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M21-1, Part IV, Subpart ii, Chapter 2, Section F – Compensation Based on Individual Unemployability (IU)

Overview

In This Section
This section contains the following topics:
Topic
Topic Name
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2
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1.  General Information on IU Claims

Introduction
This topic contains general information on IU claims, including

Change Date
April 19, 2018

IV.ii.2.F.1.a.  Establishing Entitlement to TDIU
To establish entitlement to a total disability rating for compensation based on individual unemployability (IU), the Veteran must be unemployable in fact (unable to secure or follow substantially gainful employment) by reason of service-connected (SC) disability and either
  • meet the schedular requirements of 38 CFR 4.16(a), or
  • have an extra-schedular IU evaluation, under the provisions of 38 CFR 4.16(b), approved by Compensation Service.
Note:  IU is also referred to as total disability based on individual unemployability(TDIU).
References:  For more information on

IV.ii.2.F.1.b.  Unemployable Vs. Unemployed
Being unemployable and being unemployed are not synonymous for the purpose of determining entitlement to an IU rating under 38 CFR 4.16.
A Veteran may be unemployed and even have a history of unemployment from several jobs, but not be incapable of substantially gainful employment (unemployable).  Unemployment can be due to economic factors, work performance issues, or other reasons and not necessarily related to being unable to secure or follow substantially gainful employment due to an SC disability(ies).
A Veteran might also be unemployed from one job due to an SC disability, but still be capable of securing or following another substantially gainful occupation.

IV.ii.2.F.1.c.  Definition: Substantially Gainful Employment:
Substantially gainful employment is defined as employment at which non-disabled individuals earn their livelihood with earnings comparable to the particular occupation in the community where the Veteran resides.  It suggests a living wage.
Substantially gainful employment is
  • competitive (not protected) employment, and with
  • earnings exceeding the amount established by the U.S. Department of Commerce, U.S. Census Bureau, as the poverty threshold for one person.

Reference:  For more information on the definition of substantially gainful employment, see

IV.ii.2.F.1.d.  Definition:   Marginal Employment
Marginal employment exists
  • when a Veteran’s earned annual income does not exceed the amount established by the U.S. Department of Commerce, U.S. Census Bureau, as the poverty threshold for one person, or
  • on a facts-found basis, and includes, but is not limited to, employment in a protected environment, such as a family business or sheltered workshop, when earned annual income exceeds the poverty threshold.
Important:
  • Marginal employment is by definition not substantially gainful employment.
  • Do not consider amounts received from participation in the Veterans Health Administration’s Compensated Work Therapy Program as income for IU purposes.
Reference:  For more information on the poverty threshold, see M21-1, Part IV, Subpart ii, 2.F.6.

IV.ii.2.F.1.e.  Circumstances for Considering Marginal Employment
38 CFR 4.16(a) does not limit consideration of marginal employment to only those Veterans who are currently employed.
If the evidence or facts reflect that a Veteran is capable only of marginal employment, then the Veteran is incapable of securing or following a substantially gainful occupation and is therefore entitled to IU if the Veteran’s SC disabilities are the cause of that incapability.
When the facts of a case indicate that the Veteran’s ability to work might be limited to marginal employment, a rating decision must address whether or not the Veteran is incapable of no more than marginal employment due to an SC disability(ies), even if the Veteran is not employed at the time.
Reference:  For more information on the appropriate circumstances in which to consider marginal employment, see Ortiz-Valles v. McDonald, 28 Vet.App.65 (2016).

2.  Evaluating Evidence to Establish Entitlement to IU

Introduction
This topic contains information on evaluating evidence to establish entitlement to increased compensation based on IU, including

Change Date
February 19, 2019

IV.ii.2.F.2.a. General Evidence Requirements in IU Claims
A decision concerning entitlement to an IU evaluation in accordance with 38 CFR 3.340, 38 CFR 3.341(a), and 38 CFR 4.16 is based on a review of all available evidence, which should be sufficient to evaluate the
  • current severity of the SC disability(ies) that the Veteran states and/or the evidence indicates prevent(s) substantially gainful employment
  • the impact of SC disability(ies) upon employability, and
  • employment status.
The rating activity must review all evidence and assign corresponding weight as directed at M21-1, Part III, Subpart iv, 5.A, including but not limited to evidence concerning the Veteran’s
  • current employment status
  • past employment history, and
  • functional impairment arising from SC disabilities as shown by
    • examinations
    • Department of Veterans Affairs (VA) or private medical evidence, and
    • lay evidence.
  • expressly raised by the Veteran, or
  • reasonably raised by the evidence of record.
Important:
  • When written communication or other evidence indicates the Veteran cannot work because of SC disabilities and a standard application for benefits with a specific claim for IU has not been received, but the criteria to consider the information a reasonably raised claim has not been met due to the Veteran’s disabilities not meeting the schedular criteria specified under 38 CFR 4.16(a), follow the request for application procedures at M21-1, Part III, Subpart ii, 2.C.6.
  • A Veteran’s statement of having been terminated from his or her employment may only reasonably raise a claim for IU if the Veteran indicates that termination was due to an SC disability.
References:  For more information on
IV.ii.2.F.2.b. VA Form 21-8940
A substantially complete VA Form 21-8940 is required to establish entitlement to IU because it gathers relevant and indispensable information regarding a claimant’s disabilities and employment and educational histories.  The form concludes with a series of sworn certification statements, and in endorsing it, a Veteran
  • attests to his/her employment status, and
  • signals understanding of the IU benefit’s incompatibility with substantially gainful work.
A properly signed and executed VA Form 21-8940 enables VA to gather the information necessary to determine the Veteran’s entitlement to IU and recover IU compensation that is later discovered to have been awarded on fraudulent terms.
While a substantially complete VA Form 21-8940 is necessary to provide VA with information needed to substantiate entitlement to IU, it is not necessary to raise the issue of IU.  VA must make a decision on IU when the issue is
  • explicitly raised by the Veteran, or
  • reasonably raised by the evidence of record.
If IU is raised and the Veteran fails to complete and return VA Form 21-8940, VA must make a decision on the issue of IU in a rating decision based on the available evidence of record and may deny entitlement as described in M21-1, Part IV, Subpart ii, 2.F.4.n.
Important:
  • If the issue of IU is raised by the Veteran or reasonably raised by the evidence of record and the only VA Form 21-8940 of record was received as part of a finally adjudicated claim, a new VA Form 21-8940 must be provided to the Veteran.
  • A VA Form 21-8940 must be signed by the Veteran and not a third-party source such as a power of attorney.
Reference:  For more information on criteria for substantially complete applications, see M21-1, Part I, 1.B.1.b.

