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M21-1, Part III, Subpart v, Chapter 3, Section B – Adjusting Apportioned Awards

Overview

In This Section
This section contains the following topics:
Topic
Topic Name
1
2
3
4
5
6

1.  General Information on Adjusting Apportioned Awards

Introduction
This topic contains information on adjusting apportioned awards, including

Change Date
December 20, 2017

III.v.3.B.1.a.  Handling a Reduction in a Veteran’s Disability Evaluation
When a Veteran’s award is reduced under 38 CFR 3.105(e), the claims folder usually has sufficient evidence for reapportionment so that simultaneous adjustment may be made in the awards to the primary beneficiary and apportionee(s).
Discontinue the apportionment effective the date of reduction of the Veteran’s award if
  • the reduced rate payable to the Veteran does not permit payment of a reasonable amount to the apportionees, or
  • the claims folder does not contain sufficient evidence for reapportionment.
Note:  In the latter case, undertake the actions described in M21-1, Part III, Subpart v, 3.A.2 after discontinuing the apportionment.
Reference:  For additional information on what constitutes a “reasonable amount” to apportion, see M21-1, Part III, Subpart v, 3.A.1.c.

III.v.3.B.1.b.  Handling a Retroactive Increase in a Primary Beneficiary’s Award
Retroactive increases in a primary beneficiary’s award may be subject to apportionment only in exceptional cases, as dictated by the needs of the involved persons.
Note:  38 CFR 3.400(e) provides that with certain specific exceptions, the effective date of a grant or increase of an apportionment would be the first day of the month following the date the Department of Veterans Affairs (VA) received the apportionment claim or claim for increased apportionment.

III.v.3.B.1.c.  Circumstances Requiring Discontinuation of an Apportionment
An apportionment must be discontinued when the primary beneficiary’s award is
  • discontinued for any reason, or
  • reduced to a rate that would not support a continuation of the apportionment without creating an undue hardship on the primary beneficiary.
Reference:  For information about discontinuing an apportionment in the Veterans Service Network (VETSNET) or Veterans Benefits Management System – Awards (VBMS-A), see M21-1, Part III, Subpart v, 3.B.1.d.

III.v.3.B.1.d.Discontinuing an Apportionment in VETSNET or VBMS-A
Discontinuing a primary beneficiary’s award in VETSNET or VBMS-A automatically discontinues any apportionment associated with that award.
Follow the instructions in the table below if it becomes necessary to discontinue an apportionment without discontinuing the primary beneficiary’s award.
Step
Action
1
Open the ALLOTMENT DECISION screen.
2
If the apportionee is
  • the Veteran’s spouse, proceed to Step 7, or
  • a child, proceed to the next step.
3
Select the decision row containing
  • the child’s name in the ALLOTMENT RECIPIENT field, and
  • Apportionment Terminated in the DECISION field.
4
Select the EDIT button.
5
Enter the effective date for discontinuation of the apportionment in the AWARD EFF DT field.
6
Click on the ACCEPT button and proceed no further.
7
Click on the ADD button.
8
Select the spouse’s name from the drop-down box in the ALLOTMENT RECIPIENT field.
9
Select Apportionment Terminated from the drop-down box in the DECISION field.
10
Enter the date for discontinuation of the apportionment in the AWARD EFF DT field.
11
Click on the ACCEPT button.
 
Reference:  For more information about managing apportionments in

III.v.3.B.1.e.  Other Reasons and Instructions for Discontinuing an Apportionment
The table below contains
  • reasons for discontinuing an apportionment, and
  • references to instructions for discontinuing apportionments that are unique to the reason for discontinuation.
If the apportionment must be discontinued due to the …
Then process the discontinuation as instructed in …
death of the primary beneficiary
death of the apportionee
divorce (or annulment of marriage) of the spouse-apportionee
discontinuation of a child-apportionee’s entitlement
marriage of a child-apportionee
discontinuation of a child-apportionee’s school attendance
entry of a child-apportionee on active duty
election of
  • Dependents’ Educational Assistance, or
  • education benefits under 38 U.S.C. 3311(Fry Scholarship)
cessation of the dependency of a parent
residency of the apportionee with the primary beneficiary
unknown whereabouts of the apportionee
election of Federal Employees’ Compensation
primary beneficiary begins paying child support for a child-apportionee

