Overview
In This Section |
This section contains the following topics:
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1. General Information on Preparing an Award Affected by MRP
Change Date |
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May 21, 2018 |
III.v.5.B.1.a. Identifying an Award Requiring a Waiver of MRP |
The retired pay indicator in the corporate record identifies a compensation or Section 306 or Old Law Pension award of a Veteran who
Important: Do not activate the retired pay indicator for a Veteran in receipt of current-law pension, per M21-1, Part III, Subpart v, 5.A.4.a.
References: For more information on
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III.v.5.B.1.b.Confirming the Retired Pay Indicator Is Active |
When processing an award to a Veteran whose service department awarded or will award him/her MRP, confirm that the retired pay indicator is active by selecting the RETIRED PAY tab on the MILITARY PAYMENT INFORMATION screen in the Veterans Benefits Management System — Awards (VBMS-A).
Note: Once the retired pay indicator is activated, the text Retired Pay Case will be displayed in the upper, right-hand corner of the RECORD DECISIONS and ALL AWARDS screens.
References: For information on using
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III.v.5.B.1.c. Instructions for Activating the Retired Pay Indicator in the Corporate Record |
Follow the instructions in the table below to activate the retired pay indicator in the corporate record.
Important: Activate the retired pay indicator even if VA is not withholding or will not withhold benefits based on the Veteran’s receipt of MRP.
References: For more information on
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III.v.5.B.1.d. Processing an Award to a Veteran in Receipt of MRP |
Withhold benefits to prevent the concurrent payment of VA benefits and MRP when concurrent payment is prohibited.
To calculate the amount of benefits to withhold, use the Retired Pay Withholding Calculator, which is accessible on the Special Military Retirement Benefitswebpage.
References: For more information on
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III.v.5.B.1.e. Removing the Retired Pay Indicator When Entitlement to MRP Is Terminated |
If a service department discontinues the payment of MRP to a Veteran because, for example, it removed the Veteran from the Temporary Disability Retirement List (TDRL), deactivate the retired pay indicator by
Important: If a service department awards a Veteran discharge pay after discontinuing his/her MRP, it will be necessary to update the fields on the DISCHARGE PAY tab, as well.
References: For more information on taking the actions described in this block in
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III.v.5.B.1.f. Ensuring the Veteran’s Branch of Service and SSN Are Recorded in the Corporate Record |
A Veteran’s branch of service and Social Security number (SSN) must be recorded in the corporate record to ensure the proper exchange of information between VA and retired pay centers (RPCs).
Ensure the branch of service in the corporate record is the same as the branch that is paying MRP.
Reference: For more information about making entries and updates to the corporate record, see the Share User’s Guide.
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III.v.5.B.1.h. Tax Exemption of MRP |
Anytime VA pays a Veteran less than the full rate of disability compensation because the Veteran was in receipt of MRP, VA must notify the Veteran that MRP in an amount equal to the amount of compensation VA withheld (because of the Veteran’s receipt of MRP) is tax exempt.
Examples: The table below contains descriptions of scenarios in which VA must notify a Veteran that he/she is eligible for a tax exemption.
Reference: M21-1, Part III, Subpart v, 5.B.1.i describes the information authorization activity must include in a decision notice to inform a Veteran of the tax exemption described in this block.
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III.v.5.B.1.i. Notifying a Veteran of His/Her Eligibility for a Tax Exemption |
When a Veteran is entitled to the tax exemption referenced in M21-1, Part III, Subpart v, 5.B.1.h, include the following text in the corresponding decision notice:
Because VA compensation is not taxable, you may be entitled to a tax exemption during the period VA withheld your compensation; the amount of the exemption would be the amount of compensation VA withheld based on your receipt of military retired pay.
Subsequent changes in the amount of compensation VA withholds based on your receipt of military retired pay may affect the tax exemption. Please contact the Internal Revenue Service with questions about your tax liability.