IV.ii.2.F.2.c.Medical Evidence and Examination Requirements in IU Claims
A claim for IU must contain sufficient medical evidence to support a current evaluation of the SC disabilities alleged by the claimant to be causing unemployability.
The evidence should reflect the Veteran’s condition within the past 12 months and include, but need not be limited to
  • the results of VA examination(s)
  • hospital reports, and/or
  • outpatient treatment records.

Important:  A medical examination is not automatically required in every IU claim.  An examination is required if the information and evidence of record do not contain sufficient competent medical evidence to decide the claim.

IV.ii.2.F.2.d.Requesting an Examination in IU Claims
When an examination is indicated, it is normally sufficient to request condition-specific disability benefits questionnaires (DBQs) for the conditions alleged to cause unemployability on the VA Form 21-8940 (for example, joints, mental, and peripheral nerves DBQs).
Schedule a general medical examination only if the rating activity determines that it is needed to fairly and fully adjudicate the IU claim, such as when the claim is made in connection with original claims for disability compensation or where it is alleged that multiple SC and/or non-service-connected (NSC) disabilities may have an impact on employability.  However, do not order examinations for disabilities notalleged to cause or contribute to unemployability, even if the Veteran has received a previous award of service connection (SC) for the disabilities.
Do not ask the examiner to opine as to whether or not the Veteran is “unemployable” due to his/her SC disabilities.  A determination that a Veteran is unemployable is a legal determination that rests solely with the rating activity.
Instead, request that the examiner
  • comment on the Veteran’s ability to function in an occupational environment, and
  • describe functional impairment caused solely by the SC disabilities.
It is acceptable for an examiner to comment regarding what kind of work tasks or work environments (if any), to include employment that is sedentary in nature and employment requiring physical labor, the Veteran could perform despite his/her SC disability(ies).
Note:  The language generated upon selection of the IU block in the Exam Request Builder (ERB) tool is legally sufficient to elicit the necessary information.
References:  For more information on

IV.ii.2.F.2.e.    Employment History Requirements in IU Claims
VA Form 21-8940 requires the Veteran to furnish an employment history for the last five years that he or she worked.  In determining whether the Veteran provided work history information for the required time period, review the entries in Blocks 14 and 15 on the VA Form 21-8940.

Note:  The minimum required work history, for the purpose of requesting employment information from the Veteran’s employer(s), must include the last year of employment.

Important:  If the Veteran fails to provide employment history, the evaluation of the underlying issues claimed to cause unemployability must still be adjudicated even though the claim for IU may result in denial.  A claim for IU may not be freestanding and must be associated with consideration of increased evaluation or original service connection for the underlying disabilities claimed to cause unemployability.

References:  For more information on

IV.ii.2.F.2.f.  Action to Take Based on Employment History Provided
Use the table below to determine the appropriate action to take based on whether the Veteran provides the required work history on VA Form 21-8940.
Step
Action
1
Is the work history on VA Form 21-8940 complete?
  • If yes, proceed to Step 5.
  • If no, proceed to Step 2.
Note:  When the Veteran has included an entry in the work history information, but the reported period of work covers less than five years, assume that is the entire work history unless the remainder of the evidence of record is inconsistent with such an assumption.  When the less-than-five-year history provided is inconsistent with the remainder of the evidence of record, proceed to Step 2 to clarify the work history.
2
Make reasonable efforts to contact the Veteran by telephone to gather the missing employment history.
3
Was the telephone contact successful?
  • If yes,
    • document the employment information, and
    • proceed to Step 5.
  • If no, send the Veteran a letter requesting that he or she provide work history information within 30 days from the date of the notification letter.
4
Did the Veteran respond within 30 days?
  • If yes, proceed to Step 5.
  • If no, forward the claim to the rating activity for a decision after completing other required development for IU.
5
Follow the procedures in M21-1, Part IV, Subpart ii, 2.F.2.g for requesting employment information from employers.

IV.ii.2.F.2.g. Requesting Employment Information From Employers
Development for VA Form(s) 21-4192, Request for Employment Information in Connection with Claim for Disability Benefit, is routinely initiated at the time a claim for IU is received via submission of VA Form 21-8940. Use the table below to request VA Form(s) 21-4192, for the Veteran’s last year of employment even if the Veteran
  • has not worked for five years or more, or
  • is or may be currently employed, as marginal employment is possible.
Exceptions:
  • When the evidence of record clearly warrants a grant of entitlement to IU, do not delay a rating decision granting entitlement to IU for initial or continued development for VA Form 21-4192.
  • Do not send the VA Form 21-4192 to a previous employer if the Veteran states that the employer is no longer in business or other evidence indicates the business is closed.
  • Do not send the VA Form 21-4192 when the Veteran reports self- employment.  Follow the procedures at M21-1, Part IV, Subpart ii, 2.F.3.afor development regarding self-employment.
Step
Action
1
  • Send a VA Form 21-4192 to the former employer(s) for which the Veteran worked during his last year of employment.
  • At the same time, send a copy of VA Form 21-4192 to the Veteran and request that his/her previous employer complete and return the form.
2
Was a completed VA Form 21-4192 received from the Veteran’s employer(s) within 15 days?
  • If yes, refer the claim to the rating activity.
  • If no, proceed to Step 3.
3
  • Send a follow-up request to the employer(s) for VA Form 21-4192, allowing an additional 15 days for response, and
  • notify the Veteran that it is ultimately the Veteran’s responsibility to obtain this information.
 
Notes:
  • If the information on VA Form 21-4192 only states that the Veteran retired, then request additional information as to whether the Veteran’s retirement was by reason of disability.  If so, ask the employer to identify the nature of the disability for which the Veteran was retired.
  • Do not deny an IU claim solely because an employer failed to return a completed VA Form 21-4192.
  • If the Veteran worked for a federal agency, we would treat the VA Form 21-4192 development as a request for federal records and follow the guidelines prescribed under M21-1, Part III, Subpart iii, 1.C.1.b.
  • If an employer responds to the VA Form 21-4192 by providing a web site that does not provide all of the required information in the form, we must follow-up with the employer and again request that the VA Form 21-4192 be completed, allowing an additional 10 days for response.