III.v.3.B.1.f.  Handling a Change in Status That the Primary Beneficiary Causes or Reports
When the primary beneficiary causes or reports a change in status that requires an adjustment of his/her award,
  • determine whether M21-1, Part I, 2.A.2.a,
    • requires VA to provide a notice of proposed adverse action to the primary beneficiary, or
    • allows VA to provide contemporaneous notice to the primary beneficiary, and
  • follow the instructions in the table below.
If the basis for the award adjustment …
Then …
requires VA to provide a notice of proposed adverse action to the primary beneficiary
  • send a notice of proposed adverse action to the primary beneficiary
  • send a letter to the apportionee(s) explaining that VA may
    • reduce or discontinue the primary beneficiary’s award on a given date, and
    • make corresponding adjustments to the apportionee’s award
  • continue issuing payments to the apportionee(s) and primary beneficiary until a final decision is made, and
  • adjust the awards to the primary beneficiary and apportionee(s), if necessary, once a final decision is made.
Reference:  For more information about issuing a notice of proposed adverse action, see M21-1, Part I, 2.B.
allows VA to provide contemporaneous notice to the primary beneficiary
  • adjust the awards of the primary beneficiary and apportionee(s), and
  • provide contemporaneous notice of the action taken to both parties.
Example:
Scenario:  A Veteran in receipt of pension submits a statement indicating her income now exceeds the limit for continued entitlement.
Action:  Because the Veteran personally provided the information,
  • adjust the awards of both the primary beneficiary and apportionee(s), and
  • provide contemporaneous notice to both parties.
Exceptions:
  • When VA is apportioning a Veteran’s benefits to his/her estranged spouse, and the Veteran reports their divorce or the annulment of their marriage, remove the apportionee from the Veteran’s award but do not discontinue the apportionment without
    • furnishing notice of proposed adverse action to the apportionee, and
    • allowing the apportionee 60 days to respond.
  • In accordance with M21-1, Part V, Subpart iii, 1.C.6.b, the discontinuation of a surviving spouse’s Section 306 or Old Law Pension does not deprive children not in the surviving spouse’s custody of their entitlement to the rate of payment they were receiving as apportionees.
References:  For more information about

III.v.3.B.1.g.  Handling a Change in Status That the Apportionee Causes or Reports
When an apportionee causes or reports a change in status that requires an award adjustment, determine whether M21-1, Part I, 2.A.2.a
  • requires VA to issue a notice of proposed adverse action to the apportionee, or
  • allows VA to issue contemporaneous notice to the apportionee.
Example:
Scenario:  An estranged spouse in receipt of an apportionment of a Veteran’s disability compensation submits a copy of his divorce decree.
Action:  Discontinue the apportionee’s award without issuing notice of proposed adverse action effective the first day of the month following the month in which the divorce becomes final.
If the overall effect of discontinuing the apportionment and removing the apportionee from the primary beneficiary’s award
  • adversely affects the primary beneficiary’s award,
    • send notice of proposed adverse action to the primary beneficiary, and
    • adjust or discontinue the primary beneficiary’s award at the end of the control period, or
  • increases the primary beneficiary’s award, adjust the award without sending notice of proposed adverse action to the primary beneficiary.
Note:  The requirements of 38 CFR 3.31 do not apply to the “increases” referenced in the above paragraph.
Reference:  For more information about handling a notice of divorce or annulment from a source other than the apportionee, see M21-1, Part III, Subpart v, 3.B.2.b.
III.v.3.B.1.h.  Handling Notice That a Primary Beneficiary and Apportionee Now Reside Together
Follow the instructions in the table below upon receipt of notice that a primary beneficiary and a dependent to whom VA is apportioning some of the primary beneficiary’s benefits now reside together.
Step
Action

1
Who notified VA that the primary beneficiary and the apportionee now reside together?
  • If the primary beneficiary notified VA, proceed to the next step.
  • If the apportionee notified VA, proceed to Step 5.
2
Advise the apportionee in a notice of proposed adverse action that VA intends to discontinue his/her apportionment based on notice that he/she and the primary beneficiary now reside together.
Reference:  For more information about preparing and issuing notice of a proposed adverse action, see M21-1, Part I, 2.B.
3
Did the apportionee respond to the notice of proposed adverse action within 65 days?
  • If yes, proceed to the next step.
  • If no, proceed to Step 5.
4
Did the apportionee submit evidence showing he/she and the primary beneficiary do not reside together?
  • If yes,
    • notify the primary beneficiary that the current apportionment will remain in place because the apportionee submitted evidence showing he/she does not reside with the primary beneficiary, and
    • disregard the remaining steps in this table.
  • If no, proceed to the next step.
5
Discontinue the apportionment effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share, in accordance with 38 CFR 3.500(d)(1).
6
Notify both the primary beneficiary and the apportionee of the action taken in Step 5.
 
Reference:  For more information about preparing and issuing decision notices, see M21-1, Part III, Subpart v, 2.B.

