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M21-1, Part III, Subpart v, Chapter 4, Section C – Adjusting Department of Veterans Affairs (VA) Benefits Based on a Veteran’s Receipt of Active Service Pay

Overview


In This Section

This section contains the following topics:
Topic
Topic Name
1
2
3
4
5
6
7
8

1.  General Information on Waivers of VA Benefits to Receive Drill Pay


Introduction

This topic contains general information on waivers of VA benefits to receive drill pay, including

Change Date

September 7, 2018

III.v.4.C.1.a.  Definition:  Drill Pay

The term drill pay refers to the monetary benefits a reservist or member of the National Guard receives for performing active or inactive duty training.
 
VA Form 21-8951, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances, which is discussed elsewhere in this topic, uses the terms military pay and training pay instead of drill pay.

III.v.4.C.1.b.  Prohibition Against Concurrent Receipt of Drill Pay and VA Benefits

10 U.S.C. 12316 and 38 U.S.C. 5304(c) prohibit the concurrent receipt of drill pay and Department of Veterans Affairs (VA) disability compensation or pension.
  • Veterans who perform active or inactive duty training must choose the benefit they prefer and waive the other.
  • Most Veterans choose to receive drill pay instead of disability compensation or pension because drill pay is typically the greater benefit.  These Veterans must waive their VA benefits for the same number of days they received drill pay.
  • Concurrent receipt of VA benefits and the subsistence allowance that a Veteran in the Senior Reserve Officers’ Training Corps (SROTC) might receive is not prohibited.  Only concurrent receipt of VA benefits and pay the Veteran receives for active or inactive duty training in the SROTC is prohibited.
Exception:  According to VAOPGCPREC 10-1990, a reservist or member of the National Guard may concurrently receive VA benefits and the “temporary disability compensation” described in 37 U.S.C. 204(g), (h) and (i).
 
Reference:  For more information about the prohibition against concurrent receipt of active service pay and VA compensation or pension, see

III.v.4.C.1.c.  Process for Identifying and Notifying Veterans Who Concurrently Received Drill Pay and VA Benefits

The table below describes how VA identifies and notifies Veterans who concurrently received drill pay and VA benefits.
Stage
Description
1
At the end of each fiscal year, the Defense Manpower Data Center (DMDC) sends an electronic file to the Hines Information Technology Center (ITC) that identifies Veterans who received both drill pay and VA disability compensation or pension during that fiscal year.
 
Note:  If an interruption occurs in obtaining this data from DMDC, the file may include drill pay data for one or more prior years.
2
Before processing the file, the Hines ITC updates the corporate record of each Veteran to reflect the number of days he/she received drill pay during the prior fiscal year.
Notes:
  • The update is visible in the DRILL PAY PROFILE field of the DRILL PAY tab under the AWARD ADJUSTMENTS screen.
  • If DMDC sends drill pay data for multiple fiscal years, only the data pertaining to the most recent fiscal year appears in the DRILL PAY PROFILE field.
Reference:  For more information about viewing drill pay data in Veterans Service Network (VETSNET) Awards, see the VETSNET Awards Handbook.
3
The Hines ITC
  • generates a VA Form 21-8951 for each Veteran identified in the electronic file
  • sends the form for completion to most of the Veterans identified in the electronic file, and
  • uploads a copy of the form into each Veteran’s electronic claims folder (eFolder).

Notes:

  • Starting with the VA Form 21-8951 that the Hines ITC issued to Veterans for fiscal year 2015, the ITC began
    • attaching a cover letter to each form that serves as a notice of proposed adverse action (should the recipient fail to return the form within 60 days), and
    • uploading a copy of the cover letter into the corresponding eFolder.
  • There are some circumstances under which the Hines ITC isunable to send VA Form 21-8951 to a Veteran who received drill pay.  M21-1, Part III, Subpart v, 4.C.1.h contains instructions for handling such cases.
 
Note:  VA considered the completion of VA Form 21-8951 a one-time waiver of drill pay from 1989 until 1995, when it began requiring Veterans to complete the form annually.

III.v.4.C.1.d.  Information Contained on VA Form 21-8951 From the Hines ITC

The VA Form 21-8951 that the Hines ITC generates
  • informs each Veteran
    • DMDC has identified him/her as a recipient of drill pay, and
    • the law prohibits the concurrent payment of drill pay and VA disability compensation or pension, and
  • displays the
    • Veteran’s name, address, contact information, and file number and/or Social Security number (SSN)
    • return address of the station of origination (SOO), and
    • number of days for which the Veteran received drill pay during the specified fiscal year.

III.v.4.C.1.e.  Automated Processing of Certain Drill Pay Cases 

The table below describes the actions that occur each time the Hines ITC sends a Veteran the VA Form 21-8951 and cover letter referenced in Stage 3 of the process described in M21-1, Part III, Subpart v, 4.C.1.c.
Stage
Description
1
The system automatically establishes
  • end product (EP) 600 under the claim label Drill Pay Adjustment
  • Potential Under/Overpayment as a special issue, and
  • a suspense date that is 65 days from the current date.
2
The system selects Awaiting Response for VA Form 21-8951 as the suspense reason for the EP 600.
3
In Modern Awards Processing – Development (MAP-D), the system adds the following under the pending EP 600:
  • a tracked item titled Drill Pay Proposal
  • a contention titled Drill Pay Adjustment for FY [fiscal year under review] – [number of days the Veteran received drill pay] Days, and
  • the special issue indicator titled Automated Drill Pay Adjustment.
4
The table below describes the next stages in the process.
If the Veteran …
Then …
  • responds within 65 days, and
  • agrees with the number of drill pay days printed on VA Form 21-8951
  • the regional office (RO) responsible for processing the form closes the tracked item referenced in Stage 3 by entering the date VA received the form in the RECEIVED column, and
  • the system
    • adjusts the Veteran’s award under the pending EP 600
    • generates and sends a decision notice to the Veteran, and
    • uploads the decision notice and corresponding award print into the Veteran’s eFolder.
responds within 65 days but
  • disagrees with the number of drill pay days printed on VA Form 21-8951, or
  • requests a waiver of his/her military pay
the RO responsible for processing the form first takes the actions described in M21-1, Part III, Subpart v, 4.C.1.f.  Then the ROfollows the instructions in M21-1, Part III, Subpart v, 4.C.3.
requests a hearing within 65 days of the date the Hines ITC mailed VA Form 21-8951 to the Veteran
the RO responsible for processing the form follows the instructions in M21-1, Part III, Subpart v, 4.C.1.g.
does not return VA Form 21-8951 within 65 days
the system takes the following actions as long as the tracked item referenced in Stage 3 (titled Drill Pay Proposal) is still open:
  • closes the tracked item by entering the current date in the CLOSED column
  • adjusts the Veteran’s award under the pending EP 600
  • generates and sends a decision notice to the Veteran, and
  • uploads the decision notice and corresponding award print into the Veteran’s eFolder.
Note:  The system does not automatically upload into a Veteran’s eFolder VA Forms 21-8951 that the Veteran mails to VA or submits to VA through eBenefits.  Accordingly, ROs are responsible for moving the forms from the mail repository into the appropriate eFolder upon their receipt.

III.v.4.C.1.f.  Preventing the Automatic Adjustment of a Veteran’s Award 

Taking the actions described in the table below prevents the system from automatically adjusting a Veteran’s award based on the number of days printed onVA Form 21-8951.
Important:  Follow the steps in the table below only upon referral to this specific block from
Step
Action
1
Close the tracked item referenced in Stage 3 of the process described in M21-1, Part III, Subpart v, 4.C.1.e by entering the date VA received the form in the RECEIVED column.
2
Add a new tracked item titled Drill Pay – Manual Process.
3
Enter a suspense date for the new tracked item that is 30 days from the current date.

III.v.4.C.1.g. Hearing Requests From Veterans Whose Drill Pay Case Is Subject to Automated Processing

Follow the instructions in the table below when a Veteran, whose drill pay case is subject to automated processing (as described in M21-1, Part III, Subpart v, 4.C.1.e), requests a hearing within 65 days of the date the Hines ITC mailed VA Form 21-8951 to the Veteran.
Step
Action
1
Did VA receive the request for a hearing within 30 days of the date the Hines ITC mailed VA Form 21-8951 to the Veteran?
  • If yes, proceed to the next step.
  • If no, proceed to Step 5.
Reference:  For more information about handling requests for a hearing, see M21-1, Part I, 2.C.3.
2
Take the actions described in M21-1, Part III, Subpart v, 4.C.1.f, and proceed to the next step.
3
Hold the hearing and obtain all relevant evidence the Veteran identifies during the hearing.
4
5
Did the Veteran submit a completed and signed VA Form 21-8951 with his/her hearing request?
Notes:
  • Because the Veteran did not request a hearing within 30 days of the date the Hines ITC mailed VA Form 21-8951 to the Veteran, VA may adjust the Veteran’s award before it holds the hearing.  VA may make the adjustment
    • manually (if the Veteran submitted a completed and signed VA Form 21-8951 with his/her hearing request), or
    • through the automated process (if the Veteran didnot submit a completed and signed VA Form 21-8951 with his/her hearing request).
  • If the Veteran did not submit a completed and signed VA Form 21-8951 with his/her hearing request, the system will automatically adjust the Veteran’s award to reflect the number of training days printed on the form as soon as the suspense date referenced in Stage 1 of the procedure described in M21-1, Part III, Subpart v, 4.C.1.e, passes.
6
Did the Veteran agree with the number of drill pay days printed on VA Form 21-8951?

III.v.4.C.1.h.  Actions to Take When the Hines ITC Is Unable to Send VA Form 21-8951 

When the Hines ITC is unable to send VA Form 21-8951 to a Veteran for completion, it notifies the SOO by establishing an 820 work item labeled Drill Pay Waiver.  When the work item appears in the SOO’s inventory, the SOO must take the actions described in the table below.
Reference:  For more information about 800 series EPs and their corresponding work items, see the VETSNET 800 Series Work Items Desk Reference.
Step
Action
1
Open the Veteran’s eFolder and locate a copy of the VA Form 21-8951 that the Hines ITC uploaded into it.
2
Does the file number and/or SSN printed on VA Form 21-8951 belong to the Veteran whose name, address, and contact information are also printed on the form?
  • If yes, proceed to the next step.
  • If no,
    • determine whether the Veteran’s SSN is correct in the corporate record
    • update the corporate record with the correct SSN, if necessary, and
    • proceed to the next step.
3
Clear an EP 290 and the 820 work item.
4
Does the evidence of record show the Veteran to whom VA sent theVA Form 21-8951 received drill pay during the fiscal year(s) in question?
  • If yes, proceed to the next step.
  • If no,
    • follow the instructions in M21-1, Part III, Subpart ii, 4.G.2.o for annotating the form to reflect that the Veteran received no drill pay, and
    • disregard the remaining steps in this table.
5
Establish EP 600 and add
  • Drill Pay – Manual Process as a tracked item, and
  • Potential Under/Overpayment as a special issue.
6
Print a copy of the VA Form 21-8951 referenced in Step 1.
7
Follow the instructions in the VBMS User Guide for generating a notice of proposed adverse action that proposes to adjust the Veteran’s award based on his/her receipt of drill pay.
Important:  Telephone contact is not acceptable as a substitute for a written notice of proposed adverse action.
References:  For more information on
8
Attach to the notice of proposed adverse action referenced in Step 7
9
Mail the documents referenced in Step 8 to the Veteran.
10
Did the Veteran respond to the notice of proposed adverse action within 65 days?
  • If yes, proceed to the next step.
  • If no, proceed to Step 16.
11
Did the Veteran request a hearing?
12
Did VA receive the request for a hearing within 30 days of the date of the notice of proposed adverse action referenced in Step 7?
  • If yes, proceed to the next step.
  • If no, proceed to Step 15.
Reference:  For more information about handling requests for a hearing, see M21-1, Part I, 2.C.3.
13
Hold the hearing and obtain all relevant evidence the Veteran identifies during the hearing.
14
15
Did the Veteran submit a completed and signed VA Form 21-8951 with his/her hearing request?
Note:  Because the Veteran did not request a hearing within 30 days of the notice of proposed adverse action, VA may take the actions described in the next step or in M21-1, Part III, Subpart v, 4.C.3.bbefore it holds the hearing.
16
  • Accept as correct the number of training days shown on VA Form 21-8951.
  • Follow the instructions in M21-1, Part III, Subpart v, 4.C.4 for adjusting the Veteran’s award.
 
