include assisting a person with IADL alone when the person has a physical, mental, developmental, or cognitive disorder.
Example:  A Veteran is rated in need of A&A by VA.  The Veteran pays an attendant to administer medication and provide for the Veteran’s personal needs.  The attendant also cooks the Veteran’s meals and cleans house.
Allow the entire amount paid to the attendant as a deductible medical expense.  It makes no difference whether the attendant is a licensed health care provider.
References:  For more information on

IX.iii.1.G.3.n.  Verification of In-Home Attendant Fees Required 
The claimant is required to submit verification of attendant fees when
Reference:  For more information on questionable medical expenses, see M21-1, Part IX, Subpart iii, 1.G.5.a.

IX.iii.1.G.3.o.  Documentation of In-Home Attendant Fees 
If the fees for an in-home attendant require verification as described by M21-1 Part IX, Subpart iii.1.G.3.n, receipts or other documentation are required.
Documentation includes
  • a receipt bill
  • statement on the provider’s letterhead
  • computer summary
  • an Internal Revenue Service Form W-2, Wage and Tax Statement
  • ledger, or
  • bank statement.
The evidence submitted must include the
  • amount paid
  • date payment was made
  • purpose of the payment (the nature of the product or service provided)
  • name of the person to or for whom the product or service was provided, and
  • identification of the provider to whom payment was made.

IX.iii.1.G.3.p.  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.
Premiums paid for life insurance or burial insurance are not allowable medical expense deductions.
Note:  Some hospitalization policies pay the beneficiary on admission to a hospital even if the beneficiary incurs no out-of-pocket expense, for example, beneficiary is admitted to a charity hospital.  Premiums paid for such a policy are deductible medical expenses.  Amounts received by a beneficiary from such a policy are countable income if they are not paid to cover the costs of the hospitalization.
References:  For more information on

IX.iii.1.G.3.q.  Medicare Premiums
Premiums for Medicare Parts A, B, and D and for 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 obtained using the Social Security Administration (SSA) INQUIRY command or submitted by the claimant indicates that the claimant pays the premium.
Unless an earlier effective date is supported by the evidence of record
  • grant the medical expense from the first of the month following the effective date of the Medicare Part B premiums subject to 38 CFR 3.31
  • advise the claimant, and
  • solicit a claim for an earlier effective date if the SMI START DATE field in the SSA INQUIRY screen precedes the date the expense is being counted.
This is an exception to the general rule that all deductible expenses must be specifically claimed.
Important:
  • A claimant may be paying Medicare premiums even if they are not eligible for Social Security monetary benefits.
  • Use care when interpreting information obtained from a VBMS/Share SSA INQUIRY command.  Do not allow a deduction for Medicare Part B premiums, if the SSA BASIC INFO screen shows
    • Pd by State in the SMI OPTION CODE field, and
    • a date in the SMI START DATE field.
Reference:  For more information on using Share, see the Share User Guide.

IX.iii.1.G.3.r.  Vitamins, Food Supplements, and Herbal Remedies
If a health care provider authorized to write prescriptions directs a claimant or relative to purchase vitamins, food supplements, and/or herbal remedies, the cost of such items is an allowable medical expense deduction.
Develop to the claimant for proof that a health care provider, authorized to write  prescriptions, instructed the claimant or relative to purchase vitamins, food supplements, and/or herbal remedies if the amount claimed is over $1,500 per household member per calendar year.
If the claimant does not respond to the request, allow a medical expense deduction up to $1,500 (per household member per calendar year) for vitamins, food supplements and/or herbal remedies.
Example:  A Veteran reports calendar year 2015 food supplement expenses of $2,000 for themself, $800 for their spouse, and $400 for their son.
Result:
  • Develop for evidence that a health care provider authorized to write prescriptions instructed the Veteran to purchase food supplements for themself only.  (The reported expenses for the spouse and son are $1,500 or less.)
  • If the Veteran does not respond to the request for evidence, allow $1,500 and deny the claim for the remaining $500.
Note:  Once a health professional has verified the need for a particular item, do not require the claimant/beneficiary to furnish a statement regarding this item again.
Reference:  For more information on medical expenses for VA purposes see 38 CFR 3.278(c).

IX.iii.1.G.3.s.  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, such as an air conditioner or automatic transmission.
Note:  Medical expenses do not include non-prescription food, boarding, grooming, or other routine expenses of owning an animal.
Reference:  For more information on medical expenses for VA purposes see 38 CFR 3.278(c).