IV.ii.2.F.2.h.  Veteran’s Responsibility to Specify a Disability or Disabilities That Cause Unemployability
As noted in M21-1, Part III, Subpart ii, 2.B.1.b, VA Form 21-8940 is not a standard claim form for entitlement to an increased evaluation or SC for a disability listed on that form.
  • As part of a substantially complete application for IU, VA requires that a claimant with multiple SC disabilities specify at least one disability that he/she believes causes the unemployability.
  • VA will address the evaluation of all SC disabilities claimed to cause unemployability as a part of the claim for entitlement to IU.
Use the table below to determine the appropriate action to take based on whether the Veteran specifies a disability as the cause of his/her unemployability.
If the Veteran …
Then …
only has one SC disability
  • presume that disability to be the cause of the Veteran’s unemployability, and
  • treat the IU claim as a claim for increase for that disability.
  • has multiple SC disabilities, but
  • does not identify which SC disability(ies) cause(s) unemployability
Notes:
  • If telephone contact is unsuccessful, document the attempts as a system note, and send the Veteran a letter requesting that he/she identify which SC disability(ies) are believed to result in unemployability.
  • After allowing 30 days to respond, if the Veteran has not provided the requested information, the issue must be denied by a rating decision.
  • has multiple SC disabilities, and
  • identifies one or more as the cause of unemployability
  • decide the claim for IU, and
  • address as separate issues in the rating decision the evaluation of the SC disabilities claimed to cause unemployability.
indicates on VA Form 21-8940 that all SC disabilities result in unemployability
  • address the evaluation of all SC disabilities as separate issues in the rating decision, or
  • contact the Veteran to clarify the specific disabilities causing unemployability, documenting any contact with the Veteran on VA Form 27-0820, and address the evaluation of only those SC disabilities he/she identifies.
lists an NSC disability on the VA Form 21-8940 but does not submit a claim for the NSC disability
follow the request for application procedures in M21-1, Part III, Subpart ii, 2.C.6 to address the NSC disability.
Note:  The listing of the NSC disability on the form is not considered a claim for SC for that disability.
  • lists an NSC disability on the VA Form 21-8940, but does not submit a claim for the NSC disability, and
  • was previously denied SC for the disability

follow the request for application procedures in M21-1, Part III, Subpart ii, 2.C.6 to address the NSC disability.

Exception:  When the NSC issue listed onVA Form 21-8940 is on legacy appeal, do not accept as a request for application.  To resolve the IU claim
  • continue the legacy appeal for the issue listed on VA Form 21-8940
  • proceed with development of the IU claim without further development of the legacy appeal issue as a part of the IU claim
  • notify the claimant that the issue is on legacy appeal
  • rate the IU based on the evidence of record without addressing the legacy appeal issue as a separate issue in the rating, and
  • do not delay a decision on IU pending resolution of the legacy appeal.
 
Important:
  • At all times when a VA Form 21-8940 is received, the issue of entitlement to IU must be addressed in a rating decision even when the Veteran fails to list SC disabilities that cause or contribute to unemployability.
  • When the claim for entitlement to IU is successfully withdrawn, as discussed in M21-1, Part III, Subpart ii, 2.G, all issues associated with IU claim as listed on VA Form 21-8940 are also considered withdrawn unless the issue was specifically claimed on an appropriate standard form for that claim or contention type.

IV.ii.2.F.2.i.  When to Obtain SSA Records in IU Claims
Obtain and consider complete copies of the Social Security Administration (SSA) decision (awards and denials) and any supporting medical records when
  • evidence of record is insufficient to award IU, and
  • evidence of a past or present claim for and/or award of disability benefits by SSA is shown in
    • the Veteran’s claims folder, or
    • any VA system including, but not limited to, Share (using the SSA INQUIRY command).
Notes:
  • Although decisions by SSA regarding a Veteran’s unemployability are not controlling for VA determinations, SSA’s record may indicate the level of impairment of the Veteran’s SC disability.
  • When reviewing SSA records, pay close attention to what disability resulted in an award of SSA benefits, and whether that disability is one for which SC has been awarded.
  • Regional offices (ROs) are not required to request SSA records when a Veteran fails to return the VA Form 21-8940.
References:  For more information on

IV.ii.2.F.2.j. When to Obtain VR&E Records in IU Claims
Obtain and evaluate any already-existing records of Vocational Rehabilitation and Employment Service (VR&E) consultation
  • when the evidence indicates that the Veteran underwent VR&E consultation sometime in the past related to a prior VR&E claim, such as (but not limited to)
  • when the evidence of record is insufficient to award IU, and
  • without regard to the period of time that has passed since the VR&E consultation occurred and records were created.
The VR&E records may
  • document the Veteran’s participation in a training program, or
  • show that training was not feasible or was unsuccessful.
Notes:
  • The entire Counseling/Evaluation/Rehabilitation (CER) folder is not necessary to adjudicate IU claims that are processed at the RO.  If adjudicating a claim for IU, and the Veteran has an existing VR&E record, request that VR&E provide a completed VA Form 28-1902b, Counseling Record – Narrative Report, in lieu of the entire CER folder.  VA Form 28-1902b contains the necessary information concerning the impact of the Veteran’s SC and NSC conditions on employability.
  • If the CER folder has evidentiary value that pertains to the pending claim and there is a need to scan the contents of the folder, send a photocopy of the folder to the scanning vendor and retain the original CER folder and its contents at the RO.
  • Decision review operations centers (DROCs) must request that VR&E provide the entire CER folder when adjudicating Board of Veterans’ Appeals (BVA) remands, as BVA is able to contact the RO directly to request upload of the entire CER folder into the Veterans Benefits Management System (VBMS).
  • ROs are not required to request VR&E records when a Veteran fails to return the VA Form 21-8940.
References:  For more information on

IV.ii.2.F.2.k.  Identifying Reasonably Raised Claims of IU
Reasonably raised claims of IU may arise
  • during the processing of a(n)
    • claim
    • decision review request under 38 CFR 3.2500, or
    • legacy appeal, or
  • as a result of a routine future examination.
 VA must consider a claim for IU if
  • the Veteran’s SC rating meets the minimum schedular criteria found in 38 CFR 4.16(a), and
  • there is current evidence of unemployability due to SC disability(ies) in the Veteran’s claims folder or under VA control.
Reference:  For more information on reasonably raised claims for IU, see

IV.ii.2.F.2.l.Processing Reasonably Raised Claims of IU
When a reasonably raised claim of IU is identified and additional evidence is needed
  • rate all other claimed issues that can be decided
  • show the issue of potential IU entitlement as deferred in the rating decision
  • develop the reasonably raised IU issue under the existing end product (EP), which will remain pending until a merits determination of IU entitlement is made, and
  • send the Veteran the section 5103 notice (if appropriate), enclosing VA Form 21-8940 for completion, as described in M21-1, Part IV, Subpart ii, 2.F.2.m.
Notes:
  • Do not send a Veteran VA Form 21-8940 to complete if
    • the schedular requirements of 38 CFR 4.16 are met, but
    • there is no evidence of SC unemployability.
  • A subsequent formal rating decision will be required to dispose of the issue of entitlement to IU, even when the Veteran fails to return VA Form 21-8940.
Reference:  For more information on Section 5103 notices, see M21-1, Part I, 1.B.

