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M21-1, Part V, Subpart iii, Chapter 1, Section A – General Information on the Effect Income and Net Worth Have on Pension and Parents DIC

Overview


In This Section

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

1.  Income Reporting for Pension and Parents’ DIC


Introduction

This topic contains information on income reporting for pension and Parents’ DIC, including

Change Date

March 23, 2015

V.iii.1.A.1.a.  Income Reporting Period for Section 306 Pension, Old Law Pension, and Parents’ DIC

Income for VA purposes (IVAP) for Section 306 Pension, Old-Law Pension, and Parents’ Dependency and Indemnity Copmensation (DIC) is computed on a calendar-year basis.  A beneficiary’s entitlement is determined by the amount of countable income received (and for Section 306 Pension and Parents’ DIC, also by the amount of deductible expenses paid) during the period January 1 through December 31 of any given year.
Note:  For Section 306 Pension, Old-Law Pension, and Parents’ DIC, income may not be counted for an entire 12-month period, unlike current-law pension.

V.iii.1.A.1.b.  Income Reporting Period for Current-Law Pension

For current-law pension, IVAP is not always computed on a calendar-year basis.  The income-reporting period for current-law pension beneficiaries may extend over any 12-month period.
In addition, IVAP can be re-computed within a 12-month income-reporting period if there is an intervening income change.

V.iii.1.A.1.c.  Handling Income  Reported in Foreign Currency

If a claimant reports income or expenses in a foreign currency
  • convert the foreign currency into U.S. dollars using the quarterly exchange rates established by the Department of the Treasury
  • project rates of exchange based on the most recent quarterly rate of exchange, and
  • calculate retroactive adjustments based on the average of the four quarterly exchange rates that apply to the period for which the award is being adjusted.
Note:  The Department of the Treasury publishes a quarterly document entitledTreasury Reporting Rates of Exchange.  This publication is routinely sent to the Pittsburgh Regional Office (RO), the pension management centers (PMCs), and the Houston RO.  Additionally, obtain exchange rate information by contacting the Compensation Service Procedures and Program Development Staff (212A).
Reference:  For more information on handling income reported in foreign currency, see 38 CFR 3.32.

V.iii.1.A.1.d.  Developing for Income Information

For specific information about developing for income, see M21-1, Part V, Subpart i, 3.

2.  Action to Take When IVAP Is Uncertain


Introduction

This topic contains information on the action to take when IVAP is uncertain, including

Change Date

April 12, 2018

V.iii.1.A.2.a.  Deferments in Pension Cases

Income for pension purposes is normally counted from the first of the month after the month during which it is received.  Pension rates are generally based on expected (or “projected”) income, including deductible expenses.
Almost every Department of Veterans Affairs (VA) Pension income decision is a “deferred determination” within the meaning of 38 CFR 3.271(f), because pension claimants and beneficiaries have established time limits to report income changes, including deductible expenses.
Therefore, award action need not be deferred for processing purposes simply because future IVAP changes cannot be predicted.
However, if an application or other income report is so incomplete or unclear that a decision is not possible, the claims processor may defer for processing purposes and develop the claim.  This will be a judgment call on the part of the claims processor.  Otherwise, the claims processor should pay the benefit at the lowest rate justified by all the evidence of record, including VA matching programs with the
  • Internal Revenue Service (IRS) or
  • Social Security Administration (SSA), including SSA benefit payments and Federal tax information (FTI).
Obtain information from the IRS and the SSA before paying pension and when re-calculating net worth.
Important:  VA will not normally make a decision on an incomplete income report; however, if the information provided clearly shows non-entitlement, deny entitlement based on the incomplete report.

V.iii.1.A.2.b.  Handling a Deferment in Pension Cases

Use the information in the table below to handle deferments in pension cases.
If an award is …
Then …
deferred
  • initiate development, and
  • continue the pending issue.
paid at the lowest rate justified by the evidence of record
close out the pending issue.
Important: The decision notice must fully inform the claimant or beneficiary of the assumptions on which the award is based.
Reference: For more information on the time limits to submit evidence in pension cases, see

V.iii.1.A.2.c.  Parents’ DIC Cases Where the Claimant Is Unable to Predict Income

Entitlement to Parents’ DIC is based on the amount of income received during the calendar year.
If a claimant is unable to predict the amount or date of receipt of anticipated income, base the award on the greatest amount of income expected during the calendar year.  Advise the claimant of the action taken and tell him/her that an adjustment will be made on receipt of actual income information.
If it appears that anticipated income might exceed the applicable limit, deny the claim and fully explain the reason for the denial.  Do not take award action to pay benefits until actual income information is available or there is a basis for a more accurate prediction of anticipated income.