Note:  The system does not automatically upload into a Veteran’s eFolder VA Forms 21-8951 that the Veteran mails to VA or submits to VA through eBenefits.  Accordingly, ROs are responsible for moving the forms from the mail repository into the appropriate eFolder upon their receipt.

III.v.4.C.1.i.  Options a Veteran Has When Completing VA Form 21-8951

The table below describes the various options a Veteran has when completing VA Form 21-8951.
Option
Description
1
Check the box next to the sentence that reads: I elect to waive VA benefits for the days indicated in order to retain my training pay.
2
  • Declare that the number of training days the Hines ITC printed on the form is incorrect
  • enter the correct number of training days on the form, and
  • check the box next to the sentence that reads: I elect to waive VA benefits for the days indicated in order to retain my training pay.
Important:  If the Veteran declares the actual number of training days is less than the number the Hines ITC printed on VA Form 21-8951,  the signature of the Veteran’s unit commander is required on the form in most circumstances.
Note:  See M21-1, Part III, Subpart v, 4.C.3.a for exceptions to the general requirement for a commanding officer’s signature on VA Form 21-8951.
3
Check the box next to the sentence that reads:  I received no military pay and allowances during the fiscal year(s) indicated on the front of this form.
4
Check the box next to the sentence that reads:  I elect to waive military pay and allowances for the days indicated in order to retain my VA compensation or pension.

III.v.4.C.1.j.  Use of VA Form 21-8951-2

VA typically learns a Veteran has received drill pay through the data match described in M21-1, Part III, Subpart v, 4.C.1.c.  However, a Veteran may, on his/her own initiative, notify VA of his/her receipt (or anticipated receipt) of drill pay, and whether he/she chooses to waive VA benefits or drill pay, by completing and submitting VA Form 21-89512, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances.
Notes:
  • VA Form 21-8951-2 is essentially a blank version of the Hines ITC-generated VA Form 21-8951.
  • Although VA does not require a Veteran’s unit commander to sign VA Form 21-8951 unless the Veteran asserts the actual number of training days is less than the number the Hines ITC printed on the form, VAalmost always requires a Veteran’s unit commander to sign VA Form 21-8951-2.
  • Exceptions to the requirement for a unit commander’s signature on VA Form 8951, as listed in M21-1, Part III, Subpart v, 4.C.3.a, also apply to the VA Form 21-8951-2.

2.  Determining the Number of Days of VA Benefits a Veteran Must Waive


Introduction

This topic contains information on determining the number of days of VA benefits a Veteran must waive in order to receive drill pay, including

Change Date

May 3, 2017

III.v.4.C.2.a.  Number of Days Reservists and Members of the National Guard Commonly Receive Drill Pay

During a single fiscal year, reservists and members of the National Guard commonly receive drill pay for a total of 63 days, which consists of
  • 48 armory drills or training sessions, and
  • 15 days of active duty training.
Note:  Variances in the 63-day total are typically due to
  • excused absences from drills, or
  • the performance of additional drills for various assignments, such as
    • schooling
    • planning meetings
    • conferences, or
    • preparation for inspections.

III.v.4.C.2.b.  How Reserve and National Guard Units Calculate the Number of Days of Drill Pay a Veteran Receives

The table below shows
  • the two types of training Veterans in the Reserve or National Guard attend, and
  • how reserve and National Guard units calculate the number of days of drill pay to which a Veteran is entitled for each type of training.
Type of Training
Method of Calculation
armory drill and training sessions
Veterans receive one day of drill pay for each four-hour drill/training session they attend. Units may hold one or two of these sessions per day over a weekend or during a weekday.
Example:  During one “drill weekend,” a Veteran may receive four days of drill pay for attending two drill/training sessions each day.
Notes:
  • Units report the number of days for which a Veteran received drill pay, not the number of calendar days he/she attended drills/training.
  • Request clarification from the Veteran’s unit if questions arise as to how it calculated the number of days of drill pay the Veteran received.
active duty training
Veterans receive one day of drill pay for each day of the annual, two-week, active duty training or “summer camp” they attend.
Important:  Do not confuse this period with drill weekends.

III.v.4.C.2.c.  Travel Time During Drills/Training

Include any authorized travel time for which a Veteran received drill pay when computing the number of days of VA benefits he/she must waive.

III.v.4.C.2.d.  Example:  Determining the Number of Days of VA Benefits a Veteran Must Waive

Scenario:  Sergeant Cummins, a reservist, is currently receiving VA compensation for diabetes.  His reserve unit certifies he was present for
  • 25 days of armory drills/training, with two drill/training sessions each day, and
  • 15 days of active duty training.
Result:  Sergeant Cummins must waive a total of 65 days of VA benefits based on his receipt of drill pay for
  • 50 days of armory drills/training, and
  • 15 days of active duty training.

III.v.4.C.2.e.  Veterans Who Receive Pay for Active Duty Training Only

Occasionally, a Veteran may
  • attend armory drill/training in a no-pay status, and
  • receive pay only for the annual, active duty training he/she attends.
Under these circumstances, the Veteran must waive VA benefits or military pay and allowances only for the number of days he/she attended active duty training.

3.  Manual Processing of VA Form 21-8951


Introduction

This topic contains instructions for manually processing VA Form 21-8951, including

Change Date

September 26, 2017

III.v.4.C.3.a.  Initial Review of VA Form 21-8951

Before processing VA Form 21-8951, review the form to make sure it is complete and bears the appropriate signatures.
  • VA Form 21-8951 must always bear the signature of the Veteran that completed it.
  • VA Form 21-8951 must also bear the signature of the Veteran’s unit commander if
    • the Veteran reports fewer training days than what the Hines ITC printed on the form, and
    • the exception described under the Exception sublabel in this block does not apply.
  • Return incomplete or unsigned forms to the Veteran and advise him/her that failure to return a completed and signed form may result in a reduction of his/her benefits.
Exception:  When a Veteran reports fewer training days than what the Hines ITC printed on the corresponding VA Form 21-8951, VA may accept the form withoutthe signature of the Veteran’s unit commander if
  • the Defense Finance and Accounting Services Leave and Earnings Statement for the fiscal year under review confirms the accuracy of the number of training days the Veteran reported
  • the Veteran informs VA, and VA confirms (through the Veterans Information Solution (VIS) or other means), that he/she retired from the Reserve/National Guard during the fiscal year under review, or
  • the Veteran checks the box next to the sentence on VA Form 21-8951 that reads:  I elect to waive military pay and allowances for the days indicated in order to retain my VA compensation or pension.
Notes:
  • The system does not automatically upload into a Veteran’s eFolder VA Forms 21-8951 that the Veteran mails to VA or submits to VA through eBenefits.  Accordingly, ROs are responsible for moving the forms from the mail repository into the appropriate eFolder following their receipt.
  • There is no requirement that a Veteran use VA Form 21-8951 to communicate to VA the information that a completed VA Form 21-8951 would otherwise provide to VA.  The communication must be in writing, however, and must
    • include a clear indication of which benefit (drill pay or VA benefits) the Veteran desires to waive
    • specify the fiscal year in which training took place
    • provide the number of training days during that fiscal year
    • bear the Veteran’s signature and,
    • bear the signature of the Veteran’s unit commander if
      • the Veteran reports fewer training days than what the Hines ITC printed on the corresponding VA Form 21-8951, and
      • the exception in the preceding paragraph does notapply.
  • Policies surrounding a claimant’s intent to file a claim, as explained inM21-1, Part III, Subpart ii, 2.C.2, do not apply to drill-pay cases.
References:  For more information on

III.v.4.C.3.b.  Processing VA Form 21-8951

Follow the steps in the table below upon receipt of a VA Form 21-8951 that is complete and signed in accordance with M21-1, Part III, Subpart v, 4.C.3.a.
If the Veteran …
Then …
takes the action(s) described under Option 1 or 2 in M21-1, Part III, Subpart v, 4.C.1.i, and there is no reason to question the validity of the information the Veteran provided on the form
follow the instructions in M21-1, Part III, Subpart v, 4.C.4 for withholding the Veteran’s benefits for the number of training days either the Hines ITC or the Veteran entered on the form.
Notes:
  • There is no requirement to issue notice of proposed adverse action before adjusting a Veteran’s award to reflect his/her receipt of drill pay if notice of proposed adverse action accompanied the VA Form 21-8951 when it was sent to the Veteran for completion.
  • The Hines ITC included notice of proposed adverse action with all VA Forms 21-8951 that it sent to Veterans for fiscal years 2015 and later.
checks the box on VA Form 21-8951 that reads
I elect to waive military pay and allowances for the days indicated in order to retain my VA compensation or pension
follow the instructions in M21-1, Part III, Subpart v, 4.C.3.c.
checks the box on VA Form 21-8951 that reads
I received no military pay and allowances during the fiscal year(s) indicated on the front of this form
review the evidence of record (to include data displayed in VIS) to determine whether the Veteran was a reservist or member of the National Guard during the fiscal year in question.
  • If there is reason to question the accuracy of the Veteran’s assertion, initiate development, to include requesting a field examination, if necessary and appropriate.
  • If the evidence of record confirms the Veteran was not a reservist or member of the National Guard,
    • clear an EP 290 unless this EP was previously cleared in Step 3 of the procedure described inM21-1, Part III, Subpart v, 4.C.1.h, and
    • notify the Veteran that, based on his/her response on VA Form 21-8951, VA will make no adjustments to his/her award.
Reference:  For information about using VIS, see the VIS User Guide.
 
Important:  Follow the instructions in M21-1, Part III, Subpart v, 4.C.7.l if
  • VA Form 21-8951 shows training in excess of 179 days, or
  • the evidence of record suggests the Veteran served on active duty during the fiscal year the VA Form 21-8951 covers.

III.v.4.C.3.c.  Actions to Take When a Veteran Chooses to Waive Military Pay

Follow the instructions in the table below if a Veteran checks the box on VA Form 21-8951 that reads I elect to waive military pay and allowances for the days indicated in order to retain my VA compensation or pension.
Step
Action
1
Has VA already adjusted the Veteran’s award to reflect receipt of drill pay for the fiscal year to which the VA Form 21-8951 refers?
  • If yes, proceed to the next step.
  • If no, proceed to Step 8.
2
Did VA receive the election more than one year after the date it notified the Veteran of the award adjustment referenced in Step 1?

  • If yes,
    • establish EP 290, using the claim label Drill Pay Adjustment, and
    • proceed to the next step.
  • If no, proceed to Step 5.
3
Notify the Veteran that VA cannot act on his/her election to waive military pay because the Veteran did not submit the election within one year of the date VA notified the Veteran of the award adjustment referenced in Step 1.
Important:  Inform the Veteran of his/her appellate rights in the decision notice.
4
Clear the EP 290 and disregard the remaining steps in this table.
5
Establish EP 290.
6
Reverse the award adjustment (referenced in Step 1) that VA made to reflect the Veteran’s receipt of drill pay.
Note:  Follow the instructions in M21-1, Part III, Subpart vi, 2.B.1.d, if a debt exists in the Veteran’s account.
7
Notify the Veteran of the action taken and proceed to Step 11.
8
Did VA send the VA Form 21-8951 to the Veteran through the automated process described in M21-1, Part III, Subpart v, 4.C.1.e?
9
Is an EP 600 currently pending to control for return of the VA Form 21-8951 that the Veteran has now returned?
  • If yes,
    • clear the EP 600, and
    • proceed to the next step.
  • If no,
    • clear an EP 290, and
    • proceed to the next step.
10
Prepare and send a decision notice to the Veteran.  In the notice,
  • inform the Veteran that, based on his/her election to waive his/her military pay, VA will not adjust the Veteran’s award to reflect the receipt of drill pay, and
  • notify the Veteran of his/her appellate rights.
11
Prepare an encrypted e-mail addressed to Compensation Service’s Procedures Staff (VAVBAWAS/CO/212A).
  • In the subject line of the e-mail, type VA Form 21-8951-Waiver of Military Pay
  • In the body of the e-mail,
    • provide the
      • Veteran’s name and file number
      • date VA received the VA Form 21-8951, and
      • document identification number assigned to the electronic version of VA Form 21-8951, and
    • type Veteran elects to waive military pay and allowances for the days indicated in order to retain VA compensation or pension.  Please forward the form to the appropriate service department finance center.
Important:
  • Make one attempt to contact the Veteran by telephone prior to sending the e-mail to Compensation Service to ensure the Veteran understands
    • the effect of the waiver, and
    • the likelihood that he/she is waiving the greater benefit.
  • If telephone contact is made with the Veteran, document the conversation on VA Form 27-0820, Report of General Information.
  • If, during the telephone call, the Veteran reaffirms his/her choice to waive military pay, note this fact in the e-mail to Compensation Service.
  • If the attempt to contact the Veteran by telephone is unsuccessful, document the action as a note in
    • MAP-D, or
    • the Veterans Benefits Management System (VBMS).
12
Save a copy of the e-mail as a portable document file (PDF).
Reference:  For more information about saving e-mails in the PDF format, see M21-1, Part III, Subpart ii, 4.G.2.b.
13
Follow the instructions in the VBMS User Guide for uploading the PDF into the Veteran’s eFolder.