IV.ii.2.F.2.m.  Developing Reasonably Raised Claims of IU
Use the table below to determine the proper course of action to take in developing reasonably raised claims of IU.
If the claim that prompted the reasonably raised inference of IU was submitted …
Then send a …
subsequent development letter, using the Unemployability – 21-8940 neededdevelopment action.
  • on a non-EZ form, or
  • more than one year prior to the date action is being taken
section 5103 notice, enclosing VA Form 21-8940 for completion.
 
Important:  When development for a reasonably raised claim of IU is incorporated within a decision notice letter, ensure that the claimant is informed of the time periods within which the evidence must be submitted.

IV.ii.2.F.2.n.Considering IU Claims for National Guard and Reservists
If a Veteran is currently serving in the National Guard or Reserves, the reviewer should
  • determine if a medical examiner has indicated that a Veteran is unable to perform his/her military duties due to SC disability, and
  • make sure that the latest service treatment records are of record, as such records may aid in determining if the disability is preventing the Veteran from performing his/her current National Guard or reserve duties.
If the evidence of record is not sufficient to award increased compensation based on IU, request that the unit commander complete and return VA Form 21-4192.
  
Note:  The VBMS Initial Private 3rd Party Employer Letter, 21-4192 does not allow the user to edit the salutation section of the letter.  To ensure that the request is routed to the unit commander, include “ATTN Unit Commander” in the Employer Name section following the unit designation.
Example:  334th Brigade Engineer Battalion ATTN Unit Commander

3.  Evaluating Evidence of Self-Employment or Employment With a Tightly Held Corporation

Introduction
This topic contains information on evaluating evidence of self-employment or employment with a tightly held corporation, including

Change Date
July 24, 2015

IV.ii.2.F.3.a.  Self-Employment Development
Development to produce the evidence necessary to establish the degree to which an SC disability has impaired the Veteran’s ability to engage in self-employmentmust generally be more extensive than development in cases in which the Veteran worked for others.
Request that the Veteran furnish a statement regarding the
  • types of work performed
  • number of hours worked per week, and
  • amount of time lost in the previous 12 months due to SC disabilities.

IV.ii.2.F.3.b.   Deciding Whether Self-Employed Individuals Are Unemployable Due to an SC Disability
When determining entitlement of self-employed individuals to increased compensation based on IU, consider the relationship between the frequency and the type of service performed by the Veteran for his/her business and the Veteran’s net and gross earnings for the past 12 months.
Consider facts of the case, such as
  • low gross earnings that support a finding of marginal employment, especially when the amount of time lost from work due to an SC disability is taken into account, or
  • high gross earnings that indicate the Veteran is capable of engaging in a substantially gainful occupation.
Notes:
  • Consider low net earnings in conjunction with gross income.
  • The inability to make a profit is not always indicative of the inability to engage in substantially gainful employment.

IV.ii.2.F.3.c. Definition:  Tightly Held Corporation
A tightly held corporation (or closely held corporation) is usually a family corporation.  A corporation bearing the Veteran’s name is usually indicative of a tightly held corporation.

IV.ii.2.F.3.d.  Evaluating Evidence Showing Income From a Tightly Held Corporation
Since the Veteran may control the amount of wages paid to himself/herself, do not make a finding of marginal employment solely on the basis of low wages.
Keep in mind that the issue for consideration is whether the frequency and type of service performed by the Veteran equates to substantially gainful employment.  Therefore, consider evidence that the Veteran received, or was entitled to receive, other remuneration from the corporation, such as stock dividends or loans, in lieu of wages.
Note:  If the reported wages appear low for the work performed, request a field examination per M21-1, Part III, Subpart vi, 8.8 to determine the Veteran’s entitlement to the corporation and corporate earnings.

4.  Preparing a Rating Decision Addressing the Issue of IU

Introduction
This topic contains information on preparing a rating decision addressing the issue of IU, including

Change Date
February 19, 2019

IV.ii.2.F.4.a.  Considerations When Deciding an IU Claim
When deciding an IU claim, the rating activity must take into account
  • the Veteran’s current physical and mental condition
  • the Veteran’s employment status, including the
    • nature of employment, and
    • reason employment was terminated, and
  • whether
    • the disability requirements set forth in 38 CFR 4.16 are met, or
    • extra-schedular consideration under 38 CFR 4.16(b) is warranted.
When assessing the competence, credibility, and weight of evidence, no single factor has inherently more weight than another in determining the outcome of an IU rating decision once the evidence shows that the Veteran is no longer gainfully employed.
A decision maker must consider all factors contextually.  Assignment of weight for the different factors is and must remain contingent upon the entire evidentiary picture as found in the individual IU claim.  Examples of relevant factors include (but are not limited to)
  • the impact of the SC disabilities, individually and in combination, oncurrent work functioning
  • occupational history, including
    • marginal employment (past or present)
    • self-employment (past or present)
    • past employment, and/or
    • factors contributing to discontinuation of employment, and
  • educational history, including
    • past educational achievement, and/or
    • current educational endeavors.
Important:  Do not defer a decision as to the schedular degree of disability pending receipt of evidence sufficient to adjudicate the issue of IU.
References:  For more information on

IV.ii.2.F.4.b.Applicability of the Concept of Average Impairment in Earning Capacity to IU Claims
Do not apply the concept of average impairment in earning capacity set forth in 38 CFR 4.1 to determinations regarding IU.  This concept applies only to determinations of the percentage of disability for schedular evaluations.

IV.ii.2.F.4.c.Determining the Effect of SC Disabilities on Employability
Determine whether the severity of the SC disabilities precludes the Veteran from securing or following substantially gainful employment.
The following factors have no bearing on a determination of whether SC disability renders a Veteran unemployable:
  • age
  • NSC disabilities
  • injuries occurring after military service
  • availability of work, or
  • voluntary withdrawal from the labor market.

Reference:  For more information on the discussion to include in the rating decision, see M21-1, Part IV, Subpart ii, 2.F.4.p.

