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M21-1, Part V, Subpart iii, Chapter 1, Section F – Dependents for Current-Law Pension Purposes

Overview


In This Section

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

1.  Establishing Dependents for Current-Law Pension Purposes


Introduction

This topic contains information and the special requirements for establishing dependents for current-law pension purposes, including

Change Date

December 6, 2016

V.iii.1.F.1.a.  Establishing Dependents for Current-Law Pension Purposes

M21-1, Part III, Subpart iii, 5.A.1, explains the requirements for establishing a person as a spouse or child of a Veteran.  However, even if the child or spouse relationship is established, it does not necessarily mean that the person can be established as a dependent for current-law pension purposes.
Reference:  For more information about how a dependent’s income is counted on a current-law pension award, see M21-1, Part V, Subpart iii, 1.F.2.

V.iii.1.F.1.b.  Establishing a Spouse for Current-Law Pension Purposes

Use the table below to determine if a spouse can be established for current-law pension purposes, once the marriage between the Veteran and spouse has been established.
If the Veteran and spouse physically live …
Then, for current-law pension purposes, the spouse is …
together in the same residence
a dependent.
apart for reasons not related to marital discord
a dependent, regardless of whether or not the Veteran contributes to the support of the spouse.
apart for reasons related to marital discord, but the Veteran makes reasonable contributions to the support of the spouse
a dependent.
apart for reasons related to marital discord, and the Veteran does not make reasonable contributions to the support of the spouse
not a dependent, per 38 CFR 3.23(d).
Notes:
  • Two examples of reasons for a Veteran and spouse to live apart for reasons not related to marital discord would be
    • family obligations, or
    • medical needs.
  • In unusual situations, a Veteran and spouse might live at the same residence, but the spouse is not a dependent.  For example, a Veteran and spouse may separate due to marital discord but reside separately in the same residence for financial reasons while maintaining separate finances and live as single individuals.
References:  For information on

V.iii.1.F.1.c.  Establishing a Child for Current-Law Pension Purposes

Use the table below to determine if a child, including an adopted child or stepchild, can be established as a dependent for current-law pension purposes once the child relationship has been established.
Reference:  For information on establishing a child’s relationship to a Veteran or surviving spouse, see M21-1, Part III, Subpart iii, 5.G.
If the child …
Then, for current-law pension purposes, the child is …
lives with the Veteran
a dependent.
does not live with the Veteran, but is still in the Veteran’s custody for current-law pension purposes
a dependent, regardless of whether or not the Veteran contributes to the child’s support.
  • does not live with the Veteran, and
  • is not in the Veteran’s custody for current-law pension purposes, but the Veteran contributes to the child’s support
a dependent.
Reference:  For more information on reasonable support contributions, seeM21-1, Part V, Subpart iii,1.F.1.e.
  • does not live with the Veteran, and
  • is not in the Veteran’s custody for current-law pension purposes, and
  • does not receive contributions of support from the Veteran
not a dependent, per 38 CFR 3.23(d).
lives with the surviving spouse
a dependent.
does not live with the surviving spouse, but is still in the surviving spouse’s custody for current-law pension purposes
a dependent.
  • does not live with the surviving spouse, and
  • is not in the surviving spouse’s custody for current-law pension purposes
not a dependent, per 38 CFR 3.23(d).

V.iii.1.F.1.d.  Establishing Custody of a Child for Current-Law Pension Purposes

Presume that the Veteran or surviving spouse has custody of a child regardless of where the child lives, unless there is evidence that the Veteran or surviving spouse has been divested of the legal obligation to support the child or unless there is evidence that the surviving spouse is not the child’s parent or legal custodian.
Resolve unusual questions concerning child custody by securing a legal opinion from the Regional Counsel, per M21-1, Part III, Subpart iii, 5.A.3.
Notes:
  • A Veteran or surviving spouse does not actually have to be supporting a child for the child to be in the Veteran’s or surviving spouse’s custody for current-law pension purposes.  It is sufficient that the Veteran or surviving spouse be under a legally imposed obligation to support the child.
  • The issue of actual support is relevant only for Veteran’s claims and only if the child is not in the Veteran’s custody for current-law pension purposes.
  • A child is a surviving child and eligible for current-law pension in his/her own right if
    • the child’s parent or legal custodian is not a surviving spouse, and
    • the child is not in the surviving spouse’s custody for Survivors Pension purposes.
References:  For more information on