4.  Processing UME Deductions

Introduction
This topic contains information on processing UME deductions, including

Change Date
May 24, 2023

IX.iii.1.G.4.a.  General Rule on Allowing Medical Expenses
An award should not be adjusted to allow recurring or nonrecurring medical expenses without a statement from the claimant or the claimant’s fiduciary, if applicable, stating the
  • amount of UMEs the claimant has paid, or
  • estimated amount the claimant expects to pay.
Medical expense adjustments may be made on the basis of information submitted orally, by e-mail or to be uploaded directly into the Centralized Mail portal using an approved VA claims submission service under the provisions of 38 CFR 3.217.
While development and additional information can be accepted through other means such as a phone call, a claim for medical expenses that will result in an increased benefit must be initiated on a proper standard form.
Notes:
  • If a hard copy (including faxed) VA form is submitted, either the claimant or the claimant’s fiduciary must sign it or under the provision of 38 CFR 3.2130, provide signature by mark or thumbprint.  If the signature is missing, then
    • return the form for signature, or
    • contact the claimant by telephone to receive the information orally as provided in 38 CFR 3.217(b).
  • A medical expense statement signed by a power of attorney is not acceptable unless that person is also the claimant’s VA-recognized fiduciary.
  • Do not adjust an award based solely on statements of nursing home officials unless the claimant is incompetent and the nursing home administrator is the fiduciary.
  • Ensure documentation of calculations made to determine the rate of benefits (such as calculations of medical expenses, net worth, and waived overpayments) are included in the electronic claims folder (eFolder).
  • Claims processors are not required to enter denied medical expenses into VBMS-A.
Exception:  Medicare Part B premiums are an exception to the general rule that a statement is required.  VA does not require a claim or statement to deduct Medicare Part B premiums for pension purposes.
References:  For more information on

IX.iii.1.G.4.b.  Requirements for a Medical Expense Deduction Claim
A claim for a medical expense deduction that will result in increased benefit payments must be initiated by a
Note:  Claimants are not required to submit the worksheets that are attached to standard forms for caregiver fees, assisted living fees, adult day care fees, or similar expenses to have the expenses considered as a deduction from countable income.
Example:
Surviving spouse submits VA Form 21P-0518-1, Improved Pension Eligibility Verification Report (Surviving Spouse With No Children), a statement from a caregiver, and various receipts from a pharmacy showing medications purchased.  The surviving spouse does not list the medical expenses on VA Form 21P-0518-1 and does not indicate for whom the medications or the caregiver fees were paid and who paid the medical expenses.
Result:
Telephone development or development for VA Form 21P-8416 is required since the medical expenses are considered claimed, but the information for whom paid and who paid is missing.  Do not assume the expenses were paid by the claimant because a receipt was sent.
References:  For more information on

IX.iii.1.G.4.c.  Information Required for Mileage of Privately Owned Vehicle
Use the table below to determine what the claimant must list for the itemization of expenses related to mileage for a privately owned vehicle for medical purposes.
If the claimant provides Mileage for Privately Owned Vehicle Travel for Medical Purposes, to include the following information on a standard form …
Then the claimant must list …
Medical Facility to Which Traveled
the specific facility they traveled to for medical purposes.
Total Roundtrip Miles Traveled
miles traveled (personal conveyance only).
Amount Reimbursed From Another Source
the amount reimbursed from another source such as a VA medical center.
Date Traveled
the month/day/year in which the expense was paid.
Exception:  If there is an overlapping calendar year period, the day, month and year must be shown for the initial month of entitlement, and the month, and year must be shown for the other months in the overlapping period.
Example:  A claimant’s initial year is July 14, 2017, to August 1, 2018, and the claimant submits UMEs for calendar year 2018.  Allow the 2018 UMEs for the calendar year (subject to 38 CFR 3.31).  Inform the claimant that VA can allow medical expenses paid during the initial year if they are properly itemized and dated.
Reference:  For more information on initial year calculations, see M21-1, Part IX, Subpart iii, 1.A.3.g.
Who needed to travel?
Veteran, spouse, child, or another relative who is a member or constructive member of the claimant’s household.