III.v.3.B.1.i.Apportionments Based on Criteria That Are No Longer in Effect
M21-1, Part III, Subpart v, 3.A.3.c, lists the criteria that are currently in effect for determining the amount of an apportionment.  Adjust cases with apportionments established under criteria that are no longer in effect only when
  • the case otherwise requires award action, or
  • one of the following individuals alleges hardship:
    • the primary beneficiary
    • the primary beneficiary’s representative, or
    • the apportionee.

III.v.3.B.1.j.  Handling Allegations of Hardship When an Apportionment Is Already in Place
If an apportionee alleges hardship and/or requests an increase in the amount of his/her apportionment,
If a primary beneficiary whose benefits VA is apportioning alleges hardship, follow the instructions in the table below.
Important:
Step
Action
1
Establish EP 130 under the primary beneficiary’s name.
2
Does the information/evidence the primary beneficiary provided indicate a discontinuation or reduction in the amount of the apportionment might be in order?
  • If yes, proceed to Step 5.
  • If no, proceed to the next step.
3
Notify the primary beneficiary that the evidence of record does not support an adjustment in the amount of the apportionment.
4
Clear the pending EP 130 and disregard the remaining steps in this table.
5
Establish EP 600 under the apportionee’s name.
6
Prepare a notice of proposed adverse action that proposes to reduce or discontinue the apportionment (whichever is deemed appropriate).  In the notice, ask the apportionee to
  • complete and return VA Form 21-0788, and
  • describe what hardships he/she would suffer if VA reduced or discontinued the apportionment.
7
Proceed to the next step when either of the following occur:
  • the apportionee responds to the notice of proposed adverse action, or
  • sixty-five days pass after VA issues the notice of proposed adverse action.
Note:  Follow the instructions in M21-1, Part I, 2.C.3 if the apportionee requests a hearing in response to the notice of proposed adverse action.
8
  • Make an administrative decision as to whether a reduction or discontinuation of the apportionment is in order.
  • Follow the instructions in M21-1, Part III, Subpart v, 3.A.3.d, for documenting the decision.
9
Is a reduction or discontinuation of the apportionment in order?
  • If yes, proceed to Step 12.
  • If no, proceed to the next step.
10
Notify both the apportionee and the primary beneficiary of the decision.
11
Clear the pending EP 130 and EP 600 and disregard the remaining steps in this table.
12
  • If a reduction in the amount of the apportionment is in order, proceed to the next step.
  • If discontinuation of the apportionment is in order, proceed to Step 14.
13
Follow the guidance in M21-1, Part III, Subpart v, 3.A.3.c to determine what the new amount of the apportionment should be.
14
Adjust (reduce or discontinue) the apportionment effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.
15
Notify both the apportionee and the primary beneficiary of the decision and the actions taken.
References:  For more information about preparing and issuing a

III.v.3.B.1.k.  Apportionments VA Suspended Because Payments Were Returned as Undeliverable
An apportionment is automatically suspended when payments to the apportionee are returned as undeliverable.  Proceeds accrue in the apportionee’s account when the suspension takes effect.
Upon receipt of notice that proceeds exist in an apportionee’s account for the reason stated in the preceding paragraph, Veterans Service Centers (VSCs) and pension management centers (PMCs) must attempt to locate the apportionee by
If attempts to locate the apportionee are ultimately unsuccessful, VSCs/PMCs must
  • discontinue the apportionment (according to the instructions in M21-1, Part III, Subpart v, 3.B.1.d) effective the date VA last paid theapportionee (the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share)
  • follow the instructions in M21-1, Part III, Subpart v, 3.B.1.l for
    • determining whether the apportionee should remain on the primary beneficiary’s award, and
    • removing the apportionee from the primary’s award (if necessary), and
  • notify the apportionee and primary beneficiary of the actions taken.

Important:  When discontinuing an apportionment that originated as a garnishment order (under the provisions of M21-1, Part III, Subpart v, 3.D.2.c), VA must continue to withhold benefits payable to the apportionee.  This is accomplished by entering the amount of the apportionment in the ADJUSTMENT AMOUNT field on the OTHER ADJUSTMENTS tab in VBMS-A or VETSNET.