IV.ii.2.F.4.d. Considering Educational History in IU Claims
A Veteran’s educational history and/or current student status is not determinative of the outcome of a claim for entitlement to IU.  However, it is a factor that must be weighed in decision making.  In weighing the relevance of education in claims for IU, consider the factors below.
  • Educational history and achievement does not necessarily correlate to employability.  However, these factors may indicate the ability to perform certain types of work.
  • Consider the type of educational training relative to the Veteran’s physical and mental limitations.  Particularly, consider whether
    • special accommodations are made in the educational training that may or may not be realistic in a current or future work environment, or
    • the current program of training will impact employability in the future.
  • The fact that a Veteran is participating in a program of rehabilitation does not preclude a finding of IU.
  • The fact that a Veteran has completed a program of rehabilitation does not mandate discontinuance of IU unless substantially gainful employment is sustained for a period of 12 months.
  • When IU is claimed following a completed program of rehabilitation, pay special attention to evidence of program results that indicate the Veteran’s ability to secure or follow a substantially gainful occupation.
References:  For more information on

IV.ii.2.F.4.e.  Considering Occupational History in IU Claims
A Veteran’s occupational history is not determinative of the outcome of a claim for IU unless the Veteran is currently gainfully employed.  However, occupational history is a factor that must be weighed in decision making.  In weighing the relevance of occupational history in claims for IU, consider the factors below.
  • When a Veteran is currently working or the evidence shows the Veteran is capable of working but unemployed, determine whether the ability to sustain employment is marginal as discussed at M21-1, Part IV, Subpart ii, 2.F.1.d and e.
  • Consider the difference between unemployment and unemployability as discussed at M21-1, Part IV, Subpart ii, 2.F.1.b.
  • Voluntary retirement is not necessarily determinative of the outcome of an IU decision.  The underlying impact of the Veteran’s disabilities on the discontinuation of work is the relevant determination.
  • As noted in M21-1, Part IV, Subpart ii, 2.F.2.i, SSA decisions are not determinative of the outcome of IU decisions.  However, a Veteran’s application for and/or receipt of SSA disability benefits is a factor to weigh in decision making.
  • IU may be granted on a temporary basis as noted in M21-1, Part IV, Subpart ii, 2.F.4.g.
  • When a Veteran is self-employed, follow the procedures at M21-1, Part IV, Subpart ii, 2.F.3.
Reference:  For more information on weighing evidence in rating decisions, seeM21-1, Part III, Subpart iv, 5.A.

IV.ii.2.F.4.f.Considering IU for Incarcerated Veterans
An IU rating that would first become effective while a Veteran is incarcerated in a Federal, State, or local penal institution for conviction of a felony shall not be assigned during such period of incarceration.
If an IU evaluation is in effect prior to incarceration in excess of 60 days for conviction of a felony, the IU evaluation will be reduced to 10 percent in accordance with 38 CFR 3.665.
Reference:  For more information regarding the prohibition of assigning IU ratings for incarcerated Veterans, see

IV.ii.2.F.4.g.Considering IU on a Temporary Basis
38 CFR 4.16 authorizes the VA to assign an IU rating due to a Veteran’s temporary inability to follow a substantially gainful occupation.
Receipt of temporary disability benefits, whether short- or long-term, and/or receipt of accrued leave benefits does not necessarily warrant a certain decision in IU claims.  Rather, the determination of entitlement to IU must be made based on ability or inability to follow a substantially gainful occupation.  Consider the relevance of receipt of temporary disability benefits or accrued leave benefits on a case-by-case basis, taking into account such factors as the
  • frequency and duration of periods of incapacity or time lost from work due to disability, and
  • Veteran’s
    • employment history and current employment status, and
    • annual income from employment, if any.
Note:  Not every period of inability to work will establish an inability to follow a substantially gainful occupation warranting an IU rating, because it may be possible to secure and retain employment and to earn significant income despite occasional periods of incapacity.
Reference:  For more information on considering the relevance of temporary disability benefits and/or accrued leave benefits in claims for IU, please see

IV.ii.2.F.4.h.  Considering Multiple Disabilities in IU Claims
Under certain circumstances, multiple disabilities may be considered one disability for the purpose of meeting the requirements of 38 CFR 4.16(a).
As stated in 38 CFR 4.16(a), for the purpose of meeting the requirement of having one 60-percent or one 40-percent disability, the following will be considered as one disability:
  • disabilities of one or both upper extremities, or of one or both lower extremities, including the bilateral factor, if applicable
  • disabilities resulting from common etiology or a single accident
  • disabilities affecting a single body system
  • multiple disabilities incurred in combat, or
  • multiple disabilities incurred as a former prisoner of war.
Important:
  • In determining whether the Veteran’s SC disabilities meet the schedular requirement as stated in 38 CFR 4.16(a), all SC disabilities will be considered.  This determination is not restricted to only those SC disabilities that cause or contribute to unemployability.
  • The common etiology provisions of 38 CFR 4.16(a)(2) apply to disabilities arising from the same type of exposure event during service.  Examples of exposure events include (but are not limited to) disabilities arising from herbicide exposure in Vietnam under 38 CFR 3.309(e) or multiple undiagnosed illnesses granted under 38 CFR 3.317.
  • The common etiology provisions of 38 CFR 4.16(a)(2) apply to a primary SC disability and other disabilities for which SC is established as secondary to or aggravated by the primary disability under 38 CFR 3.310.
  • Consider multiple disabilities of the musculoskeletal system as one disability because the multiple disabilities affect a single body system or multiple gunshot wounds as the result of combat serve as one disability because the multiple disabilities were incurred in combat.
Example:  A Veteran is SC for diabetes mellitus at 40 percent, right shoulder arthritis at 30 percent, ulcerative colitis at 30 percent, and posttraumatic stress disorder (PTSD) at 30 percent.  The combined disability evaluation is 80 percent.  The evidence demonstrates that all SC disabilities, except for diabetes mellitus, cause or contribute to rendering the Veteran unable to secure or maintain substantially gainful employment.
Result:  TDIU would be awarded under 38 CFR 4.16(a), as the Veteran meets the schedular requirements of the regulation (combined disability evaluation of at least 70 percent and one disability, diabetes mellitus, rated at least 40 percent).
Rationale:  The regulation does not require that the 40-percent disability specifically cause or contribute to the unemployability when multiple SC disabilities are present and collectively render the Veteran unemployable.

IV.ii.2.F.4.i.  Handling Claims Requiring Compensation Service Approval
Submit any claim to Compensation Service (211B) for extra-schedular IU consideration if the schedular requirements of 38 CFR 4.16(a) are not met but the evidence of record supports a finding that the Veteran is unemployable by reason of an SC disability.
Reference:  For more information on submitting compensation claims for extra-schedular consideration, see M21-1, Part III, Subpart iv, 6.B.4.c.