4.  Establishing a Withholding to Offset a Veteran’s Receipt of Drill Pay


Introduction

This topic contains instructions for establishing a withholding to offset a Veteran’s receipt of drill pay, including

Change Date

 September 7, 2018

III.v.4.C.4.a.  Determining the Amount of the Withholding

When a Veteran chooses to keep his/her drill pay and waive his/her VA benefits,
  • withhold benefits at the same rate VA was paying the Veteran on the last day of the fiscal year in which the Veteran received drill pay, and
  • pay the Veteran the difference between this rate and the rate in effect on the date the withholding begins.  (In most cases, there will be no difference.)
Exceptions:
Notes:
  • There is no requirement to issue notice of proposed adverse action before adjusting a Veteran’s award to reflect his/her receipt of drill pay if notice of proposed adverse action accompanied the VA Form 21-8951 when it was sent to the Veteran for completion.
  • The Hines ITC included notice of proposed adverse action with all VA Forms 21-8951 that it sent to Veterans for fiscal years 2015 and later.
Reference:  For examples of the policy expressed in this block, see M21-1, Part III, Subpart v, 4.C.8.

III.v.4.C.4.b.  Determining the Effective Date of the Withholding

On February 25, 2016, ROs were notified of a change in the procedure for handling a Veteran’s decision to keep his/her drill pay and waive his/her VA benefits.  Under the new procedure, VA retroactively withholds benefits based on a Veteran’s receipt of drill pay, effective the first day of the current fiscal year, instead of withholding benefits prospectively (from a future date).
Exception:  M21-1, Part III, Subpart v, 4.C.4.fg, and h, describe circumstances under which it is not possible to withhold benefits effective the first day of the current fiscal year.
The retroactive adjustment of a Veteran’s award creates an overpayment in the Veteran’s account.  The creation of an overpayment affords the Veteran the opportunity to request a waiver of or make payments toward the resulting debt.  Under the old procedure, no overpayment was created, which left the Veteran with no option to mitigate the adverse effect of losing the withheld benefits.
Follow the instructions in the table below under either of the following circumstances:
  • A drill pay case that an RO had in its inventory as of February 25, 2016, requires notice of proposed adverse action because no notice of proposed adverse action accompanied the VA Form 21-8951 that VA sent to the Veteran.
  • As of February 25, 2016, an RO was awaiting a response to a notice of proposed adverse action involving a drill pay case.
If …
Then …
  • notice of proposed adverse action is necessary because no notice of proposed adverse action accompanied the VA Form 21-8951 that VA sent to the Veteran, and
  • notice of proposed adverse action has not been issued
  • follow the instructions in the VBMS User Guidefor generating a notice of proposed adverse action that proposes to adjust the Veteran’s award based on his/her receipt of drill pay
  • attach VA Form 21-0789 to the notice, and
  • send the notice to the Veteran.
  • notice of proposed adverse action has already been issued, and
  • the notice informed the Veteran that the proposed award adjustment would be made from afuture date
unless the Veteran submits evidence showing the proposed action is unwarranted, or requests a hearing within 30 days of the date of the notice, take the following actions after the Veteran responds or has had 65 days to respond to the notice:
  • withhold benefits in the amount and from the date specified in the notice of proposed adverse action, and
  • add the following paragraphs to the final decision notice under the heading What Are Your Options:
If you are experiencing financial hardship and cannot afford to have your benefits reduced prospectively, please contact us immediately. We will work with you to create a debt and establish a reasonable repayment schedule.
If you inform us that a financial hardship exists, we will take action to reverse your current adjustment, as indicated in this notification, and will create an overpayment.  Once the overpayment is created, you will receive a letter from the Debt Management Center advising you of repayment options.
Important:  If the Veteran responds to the final decision notice (in writing, in person, or by telephone) by stating that the withholding will create a financial hardship, follow the instructions in the table below.
Step
Action
1
Establish EP 290, using the claim label Drill Pay.
2
Add the Hardship flash to the Veteran’s corporate record.
3
Undo the previous award adjustment (by removing the previously established withholding for drill pay).
4
Continue the EP at authorization.
5
After the Veteran receives payment for the benefits VA withheld prospectively, adjust the Veteran’s award once again by commencing the withholding for drill pay effective the first day of the current fiscal year.
 
Notes:
  • There is no requirement to issue notice of proposed adverse action before adjusting a Veteran’s award to reflect his/her receipt of drill pay if notice of proposed adverse action accompanied the VA Form 21-8951 when it was sent to the Veteran for completion.
  • The Hines ITC included notice of proposed adverse action with all VA Forms 21-8951 that it sent to Veterans for fiscal years 2015 and later.

III.v.4.C.4.c.  Determining the Date Range for Withholding Benefits

When determining the date range during which VA must withhold benefits to offset a Veteran’s receipt of drill pay, count each month – including February – as having30 days.
Examples:  If award action is taken (under the new procedures that went into effect February 25, 2016) to withhold compensation based on a Veteran’s receipt of drill pay for
  • 55 days of training,
    • the withholding begins October 1st, and
    • payment at the full rate resumes November 26th, or
  • 93 days of training,
    • the withholding begins October 1st, and
    • payment at the full rate resumes January 4th.
Important:  The provisions of 38 CFR 3.31 do not apply to the resumption of benefits in the examples above.

III.v.4.C.4.d.  Handling Advance Notice of a Veteran’s Receipt of Drill Pay

When a Veteran notifies VA in advance that he/she will receive drill pay, it might be impossible to know what the Veteran’s rate of payment will be on the last day of the fiscal year during which he/she earns the drill pay.  In this case,
  • withhold benefits at the current rate for the number of days the Veteran expects to attend training, and
  • begin the withholding effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.
Notes:
  • Do not establish an EP to control for correction of the amount of withholding at the end of the fiscal year.
  • If the rate payable at the end of the fiscal year turns out to be different than the amount VA originally withheld, correct the amount of the withholding only if some other reason exists for making a retroactive adjustment covering the period of the withholding.
  • If the Veteran in this case ultimately attends fewer days of training than he/she initially reported, follow the instructions in M21-1, Part III, Subpart v, 4.C.6.

III.v.4.C.4.e.  Temporary 100-Percent Disability Ratings in Effect on the Last Day of the Fiscal Year

If a Veteran was receiving VA compensation based on a temporary 100-percent disability rating under 38 CFR 4.29 or 38 CFR 4.30 on the last day of the fiscal year in which he/she earned drill pay,
  • determine what the Veteran’s disability rating is without the 100-percent temporary disability rating, and
  • base the withholding on that disability rating.
Example:
Scenario:
  • A Veteran is 20-percent disabled for a service-connected (SC) disorder that required surgery on August 20, 2010.
  • VA determines the Veteran is entitled to a temporary 100-percent rating for two months following surgery.
  • The Veteran submits VA Form 21-8951 in January 2011 showing she earned drill pay during fiscal year 2010.
Result:  VA bases its withholding on the 20-percent disability rating instead of the 100-percent disability rating in effect on September 30, 2010.

III.v.4.C.4.f.  Withholdings That Exceed the Rate of Payment on October 1

Occasionally, VA is unable to adjust a Veteran’s benefits from the standard effective date of October 1st because the rate of payment on October 1st is lessthan the rate of payment at the end of the prior fiscal year.
Example:
  • Based on sustained improvement in an SC disability, VA reduces a Veteran’s combined disability rating from 30 percent to 20 percent, effective October 1, 2015.
  • In June 2016, the Veteran returns a signed and completed VA Form 21-8951, showing he received drill pay during fiscal year 2015.  On the form, the Veteran indicates his desire to waive his VA benefits.
Follow the steps in the table below when the rate of payment at the beginning of the current fiscal year is less than the monthly amount VA was paying the Veteran at the end of the fiscal year during which he/she earned drill pay.
Step
Action
1
Identify the most recent award line that shows a monthly rate of payment equal to or exceeding the Veteran’s rate of payment at the end of the fiscal year during which he/she earned drill pay.
2

Did notice of proposed adverse action accompany the VA Form 21-8951 that the Veteran received?

  • If yes, proceed to Step 7.
  • If no, proceed to the next step.

Notes:

  • There is no requirement to issue notice of proposed adverse action before adjusting a Veteran’s award to reflect his/her receipt of drill pay if notice of proposed adverse action accompanied the VA Form 21-8951 when it was sent to the Veteran for completion.
  • The Hines ITC included notice of proposed adverse action with all VA Forms 21-8951 that it sent to Veterans for fiscal years 2015 and later.
3
Send the Veteran notice of VA’s proposal to reduce his/her benefits
  • by the monthly rate of payment in effect at the end of the fiscal year during which the Veteran earned drill pay, and
  • effective the date of the award line identified in Step 1.
Notes:
  • Follow the instructions in the VBMS User Guide to generate the notice of proposed adverse action.
  • Attach VA Form 21-0789 to the notice before sending it to the Veteran.
Reference:  For more information about issuing a notice of proposed adverse action, see M21-1, Part I, 2.B.
4
Did the Veteran respond to the notice of proposed adverse action within 65 days of the date of the notice?
  • If yes, proceed to the next step.
  • If no, proceed to Step 7.
5
Did the Veteran request a hearing within 30 days of the date of the notice?
  • If yes, take no further action until after
    • the hearing is held, and
    • a decision is made as to whether or not the proposed award adjustment is still warranted.
  • If no, proceed to the next step.
Reference:  For more information about handling requests for a hearing under the circumstances described in this step, see M21-1, Part I, 2.C.3.
6
Did the Veteran provide evidence showing VA should not retroactively adjust his/her award?
  • If yes,
    • notify the Veteran of VA’s decision, and
    • proceed no further.
  • If no, proceed to the next step.
7
  • Retroactively reduce the Veteran’s benefits, effective the date of the award line identified in Step 1, by the Veteran’s rate of payment at the end of the fiscal year during which he/she earned drill pay.
  • Discontinue the reduction after it has been in place for the same number of days the Veteran received drill pay.
8
Notify the Veteran of the action taken.
 