III.v.3.B.1.l.Removing a Former Apportionee From a Beneficiary’s Award Because the Former Apportionee’s Whereabouts Are Unknown
VA must remove from a beneficiary’s award
  • a child whose whereabouts are unknown, and/or
  • the beneficiary’s spouse if
    • the beneficiary is a Veteran in receipt of pension, and
    • the whereabouts of the spouse is unknown.
Exception:  Removal of a dependent from a beneficiary’s award is not required if the beneficiary is contributing to the dependent’s support.
Follow the instructions in the table below if
  • the whereabouts of an apportionee is unknown, and
  • the apportionee is
    • a child, or
    • the spouse of a Veteran in receipt of pension.
Step
Action
1
Will the combined effect of removing the dependent and discontinuing the apportionment decrease the benefits payable to the beneficiary?
  • If yes, proceed to Step 3.
  • If no, proceed to the next step.
2
  • Remove the dependent from the beneficiary’s award (withoutissuing a notice of proposed adverse action) effective the date VA last paid the beneficiary (the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share).
  • Disregard the remaining steps in this table.
Note:  Take the actions described in this step concurrent with actions to discontinue the apportionment to the dependent.
3
Establish EP 600, using the current date as the date of claim.
4
Prepare a notice of proposed adverse action.  In the notice,
  • inform the beneficiary that VA must remove the dependent from his/her award because the dependent’s whereabouts is unknown, and
  • ask the beneficiary to provide to VA
    • the dependent’s current address (physical or mailing), or
    • evidence that the beneficiary is contributing to the dependent’s support.
Reference:  For more information about issuing a notice of proposed adverse action, see M21-1, Part I, 2.B.
5
Did the beneficiary respond to the notice of proposed adverse action within 65 days?
  • If yes, proceed to Step 8.
  • If no, proceed to the next step.
Note:  If the beneficiary requests a hearing in response to the notice of proposed adverse action, follow the instructions in M21-1, Part I, 2.C.3.
6
Remove the dependent from the beneficiary’s award (under the pending EP 600) effective the date VA last paid the beneficiary (the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share).
7
  • Notify the beneficiary of the action taken.
  • Disregard the remaining steps in this table.
8
Did the beneficiary provide the dependent’s current address or evidence that the beneficiary is contributing to the dependent’s support?
  • If yes, proceed to the next step.
  • If no, return to Step 6.
9
Notify the beneficiary that VA will not remove the dependent from his/her award.
Notes:
  • If the beneficiary provides the dependent’s current address, do not resume the apportionment without a request for resumption from the apportionee.
  • Follow the instructions in M21-1, Part III, Subpart v, 3.B.1.m, upon receipt of a request for resumption of the apportionment.
10
Clear the pending EP 600.

III.v.3.B.1.m.  Requests for Resumption of an Apportionment That VA Suspended or Discontinued Because Payments Were Returned as Undeliverable
Follow the instructions in the table below upon receipt of a request from an apportionee for resumption of an apportionment that was suspended because payments to the apportionee were returned as undeliverable.
If …
Then …
VA has not yet discontinued the apportionment (it is still in suspense)
resume the apportionment under EP 130 and release to the apportionee any proceeds in his/her account.
VA has discontinued the apportionment
If VA received the request for resumption of the apportionment …
Then …
within one year of the date VA notified the apportionee that VA had discontinued his/her apportionment
resume payment of the apportionment effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.
Note:  If, after resuming an apportionment, the apportionee reports he/she did not receive the proceeds VA returned to appropriations when it discontinued the apportionment, prepare a memorandum that asks the local finance activity to pay out the proceeds.
one year or more after the date VA notified the apportionee VA had discontinued his/her apportionment
resume payment of the apportionment effective the first of the month following the date VA received the request.
Exception:  Upon receipt of a request for resumption of an apportionment that originated as a garnishment order (under the provisions of M21-1, Part III, Subpart v, 3.D.2.c) and was suspended because payments to the apportionee were returned as undeliverable, do not take the actions described in the second row of the table above if VA has discontinued the apportionment.  Instead, resume payment of the apportionment effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share regardless of the date VA received the request.

2.  Discontinuing an Apportioned Award Due to Divorce or Annulment

Introduction
This topic contains information on discontinuing an apportionment due to divorce or annulment, including

Change Date

 December 20, 2017

III.v.3.B.2.a.  Effective Date of Discontinuation of an Apportionment to a Veteran’s Spouse
Discontinue the apportionment of a Veteran’s award to his/her spouse on the first day of the month following the month in which a divorce becomes final or an annulment decree is issued.

III.v.3.B.2.b.  Notice of Divorce or Annulment From a Source Other Than the Apportionee
Upon receipt of notice – from a source other than the spouse-apportionee – that the apportionee has divorced or obtained an annulment of his/her marriage to the Veteran, do not discontinue the apportionment without
  • furnishing a notice of proposed adverse action that informs the apportionee of his/her right to introduce evidence showing why VA should not accept the notice of divorce/annullment as valid, and
  • allowing the apportionee 60 days to respond.
 Notes:
  • If the notice of divorce/annulment includes the following information, provide it in the notice of proposed adverse action:
    • court that processed the divorce/annullment
    • date of the divorce/annullment, and
    • court file number.
  • When the Veteran notifies VA of the divorce/annulment, remove the apportionee from the Veteran’s award but do not discontinue the apportionment until the apportionee has had an opportunity to respond to the notice of proposed adverse action referenced in the preceding paragraph.