V.iii.1.F.1.e.  Considering Support Contributions to a Child

A child who is not in a Veteran’s custody can be established as a dependent for current-law pension purposes if the Veteran contributes to the child’s support.
Support contributions do not have to be direct cash payments.  Examples of non-cash support are
  • housing
  • food
  • clothing, and
  • medical expenses.
Note:  A Social Security payment made directly from the Social Security Administration (SSA) to the child is not considered to be support.  The payment is not being made from the Veteran’s own assets.

V.iii.1.F.1.f.  Determining Eligibility When the Physical Location of a Dependent Is Unknown

Do not pay benefits for any dependent whose physical location is unknown since there is no way of establishing that the claimed dependent is alive.
Exception:  If the Veteran is making child support payments through a court or state agency for a child whose physical location is unknown, additional benefits may be paid for the child, provided the dependent is otherwise established for Department of Veterans Affairs (VA) purposes.

2.  Counting the Income of Dependents


Introduction

This topic contains information on counting the income of dependents, including

Change Date

June 18, 2015

V.iii.1.F.2.a.  General Information on Counting the Income of Dependents

The income-counting procedures apply equally to counting the income of dependents.
Exception:  There is one major exception to the general rule that all income must be counted for 12 months.  A dependent’s income does not
have to be counted for a full 12 months if the dependent is removed from the award.  The dependent’s income is removed with the dependent, even if this results in the income being counted for less than 12 months.
Reference:  For more information on counting income for current-law pension, seeM21-1, Part V, Subpart iii, 1.E.6.

V.iii.1.F.2.b.  Counting the Income of a Spouse

If the spouse is established as a dependent for current-law pension purposes, the Veteran’s income for VA purposes (IVAP) automatically includes the spouse’s income regardless of whether it is actually available to the Veteran.

V.iii.1.F.2.c.  Examples:  Counting the Income of a Spouse

Example 1:
Situation:
  • The Veteran and spouse physically live apart for reasons related to marital discord.
  • The Veteran’s only income is VA pension and Social Security of $900 per month.
  • The spouse earns $8,000 per year.
  • The Veteran does not contribute to the spouse’s support and is not receiving additional benefits for a spouse.
  • On October 28, 2013, the Veteran starts sending $50 a month to the spouse who physically lives apart for reasons related to marital discord.
Result:  Discontinue the Veteran’s award effective November 1, 2013, because income exceeds the maximum annual pension rate (MAPR).  The Veteran’s contributions to the spouse who physically lives apart for reasons related to marital discord make the spouse a dependent for current-law pension purposes from the date of the first contribution (October 28, 2013).  Consequently, the spouse’s income is countable from the same date.  Apply the end-of-the-month rule for income-counting to arrive at a November 1, 2013, stop date.
Example 2:
Situation:  Apply the same facts as the example above.  However, after having benefits discontinued because income exceeds the MAPR, the Veteran reports that contributions to the spouse ceased on January 22, 2015.
Result:  Removed the spouse and resume the award with a payment date of February 1, 2015 (because of 38 CFR 3.31), to pay at the single Veteran MAPR based on the Veteran’s income only.
Reference:  For information on the time limits for claiming an increased rate of pension due to the loss of a dependent, see M21-1, Part V, Subpart iii.1.F.3.i.

V.iii.1.F.2.d.  Counting the Income of a Dependent Child

A dependent child’s income is countable in computing a Veteran’s or surviving spouse’s IVAP if the income is reasonably available to the Veteran or surviving spouse.
A dependent child’s income is reasonably available if it can readily be applied to meet the Veteran’s or surviving spouse’s expenses necessary for reasonable family maintenance, per 38 CFR 3.23(d)(6).
Use the table below to determine if the dependent child’s income is countable.
If a child’s income is payable …
Then presume that a child’s income is …
  • the Veteran or surviving spouse, or
  • someone residing with the Veteran or surviving spouse
  • reasonably available to the Veteran or surviving spouse, and
  • countable.
someone not residing with the Veteran or surviving spouse
  • not reasonably available to the Veteran or surviving spouse, and
  • not countable.

