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M21-1, Part VIII, Chapter 5 – Authorization and Notification

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In This Chapter

This chapter contains the following topics
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Topic Name
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1.  General Information on Authorization and Notification


Introduction

This topic contains general information on authorization and notification, including

Change Date

July 28, 2015

VIII.5.1.a.  Authorization Responsibilities

Notifications for accrued benefits are the same as for other benefits.  The authorization activity is responsible for
  • processing awards and disallowances of accrued benefits, and
  • providing notification of the accrued benefits decision.
References:  For more information on

VIII.5.1.b.  Regular Monthly Benefits

38 U.S.C. 5121 and 38 CFR 3.1000 govern entitlement to, and disposition of, all Department of Veteran Affairs (VA) benefits payable as regular monthly benefits except those excluded below and other periodic benefits, such as clothing allowance, to which a beneficiary was entitled at time of death, either on the basis of an existing decision or on evidence in file at the date of death.
The only regular monthly benefits that cannot be paid as accrued benefits are
  • Special Allowance under 38 U.S.C. 1312(a), Restored Entitlement Program for Survivors (REPS), and
  • insurance.
Note:  When regular monthly payments were being made under a combined award which included Naval Pension or special allowance, do not include the part which represents a benefit that cannot be paid as accrued benefits in the computation of the accrued benefit otherwise payable.
References:  For more information on

VIII.5.1.c.  Benefits Awarded

Any benefits awarded are limited to any past-due benefits for the period between the effective date of the award and what would have been the effective date of discontinuance of the award as a result of the claimant’s death.

VIII.5.1.d.  When Payment Is Barred

The rules that govern the effect of adverse findings concerning wrongful and intentional killing of the Veteran or other beneficiaries apply equally to claimants for accrued benefits.
The rules bar
  • any payment of accrued amounts to the wrongdoer, or
  • the payment of an increased share, if in the same class of beneficiaries.

2.  Limitation on Retroactive Periods for Payment


Introduction

This topic contains information on time limitations, including

Change Date

June 28, 2015

VIII.5.2.a.  Limitation on Retroactive Periods

The table below shows the limitation on the retroactive period for payment of accrued benefits based on the date of the beneficiary’s or original claimant’s death.
If death occurred …
Then the retroactive period is …
  • on or after January 1, 1958, but
  • before October 9, 1996
a maximum of one year, regardless of when benefits were accrued.
  • on or after October 9, 1996, but
  • before December 16, 2003
a maximum of two years, regardless of when benefits were accrued.
on or after December 16, 2003
not limited
 
References:  For more information on
  • payment of accrued benefits when death occurs
    • on or after January 1, 1958, but before October 9, 1996, seePublic Law (PL) 85-857, and
    • on or after October 9, 1996, but before December 16, 2003, seePL 104-275, and
  • on or after December 16, 2003, see PL 108-183, and
  • limitation of payment, see Terry v. Principi367 F. 3d 1291 (2004). 

VIII.5.2.b.  Exceptions to the Limitation on Retroactive Periods

When accrued benefits are payable to the survivors or estate of a Nehmer class member under 38 CFR 3.816(f), there is no limitation in the retroactive period, regardless of the date of death.
References:  For information on accrued benefits under Nehmer, see M21-1, Part IV, Subpart ii, 2.C.4.

3.  Determining Amount of Accrued


Introduction

This topic contains information on determining the amount of accrued, including

Change Date

 December 28, 2017

VIII.5.3.a.  Processing VETSNET Work Items Related to Accrued Benefits

Stopping a beneficiary’s award, including processing a First Notice of Death (FNOD) may result in the computer generation of a Veterans Service Network (VETSNET) work item
  • showing that a payment was returned, and
  • accrued benefits may be payable.
Review the work items below in conjunction with the corporate record of the beneficiary to see if there are accrued monies payable.
A Work Item …
Is generated if …
810-605, Payee Deceased-Accrual Segment Established
a returned payment is processed against a record in which the award has been terminated by death and the amount due and payable is established in the terminated record as an accrual.
810-606, Payee Deceased-Accrual Segment Increased
the accrual segment is increased by proceeds of a returned check on a case which is terminated by reason of death.
810-607, Misc Returned Checks
one-time payments, such as special payments, clothing allowances, or burial allowances are returned and cancelled.
 