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2. Determining the Effective Date for an Award Affected by MRP
Introduction |
This topic contains information on determining effective dates for awards that are affected by MRP, including
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Change Date |
July 11, 2016
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III.v.5.B.2.a. Determining the Effective Date of Entitlement and the Effective Date of Payment |
Apply the provisions of
Reference: For an explanation of the difference between the effective date of payment and effective date of entitlement, see M21-1, Part III, Subpart v, 2.A.2.b. |
III.v.5.B.2.b. Deadline for Authorizing Awards |
On Compensation Service’s online calendar, the following entry will appear monthly, usually around the middle of each month:
Stop retired pay withholding effective [month/day/year], if award authorized before [cutoff time]. Awards with a retired pay withholding shall not be authorized from [cutoff time] to [one hour following cutoff time] on[month/day/year]. On or after [one hour following cutoff time] on[month/day/year] stop retired pay withholding with a [month/day/year]effective date.
All awards that increase a Veteran’s compensation effective the first day of the current month, based on a corresponding reduction in the Veteran’s MRP, must be authorized by the cutoff time on the date referenced in the above paragraph.
If authorization is not accomplished by the cutoff time on the referenced date, the award must be regenerated to reflect the increase in compensation (and reduction in MRP) from the first day of the following month.
Rationale: If the award is authorized after the cutoff time on the referenced date without regenerating the award as described, the RPCs will not have sufficient time to reduce the Veteran’s MRP from the first day of the current month. The one-hour moratorium allows the Hines Information Technology Center time to start the file that is used by the RPCs for this purpose.
Note: For quality review purposes, the timestamp on award prints is shown as Eastern Standard Time (or Eastern Daylight Time, when in effect).
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III.v.5.B.2.c. RPC Action When the Rate of Compensation Exceeds the Rate of MRP |
Any time RPCs receive data showing a Veteran’s monthly rate of compensation exceeds his/her monthly rate of MRP, the RPC automatically releases to the station of origination (SOO)
Upon receipt of the notice described above from an RPC, the SOO must
Note: If the information referenced in this block does not exist in the claims folder but is relevant to award processing, it may be obtained
Reference: For information on using
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III.v.5.B.2.d. Processing an Award When the Rate of Compensation Exceeds the Rate of MRP |
When processing an award and the monthly rate of compensation exceeds the monthly rate of MRP,
For the periods authorizing the differential rate,
References: For information on making award adjustments involving MRP in
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III.v.5.B.2.e. Determining the Effective Date for a Reduced Award |
Retroactively reduce benefits in accordance with existing laws and regulations (38 CFR 3.501). |
3. Handling Cases in Which a Service Department Has Not Yet Calculated the Amount of MRP It Will Pay a Veteran
Introduction |
This topic contains instructions for handling cases in which a service department has not yet calculated the amount of MRP it will pay a Veteran, including
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Change Date |
October 19, 2018
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III.v.5.B.3.a. Actions to Take Prior to Authorization When the Amount of a Veteran’s MRP Is Unknown |
Follow the instructions in the table below immediately prior to authorization of an award to a Veteran when the amount of MRP to which the Veteran is entitled is unknown.
Notes:
References: For more information about using
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III.v.5.B.3.b. Updating VBMS-A/ VETSNET Based on Data Displayed in RCPS |
The table below contains instructions for updating the RETIRED PAY tab on the MILITARY PAYMENT INFORMATION screen in VBMS-A or VETSNET based on data displayed on the SELECTED ENTITLEMENT DATA screen in RCPS.
References: For more information about using
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III.v.5.B.3.c. Awarding Benefits After Determining the Amount of a Veteran’s MRP Has Not Yet Been Calculated |
The table below contains instructions for awarding disability compensation after determining (through the procedure described in M21-1, Part III, Subpart v, 5.B.3.a) that a Veteran’s service department has not yet calculated the amount of the Veteran’s MRP.
Note: When an EP 290 must be established, authorizing an award as described in the table above between the day after the retired pay cutoff date and a few days prior to the last day of the month increases the likelihood that the EP 290 may be adjudicated in a more expeditious manner.
Reference: For more information about retired pay cutoff dates, see M21-1, Part III, Subpart v, 5.B.2.b.
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III.v.5.B.3.d. Review and Processing of EPs 290 |
Follow the instructions in the table below for every EP 290 that was established in accordance with the instructions in M21-1, Part III, Subpart v, 5.B.3.c.