References:  For more information about

III.v.3.B.2.c.  Requesting Evidence to Confirm a Divorce or Annulment
When a primary beneficiary reports the dissolution of his/her marriage to an apportionee, but the evidence of record does not confirm his/her assertion, take the action(s) described in the table below.
Status of Evidence
Development Action
No evidence is submitted.
Ask both parties to furnish evidence within 30 days.
Neither party provides evidence of dissolution within the 30-day response period.
Request a certified copy of the decree from the custodian of public records.
  • A negative reply is received from the custodian of public records, and
  • the Veteran’s spouse denies the marriage has been dissolved.
  • Notify the primary beneficiary of these facts, and
  • advise him/her that the apportionment will continue until evidence of dissolution is received.

III.v.3.B.2.d.  Determining the Validity of a Divorce or Annulment Decree
When the validity of a divorce or annulment decree is questionable, request a legal opinion from Regional Counsel before taking any action to discontinue or adjust the primary beneficiary’s or apportionee’s award.
Notify both the primary beneficiary and apportionee of the pending action.
Reference:  For more information about requesting a legal opinion from Regional Counsel, see M21-1, Part III, Subpart iii, 5.A.3.e.

III.v.3.B.2.e.  Award Adjustments Based on Divorce or Annulment
Once the primary beneficiary and apportionee have had an opportunity to respond to the notice of proposed adverse action (if necessary), and a determination has been made that an adjustment based on divorce or annulment is required,
Notes:
  • If the apportionment was for a spouse and child(ren), continue the apportionment to the child(ren) in the amount specified in the most recent apportionment decision).  Pay the apportionment to a custodian in accordance with M21-1, Part III, Subpart v, 9.C.4.a.
  • If the most recent apportionment decision does not specify the amount payable for the child(ren),
    • undertake the development actions described in M21-1, Part III, Subpart v, 3.A.2 (concurrent with preparation of the notice of proposed adverse action regarding the change in marital status, if such notice is necessary)
    • control the issue of the child(ren)’s eligibility under the same EP used for adjustment of the primary beneficiary’s award, and
    • prepare another decision, once development is complete, in accordance with the provisions of
Reference:  For more information on award adjustments stemming from the discontinuation of a Veteran’s marriage to a spouse-apportionee, seeVAOPGCPREC 74-1990.

3.  Adjusting or Discontinuing an Apportionment Due to Death

Introduction
This topic contains information on adjusting or discontinuing an apportionment due to death of the primary beneficiary or apportionee(s), including

Change Date

 December 20, 2017

III.v.3.B.3.a.  Adjusting an Apportioned Award Due to the Death of the Primary Beneficiary
Processing a first notice of death to stop a Veteran’s award simultaneously stops any running apportionee award(s), in accordance with M21-1, Part III, Subpart ii, 8.A.1.a.
Note:  Posthumous adjustments of apportionee awards do not require processing with an accompanying primary beneficiary award unless an adjustment in the primary beneficiary’s record is otherwise required.  This is because such adjustments may be effected by one-time payment awards.
Reference:  For information on processing posthumous awards in VETSNET, see the VETSNET Awards User Guide.

III.v.3.B.3.b.  Discontinuing an Apportioned Award Due to the Death of the Apportionee
Follow the steps in the table below when discontinuing an apportionment due to the death of an apportionee.
Important:  If someone other than the primary beneficiary reported the apportionee’s death, do not take the actions described in this block before furnishing a notice of proposed adverse action to the primary beneficiary, as discussed in M21-1, Part I, 2.B.1 and 2.
Step
Action
1
Is the apportioned award still running?
  • If yes, follow the instructions in M21-1, Part III, Subpart v, 3.B.1.d for discontinuing the deceased apportionee’s award effective the first day of the month of death.
  • If no (including suspended awards), discontinue the deceased apportionee’s award effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.
2
Complete the fields on the DEPENDENCY DECISION screen in VETSNET or VBMS to remove the deceased apportionee from the primary beneficiary’s award effective the first day following the month of death.
3
Were other apportionees receiving an apportionment under the same award as the deceased apportionee?
 
Reference:  For more information on adjusting a primary beneficiary’s award due to the death of an apportionee, see

III.v.3.B.3.c.  Example: Award Adjustments Following the Death of a Spouse-Apportionee
Situation:  The spouse-apportionee of a Veteran in receipt of disability compensation dies in October.  The Veteran has no other dependents.
Actions:
  • Discontinue the apportionment effective the first day of October.
  • Continue to pay the Veteran disability compensation at the rate for a Veteran and spouse through the end of the month of the spouse’s death.
  • Remove the spouse from the Veteran’s award effective the first day of November.
Reference:  For more information on adjusting a Veteran’s award due to the death of an apportionee, see M21-1, Part III, Subpart v, 3.B.6.