Note:  Some accrued cases are processed in VBMS, however, there is not capability for end-to-end accrued claims processing.
References:  For more information on

VIII.5.3.b.  Reviewing Work Items Created Prior to the Beneficiary’s Death

Review any other generated work item to identify if accrued benefits are available.  For example, an 840 work item may be generated based on
  • Combat-Related Special Compensation (CRSC)/Concurrent
    Retirement and Disability Payments (CRDP), or
  • Audit Error Worksheets (AEW).
Note:  Accrued amounts which may be payable and for which a work item is not issued, must be determined from analysis of the claims folder and are computed in the regional office (RO) of jurisdiction.

VIII.5.3.c.  Computation of Accrued Amounts by RO

Use the table below to decide what computation is necessary.
If the accrued amounts must be computed through …
Then computation is needed …
a date other than the last of the month preceding death
to determine what is payable through the
  • date of death for officer’s retirement pay and subsistence allowance
  • date of last attendance for educational allowances under Chapters 30, 32, 35, and 1606, Section 901, and the Omnibus Diplomatic Security and Anti-Terrorist Act, and
  • last day of the month of death, for amounts due to a deceased child receiving an apportioned share of a surviving spouse’s award (payable only as reimbursement).
the last day of the month preceding the month of death
for any periodic monthly benefits in cases in which
  • payments were in suspense from a prior date
  • posthumous adjustments were made, including those required by an accrued rating
  • amounts were being withheld for
    • possible apportionment and subsequently denied, or
    • incompetency determination, or
  • benefits were delivered after death covering a period prior to the termination date.

VIII.5.3.d.  Returned and Canceled Benefits Payable as Accrued

Funds represented by any benefits delivered after death covering a period prior to, and extending beyond, the date of termination due to death, are payable as accrued and only with respect to the portion due and unpaid prior to the termination date.
References:  For more information on

VIII.5.3.e.  Recouping Overpayments When Computing Accrued Benefits

If the deceased beneficiary had an overpayment, it must be recouped before any accrued benefits may be paid.  Review the corporate record and the Financial Accounting System (FAS) to determine if there is an overpayment.
If there is an overpayment that should be deducted from the benefit, take the following actions:
  • in VETSNET Awards, enter the applicable overpayment amount in the OFFSET AMOUNT field, and
  • notify the finance activity of the amount of debt offset and request that they eliminate that amount of the debt.
Reference:  For more information on processing awards, see the

4.  Benefits Not Negotiated Prior to Death


Introduction

This topic contains information on benefits not negotiated prior to death, including

Change Date

June 28, 2015

VIII.5.4.a.  Definition:  Non-Negotiated Benefits

Payments made to the beneficiary but not negotiated prior to his/her death are not accrued benefits but are considered non-negotiated benefits.
These are payable in the same manner as accrued benefits, but they are not subject to any restriction on either the retroactive period which may be covered by the amount payable or to the other time limits contained in that section of the law.
Payment may also be made as reimbursement for last illness and burial expenses if there is no one within a permitted class.
If payment cannot be made on the basis of relationship or reimbursement, it will be made to the deceased beneficiary’s estate, unless the funds will revert to the State.
References:  For more information on

VIII.5.4.b.  Non-Negotiated Benefits Payable

38 U.S.C. 5122 and 38 CFR 3.1003 provide for the disposition of funds represented by benefit payments, the whole proceeds of which are for a period not extending beyond the effective date of termination for death, which were received but not negotiated by the payee and which were returned and canceled.
38 U.S.C. 5122 applies to benefit payments to deceased Veterans or to their surviving spouses or dependents.  This includes payment of any of the regular monthly benefits except special allowance under 38 U.S.C. 1312(a) or insurance.
References:  For more information on handling canceled benefit payments, see

VIII.5.4.c.  Non-Negotiated Benefits Not Payable

These policies do not apply to any benefit payments
  • delivered after the payee’s death or representing payment for a period extending beyond the date of termination due to death, and/or
  • in payment of a lump sum representing amounts withheld because of hospitalization or institutionalization of a Veteran without a spouse or child(ren) who was
    • competent and receiving Old-Law Pension, because the amounts would be payable as an accrued lump sum under 38 CFR 3.1001, or
    • incompetent and receiving any type of pension, because the amounts would not be payable to anyone under 38 CFR 3.1007.