V.iii.1.F.2.e.  Examples:  Counting the Income of a Dependent Child

Example 1:
Situation:  A child remains in the Veteran’s legal custody, but the child actually lives with an aunt.  The Veteran establishes that the child’s Social Security check is payable to the aunt.
Result:  Although the Veteran can receive additional benefits for the child, the child’s Social Security is unavailable to the Veteran and should not be counted in determining the Veteran’s IVAP.
Example 2:
Situation:  The Veteran provides no support for a child.  The child goes to live with an aunt.  This is an informal arrangement and the Veteran is not divested of legal custody.  The child receives Social Security of $150 per month.  The Veteran’s spouse lives in the same household with the Veteran and is payee of the child’s Social Security check.
Result:  The Veteran is entitled to additional benefits for the child.  The child’s income is available to the Veteran and is considered in computing the Veteran’s IVAP.
Example 3:
Situation:  A 21-year old schoolchild lives with her boyfriend in a different state from her mother, the surviving spouse.  The child works and goes to school.  The child does not send money to her mother.
Result:  The surviving spouse is entitled to additional benefits for the child.  (In this situation, the child is considered a dependent child of the surviving spouse; the child is not entitled to benefits in her own right.)  The child’s income is unavailable to the surviving spouse and should not be counted in determining the surviving spouse’s IVAP.

V.iii.1.F.2.f.  Mixed Availability of a Dependent Child’s Income

It is possible that part of a dependent child’s income could be considered available to the Veteran or surviving spouse, while the remainder might be considered unavailable, and therefore, not countable.
Example:  A child remains in the Veteran’s legal custody, but actually lives with a grandmother.  The child’s Social Security check is payable to the grandmother, but income from a trust fund is payable to the Veteran as guardian of the child.  The child’s Social Security is unavailable to the Veteran, but the trust fund income is available to the Veteran.

V.iii.1.F.2.g.  Developing Availability of Dependent Children’s Income

Use VA Form 21-0571, Application for Exclusion of Children’s Incomefor developing availability of dependent children’s income.
If it is determined that a child’s income is available to a Veteran or surviving spouse, consider whether all or part of the income can be excluded on the basis of the
  • child’s earned income exclusion
  • post-secondary educational expenses exclusion, or
  • hardship exclusion.

V.iii.1.F.2.h.  Counting the Income of an Unestablished Dependent

Benefits may be awarded without resolving the status of a claimed dependent; however, it may be necessary to count a dependent’s income even if the dependent cannot be established.
When evidence necessary to establish the dependent has not been submitted within the control period, determine the claimant’s MAPR without consideration of the claimed dependent, and count the claimed but unestablished dependent’s income.
Notes:
  • Deny the claim or discontinue the award if the claimant’s or beneficiary’s income exceeds the MAPR.
  • For Veterans Service Network (VETSNET) Awards processing, enter the unestablished dependent’s income in the “Unestablished Dependent’s Annual Income” field as “other” income of the primary beneficiary.
  • Deny the claim or discontinue the award if the claimant’s or beneficiary’s income exceeds the MAPR
    • including the unestablished dependent’s income, but
    • excluding the additional amount for the unestablished dependent.
Reference:  For more information on processing awards in VETSNET Awards, see the VETSNET Awards User Guide.

