VA Compensation Payments

VA Compensation Payments. A. Compensation payments are based on service-connected disability or death and may be based on need. B. The following are types of compensation payments and their treatment: 1. Death Compensation and Dependency and Indemnity Compensation (DIC) payments to a surviving parent of a veteran are counted an unearned income. Since these payments are determined by the parent’s income, they are income based on need and the general income exclusion does not apply. 2. Compensation payments resulting from unusual medical expenses, aid and attendance allowances and housebound allowances are not counted as income. 3. Compensation payments to a veteran, spouse, child or widow(er) are counted as unearned income subject to the $50/$20 general exclusion.