IX.iii.1.G.4.d.   Information Required for In-Home Attendant
Use the table below to determine what the claimant must list for the itemization of expenses related to in-home attendant for medical purposes.
If the claimant provides the following information on a standard form …
Then the claimant must list …
Name of Provider
the name of the provider to whom the claimant (or spouse) paid the expense.
Hourly Rate/Number of Hours
the hourly rate and number of hours worked by the attendant.
Amount Paid
the actual out-of-pocket amount that the claimant paid and for which no reimbursement is expected.
Date Paid to the Provider
the month/day/year for which the expense was paid.
Exception:  If there is an overlapping calendar year period, the day, month, and year must be shown for the initial month of entitlement, and the month and year must be shown for the other months in the overlapping period.
For Whom Paid
Veteran, spouse, child, or another relative who is a member or constructive member of the claimant’s household.

IX.iii.1.G.4.e.  Information Required for Medical Expenses
Use the table below to determine what the claimant must list for the itemization of medical expenses.
If the claimant provides the following information on a standard form …
Then the claimant must list …
Purpose of Medical Expense
the specific purpose for which the payments were made.
Examples:  Doctor’s appointments, prescription drugs, nonprescription drugs, mileage, insurance premium, and so forth.
Note:  If the claimant lists a healthcare provider, assume the purpose was an appointment.
Amount Paid
the actual out-of-pocket amount that the claimant paid and for which no reimbursement is expected.
Examples:  Taxi, public transportation fares, tolls, parking fees, etc.
Date Paid to the Provider
the month/day/year on which the expense was paid.
Exception:  If there is an overlapping calendar year period, the day, month and year must be shown for the initial month of entitlement, and the month and year must be shown for the other months in the overlapping period.
Example:  A claimant’s initial year is July 14, 2017, to August 1, 2018, and the claimant submits UMEs for calendar year 2018.  Allow the 2018 UMEs for the calendar year (subject to 38 CFR 3.31).  Inform the claimant that VA can allow medical expenses paid during the initial year if they are properly itemized and dated.
Reference:  For more information on initial year calculations, see M21-1, Part IX, Subpart iii, 1.A.3.g.
Name of Provider
the name of the provider (specific name of doctor, dentist, hospital, lab, etc.) to whom the claimant (or spouse) paid the expense.
Note:  In certain situations, this block may be blank if the claimant lists the purpose of the expense.
For example, if prescriptions or over-the-counter drugs are listed as the purpose, the provider field does not need to list the specific provider(s).
It is acceptable for a claimant to list Part C, Part D, or Medicare as the provider instead of specifying the name of an insurance company.
For Whom Paid
Veteran, spouse, child, or another relative who is a member or constructive member of the claimant’s household.

IX.iii.1.G.4.f.  Allowing Medical Expenses Prospectively
Normally, medical expenses are deducted from an award after the fact, based on the claimant’s report of expenses actually paid.
However, under 38 CFR 3.272(g), medical expenses may be allowed prospectively if the claimant is paying recurring nursing home fees or other reasonably predictable medical expenses.
Notes:
  • Do not select an arbitrary amount for a prospective medical expense deduction.  Accept the amount claimed (less any identified expenses that do not meet medical expense criteria or do not appear to be reasonably predictable), or disallow the claim for prospective medical expenses, and calculate benefits on actual expenses reported at the end of the reporting period.
  • Deduct an estimated actual amount of recurring medical expenses unless a claimant specifically requests zero prospective medical expenses.
Reference:  For more information on calculating an estimated actual amount of recurring medical expenses, see M21-1, Part IX, Subpart iii, 1.G.4.g.

IX.iii.1.G.4.g.  Example:  Annual Amount vs. Calculated Estimated Actual Amount
A surviving spouse is a patient in a nursing home for long-term care because of disability from October 2015.  The survivor is paying $2,000 per month for nursing home expenses beginning in October and requests this recurring expense to be deducted from their income prospectively.  Therefore, the
  • annual amount the surviving spouse expects to pay is $24,000 ($2,000 x 12 months), and
  • calculated estimated actual amount the surviving spouse will pay during calendar year 2015 is $6,000 ($2,000 for October, November, and December).

IX.iii.1.G.4.h.  Dates for Allowing Medical Expenses Prospectively
When first allowing prospective continuing medical expenses, deduct the estimated actual amount from the beginning of the reporting period in which the expenses began.
Allow the annualized amount as a continuing medical expense from the beginning of the following calendar year subject to 38 CFR 3.31.