IV.ii.2.F.4.j.Entitlement to SMC at the Housebound Rate if IU Rating Is Based on a Single Disability
A Veteran in receipt of IU benefits may be entitled to special monthly compensation (SMC) at the housebound rate under 38 U.S.C. 1114(s) if the evidence shows that the
  • unemployability is the result of one SC disability, and
  • Veteran has
    • additional SC disability(ies) independently rated at least 60-percent disabling, or
    • been determined to be permanently housebound, in fact, as a result of the SC disability that rendered the Veteran unemployable.
Example:  A Veteran would be entitled to SMC at the housebound rate if
  • his/her total IU evaluation is based on a 70-percent SC rating for PTSD, and
  • he/she has additional SC evaluations for headaches and a back condition that combine to 60 percent.
Notes:
  • Entitlement to housebound benefits under 38 U.S.C. 1114(s) cannot be established if the IU rating is based on multiple disabilities considered as one disability under 38 CFR 4.16(a).
  • Do not put entitlement to SMC at issue, unless benefits will be awarded or the issue has been explicitly claimed by the Veteran.
  • For consideration of entitlement to housebound benefits, the single disability upon which the grant of IU is based must satisfy the criteria for a grant of IU independently, with an evaluation of at least 60 percent, as required in 38 CFR 4.16(a) and discussed at M21-1, Part IV, Subpart ii, 2.H.10.c.
Reference:  For more information on entitlement to housebound benefits when the IU rating is based on a single SC disability, see

IV.ii.2.F.4.k.Determining Whether to Substitute a Single 100 Percent Schedular Evaluation for IU in Housebound Cases
VA is obligated to maximize the benefits awarded.  In determining whether to substitute a 100-percent schedular evaluation for IU, consider whether substitution would result in the Veteran no longer being entitled to SMC at the housebound rate.  VA decision makers are to assess whether the Veteran still meets the criteria for IU based on a single disability for the IU.
Further, VA is obligated to maximize a claimant’s benefits by assessing all of a Veteran’s SC disabilities to determine whether any combination of the disabilities establishes entitlement to SMC based on housebound status.  Even when IU has been previously established based on multiple disabilities or when a combined schedular 100-percent evaluation is established, decision makers must assess whether entitlement to IU based on a single disability is warranted such as to maximize benefits by allowing for a grant of entitlement to SMC based on housebound status.
References:  For more information on

IV.ii.2.F.4.l. When an IU Evaluation Is Considered Moot
A single SC disability rated 100-percent disabling generally renders an IU evaluation moot, as no additional benefit would typically flow to the Veteran by substituting an IU evaluation for a single SC disability rated 100-percent disabling.
Similarly, a combined evaluation of 100 percent may also render an IU evaluation moot when no additional benefit may be derived. However, when additional benefit may be derived from a grant of entitlement to IU, such as when IU is warranted for a single disability and entitlement to SMC based on housebound status will be an ancillary benefit, then IU is not moot.

Upon determining that the IU evaluation is moot,  if the issue of IU has been claimed, formally address the issue of mootness as a free text issue in the rating decision.

  • For the ISSUE text, use Entitlement to individual unemployability.
  • For the DECISION text, use Entitlement to individual unemployability is moot. 
  • In the REASONS FOR DECISION, include an explanation of the reasons that cause the issue of entitlement to IU to be moot.  Include the following text:
Entitlement to individual unemployability is moot because your service-connected disabilities are evaluated as 100 percent disabling and no potential entitlement to an earlier effective date for a total disability evaluation based on a grant of individual unemployability is warranted by the evidence of record.
  • There will be no record of an IU decision on the rating codesheet since no decision has been made.
Important:
  • The IU evaluation is not moot if the effective date of the single schedular 100-percent evaluation is from a later date than that which can be assigned based on entitlement to IU (such as when an effective date for IU may be assigned from the day following discontinuation of last employment).
  • The determination that IU is moot is subject to review under 38 CFR 3.2500 given that a claim for IU has been received and a decision has been made.
Reference:  For more information on entitlement to IU when temporary 100-percent evaluations are assigned, see M21-1, Part IV, Subpart ii, 2.F.4.m.

IV.ii.2.F.4.m.  Granting Temporary or Permanent 100-Percent Evaluations With IU
In situations in which the Veteran was previously granted entitlement to IU and in a subsequent decision a schedular 100-percent evaluation is granted, whether permanent or temporary, the grant of IU must remain in the record as an active decision.  Do not close out entitlement to IU unless the evidence actually warrants discontinuance as specified in 38 CFR 3.343(c).
Do not stop and re-start IU entitlement due to the grant of the temporary 100-percent evaluation.
Note:  When entitlement to IU exists and the schedular combined rating is 100 percent, only the greater benefit may be paid.  In some situations, entitlement to IU based on a single disability may result in entitlement to SMC based on housebound status, in which case IU would be the greater benefit as discussed in M21-1, Part IV, Subpart ii, 2.F.4.l.
References:  For more information on

IV.ii.2.F.4.n.Reasons for Denying IU Claims
Deny entitlement to IU only if the facts demonstrate that the Veteran
  • is not precluded from securing or following substantially gainful employment by reason of SC disability
  • is gainfully employed, or
  • has failed to cooperate with development, such as failing to return a completed VA Form 21-8940 when requested.
Reference:  For more information on continuing a total evaluation based on IU, see38 CFR 3.343(c).

IV.ii.2.F.4.o.Formally Denying IU
Formally code the rating decision to indicate denial of IU if
  • the Veteran specifically claims entitlement to IU, and
  • any of the requirements for 38 CFR 4.16 are not met.
Note:  If the Veteran disagrees with the decision, the statement of the case (SOC) should cite the relevant portion of 38 CFR 4.16 as the authority of the denial.

IV.ii.2.F.4.p.Information to Include in the Rating Decision
Use the table below to determine what information to include in the rating decision.
If …
Then …
schedular requirements of 38 CFR 4.16(a) are met, but IU is denied because the Veteran is considered employable
explain the facts that are pertinent to that conclusion.
schedular requirements of 38 CFR 4.16(a) are not met and there is no finding that the Veteran is unemployable due to SC disability or evidence requiring extra-schedular consideration
explain the facts that are pertinent to the conclusion and note the absence of a basis for submission of the case to Compensation Service (211B) for consideration of an extra-schedular rating, if applicable.
References:  For more information on
a Veteran is considered unemployable primarily due to NSC factors and SC disabilities alone do not support a finding of unemployability
include
  • an explanation of the reasons for this decision, and
  • the reasoning for finding that SC disabilities alone are not sufficiently severe enough to render the Veteran unemployable.
the Veteran fails to complete and return the VA Form 21-8940
explain the basis for the denial.
IU is established
  • include an explanation or analysis of how impairment from SC disability supports the decision, and
  • specify which disability(ies) render the Veteran unemployable.
Important:  A conclusory statement alone that the criteria for a total evaluation based on IU are met doesnot satisfy the requirement to state the basis for the decision.
permanency of the total disability IU evaluation is established
award Dependents’ Educational Assistance (DEA) under 38 U.S.C. Chapter 35, regardless of whether or not there appear to be any potential dependents.
Note:  The rating conclusion must include the statement, Basic eligibility under 38 U.S.C. Chapter 35 is established from [date].
References:  For more information on

IV.ii.2.F.4.q.Incorporating IU Denial Into a Pending Legacy Appeal
A claim for IU will be encompassed in a pending legacy appeal for an increased evaluation for an SC disability when all of the criteria below are met:
  • a legacy appeal is pending (in the jurisdiction of the RO at any stage of the appeals process) for increased evaluation of an SC disability
  • the Veteran claims to be unemployable due, at least in part, to the disability on legacy appeal, and
  • the rating decision denies the IU claim while the legacy appeal is pending.
After the claim for IU is denied by rating decision under a rating EP, send the appellant an SOC or supplemental statement of the case (SSOC) on all issues on legacy appeal, including IU.  Incorporate the IU into the pending legacy appeal under the pending  EP at whatever stage the legacy appeal is in.
When an SOC was previously issued and the time period for submission of VA Form 9, Appeal to the Board of Veterans’ Appeals, has not expired, follow the procedures at M21-1, Part I, 5.D.4.c to issue an SSOC and extend the time period of submission of VA Form 9.
Reference:  For more information on preparing an SOC and SSOC, see M21-1, Part I, 5.D.