V.iii.1.A.2.d.  Action to Take When Social Security Rate Reported by the Beneficiary is Different Than Social Security Rate in Share

Use the table below to determine the action to take when the Social Security rate reported by the beneficiary is different than the Social Security rate in Share.
Reference:  For information on accessing Social Security rates through Share, seeM21-1, Part V, Subpart iii, 1.B.12.
If the Social Security rate reported by the beneficiary is …
Then …
higher than the rate in Share
  • use the rate reported by the beneficiary to compute the IVAP, and
  • inform the beneficiary of
    • the Social Security rate counted, and
    • the discrepancy with information from SSA.
lower than the rate in Share, but
the difference in the rates is $1.00 or less
  • use the rate shown in Share to calculate IVAP, and
  • inform the beneficiary of
    • the Social Security rate counted, and
    • the discrepancy with information from SSA.
Note: If using the Social Security rate in Share results in a decrease in the pension rate of a running award, initiate the due process procedures in M21-1, Part I, 2.b.4.
lower than the rate in Share, and
the difference in the rates is greater than $1.00
  • calculate IVAP based on the Social Security rate in Share, and
  • follow the due process procedures in M21-1, Part I, 2.b.4 unless the award is
    • an original award, or
    • a running award already based on the Social Security rate in Share, or,
    • no reduction in pension occurs due to other income considerations such as medical expenses.
lower than the rate in Share, but the difference in rates is equal to the SMIB rate
  • use the rate shown in Share to calculate IVAP, and
  • inform the beneficiary of
    • the Social Security rate counted, and
    • the discrepancy with information from SSA.

V.iii.1.A.2.e.  Analyzing FTI

For original claims, when FTI is available, an analysis should be completed.
Step
Action
1
Compare the FTI and SSA benefit information with the income information provided by the claimant on his or her application.
2
Analyze unearned income information provided by IRS by:
  • Matching the source of income and the income types on the IRS screen in Share to the source of income and the income types listed on the FTI Income Reference Sheet.
  • Using the table FTI Income Reference Sheet, determine whether the source of income and the type of income reported in the IRS screen is countable for purposes of income verification.
3
Analyze earned income information provided by SSA.  If SSA reports significant wages for the claimant in the most recent year, determine whether the claimant is still employed.
4
Add the the FTI and SSA benefit information that is countable for purposes of upfront verification.
5
Separately, add the countable income reported by the claimant on his/her application.
6
If the income found on the application alone is sufficient to deny pension, do so without referencing FTI.  Otherwise, refer to M21-1, Part V, Supart iii, 1.A.2.f.
Note:  If FTI is unavailable, process the claim with the available evidence of record.

V.iii.1.A.2.f.Action to Take When Income Reported on the Application is Different Than FTI Found in Share

Use the table below to determine the action to take when the income reported by the beneficiary is different than the calculated FTI and Social Security rate in Share.
If …
Then …
The sum of all countable income, minus the appropriate deductions, such as unreimbursed medical expenses, on the claimant’s application is less than the maximum annual pension rate (MAPR)
AND
The sum of all countable income reported by the FTI and Social Security Rate in Share, minus appropriate deductions, such as unreimbursed medical expenses, isless than the MAPR
Use the higher total of all countable income based on the application, or as provided by FTI and Social Security rate in Share, when evaluating countable income.  If the FTI and Social Security rate in Share reported information provides a higher total countable income, inform the claimant that we counted the higher reported income. See M21-1, Part V, Subpart i, 3.A for autotext.
Note: This is also applicable when the claimant is entitled to receive the maximum allowable monthly rate (maximum rate).
The sum of all countable income, minus any appropriate deductions, such as unreimbursed medical expenses, on the claimant’s application is less than the MAPR
The sum of all countable income, minus any appropriate deductions such as unreimbursed medical expenses, reported by FTI and Social Security rate in Share is greater than the MAPR
Use the total derived from the FTI and Social Security rate in Share information.
  • Initiate development to the claimant for any unreported income.
  • Provide the claimant 30 days to respond to VA requests for verification of income before making a failure-to-prosecute determination.
Do not initiate development to the payer.
If the claimant…
Then…
provides an explanation anddocumentation that explains why the income should not be counted
adjust the IVAP accordingly.
responds, but does not provide an explanation
count the FTI for the IVAP.
does not respond
deny the claim for Failure to Prosecute.
Note:  Unless the claimant submits proof from the issuing agency/company verifying his/her gross payment (to include, but not limited to Railroad Retirement, Civil Service Retirement, etc.), use the higher countable income based on the application, or as provided by the FTI, when evaluating countable income.

V.iii.1.A.2.g.  Handling Unreliable Income Reporting

If a beneficiary has a history of unreliable reporting of income or expenses, the claims processor may at any time ask for proof of income or expenses before awarding benefits or before awarding a higher payment amount.

V.iii.1.A.2.h.Considering  FTI on Grants of Pension based Liberalizing Law

Use the appropriate year’s IRS and SSA information that corresponds to the year at issue under liberalizing law to process the claim as normal.
Example: if liberalizing law takes the effective date back to 2011, then use the 2011 data from IRS and SSA.  Ensure that any medical expenses the claimant provides are associated with the appropriate year for which income may be reduced.

V.iii.1.A.2.i.  Time Allowed for Completion of Data Exchange for IRS/SSA

Adjudicators need to allow time for completion of the exchange of information between VA and IRS/SSA.  The table below explains the date the data will be available based on claims establishment dates.
If the claim is established on…
The data will be available…
Sunday
13 days later (Saturday).
Monday
12 days later (Saturday).
Tuesday
11 days later (Saturday).
Wednesday (6:00 p.m. Central time]),
10 days later (Saturday). If it is after [6:00 p.m. Central time], consider the claim established on Thursday.
Thursday,
16 days later (Saturday).
Friday,
15 days later (Saturday).
Saturday,
14 days later (Saturday).
Note: If IRS or SSA returns the file later than that noted above, P&F Service will notify the field to wait to process those affected claims until VA receives the return file from both IRS and SSA.
Example:
  • A Veterans Beneftis Administration (VBA) employee establishes a claim on Tuesday, May 6, 2014. The claims processor reviews the claim on May 17, 2014 (11 days later).
  • When the claims processor reviews the claim in Share, he/she notices that the buttons are disabled (or greyed out). The allotted time of 11 days has passed.
  • The claims processor determines that the claim was pending at a RO at the time of claims establishment and the RO subsequently transferred the claim to the PMC.