V.iii.1.F.2.i.  Example: Counting the Income of an Unestablished Dependent

Example:
Situation:  A Veteran’s application for pension, received July 29, 2014, shows that the Veteran is married and that the Veteran’s spouse expects to receive earnings of $5,000 per year.  The Veteran has no income.  The current MAPR is $12,652 or a Veteran without dependents and $16,565 for a Veteran with one dependent.
On August 7, 2014, the pension management center (PMC) writes to the Veteran requesting documentation concerning the spouse’s previous marriage.  No response is received from the Veteran within 30 days.  All other evidence needed to make an award is of record.
Result:  Follow the steps in the table below to adjudicate the claim.
Step
Action
1
Make the award using the single Veteran MAPR ($12,652) and counting “other” income of $5,000.
2
  • Count the $5,000 in the “Unestablished Dependent’s Annual Income” field (in VETSNET Awards)
  • flash the electronic claims folder (eFolder).
3
  • Send a letter to the Veteran explaining the basis for the award
  • request the dependency evidence, and
  • advise the Veteran that if the requested dependence evidence is submitted, VA will adjust the award.

V.iii.1.F.2.j.  Resolving the Status of a Dependent

When an award is made that includes the income of an unestablished dependent, send a locally-generated letter
  • advising the claimant of the basis for the award, and
  • inviting the claimant to submit the evidence necessary to resolve the status of the dependent.
If such evidence is received, add the dependent or remove the income, as appropriate.

V.iii.1.F.2.k.  Failure to Resolve the Income of Dependents

Do not award benefits in any current-law pension case unless the income of the claimant, and all actual or potential dependents, is of record.  If the claimant fails to furnish this information, deny the claim for failure to furnish requested evidence.
If a beneficiary with a running award reports a new dependent whose income is questionable, send the beneficiary a notice of proposed adverse action, and advise the beneficiary that failure to furnish complete income information for the dependent will result in termination of the pension award.
Use the table below to determine how to proceed if the required information is not received.
If after 60 days …
And …
Then …
evidence to establish a dependent is not received
the dependent’s income will not reduce the Veteran’s rate
  • do not include the dependent on the award,
  • notify the Veteran that
    • the dependent could not be added,
    • the information required to add the dependent, and
    •  to notify VA if there are any changes in the dependent’s income or net worth, and
  • clear the end product.
evidence to establish a dependent is received
the dependent’s income is still questionable
terminate the award effective the first of the month after the month in which the event changing the dependency status of the Veteran occured.
evidence to establish a dependent is not received
the dependent’s income is questionable
terminate the award from the first of the month after which verification of the Veteran’s dependency status was last received.

V.iii.1.F.2.l.  Reallocation of Social Security When a Family Member Is Removed

If Social Security beneficiaries are receiving the maximum family benefit, there is generally a reallocation of benefits when a member of the family loses entitlement.  The total benefit is usually reallocated equally to the remaining family members.
Assume Reallocation for Pension
If Social Security is received by three or more family members, at least one of whom is a child under age 18 at the time of award preparation, retain the Social Security income on future award lines when a dependent entitled to Social Security benefits is removed.  This assumes reallocation of Social Security benefits among the remaining entitled dependents, including the spouse.
Informing the Beneficiary
No controls are necessary to verify the future IVAP.  However, when the initial award is made reallocating dependents’ income, inform the beneficiary using the following statements:
“Your records show that you have dependents in receipt of Social Security benefits.  In an effort to avoid an overpayment of VA benefits, we are projecting that your Social Security family benefit will not decrease as each child is removed from your award.  You must notify us of any and all changes in the Social Security rates for members of your family by furnishing a statement from the Social Security Administration showing the change in your Social Security benefit when a child is no longer on their record.  We will then adjust your VA benefit accordingly and award any retroactive amount due.”
Note:  If evidence is received that the assumed Social Security income is not correct, adjust IVAP as of the first of the month after the month during which the dependent is removed.