Important:  If VA is unable to adjust a Veteran’s award to offset his/her receipt of drill pay because it discontinued the Veteran’s award based on his/her return to active duty, do not wait until VA resumes the Veteran’s award following his/her discharge to make the necessary offset in benefits.
References:

III.v.4.C.4.g.  Actions to Take When the Monthly Rate of Payment at the End of the Fiscal Year Is $0.00

Follow the instructions in the table below when the monthly rate of payment at the end of the fiscal year in which the Veteran received drill pay is $0.00.
Step
Action
1
Was the Veteran’s monthly rate of payment $0.00 for the entire fiscal year in question?
  • If yes, take no further action.  A withholding of benefits under these circumstances is unnecessary.
  • If no, proceed to the next step.
2
Are the dates the Veteran attended drills/training known?
  • If yes, proceed to the next step.
  • If no, proceed to Step 19.
3
Was the Veteran’s rate of payment at the beginning of the currentfiscal year less than the rate in effect while he/she was attending drills/training?
  • If yes, proceed to the next step.
  • If no, proceed to Step 12.
4
Identify the most recent award line that shows a monthly rate of payment equal to or exceeding the rate in effect during the period the Veteran attended drills/training.
5
Did notice of proposed adverse action accompany the VA Form 21-8951 that the Veteran received?
  • If yes, proceed to Step 10.
  • If no, proceed to the next step.
6
Send the Veteran notice of VA’s proposal to reduce his/her benefits
  • by the monthly rate of payment in effect during the period the Veteran attended drills/training, and
  • effective the date of the award line identified in Step 4.
7
Did the Veteran respond to the notice of proposed adverse action within 65 days of the date of the notice?
  • If yes, proceed to the next step.
  • If no, proceed to Step 10.
8
Did the Veteran request a hearing within 30 days of the date of the notice?
  • If yes, take no further action until after
    • the hearing is held, and
    • a decision is made as to whether or not the proposed award adjustment is still warranted.
  • If no, proceed to the next step.
9
Did the Veteran provide evidence showing VA should not retroactively adjust his/her award?
  • If yes,
    • notify the Veteran of VA’s decision, and
    • proceed no further.
  • If no, proceed to the next step.
10
  • Reduce the Veteran’s benefits
    • by the monthly rate of payment in effect during the period the Veteran attended drills/training, and
    • effective the date of the award line identified in Step 4.
  • Discontinue the reduction after it has been in place for the same number of days the Veteran received drill pay.
11
Notify the Veteran of the action taken and proceed no further.
12

Did notice of proposed adverse action accompany the VA Form 21-8951 that the Veteran received?

  • If yes, proceed to Step 17.
  • If no, proceed to the next step.
13
Send the Veteran notice of VA’s proposal to reduce his/her benefits
  • by the monthly rate of payment in effect during the period the Veteran attended drills/training, and
  • effective the first day of the current fiscal year.
14

Did the Veteran respond to the notice of proposed adverse action within 65 days of the date of the notice?

  • If yes, proceed to the next step.
  • If no, proceed to Step 17.
15

Did the Veteran request a hearing within 30 days of the date of the notice?

  • If yes, take no further action until after
    • the hearing is held, and
    • a decision is made as to whether or not the proposed award adjustment is still warranted.
  • If no, proceed to the next step.
16

Did the Veteran provide evidence showing VA should not retroactively adjust his/her award?

  • If yes,
    • notify the Veteran of VA’s decision, and
    • proceed no further.
  • If no, proceed to the next step.
17
Withhold benefits from the first day of the current fiscal year

  • for the same number of days the Veteran attended drills/training, and
  • in an amount equal to the monthly rate of payment in effect during the dates he/she attended drills/training.
18
Notify the Veteran of the action taken and proceed no further.
19
Determine what the Veteran’s monthly rate of payment was on the date prior to the date it was reduced to $0.00.
20
Was the Veteran’s rate of payment at the beginning of the currentfiscal year less than the rate identified in Step 19?

  • If yes, proceed to the next step.
  • If no, proceed to Step 29.
21
Identify the most recent award line that shows a monthly rate of payment equal to or exceeding the rate identified in Step 19.
22
Did notice of proposed adverse action accompany the VA Form 21-8951 that the Veteran received?
  • If yes, proceed to Step 27.
  • If no, proceed to the next step.
23
Send the Veteran notice of VA’s proposal to reduce his/her benefits
  • by the amount identified in Step 19, and
  • effective the date of the award line identified in Step 21.
24
Did the Veteran respond to the notice of proposed adverse action within 65 days of the date of the notice?
  • If yes, proceed to the next step.
  • If no, proceed to Step 27.
25
Did the Veteran request a hearing within 30 days of the date of the notice?
  • If yes, take no further action until after
    • the hearing is held, and
    • a decision is made as to whether or not the proposed award adjustment is still warranted.
  • If no, proceed to the next step.
26
Did the Veteran provide evidence showing VA should not retroactively adjust his/her award?
  • If yes,
    • notify the Veteran of VA’s decision, and
    • proceed no further.
  • If no, proceed to the next step.
27
  • Reduce the Veteran’s benefits
    • by the amount identified in Step 19, and
    • effective the date of the award line identified in Step 21.
  • Discontinue the reduction after it has been in place for the same number of days the Veteran received drill pay.
28
Notify the Veteran of the action taken and proceed no further.
29

Did notice of proposed adverse action accompany the VA Form 21-8951 that the Veteran received?

  • If yes, proceed to Step 34.
  • If no, proceed to the next step.
30
Send the Veteran notice of VA’s proposal to reduce his/her benefits

  • by the amount identified in Step 19, and
  • effective the first day of the current fiscal year.
31
Did the Veteran respond to the notice of proposed adverse action within 65 days of the date of the notice?

  • If yes, proceed to the next step.
  • If no, proceed to Step 34.
32
Did the Veteran request a hearing within 30 days of the date of the notice?

  • If yes, take no further action until after
    • the hearing is held, and
    • a decision is made as to whether or not the proposed award adjustment is still warranted.
  • If no, proceed to the next step.
33
Did the Veteran provide evidence showing VA should not retroactively adjust his/her award?

  • If yes,
    • notify the Veteran of VA’s decision, and
    • proceed no further.
  • If no, proceed to the next step.
34
Withhold benefits from the first day of the current fiscal year
  • for the same number of days the Veteran attended drills/training, and
  • in an amount equal to the monthly rate of payment identified in Step 19.
35
Notify the Veteran of the action taken.
 
Important:
  • There is no requirement to issue notice of proposed adverse action before adjusting a Veteran’s award to reflect his/her receipt of drill pay if notice of proposed adverse action accompanied the VA Form 21-8951 when it was sent to the Veteran for completion.
  • The Hines ITC included notice of proposed adverse action with all VA Forms 21-8951 that it sent to Veterans for fiscal years 2015 and later.
  • If the monthly rate of payment for any of the days the Veteran attended drills/training was $0.00, do not include those days when determining the length of time benefits must be withheld.
  • Follow the instructions in the VBMS User Guide to generate the notice of proposed adverse action referenced in the table above.  Attach VA Form 21-0789 to the notice before sending it to the Veteran.
References:  For more information about

III.v.4.C.4.h.  Action to Take When Withholding Benefits From the First Day of the Current Fiscal Year Will Affect the Future Rate of Payment

If adjustment of a Veteran’s award (based on the Veteran’s receipt of drill pay), effective the first day of the current fiscal year, cannot be accomplished without affecting the future rate of payment, make the adjustment effective the first day of the prior fiscal year.
Example:
Scenario:  On October 15, 2016, a Veterans Service Representative (VSR) decides to process a VA Form 21-8951 from a Veteran who received drill pay based on 65 days of training during fiscal year 2015.
Problem:  If the VSR begins the withholding for drill pay effective October 1, 2016 (per the instructions in M21-1, Part III, Subpart v, 4.C.4.b), the withholding will continue through a future date (December 5, 2016), thereby affecting the Veteran’s future rate of payment.
Resolution:  The VSR must begin the withholding effective October 1, 2015 (or some later date, if benefits were already withheld from that date based on the Veteran’s receipt of drill pay during a fiscal year prior to fiscal year 2015).

III.v.4.C.4.i.  Actions to Take When a Veteran’s Benefits Are Subject to Reduction/ Withholding Based on Incarceration and Receipt of Drill Pay

Follow the instructions in M21-1, Part III, Subpart v, 4.C.5.b, when
  • action to withhold benefits to offset a Veteran’s receipt of drill pay is pending, and
  • current procedures call for the withholding to occur over a period of time during which the Veteran’s benefits are subject to reduction due to his/her incarceration.
Follow the instructions in the table under M21-1, Part III, Subpart v, 4.C.4.g,starting with Step 2, when
  • action to withhold benefits to offset a Veteran’s receipt of drill pay is pending, and
  • the monthly rate of payment at the end of the fiscal year in which the Veteran received drill pay has been reduced based on the Veteran’s incarceration.
Important:  For the purpose of adjusting a Veteran’s award based on the circumstances described in the above paragraph, the instructions in Step 19 of the table under M21-1, Part III, Subpart v, 4.C.4.g should read:  Determine what the Veteran’s monthly rate of payment was on the date prior to the date it was reducedbased on the Veteran’s incarceration.

III.v.4.C.4.j.  Action to Take When VA Is/Was Apportioning the Benefits of a Veteran Who Received Drill Pay

Follow the instructions in the table below when the adjustment of a Veteran’s award due to his/her receipt of drill pay is necessary and
  • VA was apportioning the same Veteran’s benefits on the last day of the fiscal year during which the Veteran received drill pay, and/or
  • the time period over which VA must retroactively withhold benefits to offset the Veteran’s receipt of drill pay overlaps a period during which VA was apportioning the Veteran’s benefits.
If …
Then …
VA was apportioning the Veteran’s benefits on the last day of the fiscal year during which the Veteran received drill pay
when retroactively withholding benefits for the number of days the Veteran received drill pay,
  • withhold from the Veteran’s award the amount of benefits VA was paying him/her on the last day of the same fiscal year (notincluding the amount of the apportionment), and
  • reduce the apportionee award over the same time period by the amount of benefits VA was apportioning on the last day of the same fiscal year.
Important:  Issue notice of proposed adverse action to the apportionee(s) before taking the actions described in the above bullets.
Reference:  For information about issuing notice of proposed adverse action, see M21-1, Part I, 2.
  • VA was not apportioning benefits on the last day of the fiscal year during which the Veteran received drill pay, but
  • the time period over which VA must now withhold benefits to offset the Veteran’s receipt of drill pay overlaps a period during which VA was apportioning the Veteran’s benefits
follow the procedure outlined in the step-action table under M21-1, Part III, Subpart v, 4.C.4.f.

III.v.4.C.4.k.  Circumstances Necessitating Revision and Reissuance of a Notice of Proposed Adverse Action

Reissue notice of proposed adverse action (with revision of the amount and/or duration of the withholding, as applicable) if, after issuing the initial notice, but before making the corresponding award adjustment,
  • the amount that VA must withhold increases, and/or
  • the number of days VA must withhold benefits increases.
Examples:
  • After issuing notice of proposed adverse action, VA increases the Veteran’s monthly rate of compensation (due to, for example, an increase in her combined disability rating) from an effective date prior to the end of the fiscal year during which the Veteran received drill pay.
  • After issuing notice of proposed adverse action, a VSR discovers he misread the number of drill pay days printed on VA Form 21-8951.

Notes:

  • Follow the instructions in the VBMS User Guide to generate the notice of proposed adverse action.  Attach VA Form 21-0789 to the notice before sending it to the Veteran.
  • If an RO issues notice of proposed adverse action to withhold benefits from a specific effective date based on a Veteran’s receipt of drill pay, and the RO later decides that the withholding must begin on a different effective date, there is no requirement to issue a revised notice of proposed adverse action, as long as changing the date on which the withholding begins will have no greater adverse impact on the Veteran’s benefits.

III.v.4.C.4.l.  Making Award Adjustments in VETSNET or VBMS

When adjusting a Veteran’s award to reflect his/her receipt of drill pay, follow the instructions in the VETSNET Awards Handbook or VBMS-Awards User Guide.

 

5.  Handling Retroactive Award Adjustments After VA Has Withheld Benefits to Offset a Veteran’s Receipt of Drill Pay

 


Introduction

This topic contains information on handling retroactive award adjustments after VA has withheld benefits to offset a Veteran’s receipt of drill pay, including

Change Date

September 7, 2018

III.v.4.C.5.a.  Actions to Take if a Veteran Returns to Active Duty During a Period VA Withheld or Is Withholding Benefits

Follow the instructions in the table below if a Veteran returns to active duty during a period VA withheld benefits due to the Veteran’s receipt of drill pay.
Step
Action
1
Follow the instructions in M21-1, Part III, Subpart v, 4.C.7 to discontinue the Veteran’s benefits effective the date he/she returned to active duty.
2
Identify the most recent award line (prior to the date VA discontinued the Veteran’s benefits) that shows a monthly rate of payment equal to or exceeding the Veteran’s rate of payment at the end of the fiscal year during which he/she received drill pay.
3
  • Inform the Veteran in a notice of proposed adverse action of the new date from which VA intends to withhold benefits to offset his/her receipt of drill pay.
  • Take the action(s) described in the next step after the Veteran responds or has had 65 days to respond to the notice of proposed adverse action.