IX.iii.1.G.4.i.  Award Action to Adjust After UMEs Allowed Prospectively
Use the table below to determine the award action after medical expenses have been allowed prospectively.
If prospective medical expenses were allowed from …
Then adjust, if necessary, …
the payment date of an original or new award or from the beginning of a reporting year
for the initial year based on the amount of actual medical expenses paid during the initial year.
a date after the end of the initial year
at the end of a calendar year based on the amount of actual medical expenses paid during that calendar year.
Notes:
  • Adjust over the duration of the initial year on the basis of actual expenses paid. At the end of the calendar year, determine actual medical expenses paid during the calendar year.  During the period of overlap, allow the greater amount of medical expenses, subject to 38 CFR 3.31.
  • It is necessary to adjust medical expenses even if the actual annual amount paid does not change the pension rate compared to the amount previously allowed.
Reference:  For more information about the initial year, see M21-1, Part IX, Subpart iii, 1.A.3.g.

IX.iii.1.G.4.j.  Reconsidering a Disallowed Claim
In some situations
  • a claim that was disallowed for excessive income is reconsidered within the time limit to submit amended income information, and
  • the basis for reconsidering the claim is anticipated payment of prospective medical expenses.
In such situations, 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 claimant started paying continuing medical expenses after the effective date of the award, or if there has been a change in the level of continuing medical expenses, adjust IVAP 12 months from the payment date of the award or from February of the next calendar year as appropriate.
Example:
  • A 65-year old Veteran claims pension on February 13, 2014, but pension is denied because recurring income exceeds MAPR.
  • In November 2014, the Veteran reports paying an in-home care provider $500 per month starting on October 14, 2014.  The in-home care fees are on behalf of the Veteran’s disabled spouse, and the Veteran submits a authorized health care provider’s statement that the provider fees are necessary.
Result:  Calculate IVAP (including calculated estimated actual in-home care fees) for the period February 13, 2014, through February 28, 2015.  If estimated medical expenses (spread over the period February 13, 2014, through February 28, 2015) reduce the Veteran’s IVAP below the applicable MAPR, pay pension from March 1, 2014.

IX.iii.1.G.4.k.  Notice to Claimants for Prospective Medical Expenses
When recurring medical expenses are first allowed, send a notice
  • informing the claimant of the basis of the award, and
  • advising 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, send a notice
  • informing the claimant of the basis of the disallowance, and
  • advising that VA will consider all reported actual medical expenses at the end of the reporting period if the claimant submits VA Form 21P-8416 verifying that the expenses have been paid.

IX.iii.1.G.4.l.  Adjusting an Award for a Change in Continuing Medical Expenses
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.
A beneficiary’s report that they are no longer a nursing home patient, or a resident of another care facility may be accepted as a report that the beneficiary is no longer paying nursing home fees or custodial care fees and the award may be reduced with contemporaneous notice.  Some cases may require an immediate reduction in pension on the end product (EP) 150, and a proposal to reduce retroactively under EP 600.  If there is missing information that cannot be readily obtained via telephone contact, take immediate award action, as appropriate, and send a notice of proposed adverse action.
Example 1:  A Veteran is receiving maximum pension with continuing medical expenses based on assisted living fees since 2015.  On April 20, 2020, the Veteran reports 2020 expenses from a new facility.  There is no mention of expenses from 2015 to 2019.
Result:  Process the 2020 medical expenses.  Recertification of medical expenses from 2015 to 2019 are not required because there is no evidence that medical expenses were less than the continuing medical expense amount for those years.
Example 2:  A Veteran is receiving maximum pension with continuing medical expenses based on assisted living fees since 2015.  On April 20, 2020, the Veteran reports 2020 expenses from a new facility and reports leaving the previous facility during 2017.
Result:  VA has first party evidence that medical expenses were based on incorrect information since 2017.  If satisfactory evidence of 2020 medical expenses is received (such as a fully completed VA Form 21P-8416), take award action under EP 150 to count the 2020 expenses from the new facility and send notification.  Establish an EP 600 to send notice of proposed adverse action to remove all uncertified medical expenses for the years 2017 through 2019 or 2020.