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III.v.5.B.3.e. Review and Processing of EPs 290 That Involve a Veteran Who Retired From the Coast Guard, NOAA, or PHS |
Follow the instructions in the table below for every EP 290 that
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III.v.5.B.3.g. Adjusting a Running Award of Disability Compensation When the Amount of a Veteran’s MRP Was PreviouslyUnknown |
The table below contains instructions that are unique to the adjustment of a running award of disability compensation when the amount of a Veteran’s MRP was unknown on the most recent award.
Important:
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4. VA, Service Department, and RPC Responsibility for Avoiding and Collecting Overpayments
Introduction |
This topic contains information on VA’s, the service departments’, and the RPCs’ responsibility for |
Change Date |
March 6, 2017 |
III.v.5.B.4.a. Responsibility for Avoiding Overpayments |
To avoid the creation of an overpayment in a Veteran’s account,
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III.v.5.B.4.b. Responsibility for Collecting an Overpayment |
Use the table below to determine who is responsible for collecting an overpayment.
Note: A General Counsel memorandum for file, dated September 18, 1972, determined that 38 U.S.C. 3104(a) (now 38 U.S.C. 5304(a)), prohibiting concurrent payment of VA benefits and MRP, does not preclude the application of 38 U.S.C. 3012(b)(10) (now 38 U.S.C. 5112(b)(10)), which permits a reduction of VA benefits effective the date last paid (the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share) if the previous payment was solely VA error. That General Counsel memorandum was found to be consistent with the decision inVAOPGCPREC 2-1990.
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5. Handling an Election of VA Benefits, a Relection of VA Benefits, and an Election of MRP
Introduction |
This topic contains instructions for handling an election of VA benefits, a reelection of VA benefits, and an election of MRP, including
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Change Date |
September 6, 2018 |
III.v.5.B.5.a. Handling an Election of MRP From a Veteran in Receipt of Section 306 Pension or Old Law Pension |
A Veteran receiving Section 306 Pension or Old Law Pension may elect to receive MRP.
An election of MRP does not bar subsequent election of other benefits administered by VA.
Note: The effective date of reelection of VA benefits is governed by 38 CFR 3.401(e)(3).
Reference: For more information about a Veteran’s right to elect MRP and reelect VA benefits, see 38 CFR 3.750.
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III.v.5.B.5.b. Determining Whether a Veteran May Reelect Section 306 Pension or Old Law Pension After Waiving the Benefit |
Although a Veteran may waive Section 306 Pension or Old Law Pension in order to receive MRP, VA might not allow the Veteran to reelect the same VA benefit at a later date.
Entitlement to Section 306 Pension or Old Law Pension is not protected under 38 CFR 3.960 if the disability or annual income did not continuously meet protected pension eligibility criteria from the date pension was waived through the date of receipt of the reelection.
Before paying Section 306 Pension or Old Law Pension to a Veteran who waived his or her pension to receive MRP, request evidence to determine if the Veteran would have been continuously entitled to Section 306 Pension or Old Law Pension for the entire period that the pension payments were waived.
Absent evidence of continuous entitlement, the Veteran can no longer receive Section 306 Pension or Old Law Pension. If entitlement to current-law pension exists, VA may pay this benefit to the Veteran.
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III.v.5.B.5.c. Handling an Election of MRP From a Veteran in Receipt of Disability Compensation |
Follow the steps in the table below when a Veteran in receipt of disability compensation checks a box on one of the forms listed in the second row of the table under M21-1, Part III, Subpart ii, 2.B.1.b that is labeled
Exception: If a Veteran who is not eligible for MRP checks the box referenced in the preceding paragraph,
Important: Treat as a completed VA Form 21-651 any of the other forms (or the signed statement) referenced in M21-1, Part III, Subpart v, 5.A.2.d, that a Veteran submits at any point in the process described in the table above, as long as the Veteran does not check the box on the form he/she submits that is labeled
References:
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III.v.5.B.5.d. Handling Reelection of Disability Compensation |
When a Veteran, whose disability compensation VA discontinued because the Veteran elected MRP, later reelects disability compensation,
Reference: M21-1, Part VIII, 1.3, contains instructions for handling an election that is pending when a Veteran dies. |
III.v.5.B.5.e. Determining the Effective Date of an Award When VA Denied the Prior Claim Because the Veteran Elected MRP |
Follow the instructions in the table below when
Note: Follow the instructions in the last sub-bullet in M21-1, Part III, Subpart v, 5.A.3.c, if VA receives the new claim within one year of the date VA notified the Veteran of the denial.