Note:  The user guide notes that the buttons will be greyed out if this occurs, and the claims processor should work the claim without the data. The claims processor should not report the claim to the IRS/SSA mailbox.


V.iii.1.A.2.j.  Handling FTI When Claimant is Eligible for the $90 Medicaid Nursing Home Rate

If a the claims processor can grant the $90.00 Medicaid rate, do not use IRS and SSA data to verify income.

3.  Denying a Claim When IVAP Is Excessive; Considering Amended Income Information


Introduction

This topic contains information on denying a claim when IVAP is excessive and considering amended income information, including

Change Date

February 19, 2019

V.iii.1.A.3.a.  Notification When Income Exceeds the MAPR or Income Limit

If pension or Parents’ DIC is denied because income exceeds the MAPR or income limit, advise the claimant of
  • the evidence considered in reaching the decision
  • the reason for the denial
  • the applicable findings related to the claim
  • his/her right to request a review of the decision by submitting amended income information along with a supplemental claim request
  • the appropriate time limits for submission of the amended income information, and
  • his/her right to seek a review of the decision.
References:  For more information on

V.iii.1.A.3.b.  Time Limits to Submit Amended Income Information

Per 38 CFR 3.160(d), a claim is not finally adjudicated until the:
  • expiration of the period in which to file a review option available under 38 CFR 3.2500, or
  • disposition on judicial review where no such review option is available.
38 CFR 3.660(b) provides the time limits for a claimant to submit amended income information after his/her claim is denied due to excessive income or net worth.  It determines the date from which entitlement can be established when new evidence is submitted.
Important:  38 CFR 3.160(d) does not extend the time limits in 38 CFR 3.660(b)for submitting satisfactory evidence of entitlement because of income.  If income information is not received, along with a claim, within the established time limits, then the earliest possible effective date is the date of receipt of the new claim under 38 CFR 3.400(r).
Reference:  For more information on when a claim is considered finally adjudicated, see M21-1, Part III, Subpart iv, 2.B.1.c.

V.iii.1.A.3.c.  Provisions of 38 CFR 3.660(b)

38 CFR 3.660(b) has two subsections which address different factual situations and which invoke a different concept of the term “year.”
The table below summarizes the provisions of 38 CFR 3.660(b)(1) and 38 CFR 3.660(b)(2).
Regulation
Provided Situation
Result of Situation
A claim is initially denied because a claimant’s income exceeds the MAPR or income limit, but the claimant later submits new evidence to establish entitlement for thesame annualized year.
Benefits may be awarded effective the beginning of that annualized year, if evidence of entitlement is received within the same or next calendar year.
A claim is initially denied because a claimant’s income exceeds the MAPR or income limit, but the claimant later submits new evidence to establish entitlement for thefollowing annualized year.
Benefits can be awarded effective the beginning of the next annualized year, if evidence of entitlement is received within that annualized year.
Important: The distinction between calendar years and annualized years is not relevant to Parents’ DIC cases because income is always counted on a calendar year basis in Parents’ DIC cases. The distinction is, however, critical in pension cases.
Note38 U.S.C. 5110(h), the statutory authority for 38 CFR 3.660(b)(1), specifies that income information to establish entitlement or increased entitlement must be received before the end of the “next” calendar year for VA to pay or increase pension for the initial year. For pension purposes, the “same” calendar year is the year in which the initial year ends, and the “next” calendar year is the year after that.

V.iii.1.A.3.d.  Definition: Satisfactory Evidence of Entitlement Within Specified Time Limits

38 CFR 3.660(b) describes establishing entitlement to benefits if satisfactory evidence is received within specified time limits.
The phrase satisfactory evidence of entitlement within specified time limitsmeans evidence adequate to support award action must be received and date stamped in VA by a specific date.
Example:
Situation:  A 65-year old Veteran files a pension claim that the RO receives on March 14, 2019.
  • Initial Year:  March 14, 2019, through March 31, 2020.
  • March 28, 2019:  The Veteran wins the lottery and receives $15,000.
  • August 7, 2019:  VA denies the initial claim because income exceeds the MAPR.
  • September 15, 2021:  The RO receives a VA Form 20-0995, Veteran’s Supplemental Claim Application, from the Veteran stating that pension should be awarded from March 14, 2019, because of high medical expenses paid during the initial year of entitlement.
  • September 23, 2021:  The RO sends the Veteran VA Form 21P-8416, Medical Expense Reportfor the period March 14, 2019, through March 31, 2020.
  • January 27, 2022:  The Veteran returns the completed VA Form 21P-8416.  The information furnished establishes that the Veteran’s medical expenses for the period March 14, 2019, through March 31, 2020, were sufficient to reduce income below the limit.
Result:  Because satisfactory evidence of entitlement was not received before January 1, 2022, VA cannot award benefits for the period March 14, 2019, through March 31, 2020.
The earliest date from which pension entitlement can be established is September 15, 2021 (with a October 1, 2021, payment date), if the Veteran establishes that income and net worth are acceptable from September 15, 2021.  September 15, 2021, through September 30, 2022, would then be considered the Veteran’s new initial year.
Reference:  For more information on initial year of entitlement, see M21-1, Part V, Subpart iii, 1.A.5.