V.iii.1.F.2.m.  Examples:  Reallocation of Social Security When Family Member Removed

Example 1:
Situation:  A Veteran has a spouse and three dependent children in his custody below the age of 18 years.  The spouse and three children each receive $75 monthly from Social Security, totaling $300 for the dependents, and the Veteran receives $300, for a total of $600 a month (an IVAP of $7,200).
Result:  When preparing the initial award, the IVAP effective on the 18th birthday of the oldest child reflects that the $300 is assumed to be reallocated to the three remaining dependents.  In other words, continue the $7,200 IVAP when the child is removed.  For the IVAP as of the next oldest child’s birthday, apply the same procedure.  Continue to pay based on IVAP of $7,200 and attribute Social Security of $150 to each dependent.
Example 2:
Situation:  Apply the same facts as the example above.  However, evidence is received from the Veteran that the reallocation of benefits when the oldest child reached age 18 resulted in each remaining dependents receiving $95 monthly.  Therefore, the Veteran’s IVAP will be $7,020 as of the first of the month after the oldest child is removed, when 38 CFR 3.31 is applied.
Result:  If the new rate of Social Security is such that the new VA rate, without the dependent and with the corrected reallocated rate of Social Security, is higher than the rate of pension prior to the removal of the dependent, defer the removal of the child, as well as the corrected income, to the first day of the month following the child’s 18th birthday.
Future award lines removing the remaining dependents will again assume the reallocation of the total benefits, and the IVAP will remain $7,020 unless evidence is received to the contrary.
Reference:  For more information on removing dependents from current-law pension awards, see M21-1, Part V, Subpart iii,1.F.3.

V.iii.1.F.2.n.  Apportionments to a Spouse Who Physically Lives Apart for Reasons Related to Marital Discord

The same considerations apply to making apportionment decisions in current -law pension cases as in other types of claims.  However, before making an apportionment to a spouse, consider the possible effect on the Veteran’s overall pension entitlement.
Under 38 CFR 3.23(d), an apportionment should not be granted to the spouse of a competent Veteran unless the Veteran and spouse are either physically living apart for reasons related to marital discord or reside together, but do not cohabit.  VA does not make apportionments for a beneficiary’s convenience.  A spouse who is either physically living apart from the Veteran or residing with the Veteran, but not cohabitating is not considered to be a dependent (and therefore the spouse’s income is not countable) unless the Veteran is making contributions to the spouse’s support.
Under 38 CFR 3.451, do not make an apportionment to the spouse of a Veteran in receipt of current-law pension if the effect of the apportionment would be to create dependency and cause an overall reduction in the Veteran’s rate of pension.  Deny the apportionment on the grounds that it would cause the Veteran undue hardship.
Reference:  For more information on apportionment to a spouse who physically lives apart for reasons related to marital discord, see M21-1, Part III, Subpart v, 3.A.1.

V.iii.1.F.2.o.  Example
Apportionment to a Spouse Who Physically Lives Apart for Reasons Related to Marital Discord

Situation:  A married Veteran is receiving current-law pension at the rate of $464 per month based on IVAP of $5,000.  The Veteran is being paid at the single Veteran MAPR because
  • the Veteran and spouse physically live apart for reasons related to marital discord, and
  • the Veteran does not contribute to the spouse’s support.
VA receives an apportionment claim from a spouse who physically lives apart for reasons related to marital discord.  Development reveals that the spouse has earned income of $4,800 per year.  The spouse is supporting four children from a prior marriage (who were never established as the Veteran’s stepchildren) and the Veteran lives free with a wealthy relative.
Result:  Although the spouse could, under the circumstances, establish need, the effect of awarding the apportionment is to establish the spouse as a dependent that will in turn require that the spouse’s $4,800 in earned income be included in the Veteran’s IVAP.  This will reduce the Veteran’s monthly rate of Pension from $464 per month to $337 per month.  Because this will cause undue hardship on the Veteran, deny the apportionment claim.

3.  Removing Dependents from Improved Pension Awards


Introduction

This topic contains information on removing dependents from current-law pension awards, including

Change Date

June 18, 2015

V.iii.1.F.3.a.  Removing a Veteran’s Spouse Due to Death, Divorce, or Annulment

If a Veteran’s spouse dies or the Veteran’s marriage ends in divorce, or annulment, and a decreased rate of pension or loss of entitlement would result, reduce or discontinue the award as of the first day of the month following the month during which the death, divorce, or annulment occurs under 38 CFR 3.500(g)(2) and 38 CFR 3.501(d).
Note:  When reducing or discontinuing benefits, pay through the effective date shown in 38 CFR Part 3, and reduce or discontinue benefits as of the next day.