VIII.5.4.d.  Inability to Distribute Non-Negotiated Benefits

Any case in which all benefits payable cannot be paid based on relationship or as reimbursement of burial or last illness will be paid by the finance activity for settlement to the deceased beneficiary’s estate, provided the amount to be distributed will not revert to the State (escheat) because there is no one eligible to inherit it.
The process followed in such cases is outlined in the table below.
Stage
Description
1
The case is forwarded by memorandum to the finance activity.
Note: Include a statement as to who is to be paid the amount available and that it will not revert to the State because there is no one eligible to inherit it.
2
The finance activity prepares a 06A transaction based on the determination by the authorization activity that the administrator (trix) of the estate (or whoever is claiming the funds) is due those funds.
Note: Once payment has been made, subsequent claims will not be recognized.
Reference: For more information on handling canceled benefit payments to deceased payees, see

VIII.5.4.e.  Amounts Not Payable as Accrued

When a claim is filed for the proceeds of non-negotiated benefit payments and it is determined that none or only a part of the amount is payable on the basis of relationship or reimbursement, notify the finance activity as follows.
  • No Accrued Payable, if none of the proceeds of the returned and canceled benefit payment is payable on the basis of either relationship or reimbursement.
  • Amount Only Partially Paid, if less than the entire amount of the proceeds of the returned and canceled benefit payment is payable on the basis of either relationship or reimbursement.
Note:  If the amount from the proceeds of non-negotiated checks has been only partially paid as reimbursement, the remainder would be paid to the deceased payee’s estate, if it will not revert to the State (escheat).
References:  For more information on

5.  Accrued Lump Sum for Old Law Pension Cases


Introduction

This topic contains information on accrued lump sum for Old-Law Pension cases, including

Change Date

February 9, 2016

VIII.5.5.a.  Disposition of Veterans Pension Amounts Under 38 CFR 3.1001 and 38 CFR 3.1007

38 CFR 3.1001 provides for the disposition of Veterans Pension amounts in Old-Law Pension cases, withheld by reason of the hospitalization of a competent Veteran, as an accrued lump sum upon the Veteran’s death.
38 CFR 3.1007 prohibits paying such withheld amounts as accrued in cases of incompetent Veterans.
References:  For more information on

VIII.5.5.b.  Order of Preference for Accrued Lump Sum Benefits

The accrued lump sum benefit under 38 CFR 3.1001, the amount withheld from hospitalized competent Veterans, is payable to the same persons in the same order of relationship as is the accrued benefit under 38 CFR 3.1000except that the entitlement of children is not subject to age or marital status requirements.

VIII.5.5.c.  Time Limitations for Accrued Lump Sum Benefits

The regulations regarding time limitations are listed below.
  • A claim for accrued lump sum must be filed within five years from the date of the Veteran’s death.
  • There is no time limit for the submission of evidence of an accrued claim.
  • There is no restriction on the retroactive period that may be covered by an award of lump sum accrued benefits.
Note:  When the preferred claimant is under a legal disability at the time of the Veteran’s death, compute the five-year period from the date of termination or removal of the legal disability.

VIII.5.5.d.  Basis for Computation of Accrued Lump Sum

The accrued amount that would have been payable to the Veteran as lump sum must be computed on the basis of the prior awards in file.

VIII.5.5.e.  Change in NSC Disability and Accrued Lump Sum

The table below describes what should be considered when determining if there is an accrued lump sum payable.
If …
Then …
a rating of permanent and total disability is discontinued by reason of a change in circumstances or condition
amounts withheld prior to the effective date of termination of the award arepayable as accrued lump sum.
the permanent and total rating is considered erroneous for fraud or no legal basis
the award is retroactively terminated and the accrued lump sum is notpayable.