V.iii.1.A.3.e.  Parents’ DIC Time Limit for Establishing Entitlement for the Initial Year

Income determinations for Parents’ DIC purposes are always made on a calendar-year basis.
If a Parents’ DIC claim is initially denied because income exceeds the limit, 38 CFR 3.660(b)(1) gives the parent the remainder of the calendar year during which entitlement would have been established, had income not been a bar, plus the next calendar year to furnish evidence establishing entitlement from the original effective date.
Example:
Situation:  A parent files a DIC claim on September 29, 2019.  The claims processor considers all of the parent’s calendar year 2019 income and compares that with the parent’s proportional 2019 income to determine entitlement.  Entitlement would be established from September 29, 2019, were it not for the fact that calendar year 2019 income and proportional income received on and after September 29, 2019, is above the limit set by law.  The parent’s claim is denied on November 18, 2019.
Result:  The parent has up to and including December 31, 2020, to submit satisfactory evidence showing that calendar year 2019 income or proportional income for the period September 29, 2019, through December 31, 2019, was within the limit.
Notes:
  • The date that VA denies the claim is irrelevant.  If the claim had not been denied until February 14, 2020 the parent still would have had only up to and including December 31, 2020, to clarify the 2019 IVAP (or proportional IVAP).
  • Because of the statutory time limit, prompt VA action and notification is imperative.

V.iii.1.A.3.f.  Parents’ DIC Time Limit for Establishing Entitlement for the Following Year

Per 38 CFR 3.660(b)(2), when income for the initial calendar year is above the limit set by law, the parent can establish entitlement for the following calendar year if satisfactory evidence of entitlement is received within the following calendar year.
Situation:  A parent files a DIC claim on September 29, 2019.  Entitlement would be established from September 29, 2019, were it not for the fact that 2019 calendar year income (and proportional income) exceeds the income limit.  The parent’s claim is denied on November 15, 2014.
Result:  The parent has up to and including December 31, 2020, to submit satisfactory evidence showing that calendar year 2020 income is within the limit.
Note:  The date VA denies the claim is irrelevant.

V.iii.1.A.3.g. Definition:  Initial Year for Pension and Time Limit for Establishing Entitlement for the Initial Year
Pension income reporting periods now generally coincide with the calendar year.  However, the initial year for a pension award extends from the effective date of the award (or the date of the Veteran’s death, if later than the effective date) to 12 months after the payment date.
Therefore, the initial year will range in length from 12 months plus the stub month (up to 13 months) and will not coincide with a calendar year.
Per 38 CFR 3.660(b), if a claimant is not shown to be entitled for the initial year, the claimant has through the end of the calendar year that follows the end of the initial year to submit satisfactory evidence of entitlement for the initial year.
References:  For a definition of

V.iii.1.A.3.h.  Considering a Veteran’s Disability Status After Original Claim Was Denied Because IVAP Exceeded MAPR     

When VA denies an initial Veterans Pension claim because IVAP exceeds the MAPR, the claim is not referred to the rating activity for a permanent and total (PT) disability rating determination.
If, within the 38 CFR 3.660(b) time limit, a Veteran establishes that initial-year IVAP was below the MAPR, then VA will make a rating determination of the Veteran’s disability status, if entitlement is otherwise shown.
If a Veteran turns 65, enters a nursing home or VA approved medical foster home, or is found disabled by Social Security during the initial year and establishes that initial-year IVAP was below the MAPR, VA must determine whether the Veteran has PT disability from the beginning of the initial year.

V.iii.1.A.3.i.  Example 1:  Pension Time Limit for Establishing Entitlement for the Initial Year- Veterans Pension

Situation:  VA receives an original Veterans Pension claim on March 14, 2019.  The Veteran receives recurring income which exceeds the pension MAPR, and the claim is denied on August 7, 2019.  The initial year extends from March 14, 2019, through March 31, 2020.
Result:  The Veteran has up to and including December 31, 2021 , to submit a claim along with satisfactory evidence of deductible expenses paid (or other income changes) during the period March 14, 2019 through March 31, 2020, for the purpose of reducing IVAP below the MAPR for the initial year.  (If entitlement is shown, the effective date will be March 14, 2019, with a payment date of April 1, 2019, because of 38 CFR 3.31).
Note:  The PMC or VSC must determine whether the Veteran has PT disability from March 14, 2019, if, before January 1, 2022, VA receives the income information establishing that initial-year IVAP was below the MAPR.  If the Veteran is determined to have PT disability (or age 65 status) effective from a later date, then that later date will be the beginning of the initial year.
Reference:  For more information on effective dates, see M21-1 Part V, Subpart iii, 1.A.6.

V.iii.1.A.3.j.  Example 2:  Pension Time Limit for Establishing Entitlement for the Initial Year- Survivors Pension

Situation:  The Veteran died February 9, 2019.  The Veteran was not in receipt of VA benefits.  The Veteran’s surviving spouse files an original Survivors Pension claim on March 2, 2019, but the initial claim is denied on March 14, 2019, because the surviving spouse received one-time countable income on February 23, 2019.  The initial year is February 9, 2019, through February 29, 2020.
Result:  The surviving spouse has up to and including December 31, 2021, to submit a claim and evidence of deductible expenses paid during the period February 9, 2019, through February 29, 2020, or other evidence that initial-year IVAP was below the MAPR.  If income evidence is received before January 1, 2021, benefits, if otherwise payable, can be awarded effective February 1, 2019 (with a payment date of March 1, 2019, because of  38 CFR 3.31).