Notes:

  • Follow the instructions in the VBMS User Guide to generate the notice of proposed adverse action.
  • Attach VA Form 21-0789 to the notice before sending it to the Veteran.
Reference:  For more information about issuing a notice of proposed adverse action, see M21-1, Part I, 2.B.
4
Did the Veteran respond to the notice of proposed adverse action by requesting a hearing or submitting evidence showing the proposed adjustment would be improper?
  • If yes, postpone further action until after VA
    • holds the hearing, and/or
    • considers the evidence the Veteran submitted.
  • If no, make the adjustment described in the notice of proposed adverse action.
 
Important:  Do not wait until VA resumes the payment of benefits to the Veteran following his/her discharge to make the offset in benefits necessitated by the Veteran’s receipt of drill pay.
Reference:  For an example of the application of instructions contained in this block, see M21-1, Part III, Subpart v, 4.C.8.g.

III.v.4.C.5.b.  Actions to Take When a Veteran’s Benefits Are Subject to Reduction/ Withholding Based on Incarceration and Receipt of Drill Pay

Follow the instructions in the table below if a Veteran’s benefits are subject to reduction under M21-1, Part III, Subpart v, 8.A.1.b, because the Veteran was incarcerated, and
  • VA withheld benefits to offset the Veteran’s receipt of drill pay during a period of time that overlaps the period of time during which VA must now reduce the Veteran’s benefits due to his/her incarceration, or
  • action to withhold benefits to offset the Veteran’s receipt of drill pay is pending and current procedures call for the withholding to occur over a period of time during which the Veteran’s benefits are subject to reduction due to his/her incarceration.
Important:  The instructions in the table below were written under the assumption that VA has already informed the Veteran (in the notice of proposed adverse action discussed in M21-1, Part III, Subpart v, 8.A.3.f) that his/her benefits are subject to reduction because of incarceration.
Step
Action
1
Identify the most recent award line that
  • shows a monthly rate of payment that is equal to or exceeds the Veteran’s rate of payment at the end of the fiscal year during which he/she earned drill pay, and
  • does not fall within a period during which VA must reduce the Veteran’s disability compensation because of incarceration.
Important:  The monthly rate of payment for the award line identified in this step must continue – for as many days as the Veteran earned drill pay – to equal or exceed the Veteran’s rate of payment at the end of the fiscal year during which he/she earned drill pay.  In those rare instances when it does not, identify the next most recent award line that meets the criteria set forth in this step.
2
Follow the instructions in the table below.
If …
Then …
VA withheld benefits to offset the Veteran’s receipt of drill pay during a period of time that overlaps the period of time during which VA must now reduce the Veteran’s benefits due to his/her incarceration
proceed to Step 3.
  • action to withhold benefits to offset the Veteran’s receipt of drill pay is pending, and
  • current procedures call for the withholding to occur over a period of time during which the Veteran’s benefits are subject to reduction due to his/her incarceration
proceed to Step 4.
3
  • Process an award adjustment that
    • reverses the withholding VA initially put into place to offset the Veteran’s receipt of drill pay
    • reduces the Veteran’s disability compensation, effective the 61st day of incarceration, according to the instructions in M21-1, Part III, Subpart v, 8.A.3
    • reinstates the withholding to offset the Veteran’s receipt of drill pay effective the date of the award line identified in Step 1, and
    • discontinues the withholding after it has been in place for the same number of days the Veteran received drill pay.
  • Proceed to Step 10.
Note:  Reinstatement of the withholding to offset the Veteran’s receipt of drill pay from a different effective date does not constitute an adverse action for which the Veteran has never been given notice.  Accordingly, VA may reinstate the withholding without issuing notice of proposed adverse action for this specific action.
4

Did notice of proposed adverse action accompany the VA Form 21-8951 that the Veteran received?

  • If yes, proceed to Step 9.
  • If no, proceed to the next step.
Notes:
  • There is no requirement to issue notice of proposed adverse action before adjusting a Veteran’s award to reflect his/her receipt of drill pay if notice of proposed adverse action accompanied VA Form 21-8951 when it was sent to the Veteran for completion.
  • The Hines ITC included notice of proposed adverse action with all VA Forms 21-8951 that it sent to Veterans for fiscal years 2015 and later.
5
Send the Veteran notice of VA’s proposal to reduce his/her benefits
  • by the monthly rate of payment in effect during the period the Veteran attended drills/training, and
  • effective the date of the award line identified in Step 1.

Notes:

  • Follow the instructions in the VBMS User Guide to generate the notice of proposed adverse action.
  • Attach VA Form 21-0789 to the notice before sending it to the Veteran.
Reference:  For more information about issuing a notice of proposed adverse action, see M21-1, Part I, 2.B.
6
Did the Veteran respond to the notice of proposed adverse action within 65 days of the date of the notice?
  • If yes, proceed to the next step.
  • If no, proceed to Step 9.
7
Did the Veteran request a hearing within 30 days of the date of the notice?
  • If yes, take no further action until after
    • the hearing is held, and
    • a decision is made as to whether or not the proposed award adjustment is still warranted.
  • If no, proceed to the next step.
Reference:  For more information about handling requests for a hearing under the circumstances described in this step, see M21-1, Part I, 2.C.3.
8
Did the Veteran provide evidence showing VA should not retroactively adjust his/her award?
  • If yes,
    • notify the Veteran of VA’s decision to make no adjustment to his/her award, and
    • disregard the remaining steps in this table.
  • If no, proceed to the next step.
9
Process an award adjustment that
  • reduces the Veteran’s disability compensation, effective the 61st day of incarceration, according to the instructions inM21-1, Part III, Subpart v, 8.A.3
  • initiates a withholding (to offset the Veteran’s receipt of drill pay) that is
    • effective the date of the award line identified in Step 1, and
    • equal to the monthly rate of payment in effect during the period the Veteran attended drills/training, and
  • discontinues the withholding after it has been in place for the same number of days the Veteran received drill pay.
10
Notify the Veteran of the adjustments made to his/her award.
 
Reference:  See M21-1, Part III, Subpart v, 4.C.8.k for an example of the proper application of the instructions contained in this block.

III.v.4.C.5.c.  Retroactive Adjustments That Affect the Rate of Payment at Which VA Withheld Benefits to Offset a Veteran’s Receipt of Drill Pay

If, subsequent to the establishment of a withholding to offset a Veteran’s receipt of drill pay, VA makes a retroactive adjustment (increase or decrease) to the monthly rate of benefits a Veteran was receiving at the end of the fiscal year in which the Veteran received drill pay, VA must make a corresponding change in the amount of benefits it withholds for the number of days the Veteran received drill pay during that fiscal year.
Example:
Scenario:
  • A Veteran with a combined disability rating of 20 percent attended 65 days of training during fiscal year 2014.
  • In February 2016, VA
    • established a withholding of $258.83 per month, effective October 1, 2015, to offset the Veteran’s receipt of drill pay, and
    • resumed the full payment of benefits ($263.23 per month), effective December 6, 2015.
  • A June 2016 rating decision retroactively assigns the Veteran a combined disability rating of 30 percent, effective March 1, 2014.
Result:  When VA promulgates the rating decision it must increase the amount of the withholding for the period October 1, 2015, through December 5, 2015, to $400.93.
Note:  The policy expressed in this block also applies if
  • VA withheld benefits at the rate it paid the Veteran on a date other thanthe last day of the fiscal year in which drills/training took place (for the reasons expressed in M21-1, Part III, Subpart v, 4.C.4.eg, and i), and
  • VA makes a retroactive adjustment to the monthly rate of benefits the Veteran was receiving on that other date.

 

6.  Restoring Benefits VA Previously Withheld to Offset a Veteran’s Receipt of Drill Pay


Introduction

This topic contains information on restoring benefits VA previously withheld to offset a Veteran’s receipt of drill pay, including

Change Date

 April 6, 2016

III.v.4.C.6.a.  Circumstances Warranting a Restoration of Benefits

If a Veteran notifies VA in advance that he/she will receive drill pay, but the Veteran ultimately attends fewer days of training than he/she initially reported, the Veteran may recover the extra benefits VA withheld by notifying VA of the discrepancy within one year of the end of the fiscal year during which the training took place.
The notice must include a signed statement from the Veteran’s unit commander (or designee) containing the following information:
  • Veteran’s unit of assignment
  • beginning and ending dates of each
    • armory drill/training session, and
    • period of active duty training, and
  • total number of days of drill pay the Veteran received during the fiscal year.
Exception:  See M21-1, Part III, Subpart v, 4.C.3.a for circumstances under which a commander’s signature is not required.
References:  For more information on

III.v.4.C.6.b.  Process for Restoring Benefits

To restore benefits under the circumstances described in M21-1, Part III, Subpart v, 4.C.6.a, adjust the Veteran’s award to shorten the period during which VA previously withheld benefits.  Do this by changing only the effective date on which VA previously stopped withholding benefits.
Example:
Scenario:
  • A Veteran provides VA advance notice he will receive drill pay for 55 days.
  • VA initially
    • withholds benefits effective October 1, and
    • resumes benefits effective November 26.
  • Within one year of the end of the fiscal year during which the Veteran attended training, he notifies VA he actually attended only
    • 20 armory drill/training sessions, performed over 10 calendar days, and
    • 15 days of active duty training.
Action:  Because the Veteran received drill pay for only 35 days, adjust his award by changing the date benefits resume to November 6.
Reference:  To ensure accurate calculation of the number of days the Veteran received drill pay, see M21-1, Part III, Subpart v, 4.C.2.b.

7.  Award Adjustments Necessitated by a Veteran’s Return to and Discharge From Active Duty


Introduction

This topic contains information on award adjustments necessitated by a Veteran’s return to and discharge from active duty, including

Change Date

 September 7, 2018

III.v.4.C.7.a.  Relinquishment of Benefits Upon Return to Active Duty

Under 38 U.S.C. 5304(c), Veterans receiving VA disability compensation or pension must relinquish these benefits when they return to active duty.  This includes members of the National Guard who are activated under 10 U.S.C. or who serve full time in the Active Guard Reserve under 32 U.S.C.
Note:  This restriction does not apply to recipients of Dependency and Indemnity Compensation (DIC).  For example, a surviving spouse may concurrently receive active service pay and DIC.
References:  For more information about

III.v.4.C.7.b.  Handling Notice That a Veteran Has Returned to Active Duty

Follow the instructions in the table below upon receipt of notice that a Veteran has returned to active duty.
If …
Then …
the Veteran provided written or telephonic notification or other credible evidence to establish the date he/she returned to active duty
  • discontinue benefits according to the instructions in M21-1, Part III, Subpart v, 4.C.7.c, using the date the Veteran provided, and
  • in the decision notice, notify the Veteran that VA will reinstate his/her benefits effective the day following release from active duty if the Veteran submits a request for reinstatement within one year of that date.
VA received notice the Veteran returned to active duty from a  source other than the Veteran
follow the instructions in the table below.
Step
Action
1
Determine the date the Veteran returned to active duty by using
  • the Defense Personnel Records Image Retrieval System (DPRIS), or
  • VIS.
Important:
  • Do not use data displayed under the heading Guard/Reserve Active Service (GRAS) in VIS when determining the date a Veteran returned to active duty, as this data is not consistently accurate.
  • If a Veteran was activated while serving in the National Guard or Reserve, determine the date the Veteran returned to active duty by requesting orders and separation documents through DPRIS.
  • Data displayed under the headingActive Duty Service Periods in VISis consistently accurate.
2
Notify the Veteran of VA’s proposal to discontinue the payment of compensation or pension.
  