VIII.5.5.f.  Retroactive Increase for Accrued Lump Sum

Accrued lump sum is payable only for periods covered by an award (active or suspended) in effect at the date of the Veteran’s death.
Note:  Do not increase or create an accrued lump sum benefit by reason of an accrued rating or posthumous authorization decision relative to rates payable to the Veteran over a retroactive period.  The amount payable is only the amount withheld as determined by awards in file.
Reference:  For more information on the evidence in file, see M21-1, Part VIII, 1.4.

VIII.5.5.g.  Distinguishing Between Accrued Lump Sum and Accrued Under 38 CFR 3.1000

 

In some instances, when accrued lump sum is payable, there will also be the possibility of an amount being payable as accrued involving that portion of the award which was in the course of payment or in suspense at the date of the Veteran’s death.
If a determination is made subsequent to the Veteran’s death that additional pension is payable, the additional benefit is payable as accrued subject to limitations contained in 38 U.S.C. 5121.  The award of accrued lump sum is notaffected by such posthumous action.
References:  For more information on

6.  Personal Funds of Patients (PFOP) Accounts


Introduction

This topic contains information on PFOP accounts, including

Change Date

May 7, 2009

VIII.5.6.a.  PFOP under RO Control

This topic deals with the payment of only those personal funds of patients (PFOP) under RO control and maintained by Hines Benefit Delivery Center (BDC).  It does not relate to PFOPs under the control of Directors of VA hospitals except as to certifications required of persons having eligibility to such funds.
References:  For more information on the

VIII.5.6.b.  Deaths on or After December 1, 1959 for PFOPs

For incompetent veterans who die on or after December 1, 1959, the date of enactment of PL 86-146, all gratuitous benefits which were paid under laws administered by VA and which were deposited in a PFOP account before, on, or after December 1, 1959, in a PFOP account, are payable to the identical classes of dependents as provided in M21-1, Part VIII, 1.5 (except that children are entitled regardless of age or marital status) or as reimbursement.

VIII.5.6.c.  Non-VA Funds in a PFOP Account

Funds not deposited in the PFOP account by VA, but deposited by the Veteran or others, are excluded from application of this law and may be disposed of by the local finance activity only in accordance with the law and instructions in effect prior to enactment of PL 86-146.

7.  PFOP Accrued Distinguished from Accrued Lump Sum


Introduction

This topic contains information on PFOP accrued distinguished from accrued lump sum, including

Change Date

June 4, 2004

VIII.5.7.a.  Differences Between PFOP and Accrued Lump Sum

The differences between PFOP and accrued lump sum are basic.  These differences are outlined below.
  • PFOP accrued represents funds deposited by VA to the account of theincompetent Veterans.
  • Accrued lump sum represents amounts withheld from awards to hospitalized, competent Veterans.
Note:  Amounts withheld from awards to incompetent Veterans, for periods prior to, as well as subsequent to the rating of incompetency, are specifically prohibited from payment as accrued lump sum.
Reference:  For more information on hospitalized incompetent Veterans, see 38 CFR 3.1007.

VIII.5.7.b.  Limitations to Gratuitous Benefits in PFOP and Accrued Lump Sum

The policies and procedures for payment of accrued lump sum are applicable in determining entitlement to gratuitous funds on deposit in PFOP, as listed below.
  • Claim for gratuitous funds must be filed within five years from the date of the Veteran’s death.
  • There is no restriction on the retroactive period, which may be covered by the funds to be awarded.
  • Once a claim has been filed, there is no time limit for the submission of evidence requested to perfect the claim.  When the claimant fails to submit requested evidence within one year in cases which have been referred to the authorization activity for certification of persons entitled, the authorization activity will, at the expiration of the established control period
    • inform the referring activity to transfer (redeposit) the funds to the applicable current appropriation, and
    • state the reason for redepositing the funds.
References:  For more information on
  • hospitalization of competent Veterans, see 38 CFR 3.1001, and
  • paying benefits to the person having custody and control of incompetent or minor beneficiaries, see 38 U.S.C. 5502(d).