V.iii.1.A.3.k.  Pension Time Limit for Establishing Entitlement for the Following 12-Month Period

Per 38 CFR 3.660(b), when IVAP for the initial year exceeds the MAPR, the claimant can establish entitlement for the “following 12-month period” (that is, the 12-month period that follows the initial year) if satisfactory evidence of entitlement is received within that following 12-month period.
In this situation, the beginning of the following 12-month period becomes the beginning of a new initial year. When a new initial year is established, initial year time limits apply.
Note:  For pension claims, the time limit to establish entitlement for the following 12-month period is shorter than the time limit to establish entitlement for the initial year.

V.iii.1.A.3.l. Initial Year Periods Following a Break in Entitlement

When entitlement to pension is reestablished on a new date after break in entitlement, the claimant is entitled to a new initial year.  A new entitlement date denotes a new initial year.
Example:
  • A Veteran’s Pension benefits are stopped effective February 1, 2019 because the IVAP exceeds the MAPR.
  • On April 3, 2020 the Veteran submits a claim to reestablish entitlement to Pension.
  • His IVAP continues to exceed the MAPR as of February 1, 2019. However, based on his claim, his IVAP is less than the MAPR as of April 3, 2020.
  • Pension is granted effective April 3, 2020, payable May 1, 2020.  His new initial year of entitlement is April 3, 2020 through April 30, 2021.

V.iii.1.A.3.m.  Time Limits and Payment Dates for Initial Year and Following 12-Month Period for Pension Claims

The table below contains examples for pension claims of
  • the time limits for VA receiving income information for the
    • initial-year entitlement, and
    • following 12-month period entitlement, and
  • payment dates for
    • initial-year entitlement, and
    • following 12-month period entitlement.
If a claim is received on …
Then the initial year is …
And the following 12-month period is …
Income information for initial-year entitlement must be received before …
Income information for following 12-month period entitlement must be received before …
Payment date for initial-year entitlement is …
Payment date for following 12-month period entitlement is …
January 13, 2019
January 13, 2019 through January 31, 2020
February 1, 2020, through January 31, 2021.
January 1, 2022.
February 1, 2021.
February 1, 2019.
February 1, 2020.
April 3, 2019
April 3, 2019, through April 30, 2020
May 1, 2020, through April 30, 2021.
January 1, 2022.
May 1, 2021
May 1, 2019.
May 1, 2020.
Important: If the claimant submits income information before the time limit for the initial-year of entitlement expires, but after the time limit for the following 12-month period of entitlement expires, benefits are payable from the following 12-month period of entitlement only if the claimant is also entitled for the initial year. Otherwise, entitlement would be based on date of receipt of either the initial or supplemental claim (whichever was used to reopen the evidentiary record). The date of receipt of that claim would start a new initial period. When a new initial year is established, initial year time limits apply.

V.iii.1.A.3.n.  Example 1:  Pension Time Limit for Establishing Entitlement for the Following 12-Month Period – Veterans Pension

Situation:  A Veteran who is receiving Social Security disability benefits files an original pension claim that VA receives March 14, 2019  However, the Veteran has recurring income that causes expected IVAP to exceed the MAPR, and the claim is denied because IVAP exceeds the MAPR.  The initial year extends from March 14, 2019, through March 31, 2020.  The following 12-month period extends from April 1, 2020, through March 31, 2021.
Result:  The Veteran has until  March 31, 2021, to submit a claim and satisfactory evidence establishing that IVAP for the period April 1, 2020, through March 31, 2021, is below the MAPR.  If VA receives the evidence before April 1, 2021, benefits can be awarded with a payment date of April 1, 2020.
Reference:  For more information on effective dates, see M21-1, Part V, Subpart iii, 1.A.6.

V.iii.1.A.3.o.  Example 2:  Pension Time Limit for Establishing Entitlement for the Following 12-Month Period – Survivors Pension

Situation:  The Veteran died on February 9, 2019.  The surviving spouse files a pension claim that VA receives on February 13, 2019.  The surviving spouse reports receiving retirement benefits of $12,000 per year.  The claim is denied because IVAP exceeds the MAPR.
Result:  The surviving spouse has up to and including December 31, 2021, to submit medical expenses or other evidence establishing that IVAP for the period February 9, 2019, through February 29, 2020, was below the MAPR.  However, the surviving spouse only has up to and including February 28, 2021, to submit medical expenses or other evidence establishing that IVAP for the period March 1, 2020, through February 28, 2021, was below the MAPR.
Note:  If the surviving spouse submitted the income information after February 28, 2021, but before January 1, 2022, benefits could  have been payable from March 1, 2020, only if the surviving spouse was also entitled for the initial year (February 9, 2019, through February 29, 2020).  Otherwise, entitlement would be based on date of receipt of the claim that was used to reopen the evidentiary record.  The date of receipt of that claim would start a new initial period.

V.iii.1.A.3.p.  Time Limit to Furnish Amended Income Information to Increase Rate

For information about the time limit for a Veteran to furnish amended income information to increase his/her rate, see M21-1, Part V, Subpart iii, 1.H.1.

.

4.  Pension and Parents’ DIC Award Effective Dates and Payment Dates


Introduction

This topic contains information on pension and Parents’ DIC award effective dates and payment dates, including

Change Date

February 19, 2019

V.iii.1.A.4.a.  Definition:  Effective Date or Entitlement Date

The effective date (or entitlement date) is the date a claimant is entitled to benefits under the existing law without regard to 38 CFR 3.31.