Important:
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III.v.5.B.5.f. Special Consideration of Veterans Hospitalized for a Service-Connected Disability |
When all of the conditions listed below are met, notify the Veteran of the VA benefits that are payable to him/her and tell the Veteran that if he/she files a formal election within one year of the date of the notice, he/she will be eligible for VA benefits from the date of hospitalization.
Note: If a rating under 38 CFR 4.29 or 4.30 is involved, inform the Veteran of the temporary nature of the VA benefits.
Reference: For more information on the forms a Veteran may submit to waive his/her MRP, see M21-1, Part III, Subpart v, 5.A.2.
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III.v.5.B.5.g. Awarding Benefits When VA Form 21-651 Is Timely Received From a Veteran in a VA or Service Hospital |
If, after receiving the notice discussed in M21-1, Part III, Subpart v, 5.B.5.f, a Veteran submits VA Form 21-651 within one year of the date of the notice, award benefits effective the date of hospitalization.
Notes:
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6. Removal of a Veteran From the TDRL
Introduction |
This topic contains information on the effect of a Veteran’s removal from the TDRL, including |
Change Date |
May 21, 2018
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III.v.5.B.6.a. General Information on the Removal of a Veteran From the TDRL |
VA may become aware of a Veteran’s removal from the TDRL through
In any case,
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III.v.5.B.6.b. Removal From the TDRL of a Veteran in Receipt of VA Benefits |
If an RPC provides notice that a Veteran in receipt of compensation is no longer receiving MRP, follow the instructions in M21-1, Part III, Subpart v, 5.B.1.e for removing the retired pay indicator from the corporate record.
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III.v.5.B.6.c. Removal From the TDRL of a Veteran Who Is Not Receiving VA Benefits |
Follow the instructions in the table below when a Veteran who never filed a claim for VA benefits, or whose claim VA denied due to the Veteran’s receipt of MRP, is removed from the TDRL.
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III.v.5.B.6.d. Awarding of Severance Pay Following Removal of a Veteran From the TDRL |
RPCs occasionally notify VA that a Veteran in receipt of compensation has been
In these cases, send the Veteran notice of proposed adverse action before adjusting his/her benefits. Unless the Veteran submits evidence within 65 days that demonstrates VA should not take the proposed action, follow the instructions in the table below.
References: For more information about
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7. Effect of a Reduction of Benefits Under 38 CFR 3.551 on MRP
Introduction |
This topic contains information on the effect of a reduction of benefits under 38 CFR 3.551 on MRP, including |
Change Date |
July 31, 2015 |
III.v.5.B.7.a. Handling the Reduction of a Veteran’s Award Under 38 CFR 3.551 |
Unlike pension, MRP is not subject to reduction when a Veteran is hospitalized at VA expense.
If a Veteran is hospitalized and has waived a portion of his/her MRP to receive Section 306 or Old Law Pension,
Rationale: This reciprocal action ensures the Veteran receives his/her full entitlement, but not in excess thereof, on each benefit, per 38 U.S.C. 5305.
Reference: For more information about reducing a Veteran’s award under 38 CFR 3.551, see M21-1, Part III, Subpart v, 6.B.
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III.v.5.B.7.b. Notifying a Veteran’s RPC of a Reduction in the Veteran’s Old Law Pension |
After reducing a Veteran’s Old Law Pension under 38 CFR 3.551(b), inform the Veteran’s RPC, by locally generated letter, that VA has reduced the Veteran’s benefits under 38 U.S.C. 5503(a)(1). The letter must also provide the RPC with
Result: Information contained in the letter will ensure the RPC makes no adjustments in the Veteran’s MRP.
Reference: M21-1, Part III, Subpart v, 5.C.2.f provides the mailing address for each RPC.
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III.v.5.B.7.c. Notifying a Veteran’s RPC of a Restoration of the Veteran’s Old Law Pension to the Full Rate of Entitlement |
If VA restores an Old Law Pension award under 38 CFR 3.556 after reducing it under 38 CFR 3.551(b), send a locally-generated letter to the Veteran’s RPC that
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