4.  Discontinuing an Apportionment for a Child Because the Primary Beneficiary Began Paying Child Support for the Child

Change Date
 November 30, 2017

III.v.3.B.4.a.  Discontinuing an Apportionment for a Child Because the Primary Beneficiary Began Paying Child Support for the Child
Discontinue the payment of an apportionment for a child effective the date the primary beneficiary begins paying child support for the child.
If someone other than the child-apportionee (or his/her custodian)
reports the payment of child support, issue a notice of proposed adverse action to the child apportionee (or his/her custodian) before discontinuing the apportionment.
The table below contains instructions for discontinuing the child’s apportionment if other dependents (such as an estranged spouse) remain entitled to an apportionment of the primary beneficiary’s benefits.
Step
Action
1
Update the ALLOTMENT DECISION screen (in VETSNET or VBMS) to remove the apportionment to the child effective the date the primary beneficiary began paying child support.
2
Does the most recent apportionment decision specify how much of the primary beneficiary’s award is to be allotted to each apportionee?
  • If yes, proceed to Step 4.
  • If no, proceed to the next step.
3
Determine how much of the primary beneficiary’s award to apportion to the remaining apportionee(s) by following the instructions in
4
Update the ALLOTMENT DECISION screen with the new amount(s) allotted to the remaining apportionee(s).
5
Notify the primary beneficiary and the apportionee(s) of the actions taken.
 
References:  For more information about

5.  Discontinuing an Apportionment for a Child That Goes on Active Duty

Change Date
 May 14, 2018

III.v.3.B.5.a.  Discontinuing an Apportionment for a Child That Goes on Active Duty
Discontinue an apportionment for a child that goes on active duty, unless the child is in the custody of an estranged spouse.
When the apportionment ends, continue paying additional benefits for the child to the primary beneficiary until the child turns 18.
Note:  For the purpose of this block, a “primary beneficiary” includes the fiduciary of a child that is not in the custody of the surviving spouse whose benefits VA is apportioning for the child.
Reference:  For more information about apportionments for children that go on active duty, see

6.  Adjusting the Primary Beneficiary’s Award Due to the Loss of a Dependent-Apportionee

Introduction
This topic contains a summary of information on adjustments due to the loss of a dependent-apportionee, including

Change Date

 January 30, 2018

III.v.3.B.6.a.  Effective Date for Removing a Dependent-Apportionee From a Beneficiary’s Award
In most situations, VA uses the “end-of-month rule” described in M21-1, Part III, Subpart iii, 5.L.4.b and c when adjusting a primary beneficiary’s award to reflect loss of a dependent.
References:  For more information about adjusting a primary beneficiary’s award because

III.v.3.B.6.b. Loss of a Child-Apportionee Due to Death, Marriage, Adoption, or Discontinuation of School Attendance
Follow the instructions in the table below when a child-apportionee dies, marries, or stops attending school.
If the child-apportionee …
Then …
  • dies, and
  • is the only apportionee
  • discontinue the apportionment for the child effective the first day of the month of death, per 38 CFR 3.500(g)(1), and
  • remove the child from the primary beneficiary’s award effective the first day of the month following death, per 38 CFR 3.500(g)(2)(ii).
  • marries, and
  • is the only apportionee
  • discontinue the apportionment for the child effective the first day of the month of marriage, per 38 CFR 3.500(n)(1), and
  • remove the child from the primary beneficiary’s award effective the first day of the month following marriage, per 38 CFR 3.500(n)(2)(ii).
  • is given up for adoption, and
  • is the only apportionee
  • discontinue the apportionment for the child effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share, per 38 CFR 3.500(d)(1), and
  • follow the instructions in M21-1, Part III, Subpart iii, 5.G.5.a, for removing the child from the Veteran’s award.
Important:  Application of the instructions in this cell is limited to Veterans and apportionees in receipt ofdisability compensation.  M21-1, Part III, Subpart iii, 5.G.5.b, describes the effect the adoption of a Veteran’s child has on an award of Veterans Pension.
  • stops attending school, and
  • is the only apportionee
discontinue the apportionment and remove the child from the primary beneficiary’s award effective the first day of the month following the date school attendance ended, per 38 CFR 3.667(c).
Note:  If an award has been made covering a vacation period, and the child fails to return to school at the end of that period, the effective date for the adjustments described above is the earlier of the following dates, per 38 CFR 3.667(b):
  • date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share, or
  • first day of the month following the month the child was scheduled to return to school.
  • marries, dies, or stops attending school, and
  • is included as a dependent on a spouse-apportionee’s award
reduce the spouse-apportionee’s award effective the first day of the month following
  • is given up for adoption, and
  • is included as a dependent on a spouse-apportionee’s award
reduce the spouse-apportionee’s award effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share, per 38 CFR 3.500(d)(1).
 