IX.iii.1.G.4.m.  Nonrecurring Medical Expenses
Most medical expenses are allowed as a deduction after the claimant pays them.  All medical expenses other than those that are allowed prospectively are considered to be nonrecurring medical expenses.
Apply nonrecurring medical expenses against otherwise countable income for the reporting period (initial year or calendar year) during which the expenses were paid.
In an original or new award after a period of non-entitlement, apply medical expenses paid between the award effective date (or date of Veteran’s death in an original Survivors Pension claim filed within one year after the Veteran’s death) and the date that is 12 months after the award payment date against income for the initial year.
If the claimant also reports medical expenses for the first full calendar year after the commencement of the award, determine the total amount of medical expenses paid during the
  • initial year, and
  • following calendar year.
Allow the greater amount of medical expenses during the period of overlap, subject to 38 CFR 3.31.
Reference:  For more information on the initial year, see M21-1, Part IX, Subpart iii, 1.A.3.g.

IX.iii.1.G.4.n.  Example 1:  Nonrecurring Medical Expenses
Example:  In May 2015, a Veteran who has been in receipt of pension for more than a year reports nonrecurring medical expenses paid between January 1, 2015, and May 15, 2015.
The Veteran requests an immediate recalculation of IVAP.  Although the preferred procedure is to defer the medical expense adjustment until the end of 2015, the Veteran has the right to an immediate recalculation.
Result:  Adjust the award from January 1, 2015, subject to 38 CFR 3.31, to allow medical expenses paid between January 1, 2015, and May 15, 2015.  Remove the medical expenses from the award January 1, 2016.
At the end of 2015, adjust the award based on total medical expenses paid during 2015 (including the previously reported medical expenses).  The adjustment is effective January 1, 2015, subject to 38 CFR 3.31.

IX.iii.1.G.4.o.  Example 2:  Nonrecurring Medical Expenses
Example:
  • A Veteran is rated with a permanent and total disability effective October 28, 2013.  The Veteran is paid pension from November 1, 2013.
  • During November 2014, the Veteran reports paying medical expenses of $1,000 between October 28, 2013, and November 1, 2014.
Result:  Adjust the award from November 1, 2013, to allow a gross medical expense deduction of $1,000 from October 28, 2013, through October 31, 2014.
Note:  The adjustment to allow the medical expense is made from November 1, 2013, because 38 CFR 3.31 has already been applied, in that the effective date of entitlement is October 28, 2013.

IX.iii.1.G.4.p.  Example 3:  Nonrecurring Medical Expenses
Example:  In May 2015, a Veteran who has been in receipt of pension for more than a year submits a VA Form 21P-8416 showing medical expenses paid between November 2014 and May 2015.
Result:  Adjust the award from January 1, 2014, subject to 38 CFR 3.31, to allow those medical expenses paid during calendar year 2014.  Recalculate IVAP as of January 1, 2015, based on the
  • expected income for 2015, and
  • medical expenses paid between January 1, 2015, and the date the VA Form 21P-8416 was signed.
Include a January 1, 2016, future award line to remove the medical expenses.

IX.iii.1.G.4.q.  Overlapping Initial Year and Calendar Year Periods
Overlapping periods occur 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, subject to 38 CFR 3.31.
Apply this same procedure where overlapping medical expense counting periods result from processing an original or new award.
Example:  A surviving spouse’s initial year is July 15, 2014, through July 31, 2015.
Result:  Compare the medical expenses for the following two periods:
  • July 15, 2014, through July 31, 2015, and
  • calendar year 2015.
For the overlapping period (January 1, 2015, through July 31, 2015, pay based on the higher period of medical expenses.

IX.iii.1.G.4.r.  Effect of COLA or Change in Dependency Status on a Pension Rate
If a MAPR increase occurs during a period when medical expenses are being allowed, IVAP will usually change on the date of the cost-of-living adjustment (COLA) even if there is no change in the claimant’s income.
This happens because there is now a new MAPR from which to calculate the 5 percent deductible.  The same thing occurs when a dependent is added or removed.
Example:  The 5 percent deductible for a single Veteran on August 1, 2014, is $632, whereas on December 1, 2014, it changes to $643 due to the COLA.  This change causes IVAP to increase.

IX.iii.1.G.4.s.  Reimbursed Medical Expenses
Do not allow a deduction for any medical expenses for which the claimant expects to be reimbursed.
If a medical expense deduction is allowed and the claimant later receives reimbursement for that expense, recalculate IVAP for the applicable reporting period based on actual expenses paid.