VIII.5.7.c.  Persons Entitled to Gratuitous Benefits in PFOP and Accrued Lump Sum

For death occurring on or after July 25, 1962, the classes of eligible payees for both PFOP and accrued lump sum are identical.
Brothers, sisters, and non-dependent parents are not and never have been entitled to PFOP accrued on the basis of relationship.
References: For more information on

VIII.5.7.d.  Effect of Processing NOD

The Hines BDC maintains a running balance of amounts on deposit in PFOP accounts.
If a NOD transaction is processed at the Hines BDC on an account subject to a withholding for PFOP, the BDC notifies the field station of the amount on deposit in PFOP to the Veteran’s account and requests its disposition.

8.  Action by Local Finance Activity for PFOPs


Introduction

This topic contains information on action by the local finance activity for PFOPs, including

Change Date

 June 28, 2015

VIII.5.8.a.  Analysis of PFOP Accounts

When notification of the death of an incompetent Veteran is received, the Hines BDC Accounting section analyzes the balance in the PFOP account to identify the funds derived from gratuitous VA benefits.
The analysis is placed in the record maintained by the station having jurisdiction of the account.  The original analysis is forwarded to the Veterans Service Center (VSC) or pension management center (PMC) having jurisdiction of the  deceased Veteran’s claims folder.

VIII.5.8.b.  Initiation of Claims for Gratuitous Benefits from PFOPs

Initial responsibility for obtaining claims from persons within the prescribed classes for the gratuitous funds on deposit in PFOP of a deceased incompetent Veteran is vested in the Registrar of the VA hospital or the finance activity in the RO having jurisdiction of the account.
If it appears that there is someone in the prescribed class who may be entitled to the gratuitous portion or to a share of the PFOP account the
  • Registrar of the VA hospital or the finance activity in the RO having jurisdiction of the account
  • the RO processes the claim for payment by the finance activity in the hospital or by the Hines BDC.

VIII.5.8.c.  Gratuitous PFOP Payable as Reimbursement

Although the local finance activity is initially responsible for dispatching claims for, and payment of, gratuitous PFOP funds on the basis of relationship, responsibility for payment of this accrued benefit as reimbursement is vested exclusively with the VSC or PMC based on the jurisdiction of the deceased Veteran’s claim folder.
Note:  As soon as the transfer (redeposit) of PFOP funds is made, take appropriate action.

9.  Transfer (Redeposit) of PFOP Funds


Introduction

This topic contains information on transfer (redeposit) of PFOP funds, including

Change Date

June 4, 2004

VIII.5.9.a.
No Heirs Within Permitted Class for Gratuitous Benefits From PFOP

When it appears that no individual within the prescribed class eligible to receive benefits on the basis of relationship has survived the Veteran, notify the finance activity.
The finance activity immediately authorizes the transfer (redeposit) of the gratuitous portion of the PFOP funds to the applicable current appropriation.  Transfer (redeposit) is also authorized if no claim has been received within one year from the date of the Veteran’s death.

VIII.5.9.b.  Record of Transfer (Redeposit) of PFOP Funds

The amount of funds transferred (redeposit) to the applicable current appropriation and the date of that action is made a matter of record.  The SF 1081 or other document processed by the finance activity authorizing transfer (redeposit) of such funds is placed in the deceased Veteran’s folder.

10.  Responsibilities of the VSC or PMC


Introduction

This topic contains information on the responsibilities of the VSC or PMC for PFOPs, including those related to