Notes:
Exception:  Attach VA Form 21-0789 to the notice referenced in this step if the period of active duty for which VA is proposing the discontinuation of benefits has already ended.
3
Unless the Veteran requests a hearing within 30 days or submits evidence within 65 days that shows VA should not take the proposed action, discontinue benefits according to the instructions in M21-1, Part III, Subpart v, 4.C.7.c.
4
  • Notify the Veteran of the action taken.
  • In the decision notice, inform the Veteran that VA will reinstate his/her benefits effective the day following release from active duty if the Veteran submits a request for reinstatement within one year of that date.
 
References:  For more information on

III.v.4.C.7.c.   Effective Date for Discontinuing Compensation or Pension

According to 38 CFR 3.501(a) and 3.654(b), an award of compensation or pension to a Veteran will be discontinued effective the day preceding his/her return to active duty.  For the purpose of discontinuing an award in VETSNET or VBMS because a Veteran returned to active duty, this means
  • the last day the Veteran is entitled to benefits is the day preceding the date he/she returns to active duty, and
  • the date the Veteran returned to active duty represents the first day of non-payment of VA benefits.
Because the programming of VETSNET and VBMS requires users to enter the first day of non-payment as the effective date of discontinuance of an award due to a Veteran’s return to active duty, the “effective date of discontinuance” referred to in this section is the date on which the Veteran returned to active duty, not the day preceding it.
Important:
  • Preparation of a rating decision that reflects loss of entitlement to benefits based on a Veteran’s return to active duty is not necessary.  Discontinue benefits by award action, making the appropriate entries on the BASIC ELIGIBILITY tab in VETSNET or VBMS-Awards.
  • VA typically learns of a Veteran’s return to active duty after active duty has begun.  If a Veteran will return to active duty on a date that is in the future,
Reference:  For more information about making entries on the BASIC ELIGIBILITY tab in

III.v.4.C.7.d.  Discontinuing Benefits in VBMS When the Veteran Will Return to Active Duty on a Date That Is in the Future

VBMS currently lacks the functionality to discontinue benefits from a future effective date.  Until this functionality is added, claims processors must use the workaround described in the table below to discontinue benefits from a future effective date in VBMS.
Step
Action
1
Select Return to Active Duty from the drop-down box in the DECISION field on the BASIC ELIGIBILITY tab.
2
Enter the current date in the EVENT DATE field.
3
Enter the effective date for the (future) discontinuation of benefits in the AWARD EFFECTIVE DATE field.
4
Generate the award (discontinuation).
5
Use Personal Computer-Generated Letters (instead of Redesigned Automated Decision Letters) to prepare a decision notice for the Veteran.

III.v.4.C.7.e.  Handling the Pending Claim of a Veteran Who Returns to Active Duty

VA is prohibited from paying compensation or pension to a Veteran while he/she is receiving active service pay.  If, however, a Veteran files a claim before returning to active duty, VA may not deny the claim solely because the Veteran returned to active duty.
Rationale:  If VA ultimately grants the Veteran’s claim, it may pay the Veteran any benefits due him/her for the period preceding his/her return to active duty.
Important:  According to VAOPGCPREC 10-2004, the return of a Veteran to active duty under the circumstances described above does not change VA’s duty to assist him/her in substantiating a pending claim, to include providing the Veteran an examination, when necessary, to decide his/her claim.
Reference:  For more information about handling the pending claim of a Veteran who returns to active duty, see M21-1, Part IV, Subpart ii, 2.A.4.

III.v.4.C.7.f.  Action to Take Upon Receipt of DD Form 214

Upon receipt of DD Form 214Certificate of Release or Discharge from Active Duty, or other credible evidence showing a Veteran has been released from active duty,
  • ensure VA properly discontinued benefits effective the day the Veteran returned to active duty, and
  • notify the Veteran that VA will reinstate his/her benefits effective the day following release from active duty if the Veteran submits a request for reinstatement within one year of that date.

III.v.4.C.7.g.  Action to Take Upon Receipt of a Request for Reinstatement of Compensation

Follow the steps in the table below upon receipt of a request for reinstatement of compensation from a Veteran who is no longer on active duty.
Important:
  • VA does not require a Veteran to use a prescribed form to request reinstatement of benefits unless the Veteran is concurrently claiming entitlement to
    • an increased disability rating, or
    • service connection (SC) for a new disability.
  • Accept as a request for reinstatement of compensation a Veteran’s communication of an intent to file (ITF) a claim for VA disability benefits.
References:
Step
Action
1
Use DPRIS or VIS to confirm the date the Veteran was discharged from active duty.

Note:  If attempts to confirm the date of discharge through DPRIS and VIS are unsuccessful, ask the Veteran to provide official documentation (such as a DD Form 214 or order to duty) that shows the date of discharge.

  • Proceed to the next step after the Veteran provides documentation.
  • If the Veteran fails to provide documentation within 30 days,
    • deny his/her request for a reinstatement of benefits, and
    • disregard the remaining steps in this table.
2
Undertake development to obtain service treatment records (STRs) for the period(s) of service the Veteran most recently completed by following the instructions in M21-1, Part III, Subpart iii, 2.
3
Did VA accept the request for reinstatement as a Benefits Delivery at Discharge (BDD) claim, or will VA concurrently process a claim the Veteran submitted with his/her request for reinstatement under the BDD program?
4
 Follow the instructions in the table below.
If …
Then establish …
the Veteran is requesting reinstatement only (the Veteran isnot claiming entitlement to an increased disability rating or SC for a new disability) and
  • all of his/her SC disabilities are static (no future review examination is indicated on the most recent rating decision), or
  • the Veteran has an SC disability that is notstatic, but the designated date for the review examination is a future date.
EP 290.
  • the Veteran is requesting reinstatement only
  • the Veteran has an SC disability that is notstatic, and
  • the designated date for reexamination of the non-static disability falls between the current date and the dates during which the Veteran was on active duty
  • EP 290 (for reinstatement), and
  • EP 310 (for reexamination of the non-static disability).
the Veteran is requesting reinstatement and concurrently claiming entitlement to
  • an increased disability rating, or
  • SC for a new disability
  • EP 290 (for reinstatement), and
  • EP 020 (for the concurrently filed claim).
Notes:
  • Establish EP 310, in addition to the other EPs referenced in this cell, if
    • the Veteran has an SC disability that isnot static, and
    • the designated date for reexamination of the non-static disability falls between the current date and the dates during which the Veteran was on active duty.
  • Do not establish EP 310 if the onlycontention associated with the concurrently filed claim is entitlement to an increased disability rating for (a) non-static disability(ies) that is(are) subject to immediate reexamination.
5
If VA received the Veteran’s request for reinstatement
  • within one year of discharge from active duty, reinstate compensation for all SC disabilities (static and non-static) effective the day following the date of discharge, or
  • one year or more after the date of discharge, reinstate compensation for all SC disabilities (static and non-static) effective one year prior to the date VA received the claim.
Important:
  • Reinstate compensation by award action in VETSNET or VBMS-Awards.  No rating action is required, except under the circumstances described in M21-1, Part III, Subpart v, 4.C.7.h.
  • Authorization activity must follow the instructions in theVBMS-Awards User Guide or VETSNET Awards Handbook to ensure the Veteran’s benefits are
    • discontinued effective the date the Veteran returned to active duty, and
    • reinstated from the appropriate effective date following discharge.
6
Were multiple EPs established in Steps 3 or 4 (more than EP 290)?
  • If yes, proceed to the next step.
  • If no,
    • clear the EP 290, and
    • take no further action unless review of the STRs requested in Step 2 results in the identification of a chronic, unclaimed disability, in which case it would be necessary to invite a claim, as stated in M21-1, Part IV, Subpart ii, 2.A.1.e.
7
If the Veteran is claiming SC for a new disability or entitlement to an increased disability rating, undertake any necessary development, to include issuing Section 5103 notice according to the instructions inM21-1, Part I, 1.B.
8
Follow the instructions in the table below for each of the Veteran’s non-static, SC disabilities.
If the designated date for the future review examination …
Then …
falls between the current date and the dates during which the Veteran was on active duty
schedule the Veteran for a review examination unless the evidence of record is sufficient to assign a disability rating without an examination report.
is a future date
do not schedule the examination until the 810-series work item referenced in M21-1, Part III, Subpart iv, 3.C.2.d is generated.
 
Example:
Scenario:
  • A Veteran with two non-static, SC disabilities (a back disorder and a knee disorder) is discharged from active duty.
    • The designated date for a review examination of the back disorder is June 2016.
    • The designated date for a review examination of the knee disorder is July 2020.
  • Award action to reinstate the Veterans benefits is being taken in August of 2016.
Result:  The only non-static disability that is subject to reexamination concurrent with reinstatement of the Veteran’s benefits is the back disorder.
9
Refer the claim to the rating activity for a decision
  • after development is complete (if initiated), and/or
  • upon receipt of examination reports and STRs (if requested).
Note:  Do not postpone rating action based solely on the absence of the Veteran’s STRs if the evidence of record supports an award of the benefit the Veteran is seeking. In such cases,
  • process the rating decision, to include clearing the controlling EP, and
  • follow the instructions in M21-1, Part IV, Subpart ii, 2.A when the STRs eventually arrive.
 
References:  For more information on

III.v.4.C.7.h.  Rating Decisions That Show Loss of Entitlement During Periods of Active Duty

At one point in the past, it was common practice for the rating activity to prepare a rating decision that reflected a Veteran’s loss of entitlement to disability compensation when he/she returned to active duty.  The authorization activity then discontinued the Veteran’s benefits based on the rating decision.
As indicated in M21-1, Part III, Subpart v, 4.C.7.c, authorization activity now administratively (without a rating decision) discontinues a Veteran’s benefits when he/she returns to active duty.
When claims processors identify a rating decision that reflects loss of entitlement to disability compensation during a period or periods of active duty,
  • the rating activity must prepare a rating decision that removes all previousActive Duty Discontinuance selections from the codesheet, per the instructions in M21-1, Part III, Subpart iv, 6.E.6.d, and
  • the authorization activity must
    • promulgate the rating decision
    • recreate the previously coded discontinuances by way of award action, and
    • ensure updates to the codesheet are reflected in the corporate record.

III.v.4.C.7.i.  Proper Effective Date for a Grant of Entitlement to an Increased Disability Rating or SC 

Veterans often file a claim for an increased disability rating or SC for a new disability in connection with their request for reinstatement of disability compensation following discharge.  The table below contains instructions for determining the proper effective date of entitlement if entitlement to the claimed benefit exists.
If …
Then the proper effective date is …
entitlement to an increased disability rating exists
the earlier of the following dates:
  • the date on which increased disability was first shown (up to one year prior to the date VA received the claim), or
  • the date VA received the claim.
Note:  The effective date may never fall within a period of active duty.
  • entitlement to SC for a new disability exists, and
  • VA received the Veteran’s claimwithin one year of discharge
the day following the date of discharge.
  • entitlement to SC for a new disability exists, and
  • VA received the Veteran’s claim at least one year afterdischarge
the later of the following dates:
  • the date VA received the claim, or
  • the date entitlement arose.
References:  For more information about determining the proper effective date when granting entitlement to

III.v.4.C.7.j.  Proper Application of 38 CFR 3.31

The reinstatement of compensation VA previously discontinued because a Veteran returned to active duty does not constitute a new award of or increase in benefits.  Therefore, the requirement in 38 CFR 3.31 to award benefits effective the first of the month following the month of entitlement is not for application.
The provisions of 38 CFR 3.31 do apply if, in connection with a Veteran’s request for reinstatement, VA awards additional benefits based on the
  • establishment of SC for a new disability
  • assignment of an increased disability rating to an existing, SC disability, and/or
  • Veteran’s claim to add a dependent to his/her award.
Example:
Scenario:
  • A Veteran with a static, SC knee disorder, which VA rated 10-percent disabling, returns to active duty on August 1, 2010.
  • VA discontinues the Veteran’s benefits effective the date she returned to active duty.
  • The Veteran’s active duty ends August 15, 2011.
  • On October 1, 2011, the Veteran files a request for reinstatement of her compensation and a claim for an increased rating for the knee disorder.
  • VA determines the knee disorder worsened during service and subsequently assigns the knee disorder a disability rating of 30 percent.
Result:  The effective date of the award that reinstates compensation at the rate payable for a disability rated 10-percent disabling is August 16, 2011.  Although the Veteran is entitled to the 30-percent disability rating for the knee disorder from August 16, 2011, the proper effective date of the increased award, per 38 CFR 3.31, is September 1, 2011.