V.iii.1.F.3.b.  Removing a Veteran’s Spouse Due to Physically Living Apart for Reasons Related to Marital Discord

If the spouse ceases to be a dependent because the Veteran and spouse physically live apart for reasons related to marital discord and the Veteran is not making reasonable contributions to the spouse’s support, remove the spouse from the award effective the date of separation, if removing the spouse would result in a decreased rate of pension or loss of entitlement.  Do not apply the end-of-the-month rule.
Example 1:  A married Veteran’s spouse has no income.  The Veteran reports separating from the spouse on May 6, 2014.  The Veteran does not contribute to the spouse’s support.  Remove the spouse from the award effective May 6, 2014.
Example 2:  A married Veteran’s IVAP is $14,000 per year, and his monthly pension entitlement in 2014 is $214 per month.  The Veteran reports separating from the spouse on May 6, 2014.  The spouse has no countable income and the Veteran does not contribute to the spouse’s support.  Discontinue the Veteran’s award effective May 6, 2014.

V.iii.1.F.3.c.  Removing a Veteran’s Spouse Due to Cessation of Contributions

If a spouse who physically lives apart for reasons related to marital discord ceases to be a dependent because the Veteran stops making reasonable contributions to the spouse’s support, remove the spouse (reduce or discontinue the award) as of the day after the date the Veteran made the last contribution to the support of the spouse who physically lives apart for reasons related to marital discord.  Do not apply the end-of-the-month rule.
Reference:  For more information on counting the income of dependents, seeM21-1, Part V, Subpart iii,1.F.2.

V.iii.1.F.3.d.  Removing a Child Due to Death or Marriage

If a child dies or marries, reduce or discontinue the parent’s running or suspended award effective the first day of the month following the month of death or marriage.  However, if the child was scheduled to go off the award from an earlier date, use the previously scheduled removal date, under 38 CFR 3.500(g)(2) and 38 CFR 3.500(n)(2).
Example 1:  A 16-year-old child marries on September 29, 2014.  Remove the child October 1, 2014.
Example 2:  A child turns 18 on October 14, 2014.  The child marries on October 29, 2014.  Remove the child October 14, 2014.  (The child was previously scheduled to be removed as of the child’s 18th birthday under 38 CFR 3.503(a)(1).
Note:  When reducing or discontinuing benefits, pay through the effective date shown in 38 CFR Part 3, and reduce or discontinue benefits as of the next day.

V.iii.1.F.3.e.  Removing a Child Due to Cessation of Contributions

If a child who is out of the custody of a Veteran ceases to be a dependent because the Veteran stops making reasonable contributions to the child’s support, remove the child from the award as of the day after the date the Veteran made the last contribution to the support of the child.
Do not apply the end-of-the-month rule.
Reference:  For more information on the definition of custody, see 38 CFR 3.57(d).

V.iii.1.F.3.f.  Marriage of Schoolchild

If a schoolchild marries and stays in school, continue to pay benefits until the first of the month after the month of marriage.
However, if the child discontinues school attendance before marrying, reduce the award effective the first day of the month following the date the child last attended school.
Example:  A 21 year old schoolchild marries on May 24, 2014, but remains in school.  Remove the child on June 1, 2014.

V.iii.1.F.3.g.  Scheduling Future Dependency Losses

When processing an award that adds a child, prepare award lines to show future changes due to the child’s reaching age 18 or discontinuing approved school attendance.
If a child has countable income, recalculate IVAP on the future award lines to exclude each child’s income as he or she goes off the award.
If the loss of the child and the child’s income warrants an increase in the pension rate, do not pay the increase until the first of the following month, per 38 CFR 3.31.

V.iii.1.F.3.h.  Loss of a Dependent Before the Dependent Is Added to the Award

If a dependent is lost after the date of entitlement to additional benefits for the new dependent, but prior to award action to add the dependent, remove the dependent from the award effective the actual date of loss.
Notes:
  • The end-of-month rule for removing dependents applies only to running awards, per 38 CFR 3.660(a)(2).
  • The end-of-month rule only applies in situations in which the loss of a dependent causes a reduction or discontinuance in the beneficiary’s benefits.
  • If the loss of a dependent causes an increase in monthly benefits, delay the removal of the dependent until the first of the month following the date of the event.