IX.iii.1.G.4.t.  Renouncement of Claimed Medical Expenses
In some situations, a beneficiary may wish to receive a lower rate of pension to establish eligibility for benefits from another agency.
The table below outlines the guidelines to apply in such situations.
Criteria
Guideline
Not required to claim all medical expenses
A beneficiary
  • is not required to claim a deduction for UMEs, and
  • may claim a deduction for some, but not all, UMEs.
Partial renouncement prohibited
Once a beneficiary has reported payment of medical expenses and VA has reduced the beneficiary’s IVAP based on the medical expenses, it is too late to recalculate IVAP because the beneficiary no longer wishes to claim the medical expenses. This would constitute a partial renouncement of benefits, which is precluded by 38 CFR 3.106.
Recalculation of medical expenses claim permitted
If a prospective deduction was allowed for recurring medical expenses, a beneficiary may request that recurring medical expenses no longer be allowed.
Consider this a recalculation of projected medical expenses. Adjust the award effective the beginning of the reporting period based on the actual medical expenses paid during that reporting period and remove the recurring medical expenses for the following calendar year.
Note:  The additional pension or Parents’ DIC that VA pays to a beneficiary because they incurred UMEs is not countable as VA income for SSA purposes.
Reference:  For more information on how to report VA income for SSA requests see M21-1, Part XIII, Subpart ii, 1.B.5

5.  Verifying Medical Expenses

Introduction
This topic contains information on verifying medical expenses, including

Change Date
August 17, 2022

IX.iii.1.G.5.a.  When to Request Provider Proof
Request provider proof of claimed medical expenses when some or all of the expenses are questionable.  Questionable medical expenses are those that raise doubt of validity.
Examples of questionable medical expenses:
  • The amount of claimed annual medical expenses exceeds the claimant’s annual income (including VA pension) and liquid assets.
  • A claimant resides in an urban area and reports 10,000 miles traveled for prescription purchases.
Important:  Only request proof of the medical expenses in question.  Proof is not required for all expenses reported in a claim.  Do not request
  • proof of expenses that were claimed over 24 months before the date of review if VA already deducted the expense(s), or
  • provider proof of medical expenses if the beneficiary
    • is approved for Medicaid
    • is a patient in a Medicaid approved nursing home, and
    • has no dependents.

IX.iii.1.G.5.b.  What Constitutes Acceptable Provider Proof
Provider proof can be in the form of a receipted bill, statement on the provider’s letterhead, computer summary, or other document from the provider showing all of the following information:
  • the amount paid
  • the date payment was made
  • the purpose of the payment (the nature of the product or service provided)
  • the name of the person to or for whom the product or service was provided, and
  • identification of the provider to whom payment was made.
Exception:  When the provider is a nursing home, accept as provider proof a properly completed VA Form 21-0779, or a statement on VA Form 27-0820b that
  • documents contact with the nursing home administrator or other provider, and
  • shows the amount of UMEs paid by the claimant.

IX.iii.1.G.5.c.  Obtaining Proof of Expenses
Follow the steps in the table below to obtain proof of medical expenses.
Step
Action
1
  • Print or copy the VA Form 21P-8416 with the questionable expenses.
  • Highlight the medical expense(s) in question.
2
  • Send the highlighted copy to the claimant with a development letter explaining that a special review of claimed medical expenses is being conducted, and
  • advise the claimant
    • which specific medical expense(s) are in question
    • that receipts and/or other documentation of all highlighted medical expenses are required for the period reported on the VA Form 21P-8416
    • that documents submitted to VA become a part of the permanent record and that photocopies should be submitted if the original documents are needed for insurance, tax, or other purposes
    • that they must furnish the requested evidence within
      • 30 days if the expense(s) was not already used as a deduction for calculating IVAP, or
      • 60 days if the expense(s) was already used as a deduction for calculating IVAP, and
    • if the expense was already used,
      • VA will remove the expense in question if the requested evidence is not received within the 60 days, and
      • provide the proposed pension rates if the expense is excluded from the IVAP due to lack of proof of payment of expense.
 Notes:
  • If sending highlighted copies of medical expense claim forms would be unduly confusing to the claimant, send a letter describing the documents needed as provider proof.
  • It is also permissible to contact a provider, such as a nursing home, directly to confirm payment of medical expenses.  If payment is confirmed directly with the provider, place a VA Form 27-0820b or VA Form 27-0820 in the claims folder.
3
 Maintain a control for
  • 30 days under EP 150 if expenses were not already used as a deduction, or
  • 60 days under EP 600 if expenses were used as a deduction.
4
Use the table below to determine the actions to take based on the response or lack of response to the development letter.
If the claimant …
Then …
submits acceptable documentation of all highlighted medical expenses within the 30 or 60-day period
  • process the EP 150, allowing all claimed medical expenses, or
  • clear EP 600 and advise the claimant that benefits will not be reduced.
is unable or unwilling to provide proof of medical expenses or does not respond
go to Step 5.
requests more time to submit the requested evidence
consider extending the control, depending on the reasons given, and go to
  • Step 3 if the request for more time is granted, or
  • Step 5 if the request for more time is denied.
5
If the claimant does not respond or does not provide adequate evidence of payment within the time limit provided and the expenses were
  • previously deducted, make the adjustment effective as of the beginning of the appropriate initial year or calendar year, or
  • not previously deducted, deny the medical expenses that have not been adequately documented and process the claim.
Important:  Do not remove any expenses that were adequately documented or for which provider proof was not required.