III.v.4.C.7.k.   Discontinuing and Reinstating VA Benefits in the Same Award Action

Sometimes, VA may not discover that a Veteran in receipt of VA benefits returned to active duty and was subsequently discharged until years after the fact.  When retroactively discontinuing benefits during the period of active duty, do notdiscontinue benefits beyond the date of discharge, even though the Veteran did not notify VA of his/her discharge within one year.
Example:
Scenario:  On August 10, 2010, a Veteran in receipt of compensation reports a period of active duty that began December 15, 2007, and ended January 5, 2009.
 
Action:  Discontinue the Veteran’s compensation effective December 15, 2007, and reinstate it effective January 6, 2009.

III.v.4.C.7.l.   Active Duty and Drill(s)/Training During the Same Fiscal Year

If a Veteran received active service pay for both active duty and drill(s)/training during the same fiscal year, VA Form 21-8951 will show the combined number of days for which the Veteran received active service pay.

Follow the instructions in the table below if

  • VA Form 21-8951 shows training in excess of 179 days, or
  • the evidence of record suggests the Veteran had active duty during the fiscal year the VA Form 21-8951 covers.
Note:  Consider a report of training in excess of 179 days on VA Form 21-8951 an indication the Veteran might have returned to active duty for a period of time.
Step
Action
1

Use VIS and/or DPRIS to determine whether the Veteran had a period of active duty during the fiscal year in question.

Important:
  • Do not use data displayed under the heading Guard/Reserve Active Service (GRAS) in VIS when determining the length of periods of active duty, as this data is not consistently accurate.
  • If a Veteran was activated while serving in the National Guard or Reserve, confirm the length of periods of active duty by requesting orders and separation documents through DPRIS.
  • Data displayed under the heading Active Duty Service Periods in VIS is consistently accurate.
References:  For more information on
2
Does VIS and/or DPRIS confirm the Veteran had an unreported period of active duty?
  • If yes, proceed to the next step.
  • If no, proceed to Step 5.
3
Notify the Veteran VA proposes to discontinue his/her benefits effective the date he/she returned to active duty. In the notice, ask the Veteran to submit the following with regard to the time period in question:
  • a copy of his/her orders or separation document, or
  • other evidence of the duty he/she performed.
Notes:
  • Follow the instructions in the VBMS User Guide to generate the notice of proposed adverse action.
  • Attach VA Form 21-0790 to the notice before sending it to the Veteran.
Reference:  For more information about preparing a notice of proposed adverse action, see M21-1, Part I, 2.B.
4
After the Veteran responds or has had 65 days to respond to the notice,
  • take the proposed action unless the Veteran
    • requested a hearing within thirty days of the notice, or
    • submits evidence showing VA should not take the proposed action, and
  • proceed no further, except to follow the instructions in M21-1, Part III, Subpart v, 4.C.7.m.
5
Send a letter to the Veteran asking for the dates he/she was on active duty, if any, during the fiscal year in question and
  • a copy of his/her orders or separation document, or
  • other evidence of the duty he/she performed during the fiscal year.
6
Follow the instructions in the table below after giving the Veteran 30 days to respond.
If …
Then …
the Veteran responds by confirming his/her return to active duty
discontinue benefits effective the date active duty began.
the Veteran fails to respond
evidence is obtained from a source other than the Veteran that he/she returned to active duty
follow the instructions in Steps 3 and 4 of this table.

III.v.4.C.7.m.  Separating Training Days From Days of Active Duty on VA Form 21-8951

After confirming the number of days a Veteran was on active duty during a specific fiscal year, calculate the number of days he/she received drill pay by subtracting the number of days the Veteran was on active duty from the total number of training days shown on VA Form 21-8951.
Important:
  • The number of training days shown on VA Form 21-8951 should never exceed 360, per the explanation in M21-1, Part III, Subpart v, 4.C.4.c.  If it does, claims processors must calculate the number of days the Veteran received drill pay by subtracting the number of days the Veteran was on active duty from 360.
  • The instructions in M21-1, Part III, Subpart v, 4.C.4.c, for determining the date range during which VA will withhold benefits based on a Veteran’s receipt of drill pay do not apply when calculating the number of days a Veteran was on active duty.
Example:
Scenario:  The number of training days shown on VA Form 21-8951 is 185.  Both the Veteran and personnel records retrieved through DPRIS confirm the Veteran was on active duty from June 25, 2011, through August 31, 2011.
Result:  The Veteran was on active duty for 68 days (6 days in June, 31 days in July, and 31 days in August) and received drill pay for a total of 117 days.

III.v.4.C.7.n.  Veteran Has More Active Duty Days Than the Number of Training Days Shown on VA Form 21-8951

When a Veteran has more active duty days during a given fiscal year than the number of training days shown on VA Form 21-8951 for the same fiscal year,
  • assume the Veteran was on active duty for all of the days printed on VA Form 21-8951, and
  • take no action on the VA Form 21-8951 except to electronically annotate it with an explanation as to why no action was taken.

Example:

  • VA terminated a Veteran’s benefits for the period November 1, 2011, through May 15, 2012, because the Veteran returned to active duty.
  • In 2013, VA receives a VA Form 21-8951 showing the Veteran was paid for 65 days of drill/training during fiscal year 2012.
Reference:  For information about electronically annotating documents in an eFolder, see the VBMS User Guide.

III.v.4.C.7.o.    Listing of ADSW on VA Form 21-8951

In addition to active and/or inactive duty training, VA Form 21-8951 may also include Active Duty for Special Work (ADSW).
Duties performed under ADSW may be for operational, support, or training purposes.  The Department of Defense (DoD) defines ADSW as a tour of active duty to fulfill support requirements.  VA characterizes ADSW as active duty for the purpose of this topic unless the purpose for going on ADSW was to receive training.
Important:
  • Undertake development to determine the type of duty a Veteran performed while on ADSW, even though
    • the duration of service is less than 180 days, and/or
    • DoD issues the Veteran a DD Form 214 for the ADSW.
  • If the Veteran went on ADSW to receive training, treat the active service pay he/she received during this period of time as drill pay.
  • If the duties a Veteran performed during ADSW cannot be ascertained, treat the period of service as active duty.
Reference:  For assistance in characterizing a Veteran’s duty when he/sheprovided training as opposed to receiving it, see VAOPGCPREC 25-1990.

8.  Examples of Award Adjustments

 


Introduction

This topic contains examples of award adjustments necessitated by a Veteran’s receipt of drill pay, including

Change Date

 April 6, 2016

III.v.4.C.8.a.  Training Is Completed During a Prior Year

Scenario:
  • In January 2016, a Veteran with a 10-percent disability rating returns a signed VA Form 21-8951 showing he attended 63 days of training during fiscal year 2015.
  • The RO that received the VA Form 21-8951 processes it in April 2016.
  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year 2015 (September 30, 2015) was $133.17.
  • The monthly rate of compensation payable to the Veteran on October 1, 2015, is still $133.17.
Results:
  • VA begins withholding all of the Veteran’s compensation effective October 1, 2015.
  • VA resumes monthly payments of $133.17 effective December 4, 2015.
Note:  There was no cost-of-living adjustment (COLA) on December 1, 2015.  Had there been, the Veteran would have been entitled to
  • the amount of the COLA, for the period December 1, 2015, through December 3, 2015, and
  • $133.17 plus the amount of the COLA, effective December 4, 2015.

III.v.4.C.8.b.  Veteran Provides Advance Notice of Training

Scenario:
  • In December 2015, a Veteran with a 10-percent disability rating submits a signed VA Form 21-8951-2 showing she will attend 55 days of training during fiscal year 2016.
  • The earliest future date from which VA can make an award adjustment is January 1, 2016.
  • The monthly rate of compensation payable to the Veteran on January 1, 2016, is $133.17.
Results:
  • VA begins withholding all of the Veteran’s compensation effective January 1, 2016.
  • VA resumes monthly payments of $133.17, effective February 26, 2016.

III.v.4.C.8.c.  VA Increases the Disability Rating After the End of the Fiscal Year in Question

Scenario:
  • In June 2015, VA increased a Veteran’s disability rating from 10 percent to 30 percent, effective December 1, 2014.
  • In March 2016, the Veteran returns a signed VA Form 21-8951 showing he attended 63 days of training during fiscal year 2014.
  • The RO that received the VA Form 21-8951 processes it in May 2016.
  • As of the last day of fiscal year 2014 (September 30, 2014), VA was paying the Veteran $130.94 per month.
  • The Veteran has no dependents.
  • The monthly rate of compensation payable to the Veteran on October 1, 2015 is $407.75.
Results:
  • VA reduces the Veteran’s compensation to $276.81 per month effective October 1, 2015.  (This amount represents the difference between the rate payable at the end of fiscal year 2014 and the rate payable on October 1, 2015.)
  • VA resumes monthly payments of $407.75 effective December 4, 2015.
Notes:
  • There was no COLA on December 1, 2015.  Had there been, the Veteran would have been entitled to
    • $276.81 plus the amount of the COLA, for the period December 1, 2015, through December 3, 2015, and
    • $407.75 plus the amount of the COLA, effective December 4, 2015.
  • If VA subsequently receives a signed VA Form 21-8951 showing the Veteran received drill pay during fiscal year 2015, and the RO that receives the form processes it during fiscal year 2016, begin the withholding for drill pay the Veteran received during fiscal year 2015 effective December 4, 2015.  If the amount of benefits VA must withhold on December 4, 2015, is greater than the monthly rate of compensation payable to the Veteran on that same date, begin the withholding from anearlier date, such as
    • the date of the most recent award line that precedes October 1, 2015 (this might be December 1, 2014, which was the effective date for a COLA), or
    • the first day of the fiscal year prior to fiscal year 2015 (October 1, 2014).

III.v.4.C.8.d.  VA Increases the Disability Rating Prior to the End of the Fiscal Year in Question

 Scenario:
  • In December 2015, VA increased a Veteran’s disability rating from 10 percent to 30 percent, retroactive to April 1, 2000.
  • In January 2016, the Veteran returns a signed VA Form 21-8951 showing she attended 63 days of training during fiscal year 2014.
  • The RO that received the VA Form 21-8951 processes it in April 2016.
  • The Veteran has no dependents.
  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year 2014 (September 30, 2014) is $400.93.
  • The monthly rate of compensation payable to the Veteran on October 1, 2015, is $407.75.
Results:
  • VA reduces the Veteran’s compensation to $6.81 per month effective October 1, 2015.  (This amount represents the difference between the monthly rate payable on the last day of fiscal year 2014 and the monthly rate payable on October 1, 2015.)
  • VA resumes monthly payments of $407.75, effective December 4, 2015.
Notes:
  • There was no COLA on December 1, 2015.  Had there been, the Veteran would have been entitled to
    • $6.81 plus the amount of the COLA, for the period December 1, 2015, through December 3, 2015, and
    • $407.75 plus the amount of the COLA, effective December 4, 2015.
  • If VA subsequently receives a signed VA Form 21-8951 showing the Veteran received drill pay during fiscal year 2015, and the RO that receives the form processes it during fiscal year 2016, begin the withholding for drill pay the Veteran received during fiscal year 2015 effective December 4, 2015.  If the amount of benefits VA must withhold on December 4, 2015, is greater than the monthly rate of compensation payable to the Veteran on that same date, begin the withholding from anearlier date, such as
    • the date of the most recent award line that precedes October 1, 2015 (this might be December 1, 2014, which was the effective date for a COLA), or
    • the first day of the fiscal year prior to fiscal year 2015 (October 1, 2014).