V.iii.1.F.3.i.  Loss of a Dependent Causes an Increased Rate of Pension

Use the table below to determine when to increase the rate of pension after the loss of a dependent.
If the dependent is lost because of …
And VA receives evidence of the loss …
Then remove the dependent, the dependent’s income, and increase the pension award effective …
  • marriage, or
  • adoption out of the family
within one year of the event
the first day of the month following the date of the event (38 CFR 3.31).
  • marriage, or
  • adoption out of the family
more than one year after the event
the first day of the month following the date of receipt of the claim (38 CFR 3.31).
any reason other than
  • marriage, or
  • adoption out of the family
within the calendar year
  • of the event, or
  • following the event
the first day of the month following the date of the event (38 CFR 3.31).
any reason other than
  • marriage, or
  • adoption out of the family
after the calendar year following the event
the first day of the month following the date of receipt of the claim (38 CFR 3.31).

4.  Removing the Income of Dependents


Introduction

This topic contains information on removing the income of dependents, including

Change Date

December 6, 2016

V.iii.1.F.4.a.  When to Remove a Dependent’s Income

The general rule for current -law pension is that all income must be counted for 12 months.
Do not count an established dependent’s income after the dependent has been removed from the award, even if this results in the income of the dependent being counted for less than 12 months.
When an established dependent with income is removed from a Veteran’s or surviving spouse’s award, remove the dependent’s income as well.

V.iii.1.F.4.b.  How to Remove a Dependent’s Income

Use the table below to determine how to remove a dependent’s income.
If the dependent’s income …
Then …
is non-recurring
remove the non-recurring income on the same date the dependent goes off the award, even if this means that the non-recurring income is not counted for a full 12 months.
  • is recurring, and
  • has been counted on the award for at least 12 months
remove the recurring income on the same date the dependent goes off the award.
  • is short-term recurring, and
  • has not been counted on the award for at least 12 months
remove the short-term recurring income on the same date the dependent goes off the award, even if this means that the non-recurring income is not counted for a full 12 months.
Exception:  When adjusting income or processing a retroactive award for another reason
  • calculate the total amount received by the dependent from the date the dependent’s income was first countable to the date the dependent goes off the award, and
  • count the total until the date the dependent goes off the award.
is irregular

remove the irregular income on the same date the dependent goes off the award, even if this means that the irregular income is not counted for a full 12 months.Exception:  When adjusting income or processing a retroactive award for another reason

  • calculate the total amount of irregular income received by the dependent from the beginning of the current year, or the date the dependent’s irregular income was first countable (whichever is later), to the date the dependent goes off the award, and
  • count the total until the date the dependent goes off the award.

V.iii.1.F.4.c.  Date of Income Removal in Accordance With 38 CFR 3.31

Use the table below to determine the date to remove the dependent’s income in accordance with 38 CFR 3.31.
If …
Then …
the date the dependent goes off the award is the first of the month after the event
Examples:
  • death,or
  • divorce.
remove the dependent’s income the same day the dependent goes off the award.
  • the end-of-month rule does not apply, for example, separation, cessation of contributions, or the child turns 18, and
  • removal of the dependent and the dependent’s income will result in an increased rate of pension
pay the increase from the first of the month after the event.
removal of the dependent and the dependent’s income does not increase the rate of pension
  • remove the income the same day the dependent goes off the award, and
  • 38 CFR 3.31 does not apply.

V.iii.1.F.4.d.  Date of Income Removal When a Child’s Income Is No Longer Available

Use the table below to determine the date to remove the dependent’s income when the child’s income is no longer available.
If …
Then …
  • a child’s income ceases to be available to the Veteran or surviving spouse, and
  • removing the income does not result in an increased rate of pension
remove the income as of the day after the day it ceased to be available.
the removal of the child’s income results in an increase in the Veteran’s or surviving spouse’s rate of pension
remove the income as of the first day of the month after it ceased to be available, because 38 CFR 3.31applies.