Reference:  For more information on discontinuing an apportioned award due to the death of the apportionee, see M21-1, Part III, Subpart v, 3.B.3.b.

III.v.3.B.6.c.  Retroactive Increases in a Primary Beneficiary’s Award That Are Effective Prior to the Loss of a Dependent-Apportionee
If increased disability or decreased income requires a retroactive award adjustment from a date prior to the loss of a dependent-apportionee, pay the increased benefit to the primary beneficiary, to include any additional allowance for the lost dependent.  Exclude, however, the amount previously allocated to the apportionee award through the end of the month in which the dependent was lost.

III.v.3.B.6.d.  Action to Take if the Lost Dependent Was One of Multiple Apportionees
Follow the steps in the table below if the lost dependent was one of multiple apportionees on the same award.
Step
Action
1
Update the ALLOTMENT DECISION screen (in VETSNET or VBMS) to remove the apportionment to the lost dependent effective the first day of the month of loss.
Exception:  If the lost dependent is a former spouse who divorced the Veteran or whose marriage to the Veteran was annulled, discontinue the award effective the first of the month following the date of divorce or annulment, per VAOPGCPREC 74-1990.
2
Complete the fields on the DEPENDENCY DECISION screen to remove the lost dependent from the primary beneficiary’s award.
Note:  Follow the instructions in M21-1, Part III, Subpart iii, 5.L.4.b.and c for selecting an effective date.
3
Does the most recent apportionment decision specify how much of the primary beneficiary’s award is to be allotted to each apportionee?
  • If yes, proceed to Step 5.
  • If no, proceed to the next step.
4
Determine how much of the primary beneficiary’s award to apportion to the remaining apportionee(s) by following the instructions in
5
Update the ALLOTMENT DECISION screen with the new amount(s) allotted to the remaining apportionee(s).
6
Notify the primary beneficiary and the apportionee(s) of the actions taken.
 
Reference:  For more information about making award adjustments in

III.v.3.B.6.e.  Example: Award Adjustments Following the Divorce of a Veteran and Apportionee
Situation:  A Veteran is evaluated 100-percent disabled and receives $2,673 monthly.  An apportioned award of $559 is being paid to the spouse and five children.  The spouse and Veteran divorce on December 8, 2010.  The date of last payment to the former spouse is February 1, 2011.
Actions:
  • Adjust the award to the former spouse (payee code 10) to pay the children’s apportioned rate ($401) effective January 1, 2011.
  • Discontinue the apportionment effective February 1, 2011.
Note:  A new apportionment decision is required to determine the children’s entitlement to an apportioned share of the Veteran’s compensation, unless the original apportionment decision specified the amount payable for each child.

III.v.3.B.6.f.  Loss of an Out-of-Custody Child in Receipt of DIC
According to 38 CFR 3.461(a),
The surviving spouse’s award of dependency and indemnity compensation will be apportioned where there is a child or children under 18 years of age and not in the custody of the surviving spouse.  
The apportionment referenced in this regulation is slightly different than the apportionments discussed elsewhere in this chapter because it is paid to the out-of-custody child without
  • undertaking development to determine the child’s need
  • issuing notice of proposed adverse action to the primary beneficiary, or
  • preparing an administrative decision.
The out-of-custody child, in this case, is entitled to the amount of additional Dependency and Indemnity Compensation (DIC) payable to the surviving spouse for a child under the age of 18.
Other differences in apportionments under 38 CFR 3.461(a) include the following:
  • loss of the out-of-custody child due to his/her death or marriage does notrequire a corresponding adjustment of the surviving spouse’s award, and
  • the surviving spouse is not entitled to additional benefits for the child through the end of the month in which the child died or married.