V.iii.1.A.4.b.  Effective Dates for Pension and Parents’ DIC Awards

Generally, the effective date for an original or new pension or Parents’ DIC award is the date of the receipt of the initial claim, per 38 CFR 3.400.

V.iii.1.A.4.c.  Retroactive Effective Dates Due to a Veteran’s PT Disability

Under 38 CFR 3.400(b)(1), if all of the conditions listed below are met, a pension award may be retroactive for up to one year prior to the date of receipt of the initial claim, but not earlier than the date of PT disability.
  • The Veteran files a claim for a retroactive award within one year from the date of PT disability.
  • The Veteran was prevented from applying for pension by a disability.  The preventing disability
    • must not be of misconduct in origin, and
    • need not be the PT disability.
  • The disability prevented the Veteran from filing the initial pension claim for at least the first 30 days immediately following the date on which he/she acquired PT disability.

V.iii.1.A.4.d.  Retroactive Effect Dates to Pension Due to Liberalizing Law

Under Public Law  (PL) 107-103 subject to 38 CFR 3.114, Pension may be awarded to a Veteran retroactive for up to one year prior to the date of receipt of the initial claim if any of the following criteria are continuously met from September 17, 2001 until the date of claim:
  • Age 65; or
  • Found disabled by SSA for the purpose of Social Security Disability benefits; or
  • a patient in a nursing home for long-term care because of disability
Important: After entitlement to pension has been granted a claims processor should send a development letter to request income, expense information and a complete application to determine entitlement from one year prior to the date of receipt. Do not establish an end product for control. Inform the Veteran that he/she has one year to establish entitlement to the earlier date.

5.  General Information on the Payment Date Under 38 CFR 3.31


Introduction

This topic contains general information on the payment date under 38 CFR 3.31, including

Change Date

February 19, 2019

V.iii.1.A.5.a.  Definition: Payment Date

The payment date is the date an award is effective after application of 38 CFR 3.31.
Example:  If a Veteran is determined to have a PT disability from March 14, the effective date is March 14 and the payment date is April 1.

V.iii.1.A.5.b.  Provisions of 38 CFR 3.31

Under 38 CFR 3.31, payment of monetary benefits based on original, new, initial, supplemental, or increased awards of pension or Parents’ DIC may not be made for any period before the first day of the calendar month, following the month in which the award would otherwise have been effective.
For purposes of this provision, an increased award is an award that is increased because of
  • an added dependent
  • an increase in disability, or
  • a reduction in IVAP.
Notes:
  • 38 CFR 3.31 became effective October 1, 1982.
  • A reduction in IVAP can result from a change in income and/or deductible expenses.

V.iii.1.A.5.c.  History of 38 CFR 3.31

PL 97-253, The Omnibus Budget Reconciliation Act of 1982 (OBRA), provided the statutory authority for 38 CFR 3.31.  It was codified as 38 U.S.C. 5111.
The Omnibus Act was intended to save money by withholding payment for the initial month of entitlement or stub month.  However, this deceptively simple provision has given rise to numerous questions as to its applicability in specific situations and as to its effect on income-counting rules and payment dates.

V.iii.1.A.5.d.  Determining Whether to Apply 38 CFR 3.31

Follow the steps in the table below to determine whether to apply 38 CFR 3.31.
Step
Action
1
Determine the effective date without respect to 38 CFR 3.31.
2
Determine the type of award. If the award is
  • an original or new award (regardless if awarded due to an initial or supplemental claim, or higher-level review), 38 CFR 3.31 does apply
  • an increased award, go to Step 3, or
  • another type of award38 CFR 3.31 does not apply.
3
Is the increase in payment due to an added dependent, an increase in disability, or a reduction in IVAP?
Important: The provisions of 38 CFR 3.31 do not apply to certain types of awards.
Reference: For information on specific exclusions to the payment period commencement under 38 CFR 3.31, see M21-1, Part V, Subpart iii, 1.A.6.

V.iii.1.A.5.e.  Determining the Payment Period Commencement After an Election

When an election of current-law pension from Section 306 Pension or Old-Law Pension results in an increased rate, the new rate commences as of the first of the month following the date of the election.
Elections between disability compensation and pension (including assumed elections) are subject to 38 CFR 3.31, but 38 CFR 3.31 does not apply if an assumed election results solely from a legislative change, such as when a cost-of-living adjustment (COLA) under 38 CFR 3.27 makes an election of the other benefit advantageous.

V.iii.1.A.5.f.  Terminating Protected Pension When Income Exceeds the Limit

If Section 306 Pension or Old-Law Pension is terminated because income exceeds the limit, current-law Pension is effective and payable January 1st of the next year, if the beneficiary is otherwise entitled.
Note:  The award of current-law pension is not an election and is not subject to 38 CFR 3.31.

V.iii.1.A.5.g.  Rec-omputing Awards Based on New Income Information

Under 38 CFR 3.660(b)(1), a claimant or beneficiary has until the end of the calendar year that follows a calendar year or the end of an initial period to furnish new income information and get a retroactive increase.  Until the time limit has expired, the pension or parents’ DIC payment amount (“rate”) is always provisional.
Important:  The adjustment of a provisional rate does not constitute an increased rate for purposes of 38 CFR 3.31, unless the change in income results in an increased rate compared to the month immediately preceding the date that the income change is effective.
If a change in income does cause an increased rate (compared to the month immediately preceding the date that the income change is effective), 38 CFR 3.31applies.  In this situation, carry forward the preceding month’s rate for the so-calledstub month.  The stub month is the month during which payment of the increased rate is barred by 38 CFR 3.31.
Note:  In some situations, a stub month can be an entire month in length.