V.iii.1.F.4.e.  Example 1:  Removing the Income of Dependents

Situation:  The award for a surviving spouse with a child is payable from August 1, 2014.  The child turns 18 on October 28, 2014.  The only family income is the child’s Social Security of $521 per month.  The family unit received three $521 Social Security checks totaling $1,563 between the date of entitlement and the date the child went off the award (short-term recurring income).
Result:  Count IVAP of $1,563 effective August 1, 2014.  Reduce IVAP to $0 on November 1, 2014, under 38 CFR 3.31.

V.iii.1.F.4.f.  Example 2:  Removing the Income of Dependents

Situation:  A married Veteran receives pension based on IVAP of $1,200.  The $1,200 represents the earned income of the Veteran’s spouse.  Therefore, removing the spouse will decrease the Veteran’s rate of pension.  The spouse’s earned income of $100 per month has been counted on the award for more than 12 months.  The spouse dies on March 3, 2014.  The Veteran receives $2,000 life insurance on June 8, 2014.  The Veteran claims no unreimbursed final expenses.
Result:  The end-of-the-month rule applies.  Adjust the award as shown in the table below:
Date
IVAP
Reason
04-01-2014
0
Remove spouse and income effective 03-03-2014.
07-01-2014
2000
Count $2,000 life insurance.
07-01-2015
0
Remove $2,000 life insurance.

V.iii.1.F.4.g.  Example 3:  Removing the Income of Dependents

Situation:  A married Veteran’s award is effective August 7, 2014.  The Veteran is paid based on IVAP of $3,600.  The $3,600 represents the spouse’s wages of $300 per month.  The spouse dies on November 13, 2014.  The total earned income received by the spouse between August 7, 2014, and November 13, 2014, was $1,200.
Result:  Charge IVAP of $1,200 from September 1, 2014.  Pay the Veteran at the single Veteran rate based on IVAP of $0 from December 1, 2014.

V.iii.1.F.4.h. Example 4:  Removing the Income of Dependents

Situation:  A married Veteran with a child receives pension based on IVAP of $3,000.  The Veteran receives interest income of $1,000 per year.  The child receives interest income of $2,000 per year.  The spouse has no income.
The Veteran reports a separation from the spouse on September 27, 2014.  The child moves out with the spouse.  The Veteran does not contribute to the support of the spouse or child.  The child’s bank account is in the name of the spouse as guardian of the child.  The child’s interest is not available to the Veteran.
Result:  Remove the spouse from the award as of September 27, 2014.  Remove the child’s $2,000 as of October 1, 2014, the first of the month after it ceased to be available, because 38 CFR 3.31 applies.  The child’s income is no longer available to the Veteran, but the Veteran is still entitled to additional benefits for the child because the child has not been removed from the Veteran’s legal custody.
References:  For more information on

V.iii.1.F.4.i.  Example 5:  Removing the Income of Dependents

Situation:  The Veteran’s only income is VA pension and Social Security of $900 per month.
On October 28, 2014, the Veteran starts sending $50 a month to a spouse who physically lives apart for reasons related to marital discord and is not currently a dependent on the Veteran’s benefits.  The spouse earns $8,000 per year.
The Veteran’s award is discontinued effective November 1, 2014 because income exceeds the MAPR.
After having benefits discontinued, the Veteran reports that contributions to the spouse ceased on March 14, 2015.
Result:  Remove the spouse and resume the award with a payment date of April 1, 2015 (because of 38 CFR 3.31), to pay at the single Veteran MAPR based on the Veteran’s income only.  In addition, because the spouse’s income was not counted on the Veteran’s award for at least one year, develop to the Veteran to obtain the amount of wages received by his spouse from October 28, 2014 until March 14, 2015 to see if the Veteran’s award is able to be resumed from an earlier effective date.
Reference:  For more information on counting short-term recurring income, seeM21-1, Part V, Subpart iii, 1.E.6.m.
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