IX.iii.1.G.5.d.  Beneficiaries Affected by Natural Disasters
Victims of natural disasters may have lost or misplaced many of their possessions, including personal documents and records.  Such a situation could make it especially difficult to obtain provider proof of their reported medical expenses.
Natural disasters include, but are not limited to
  • hurricanes
  • tornados
  • floods
  • wildfires, and
  • earthquakes.
Note:  If residence in an area affected by a natural disaster is established, VA may concede a claimant’s loss of records to verify their reported medical expenses.

IX.iii.1.G.5.e.  Verifying Expenses for Beneficiaries Affected by Natural Disasters
Follow the steps in the table below to verify reported expense(s) for an alleged victim of a natural disaster.
Step
Action
1
Determine whether the claimant lived in an area affected by a natural disaster. If necessary, ask them to furnish
  • a mailing address within the affected area
  • Federal Emergency Management Agency claim documents
  • U. S. Post Office listing of zip codes affected by mail suspension
  • insurance claims documents
  • landlord or leasing office statements, or
  • other evidence of exposure to the natural disaster.
2
Did the claimant live in an area affected by a natural disaster?
3
Review the medical expenses reported by the claimant. If the medical expense(s) is in question, request an explanation of the purpose of the claimed medical expense(s) and frequency of use to justify the excessive amount claimed.
Note:  Follow the procedures outlined in Steps 4 and 5 of M21-1, Part IX, Subpart iii, 1.G.5.c.
Note:  Consider reasonable expenses on a case-by-case basis.  Generally, these would be claimed expenses that are consistent with the nature of the claimant’s or relative’s identified disabilities, age, and amounts reported in previous years.

IX.iii.1.G.5.f.  Incidental Medical Expenses
Do not request provider proof for mileage and incidental medical expenses unless the amount claimed or the number of items claimed appears questionable.
Incidental medical expenses are relatively low-cost expenses for which the claimant would not normally be expected to have documentation such as parking fees or cab fares.  Whether a particular expense is an incidental medical expense is a judgment call by the claims processor.  Do not routinely request verification of incidental medical expenses when sending out VA Form 21P-8416.

IX.iii.1.G.5.g.  Proof Not Required for Medicare Part B Premium
Do not require provider proof from SSA for the Medicare Part B premium.  Insert a copy of the Share/VBMS Social Security print in the eFolder each time an award is processed to allow a UME deduction for Medicare reasons.

IX.iii.1.G.5.h.  Acceptability of Photocopies
Photocopies of receipted bills, canceled checks, or other documents are acceptable provider proof as long as they are legible and appear regular.
If there is any question as to the validity of a photocopy, request the original document.

IX.iii.1.G.5.i.  Provider Proof Maintained in the eFolder
Maintain provider proof of claimed medical expenses in the eFolder.
When requesting provider proof, advise the claimant that photocopies should be submitted if the original documents are needed for insurance, tax, or other purposes.
Use the table below to determine the actions needed based on the documents submitted as proof by the claimant.
If …
Then …
the photocopies that are submitted
  • appear to have been altered
  • are illegible, or
  • are otherwise unacceptable
  • request that the original documents be submitted, and
  • advise the claimant that the originals will not be returned.
unsolicited original documents are submitted and the claimant specifically requests that they be returned
advise the claimant that the originals will not be returned.