V.iii.1.A.5.h.  Example 1:  Re-computing Awards Based on New Income Information

Situation:  A Veteran’s pension rate for the period January 1, 2019, through November 30, 2019, is $200 per month.  Effective December 1, 2019, the rate increases to $215 per month due to the COLA.  The pension rate is reduced to $100 per month for the period January 1, 2020, through December 31, 2020, because of the removal of 2019 unreimbursed medical expenses (UMEs).
In March 2021, the Veteran reports calendar-year 2020 medical expenses.
After re-computation, it is determined that the Veteran is entitled to $150 per month for the period January 1, 2020, through December 31, 2020.
Result:  Pay the increase from January 1, 2020, because the rate payable on that date ($150) is less than the December 2019 rate ($215).  The fact that the $150 rate is greater than the former January 1, 2020, rate ($100), based on estimated income is irrelevant.
Rationale:  There has not been an increased award within the meaning of 38 CFR 3.31.

V.iii.1.A.5.i.  Example 2:  Re-computing Awards Based on New Income Information

Situation:  A Veteran’s Pension rate for the period January 1, 2019, through November 30, 2019, is $200 per month.  Effective December 1, 2019, the rate increases to $215 per month due to the COLA.  The rate is reduced to $100 per month for the period January 1, 2020, through December 31, 2020, because of the removal of 2019 UMEs.
In March 2021 the Veteran reports calendar-year 2020 medical expenses.  After re-computation, it is determined that the Veteran is entitled to a rate of $250 per month for calendar-year 2020.
Result:  Do not increase the $250 rate until February 1, 2020.  Adjust the January 1, 2020, payment to $215 (the December 2019 amount).
Rationale:  There has been an increased award as defined by 38 CFR 3.31.

V.iii.1.A.5.j.  Handling a MAPR and Income Change Effective the Same Date

In a pension case, when an income change necessitates application of 38 CFR 3.31, and the effective date of the income change coincides with the date of a change in the MAPR, strict application of the procedures outlined in this topic deprives the beneficiary of the benefit of the new MAPR for the initial month.
To afford the beneficiary the benefit of the MAPR increase, when 38 CFR 3.31 is a factor and the effective dates of an income change and MAPR change coincide, carry forward the deductible expenses and non-Social Security income (as opposed to the pension rate) from the month immediately preceding the income/MAPR change.
If the beneficiary receives recurring Social Security income, count the post-COLASocial Security rate from the effective date of the COLA.
If the beneficiary receives a benefit other than Social Security which has a COLA increase effective the same date as the MAPR change, carry forward the rate of the other benefit (as opposed to the VA pension rate) from the month preceding the income/MAPR change (that is, November for a December 1 COLA).
Note:  Social Security is the only type of income that is charged at the post-COLA rate in this situation.

V.iii.1.A.5.k.Applying 38 CFR 3.31 When Effective Dates of the MAPR and Income Change Coincide

When the effective dates of the MAPR change and beneficiary’s income change coincide, the basic question is whether 38 CFR 3.31 would have been applied had the same income change taken place on a date that did not coincide with the Social Security COLA and change in the VA pension MAPR.
One way of determining whether 38 CFR 3.31 should be applied is to complete the initial (December 1st) Income screen twice.
Follow the steps in the table below to determine if 38 CFR 3.31 must be applied.
Step
Action
1
Complete the Income screen with
  • all non-Social Security income and expenses from the preceding month, and
  • the post-COLA Social Security rate.
2
Enter the actual December 1st income, with the new deductible expenses from the current EVR.
Result: If a lower IVAP results the second time, 38 CFR 3.31 must be applied.

V.iii.1.A.5.l.  Example:  Handling a MAPR and Income Change Effective the Same Date

Situation:  A Veteran was paid pension of $446 per month from January 2019 through November 2019 based on retirement income of $400 per month ($4,800 per year).  Effective December 1, 2019, the pension rate increased to $481 because of the COLA.
In February 2020, the Veteran reports that his retirement income was reduced to $350 per month on December 1, 2019.  The re-computed IVAP effective December 1, 2019, is $4,200, which entitles the Veteran to a monthly rate of $531 effective December 1, 2019.
Result/Rationale:  Because there is an increase in the monthly rate compared to the month immediately preceding the month of the income change ($531 for December 2019 compared to $446 for November 2019) and part of the increase is attributable to the reduction in IVAP, 38 CFR 3.31 applies.  Therefore, the $531 rate cannot be paid until January 1, 2020.  If the claims processor carries forward the November 2019 rate ($446) for the month of December 2019 however, the Veteran will be deprived of the benefit of the MAPR increase effective December 1, 2019.
To compensate for this, carry forward the November 2019 IVAP of $4,800 for the month of December 2019.  The award should pay
  • $446 based on IVAP of $4,800 effective November 1,2019
  • $481 based on IVAP of $4,800 effective December 1, 2019 and
  • $531 based on IVAP of $4,200 effective January 1, 2020.

