Overview
In This Section |
This section contains the following topics:
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1. General Information on IU Claims
Introduction |
This topic contains general information on IU claims, including
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Change Date |
April 19, 2018
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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
Note: IU is also referred to as total disability based on individual unemployability(TDIU).
References: For more information on
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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.
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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
Reference: For more information on the definition of substantially gainful employment, see
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IV.ii.2.F.1.d. Definition: Marginal Employment |
Marginal employment exists
Important:
Reference: For more information on the poverty threshold, see M21-1, Part IV, Subpart ii, 2.F.6.
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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).
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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
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Change Date |
February 19, 2019
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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
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
Forward a VA Form 21-8940, Veteran’s Application for Increased Compensation based on Unemployability, to the Veteran if a request for IU is
Important:
References: For more information on
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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
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
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:
Reference: For more information on criteria for substantially complete applications, see M21-1, Part I, 1.B.1.b.
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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
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
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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
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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.
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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
Exceptions:
Notes:
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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.
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.
Important:
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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
Notes:
References: For more information on
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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
The VR&E records may
Notes:
References: For more information on
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IV.ii.2.F.2.k. Identifying Reasonably Raised Claims of IU |
Reasonably raised claims of IU may arise
VA must consider a claim for IU if
Reference: For more information on reasonably raised claims for IU, see
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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
Notes:
Reference: For more information on Section 5103 notices, see M21-1, Part I, 1.B.
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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.
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.
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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
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
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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
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Change Date |
July 24, 2015
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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.
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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
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Change Date |
February 19, 2019
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IV.ii.2.F.4.a. Considerations When Deciding an IU Claim |
When deciding an IU claim, the rating activity must take into account
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)
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
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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.
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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:
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.
References: For more information on
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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.
Reference: For more information on weighing evidence in rating decisions, seeM21-1, Part III, Subpart iv, 5.A.
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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
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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
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
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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:
Important:
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.
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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.
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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
Example: A Veteran would be entitled to SMC at the housebound rate if
Notes:
Reference: For more information on entitlement to housebound benefits when the IU rating is based on a single SC disability, see
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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
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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.
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.
Important:
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.
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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
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IV.ii.2.F.4.n.Reasons for Denying IU Claims |
Deny entitlement to IU only if the facts demonstrate that the Veteran
Reference: For more information on continuing a total evaluation based on IU, see38 CFR 3.343(c).
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IV.ii.2.F.4.o.Formally Denying IU |
Formally code the rating decision to indicate denial of IU if
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.
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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.
References: For more information on
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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:
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.
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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.
Notes:
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5. Monitoring Income for Veterans in Receipt of IU
Introduction |
This topic contains information on special considerations in IU claims, including
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Change Date |
February 19, 2019
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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.
References: For more information on
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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
Notes:
Reference: For more information on protection of evaluations, see 38 CFR 3.951(b).
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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.
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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.
Reference: For more information on using the Letter Creator tool, see the Letter Creator User Guide.
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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.
Reference: For more information on RPO jurisdiction, see M21-1, Part IX, Subpart ii, 2.8.a.
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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.
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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
Important:
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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.
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6. Poverty Threshold Information
Introduction |
This topic contains information on the poverty threshold, including
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Change Date |
September 27, 2018
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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.
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1-20-16_Key-Changes_M21-1IV_ii_2_SecF.docx | May 21, 2019 | 102 KB |
9-27-18_Key-Changes_M21-1IV_ii_2_SecF.docx | May 21, 2019 | 118 KB |
Historical_M21-1IV_ii_2_SecF_1-20-16.docx | May 21, 2019 | 124 KB |
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