Change Date

 June 28, 2015

VIII.5.10.a.  Funds Under VA Hospital Control

Prior to the transfer (redeposit) to the applicable current appropriation, the VSC or PMC having jurisdiction of the deceased Veteran’s claims folder is responsible only for the certificate of eligibility or the memorandum of non-entitlement, as outlined below.
Note:  The VSC or PMC does not notify a claimant of its determination when the claim has been referred to the VSC or PMC only for certification of entitlement.  The activity referring the claim notifies the claimant and gives the right to appeal
Stage
Description
1
The administrative service of a VA hospital or the finance activity of an RO initially receives and reviews applications for the gratuitous funds on deposit in PFOP.
2
Claims based on relationship with the permitted classes are forwarded to the VSC or PMC for review and, if necessary, development of the evidence to establish the eligibility and proper shares of the claimants.
3
If it is determined that the claimant is a member of an eligible class, the claims processor
  • prepares a certificate of eligibility (original and one copy) for signature of the claims processor and an authorizer
  • files the signed copy of the certificate in the claims folder, and
  • returns the original signed certificate with the application to the originating activity.
Note:  Since the claim will not remain in the claims folder, the certificate of eligibility must include the reasons for eligibility of each claimant and the proportion to which he/she is entitled. The certificate must have all essential data of the claim. The certificate of eligibility includes the reasons for eligibility of each claimant and the proportion to which he/she is entitled.
4
If it is determined that the claimant has no entitlement to a share of the gratuitous funds on deposit in PFOP, the claims processor
  • prepares a memorandum of non-entitlement (original and one copy) for the approval of an authorizer, concisely stating the reasons the determination was made
  • files the signed copy of the memorandum of non-entitlement in the claims folder, and
  • returns the original signed memorandum of non-entitlement with the application to the originating activity.
Notes:
  • Incorporate into the memorandum all essential data in the claim so that the copy of the memorandum retained in the claims folder will be self-explanatory.
  • The claims processor and authorizer sign the original and the copy.

VIII.5.10.b.  Accrued PFOP Authorized by VSC or PMC

The VSC or PMC has complete responsibility for the development and final disposition of
  • a claim for the gratuitous portion of funds in PFOP accounts under RO control (maintained by the Hines BDC) for payment as accrued, and
  • VA hospital PFOP funds after transfer (redeposit) when reimbursement is the only basis for payment as PFOP accrued.
After completion of any necessary development
  • dispose of the accrued gratuitous funds in the PFOP account by award or disallowance action, and
  • notify the claimant of the action taken including the right of appeal.
References:  For more information on

11.  Payment of Accrued Benefits as Reimbursement


Introduction

This topic contains information on the payment of accrued benefits as reimbursement, including

Change Date

March 1, 2006

VIII.5.11.a.  Accrued Benefits Used to Reimburse

Accrued benefits may be used to reimburse a person or person(s) who paid the expenses of the last illness and burial of a beneficiary, but only if there is no one in a permitted class entitled to the accrued benefit on the basis of relationship.
Note:  The amount of accrued payable as reimbursement is restricted to the actual amount of expenses paid.
Reference:  For more information on entitlement to accrued benefits on the basis of relationship, see M21-1, Part VIII, 1.5.

VIII.5.11.b.  Claims for Reimbursement

  • paid the expenses of the last illness and burial of the deceased beneficiary, or
  • is held responsible by the unpaid creditors for the payment of the deceased beneficiary’s bills.
References:  For more information on

VIII.5.11.c.
Claim by Creditor

A creditor may be paid accrued benefits as reimbursement, but must support the claim by a waiver of claims from
  • all other creditors, and
  • any person who
    • is shown to have an interest in the accrued benefits because of service rendered to the deceased beneficiary related to last illness or burial, and
    • holds the creditor responsible for the payment of his/her claim.

VIII.5.11.d.  Estate as Claimant

If one of the co-executors or co-administrators of an estate files a claim, any award to the estate must be payable to all of the co-executors or
co-administrators as appointed by the court.
A formal application on VA Form 21P-601 must be filed, supported by a certified copy of the letters of administration or letters testamentary bearing the signature and seal of the appointing court.
Reference:  For more information on claims involving political subdivisions, seeM21-1, Part VIII, 5.13.

VIII.5.11.e.  Estate Closed Prior to Approval of Award

Prior to the approval of an award, if VA is placed on notice that the estate is closed
  • obtain a certified copy of the discharge of the fiduciary, including the court order of distribution, and
  • authorize payment to the distributees shown.