V.iii.1.A.5.m.  Handling Income That Exceeds the MAPR for the Initial Year

In a pension case, the initial year extends from the effective date of the award (or later date of the Veteran’s death) to one year from the payment date.
If payment is barred for the initial year because income exceeds the MAPR but income for the following 12-month period is below the MAPR, pay from the beginning of the following 12-month period.  Although this is an original award, 38 CFR 3.31 has already been factored into the initial year.

V.iii.1.A.5.n.  Example:  Handling Income Over the MAPR for the Initial Year

Situation:  A 65-year old Veteran files an initial pension claim that VA receives March 14, 2019.  VA is about to award Pension, but before the award is authorized, the Veteran reports her spouse started working, with the first check received on March 28, 2019.  The Veteran expects her spouse to receive wages of $1,400 each month.  The  initial claim is denied because income exceeds the MAPR.
During March 2020 the Veteran submits a claim and reports that her spouse was fired at the end of calendar-year 2019.  The total wages received were $14,000.  (The Veteran reported no medical expenses and did not claim special monthly pension.)  Her income still exceeds the MAPR for the initial year extending from March 14, 2019, through March 31, 2020.
Result:  If the Veteran expects no income after December 2019, the original award can be made with a payment date of April 1, 2020.
Reference:  For more information on this type of recalculation of income, see 38 CFR 3.271(a)(1).

6.  Specific Exclusions to Payment Period Commencement Under 38 CFR 3.31


Introduction

This topic contains information on specific exclusions to the payment period commencement under 38 CFR 3.31, including

Change Date

February 19, 2019

V.iii.1.A.6.a.  Award Adjustments

An award may be reduced or benefits may be withheld for a variety of reasons, such as
  • a Veteran’s hospitalization
  • apportionment
  • incarceration, or
  • recoupment of an overpayment.
In some cases, the award is subsequently restored to the preadjustment rate because the circumstances that necessitated the adjustment no longer exist.  For example, the Veteran was discharged from the hospital or is no longer incarcerated.
In such cases, 38 CFR 3.31 does not apply to restoration of the preadjustment rate, per 38 CFR 3.31(c)(3).

V.iii.1.A.6.b.  Example 1:  Award Adjustments

Situation:  A Veteran’s Pension has been reduced because a minor child attained age 18.  VA Form 21-674, Request for Approval of School Attendance, is received showing the child’s continuous enrollment in an approved school from age 18.
Result/Rationale:  If entitlement exists retroactively to the date the child was removed, with no increase over the prior rate, the award to restore additional benefits for the child is not an “increased award” for purposes of 38 CFR 3.31.  Adjust the award from the date of reduction.

V.iii.1.A.6.c.  Example 2:  Award Adjustments

Situation:  A Veteran without dependents whose pension was reduced under 38 CFR 3.551(c) is now discharged from nursing home care at VA expense.
Result/Rationale:  Restoration of the full pension benefit is not an
“increased award” within the meaning of 38 CFR 3.31.  It is an adjustment to restore the previous rate.  Adjust the award effective the date of discharge.
Note:  The same principle applies if aid and attendance (A&A) benefits are reduced under 38 CFR 3.552.

V.iii.1.A.6.d. Example 3:  Award Adjustments

Situation:  A part of the Veteran’s Pension is being apportioned for the Veteran’s estranged spouse.
Result/Rationale 1:  If the apportionment is terminated and the apportioned amount is restored to the Veteran, 38 CFR 3.31 does not apply.  This is viewed as a restoration of benefits.
Result/Rationale 2:  If the estranged spouse had income that was being counted against the Veteran and the termination of the apportionment results in an increased rate of pension, 38 CFR 3.31 does apply.  In this instance, the increased award would be at least partially attributable to a reduction in countable income.

V.iii.1.A.6.e.  Reduction or Discontinuance of an Award After Receipt of Non-recurring Income

If a pension beneficiary receives non-recurring income, the income is counted on the award for 12 months.  However, the effect on pension payments depends on whether the non-recurring income causes discontinuance or only reduction of the running award.
Use the table below to determine when to resume the benefits.
If the award must be …
Then …
reduced
resume the pre-adjustment rate exactly 12 months from the date of the reduction.
discontinued
benefits cannot be resumed for 13 months.
Note: This is sometimes referred to as the “13- month rule.” For more information, seeVAOPGCPREC 02-89.

V.iii.1.A.6.f.  Example 1: 38 CFR 3.31 and Nonrecurring Income – Discontinuance of Award

Situation:  A Veteran receives a one-time payment of income on August 7, 2019.  The amount of the payment causes the Veteran’s income to exceed the MAPR.  The award is discontinued effective September 1, 2019.
Result:  The earliest effective date for a new award is September 1, 2020, with a payment date of October 1, 2020.

V.iii.1.A.6.g.  Example 2: 38 CFR 3.31 and Non-recurring Income – Reduction of Award

Situation:  A Veteran receives a one-time payment of income on August 7, 2019.  Pension is reduced for the period September 1, 2019, to September 1, 2020.
Result/Rationale:  The pension rate change when it occurs on September 1, 2020, will not be an increased award based on a reduction of income.  The September 1, 2020, award line represents a restoration of benefits.

V.iii.1.A.6.h.  Increases Resulting Solely from the Enactment of Legislation

Pension COLA increases under 38 CFR 3.27 and other increases attributable to legislation are not subject to 38 CFR 3.31.
Reference:  For more information on exceptions to the delayed payment provisions of the Omnibus Act, see 38 CFR 3.31(c).
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