III.v.3.B.6.g.  Handling Evidence From a Primary Beneficiary Indicating a Child in Receipt of an Apportionment Is Not a Child Per 38 CFR 3.57
Follow the instructions in the table below upon receipt of evidence from a primary beneficiary indicating a child-apportionee cannot be recognized as a Veteran’s child under 38 CFR 3.57.
Example:  A male Veteran submits a statement indicating he did not father a child to whom VA is apportioning the Veteran’s benefits.
Step
Action
1
Establish EP 130 under the primary beneficiary’s name.
2
Is additional evidence required to confirm that the child apportionee cannot be recognized as a child for VA purposes?
  • If yes, proceed to the next step.
  • If no, proceed to Step 4.
Examples:
  • Additional evidence might be required if the only evidence of record is a statement from a male Veteran that he did not father a child-apportionee.
  • Additional evidence might not be required if the evidence of record includes the results of a paternity test.
3
Concurrent with the actions described in the next two steps, request additional evidence from the primary beneficiary.
4
Establish EP 600 under the child-apportionee’s name.
5
  • Send the child-apportionee or the child-apportionee’s custodian (whichever applies) notice of VA’s proposal to discontinue the child’s apportionment effective the first of the month following the month in which the due process period ends. (The due process period ends 60 days following the date of the notice.)
  • Once 65 days (from the date of the notice) have passed, proceed to the next step.
6
Based on the evidence of record, may VA recognize the child-apportionee as a Veteran’s child under 38 CFR 3.57?
  • If yes, proceed to the next step.
  • If no, proceed to Step 9.
7
  • Notify the primary beneficiary and the child-apportionee or child-apportionee’s custodian (whichever applies) that VA willnot discontinue the apportionment.
  • Notify the primary beneficiary that the child-apportionee will remain on his/her award.
8
  • Clear the EP 130 and EP 600.
  • Disregard the remaining steps in this table.
9
Discontinue the child-apportionee’s award under the EP 600, effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share
10
Remove the child-apportionee from the primary beneficiary’s award under the EP 130, effective the same date the apportionment was discontinued.
11
Notify the primary beneficiary and the child apportionee or child apportionee’s custodian (whichever applies) of the actions taken.
 
References:  For more information about

III.v.3.B.6.h.  Handling Evidence From a Child-Apportionee or Custodian Indicating the Apportionee Is Not a Child Per 38 CFR 3.57
Follow the instructions in the table below upon receipt of evidence from a child-apportionee or child-apportionee’s custodian indicating the apportionee cannot be recognized as a Veteran’s child under 38 CFR 3.57.
Example:  A child-apportionee’s custodian, who is also the child-apportionee’s biological mother, submits a statement to VA in which she reports learning that the child-apportionee was fathered by someone other than her Veteran-husband.
Step
Action
1
Establish EP 130 under the child-apportionee’s name.
2
Is additional evidence required to confirm that the child apportionee cannot be recognized as a child for VA purposes?
  • If yes, proceed to the next step.
  • If no, proceed to Step 4.
Examples:
  • Additional evidence might be required if the only evidence of record is a statement from the child-apportionee’s custodian, such as the one referenced in the example that precedes this table.
  • Additional evidence might not be required if the evidence of record includes the results of a paternity test.
3
Concurrent with the action described in the next step, request additional evidence from the child-apportionee or the child-apportionee’s custodian (whichever applies).
4
Discontinue the child-apportionee’s award under the EP 130, effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.
5
Notify the child-apportionee or the child-apportionee’s custodian (whichever applies) of the action taken.
6
Establish EP 600 under the primary beneficiary’s name.
7
  • Send the primary beneficiary notice of VA’s proposal to remove the child from the primary beneficiary’s award effective the same date the child-apportionee’s award was discontinued.
  • Once 65 days (from the date of the notice) have passed, proceed to the next step.
8
Based on the evidence of record, may VA recognize the child-apportionee as a Veteran’s child under 38 CFR 3.57?
  • If yes,
    • leave the child on the primary beneficiary’s award, and
    • proceed to the next step.
  • If, no, proceed to Step 13.
9
Establish EP 130 under the child-apportionee’s name.
10
Resume payment of the apportionment under EP 130 from the date it was discontinued in Step 4.
11
  • Notify the primary beneficiary and the child apportionee or child apportionee’s custodian (whichever applies) of the resumption of the apportionment.
  • Notify the primary beneficiary that the child-apportionee will remain on his/her award.
12
  • Clear the EP 600.
  • Disregard the remaining steps in this table.
13
Remove the child from the primary beneficiary’s award under EP 600, effective the same date the child-apportionee’s award was discontinued.
14
Notify the primary beneficiary of the action taken.
 
References:  For more information about
5-14-18_Key-Changes_M21-1III_v_3_SecB.docx May 16, 2019 91 KB
1-30-18_Key-Changes_M21-1III_v_3_SecB.docx May 16, 2019 87 KB
8-12-16_Key-Changes_M21-1III_v_3_SecB.docx May 16, 2019 72 KB
Historical_M21-1III_v_3_SecB_1-30-18.docx May 16, 2019 121 KB
Historical_M21-1III_v_3_SecB_5-17-17.doc May 16, 2019 267 KB
11-30-17_Key-Changes_M21-1III_v_3_SecB.docx May 16, 2019 94 KB
Change-July-8-2015-Transmittal-Sheet-M21-1III_v_3_SecB_TS.docx May 16, 2019 39 KB
Transmittal-M21-1MRIII_v_3_SecB_TS.docx May 16, 2019 31 KB
in Chapter 3 Apportionments, Part III General Claims Process, Subpart v General Authorization Issues and Claimant Notification
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