For North Carolina Medicaid budgeting purposes, VA pension income — including the Aid & Attendance and Housebound increases — generally counts as unearned income, both for community and institutional cases. The one narrow carve-out is the VA Reduced Improved Pension exclusion, capped at $90 per month.
The rules get more specific once someone is in institutional post-eligibility budgeting. There, the standard $20 unearned-income exclusion that applies elsewhere does not apply to VA income under NCDHHS Policy MA-2250. Instead, MA-2270 provides a $70 Personal Needs Allowance along with other applicable deductions as part of the patient-liability calculation.