IV.ii.2.F.4.r. Prohibition Against Incorporating Rated Issues Into a Legacy IU Appeal
When a legacy appeal for IU is pending and the Veteran subsequently claims that an SC disability not on legacy appeal causes or contributes to unemployability, do not incorporate the disability claimed to cause or contribute to unemployability into the pending legacy appeal for IU.
  • The disability’s impact on IU should be considered in the legacy IU appeal, but the evaluation of the disability itself should not be incorporated into the legacy appeal and addressed as a specific legacy appeal contention.
  • The evaluation of the disability may be specifically appealed by the Veteran using standard legacy appeals procedures.
Notes:
  • When the evaluation of the disability was previously incorporated into the legacy appeal under prior procedural guidance and an SOC or SSOC has been issued to address the contention, continue the legacy appeal.
  • When IU is on legacy appeal and VA Form 21-8940 is received in support of the legacy appeal but lists SC issues causing IU that have not been rated in connection with the IU claim as directed at M21-1, Part IV, Subpart ii, 2.F.2.h, establish an EP 020 to control for rating the issues listed on the VA Form 21-8940.  Do not incorporate the issues into the legacy IU appeal unless, after a decision is rendered for the new issue(s), the Veteran submits a specific legacy appeal for the issue(s).

5.  Monitoring Income for Veterans in Receipt of IU

Introduction
This topic contains information on special considerations in IU claims, including

Change Date
February 19, 2019

IV.ii.2.F.5.a.  Monitoring Changes in Employability Status
Changes in the employability of Veterans for whom IU is established are monitored through a yearly SSA wage data match.
  • A Veteran who is identified as having verified earned income over the poverty line and is also in receipt of IU will be sent a due process letter and VA Form 21-4140, Employment Questionnaire, via the Hines Information Technology Center (ITC).
  • The Veteran will be required to identify and explain his/her earned income via return of VA Form 21-4140.
References:  For more information on

IV.ii.2.F.5.b.  Discontinuance of Monitoring for Changes in Employability Status
Monitoring changes in employability status is not required when the Veteran
  • has not been identified in the SSA data match as having verified earned income above the poverty line
  • has an IU rating that has been in effect for 20 or more continuous years, or
  • has had an IU rating replaced with a 100-percent schedular evaluation.
Notes:
  • Monitoring for changes in employability status is not necessary if a discontinuation of IU would not alter the claimant’s benefit entitlement.  In this situation, development for VA Form 21-4140 may be discontinued.
  • A review of the rating codesheet, particularly the SMC paragraph text entries, will reflect whether payment of SMC is contingent on a grant of entitlement to IU.  When payment of SMC is contingent on a grant of entitlement to IU, continued monitoring of employability status is required even in spite of the presence of a 100-percent schedular evaluation.
Reference:  For more information on protection of evaluations, see 38 CFR 3.951(b).

IV.ii.2.F.5.c.  Automated Monitoring for Income of Veterans in Receipt of IU
Veterans in receipt of IU are monitored for receipt of earned income by an SSA data match as described in M21-1, Part IV, Subpart ii, 2.F.5.a.  The table below describes the automated monitoring process.  When the automated process cannot occur, refer to M21-1, Part IV, Subpart ii, 2.F.5.d for procedures to follow.
  
Step
Action
1
Upon receipt of wage files from SSA, Hines ITC will run a data match to identify those Veterans receiving IU who are shown to have verified earned income over the poverty line.
2
Hines ITC will automatically generate and send a notice of proposed adverse action letter with an attached VA Form 21-4140 to the identified Veterans.
3
Hines ITC will
  • batch establish an EP 600 with the claim labelPredetermination – Rating Issue to control for the return ofVA Form 21-4140 and the due process period
  • set a suspense date for 65 days from the month the due process letter is issued by Hines ITC, and
  • add the special issue Annual Eligibility Report to each claim in the batch process.
Important:  Claims processors should add this special issue flash if it was not automatically added by Hines ITC.
4
Upon expiration of the suspense date, refer to M21-1, Part IV, Subpart ii, 2.F.5.e–h for actions to take based on receipt or non-receipt of VA Form 21-4140.

IV.ii.2.F.5.d.  RO Dispatch and Control for Return of VA Form 21-4140
Claims identified in the income match discussed in M21-1, Part IV, Subpart ii, 2.F.5.a that cannot be batch processed by Hines ITC will require manual review and action by the RO.
Follow the steps in the table below for dispatch and control of VA Form 21-4140 by the RO when Hines ITC cannot perform batch processing.
 Step
Action
1
The Office of Field Operations (OFO) sends an annual e-mail to RO leadership of cases in its jurisdiction (based on the Veteran’s address) in which the Veteran
  • has been identified as being in receipt of income above the poverty threshold, and
  • is in receipt of individual unemployability, but
  • did not receive due process through the batch process.
2
The RO will
  • establish EP 600 with the claim label Predetermination – Rating Issue
  • ensure the SUPPRESS ACKNOWLEDGEMENT LETTER checkbox is selected so the Hines ITC-generated acknowledgement letter is not automatically sent to the Veteran, and
  • add the special issue Annual Eligibility Report.
3
Provide the Veteran with due process to propose to discontinue entitlement to IU based on receipt of earned income by sending the Veteran notice of proposed adverse action and including VA Form 21-4140 using the IU Eligibility Review Due Process letter in the VSC tab of the Letter Creator tool (or equivalent letter in Personal Computer Generated Letters).
4
Utilizing a suspense date of 65 days, establish tracked items for
5
Provide an email response to OFO confirming that due process was sent on identified claims.
Reference:  For more information on using the Letter Creator tool, see the Letter Creator User Guide.