VIII.5.11.f.
No Administrator or Executor Appointed

When there is no administrator or executor appointed for the estate of the deceased Veteran or beneficiary or of a claimant who died prior to receiving payment, a claim may be filed on VA Form 21P-601 by a person who assumed the informal distribution of the Veteran’s or beneficiary’s estate using assets of the estate for payment of the expenses.  In such cases, follow the guidelines listed below.
  • Distribution of any amount due may be made to the person or persons entitled under the intestacy laws of the State of the decedent’s domicile with due regard to exemptions and allowances and the order of payment of debts and heirs.  Each person must complete a VA Form 21P-601Payment may also be made to one heir or creditor after receiving the unconditional written consent of all other heirs and creditors.
  • When the personal funds of an individual are used to pay the expenses of the last illness or burial, that person is the proper claimant entitled to the accrued payable as reimbursement.  That person is also the proper claimant if he or she paid the expenses of the last illness and burial of a claimant who died prior to receiving payment.

VIII.5.11.g.  Claims Not Filed During Lifetime

When an individual whose personal funds are used to pay the expenses of the last illness and burial dies before filing a claim (formal or informal) for the accrued benefit, no payment is made as reimbursement.

12.  Allowable Items for Reimbursement


Introduction

This topic contains information on allowable items for reimbursement, including

Change Date

December 28, 2017

VIII.5.12.a.  Payment of Accrued as Reimbursement

Payment of accrued benefits, as reimbursement, is not limited to specific items or amounts.  Consider for reimbursement all reasonable expenses incident to the last illness and burial of a beneficiary, Veteran, and/or surviving spouse.
Exception Disallow only those charges that are unrelated to the beneficiary’s last illness or burial.
Reference: For more information regarding the definition of last illness, see M21-1, Part V, Subpart iii, 1.G.6.b.

VIII.5.12.b.  Medicinal Expenses as Reimbursable Expenses

Bills covering the cost of medicines are not required if the claimant alleges that the medicine was paid for in cash and it is apparent that the amount claimed is reasonable and consistent with the character and duration of the last illness.
Note: Approvable charges for medical treatment are limited to the actual period of the last illness.

VIII.5.12.c.  Nursing Expenses as Reimbursable Expenses

Approve charges for registered and nonregistered nursing services rendered from, and including the established date of, commencement of the last illness through the date of death.
Approve charges for nonregistered nursing services performed by a member of the same household in an amount not to exceed those consistent with charges made in the community for such nonprofessional services.
Exception:  If the last illness expenses claimed are the same expenses that VA already used on the original claimant’s award or to determine eligibility for benefits for the original claimant, then these same expenses are not allowable for reimbursement purposes.

VIII.5.12.d.  Transportation Expenses as Reimbursable Expenses

The expenses incurred for transporting the body of a deceased Veteran or other beneficiary to the place of burial and for an attendant or escort to and from the place of burial are payable as reimbursement from accrued benefits without regard to the restrictions stated in 38 CFR 3.1706 and 38 CFR 3.1709 as to hospitalization by VA or shipment by Government bill of lading.
If the expenses of transporting the body of a deceased Veteran were partially paid by VA in connection with a burial claim, only those expenses in excess of the amount paid by VA will be reimbursed.
References:  For more information on
  • payment to an estate of burial benefits, see M21-1, Part VII, 1.D.2
  • handling death while traveling under prior authorization or while hospitalized by VA, see 38 CFR 3.1706, and
  • handling payment of transportation costs, see 38 CFR 3.1709.

VIII.5.12.e. Miscellaneous Items as Reimbursable Expenses

Charges for items essential to emergency treatment are allowed, including
  • ambulance or other conveyance to a hospital
  • summoning or procuring medical assistance, and
  • arranging for proper medical care from the commencement of the last illness.
Note:  If the beneficiary is shown to have died under conditions which made it necessary to destroy furniture or bed clothing for sanitary reasons or if damage is incurred by fumigation, allow those charges based on the claimant’s affidavit, corroborated by two competent witnesses, stating the actual value of the articles destroyed or the damages incurred and the reason for the destruction.