III.v.4.C.8.e.  38 CFR 3.31 Causes the Effective Date of the Increase in Compensation to Fall After the End of the Fiscal Year

Scenario:
  • In December 2015, VA increases a Veteran’s disability rating from 10 percent to 30 percent, effective September 15, 2015.  The effective date of the increase in the Veteran’s compensation after application of 38 CFR 3.31 is October 1, 2015.
  • In January 2016, the Veteran returns a signed VA Form 21-8951 showing he attended 63 days of training during fiscal year 2015.
  • The RO that received the VA Form 21-8951 processes it in April 2016.
  • The Veteran is married and has no other dependents.
  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year 2015 (September 30, 2015) for a 30-percent disability rating is $455.75.
  • The monthly rate of compensation payable to the Veteran on October 1,2015, is $455.75.
Results:
  • VA begins withholding all of the Veteran’s compensation, effective October 1, 2015.
  • VA resumes monthly payments of $455.75, effective December 4, 2015.
Rationale:  Under 38 CFR 3.31, Veterans are in receipt of increased benefits on the effective date of the increased rating, even though the effective date ofpayment is not until the first of the following month.  Accordingly, the monthly rate payable to the Veteran in this scenario, as of the end of fiscal year 2015, was $455.75, not $133.17.
Note:  There was no COLA on December 1, 2015.  Had there been, the Veteran would have been entitled to
  • the amount of the COLA, for the period December 1, 2015, through December 3, 2015, and
  • $455.75 plus the amount of the COLA, effective December 4, 2015.

III.v.4.C.8.f.  VA Reduces the Veteran’s Disability Rating

 Scenario:
  • In January 2015, a Veteran returns a signed VA Form 21-8951 showing she attended 55 days of training during fiscal year 2014.
  • In December 2015, VA reduces the Veteran’s disability rating from 10 percent to 0 percent, effective August 1, 2015.
  • The RO that received the VA Form 21-8951 processes it in March 2016.
  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year 2014 (September 30, 2014) is $130.94.
  • The last award line before VA discontinued the Veteran’s compensation on August 1, 2015, shows a COLA on December 1, 2014, that increased the Veteran’s monthly rate of payment to $133.17.
 Result:
  • VA creates an overpayment in the Veteran’s account by retroactively reducing her compensation to $2.23 effective December 1, 2014.  (This amount represents the difference between the monthly rate payable on the last day of fiscal year 2014 and the monthly rate payable on December 1, 2014.)
  • VA resumes payments at the monthly rate of $133.17 from January 26, 2015, to August 1, 2015.

III.v.4.C.8.g.  Veteran Returns to Active Duty During a Period VA Withheld or Is Withholding Benefits

Scenario:
Part I:
  • In May 2015, a Veteran with a 10-percent disability rating returns a signedVA Form 21-8951 showing he attended 64 days of training during fiscal year 2014.
  • The RO that received the VA Form 21-8951 processes it in March 2016.
  • The monthly rate of compensation payable to the Veteran
    • on the last day of fiscal year 2014 (September 30, 2014) is $130.94, and
    • between December 1, 2014, and December 1, 2015, is $133.17.
Results:  VA reduces the Veteran’s award to $2.23 per month for the period October 1, 2015, through December 4, 2015.  (This amount represents the difference between the monthly rate payable at the end of fiscal year 2014 and the monthly rate payable on October 1, 2015.)
Note:  There was no COLA on December 1, 2015.  Had there been, the Veteran would have been entitled to
  • $2.23 plus the amount of the COLA, for the period December 1, 2015, through December 3, 2015, and
  • $133.17 plus the amount of the COLA, effective December 4, 2015.
Part II:
  • In May 2016, the Veteran informs VA he returned to active duty on October 21, 2015.
  • December 1, 2014, is the date of the most recent award line that both
    • precedes the date the Veteran returned to active duty, and
    • equals or exceeds $130.94.
Results:  VA
  • discontinues the Veteran’s benefits effective October 21, 2015, and
  • reduces his monthly benefit to $2.23 for the period December 1, 2014, through January 4, 2015. (This date range represents the 34-day period during which VA was unable to withhold benefits (from October 1, 2015, through December 4, 2015) because the Veteran is not entitled to VA benefits while on active duty.)
Part III:
  • In May 2016, the Veteran returns a signed VA Form 21-8951 showing he attended 63 days of training during fiscal year 2015.
  • The RO that received the VA Form 21-8951 processes it in August 2016.
  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year 2015 (September 30, 2015) is $133.17.
Result:
  • VA begins withholding all of the Veteran’s compensation effective January 5, 2015.
  • VA resumes payments at the monthly rate of $133.17 from March 8, 2015, through October 20, 2015.

III.v.4.C.8.h.  RO Concurrently Processes Multiple VA Forms 21-8951 From the Same Veteran for Multiple Fiscal Years

 Scenario:
  • A Veteran with a combined disability rating of 10 percent attended 65 days of training each fiscal year between 2012 through 2015.
  • Each time the Veteran received a VA Form 21-8951 from the Hines ITC, she completed, signed, and returned it to the local RO.
  • The local RO saved the VA Forms 21-8951 that it received each year from the Veteran but was unable to process any of them because the RO was understaffed.
  • The local RO underwent a hiring initiative in June 2016 and, after training 10 new employees, was finally able to process all the Veteran’s VA Forms 21-8951 (concurrently) in August 2016.
  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year
    • 2012 (September 30, 2012) is $127.00
    • 2013 (September 30, 2013) is $129.00
    • 2014 (September 30, 2014) is $130.94, and
    • 2015 (September 30, 2015) is $133.17.
Results:
  • VA reduces the Veteran’s award to
    • $6.17 ($133.17 – $127.00), effective October 1, 2015
    • $4.17 ($133.17 – $129.00), effective December 6, 2015
    • $2.23 ($133.17 – $130.94), effective February 11, 2016, and
    • $0.00, effective April 16, 2016.
  • VA resumes payments at the monthly rate of $133.17, effective June 21, 2016.
Notes:
  • There was no COLA on December 1, 2015.  Had there been, the Veteran would have been entitled to
    • $6.17 plus the amount of the COLA, for the period December 1, 2015, through December 5, 2015
    • $4.17 plus the amount of the COLA, effective December 6, 2015
    • $2.23 plus the amount of the COLA, effective February 11, 2016
    • the amount of the COLA, effective April 16, 2016, and
    • $133.17, plus the amount of the COLA, effective June 21, 2016.
  • As explained in M21-1, Part III, Subpart v, 4.C.4.b, it is now VA policy to make all award adjustments necessitated by a Veteran’s receipt of drill pay retroactively.  Had the local RO in this scenario been able to concurrently process all of the Veteran’s VA Forms 21-8951 much earlierin 2016 (March, instead of August, for example) it would have had to take a different approach than the one described under the Results sublabel in order to comply with this policy.  The RO would have had to begin the series of withholdings listed under the Results sublabel from an earlierdate, such as
    • the date of the most recent award line that precedes October 1, 2015 (this might be December 1, 2014, which was the effective date for a COLA), or
    • the first day of the fiscal year prior to fiscal year 2015 (October 1, 2014).

III.v.4.C.8.i.  VA Is Withholding Compensation in Its Entirety to Recoup Separation Benefits

 Scenario:
  • In December 2010, VA
    • determines a Veteran is entitled to SC for residuals of a broken wrist effective June 25, 2009, and
    • assigns the wrist a disability rating of 10 percent.
  • VA withheld all of the Veteran’s compensation because she received $38,000.00 in separation benefits that are subject to recoupment.
  • In November 2015, the Veteran returns a signed VA Form 21-8951showing she attended 63 days of training during fiscal year 2014.
  • The RO that received the VA Form 21-8951 processes it in March 2016.
  • The monthly rate of compensation payable for a disability rated 10-percent disabling is $130.94 on the last day of fiscal year 2014 (September 30, 2014).
Results:
  • VA continues to withhold all of the Veteran’s compensation.  However, effective October 1, 2015, VA withholds
    • $2.23 for recoupment of the Veteran’s separation benefits (This represents the difference between the rate payable at the end of fiscal year 2014 and the rate payable on October 1, 2015.), and
    • $130.94 to offset the Veteran’s receipt of drill pay.
  • VA resumes the withholding of $133.17 for recoupment of the Veteran’s separation benefits effective December 4, 2015.
 Notes:
  • There was no COLA on December 1, 2015.  Had there been, VA would have
    • increased the amount of the withholding for recoupment of the Veteran’s separation benefits by the amount of the COLA ($2.23 plus the amount of the COLA) for the period December 1, 2015, through December 3, 2015, and
    • resumed the withholding of all of the Veteran’s benefits (for recoupment of the Veteran’s separation benefits), effective December 4, 2015.
  • If VA subsequently receives a signed VA Form 21-8951 showing the Veteran received drill pay during fiscal year 2015, and the RO that receives the form processes it during fiscal year 2016, begin the withholding for drill pay the Veteran received during fiscal year 2015 effective December 4, 2015.
Reference:  For instructions about withholding benefits for more than one purpose in

III.v.4.C.8.j.  VA Is Withholding Part of the Veteran’s Compensation to Recoup Separation Benefits

Scenario:
  • In January 2010, VA
    • awards SC for a Veteran’s original claim, and
    • assigns the Veteran a disability rating of
      • 30 percent for depression, and
      • 10 percent for residuals of a right knee strain.
  • The effective date of the rating is June 2, 2009.
  • The Veteran has no dependents.
  • VA pays the Veteran at the rate payable for a disability rated as 10-percent disabling and withholds the difference because the Veteran received disability severance pay (in the amount of $49,000.00) for depression.
  • In November 2015, the Veteran returns a signed VA Form 21-8951showing he attended 60 days of training during fiscal year 2014.
  • The RO that received the VA Form 21-8951 processes it in March 2016.
  • The monthly rate of compensation payable for a combined disability rating of 40 percent is $577.54 on the last day of fiscal year 2014 (September 30, 2014).
Results:
  • Effective October 1, 2015, VA withholds
    • $577.54 from the Veteran’s award for the drill pay he received during fiscal year 2014, and
    • the balance of the Veteran’s award ($9.82) for recoupment of his disability severance pay.
  • VA resumes the payment of $133.17 and the withholding of $454.19 (for recoupment of disability severance pay), effective December 1, 2015.
Notes:
  • There was no COLA on December 1, 2015.  Had there been, VA would have made corresponding increases, effective December 1, 2015, in
    • the Veteran’s monthly rate of payment, and
    • the amount of the withholding for recoupment of the Veteran’s disability severance pay.
  • If VA subsequently receives a signed VA Form 21-8951 showing the Veteran received drill pay during fiscal year 2015, and the RO that receives the form processes it during fiscal year 2016, begin the withholding for drill pay the Veteran received during fiscal year 2015 effective December 1, 2015.

III.v.4.C.8.k.  Veteran’s Benefits Are Subject to Reduction/ Withholding Based on Incarceration and Receipt of Drill Pay

Scenario:
  • In June 2015, a Veteran with a 20-percent disability rating returns a signed VA Form 21-8951 showing she attended 60 days of training during fiscal year 2014.
  • In March 2016, the RO that received the VA Form 21-8951
    • reduces the Veteran’s award to $4.40 ($263.23 – $258.83), effective October 1, 2015, and
    • resumes payments at the monthly rate of $263.23, effective December 1, 2015.
  • In May 2016, VA receives notice the Veteran is currently incarcerated.  Further development reveals
    • the Veteran was incarcerated following conviction of a felony, and
    • the 61st day of incarceration was September 12, 2015.
  • The Veteran does not respond to VA’s notice of proposed adverse action to reduce her monthly rate of payment to $133.17, effective September 12, 2015.
  • December 1, 2014, represents the most recent award line that
    • precedes the 61st day of incarceration, and
    • shows a monthly rate of payment ($263.23) that is equal to or exceeds the Veteran’s rate of payment at the end of fiscal year 2014 ($258.83).
 Results:
  • VA changes the effective date of the withholding (to offset the Veteran’s receipt of drill pay during fiscal year 2014) to December 1, 2014.  (This action has the effect of reducing the Veteran’s monthly rate of payment to $4.40 ($263.23 – $258.83) for a period of 60 days, beginning December 1, 2014.)
  • VA resumes payments at the monthly rate of $263.23, effective February 1, 2015.
  • VA reduces the Veteran’s award to $133.17, effective the 61st day of incarceration (September 12, 2015).
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