IV.ii.2.F.5.e.  Handling Failure to Return VA Form 21-4140
Follow the steps in the table below for procedures to follow when the Veteran does not return VA Form 21-4140.
Step
Action
1
Refer the claims folder to the rating activity.
2
Prepare a rating decision reflecting reduction to the schedular evaluation effective the date indicated in the LAST PAID DATE field on the AWARD INFORMATION tab in Share (see 38 CFR 3.501(f)) or the date specified in the notice of proposed adverse action, whichever is later.
Important:  If entitlement to DEA or SMC was previously established based on the grant of IU, address DEA in the rating if otherwise warranted.
3
Refer the claims folder to the authorization activity to reduce the award.
  • Notify the Veteran of the reduction and any loss of entitlement to DEA or SMC.
  • Advise the Veteran that if VA receives evidence showing continued unemployability within one year of the date of the decision notice, IU will be restored from the date of the reduction.
  • Advise the regional processing office (RPO) of jurisdiction of the loss of entitlement to DEA if a 38 U.S.C. Chapter 35record exists under the Veteran’s claim number.
Reference:  For more information on RPO jurisdiction, see M21-1, Part IX, Subpart ii, 2.8.a.

IV.ii.2.F.5.f.  Receipt of VA Form 21-4140 Following Discontinuation of IU
If the Veteran provides a completed VA Form 21-4140 after the notification of IU discontinuation is sent, revise the prior decision, as warranted, in accordance with the facts found.
Reference:  For more information on periodic certification of continued eligibility, see 38 CFR 3.652.

IV.ii.2.F.5.g.  Handling VA Form 21-4140 Returned With No Reported Wages
A VA Form 21-4140 is sent only to Veterans identified in the wage data match as having received income. The notice of proposed adverse action sent by Hines ITC asks the Veteran to explain the earned wages.
When a Veteran returns VA Form 21-4140, the earned wages must be explained as requested in the notice of proposed adverse action.  A Veteran’s response indicating no employment and/or wages is unacceptable and considered a fraudulent response.
Follow the steps in the table below when a Veteran returns VA Form 21-4140 and
  • checks the block indicating he/she has not been employed in the past 12 months, and
  • signs the form.
Important:
  • If the Veteran fails to check the No box indicating that he/she has not worked but signs the VA Form 21-4140 indicating that he/she has not been employed by VA or others or self-employed at any time during the previous 12 months, the claims folder should still be referred to the rating board as described in the table below.
  • If a signed VA Form 21-4140 is received but necessary information, such as wage data, is missing or requires clarification, it is permissible to telephone the Veteran to obtain the clarifying information orally and document any contact with the Veteran on VA Form 27-0820.
  • A phone call to the Veteran cannot be used to substitute for a signature onVA Form 21-4140.
Step
Action
1
Refer the claims folder to the rating activity.
2
Prepare a rating decision
  • reflecting reduction to the schedular evaluation effective the date indicated in the LAST PAID DATE field on the AWARD INFORMATION tab in Share (see 38 CFR 3.501(f)) or the date specified in the notice of proposed adverse action, whichever is later, and
  • explaining in the rating narrative that the reason for the rating reduction is failure to provide requested evidence.
Important:  If entitlement to DEA or SMC was previously established based on the grant of IU, address DEA in the rating if otherwise warranted.
3
Refer the claims folder to the authorization activity to reduce the award.
  • Notify the Veteran of the reduction and any loss of entitlement to DEA or SMC.
  • Advise the Veteran that if VA receives evidence showing continued unemployability within one year of the date of the decision notice, IU will be restored from the date of the reduction.
  • Advise the RPO of jurisdiction of the loss of entitlement to DEA if a 38 U.S.C. Chapter 35 record exists under the Veteran’s claim number.
  • Add the corporate flash, Annual IU Eligibility Review-Fraud, to the claim.

IV.ii.2.F.5.h.  Handling VA Form 21-4140 Returned With Reported Wages
Refer to the table below for procedures for handling other scenarios involving the Veteran’s report of income and employment information on VA Form 21-4140.
If the Veteran returns VA Form 21-4140 and…
Then …
indicates possible gainful employment for 12 months or more
follow the steps in the table below.
Step
Action
1
Refer the claims folder to the rating activity.
2
The rating activity will review VA Form 21-4140 and all other evidence of record to determine whether discontinuation of entitlement to IU is warranted.  The rating activity must consider whether
  • the employment is sustained, gainful employment or marginal employment, and/or
  • an examination is necessary to evaluate employment status or employability.
References:  For more information on
3
The rating activity will complete a rating decision to
  • discontinue entitlement to IU based on the return to sustained, gainful employment as well as any ancillary issues such as DEA or SMC entitlement, or
  • continue entitlement to IU based on the lack of evidence showing that the employment is sustained, gainful employment.
Important:  The reasons for decision must discuss the evidence relevant to the determination that sustained gainful employment has or has not been shown.
regained employment is reported, but it has not been sustained for 12 months
  • refer the claims folder to the rating activity for a rating decision reflecting confirmed and continued entitlement to IU which will be reviewed if sustained employment is shown, and then
  • refer the claims folder to the authorization activity to notify the Veteran.
Important:  There is no need to establish a review examination to determine if sustained employment is shown.  If continued employment is shown when the next annual data match occurs, entitlement to IU will be reviewed at that time.
provides wage information but fails to sign the form
  • return VA Form 21-4140 to the Veteran
    • indicating that the form is incomplete using theForm Not Complete letter from the IPC menu in the Letter Creator tool, and
    • advising the Veteran that a signature is required, and
  • establish a 30 days suspense date.
 Note:  If the form is
  • returned with a signature, follow the most appropriate procedure based on the income reported, or
  • returned without a signature or not returned, follow the procedures in M21-1, Part IV, Subpart ii, 2.F.5.e.

6.  Poverty Threshold Information

Introduction
This topic contains information on the poverty threshold, including

Change Date
September 27, 2018

IV.ii.2.F.6.a.  Marginal Employment Based on Income Below the Poverty Threshold
38 CFR 4.16(a) provides that marginal employment is generally deemed to exist when a Veteran’s earned income does not exceed the amount established by the U.S. Census Bureau as the average poverty threshold for one person.
Reference:  For more information on the U.S. Census Bureau’s poverty thresholds, see http://www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-thresholds.html.

IV.ii.2.F.6.b. Poverty Threshold for One Person
The table below lists the poverty threshold for one person by year.
Calendar Year
Amount
1989
$6,310
1990
$6,652
1991
$6,932
1992
$7,143
1993
$7,363
1994
$7,547
1995
$7,763
1996
$7,995
1997
$8,183
1998
$8,316
1999
$8,501
2000
$8,794
2001
$9,039
2002
$9,183
2003
$9,393
2004
$9,645
2005
$9,973
2006
$10,294
2007
$10,590
2008
$10,991
2009
$10,956
2010
$11,137
2011
$11,484
2012
$11,720
2013
$11,888
2014
$12,316
2015
$12,331
2016
$12,486
2017 $12,752
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in Chapter 2 Rating, Part IV Compensation, DIC, and Death Compensation Benefits, Subpart ii Compensation
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