VIII.5.12.f.  Burial Payment Made to Accrued or Substitute Claimant

If VA paid burial benefits to the accrued or substitute claimant, subtract the amount of burial benefits paid from the claimed burial expenses.

13.  Claims Involving Political Subdivisions


Introduction

This topic contains information on  accrued benefits and political subdivisions, including

Change Date

December 28, 2017

VIII.5.13.a.  Payment by Estate or Personal Funds

VA may not pay accrued benefits to any political subdivision of the United States as reimbursement.  However, if either the estate of a deceased beneficiary or personal funds of an individual are used to pay an expense incurred by a political subdivision of the United States or of a foreign government in connection with the last illness and burial, then payment of an accrued amount to the estate of the deceased beneficiary or to the individual is allowed.
Note:  Do not pay the proceeds of non-negotiated checks to an estate if there is a statement of record from any source (public or private) that such benefit, if paid, will revert to the State (escheat).

<viii.5.13.< span=””></viii.5.13.<>VII.1.5.13.b.  Payment to Homes for the Aged and Infirm

Disallow any claim for reimbursement of expenses related to the beneficiary’s last illness or burial made by a home maintained entirely by public funds.
Allow a claim for reimbursement if the beneficiary was a resident who was under contract to furnish his/her own support during life and effect burial at death.

14.  Establishing Shares of Claimants


Introduction

This topic contains information on establishing shares of claimants, including

Change Date

December 28, 2017

VIII.5.14.a.
Total Expenses Do Not Exceed Total Accrued Payable

When the total charges for expenses of the last illness and burial do not exceed the total amount of accrued payable, award each claimant an amount equal to his/her share as verified by receipted bills.
Receipted bills for unpaid portions are not required if the unpaid creditors execute a reimbursement waiver by completing the “Reimbursement Waiver” part of VA Form 21P-601.

VIII.5.14.b.
Total Expenses Exceed Total Accrued Payable

When the charges covering all expenses are shown on the claim and they exceed the total accrued payable, use the information in the table below to determine what action to take.
If …
Then …
  • two or more persons have paid the expenses of the last illness and burial from their personal funds, and
  • submit receipted bills or reimbursement waivers
pay each person the same proportion of accrued amount available as the proportion of total expenses each paid, not to exceed the amount each paid.
  • receipted bills are submitted by a claimant for only part of the expenses claimed, and
  • waivers are not furnished for the remaining unpaid charges
request that the claimant submit the necessary receipted bills or waivers for the remaining unpaid charges.

VIII.5.14.c.
Time Limits for Accrued Amounts Payable as Reimbursement

If the accrued amount is payable as reimbursement, establish a control for the expiration of the period within which additional claims for reimbursement may be filed.
If the necessary evidence establishing the claimant’s entitlement to his/her full share is not received within the time limit allowed and a claim is not filed by any other claimant, award the claimant of record a proportionate share of the accrued amount payable based on the expenses supported by receipted bills or waivers.
Exception:  If there are proceeds of non-negotiated payments available for payment as reimbursement, do not apply the partial allowance procedures.
Additionally, do not apply the procedures if an additional claim is timely made and the evidence requested is not subject to a time limitation.  In these cases, inform the claimants that requested evidence must be submitted before any settlement may be made.
If any additional claim is filed for accrued within the statutory time limit, extend the control period accordingly.
References:  For more information on

15.  Railroad Retirement Act Survivor Benefits


Introduction

This topic contains information on Railroad Retirement Act survivor  benefits, including

Change Date

December 28, 2017

VIII.5.15.a.  General Policy for Railroad Retirement Act Survivor Benefits

If evidence indicates that the deceased beneficiary’s employment was covered by the Railroad Retirement Act and accrued VA benefits are available to be paid as reimbursement for burial expenses, request that the Railroad Retirement Board (RRB) furnish information as to whether or not survivor benefits were paid by that agency, and if so, to whom and in what capacity.
Reference:  For more information on information requests from Federal, and State agencies, see M21-1, Part III, Subpart iii, 4.

VIII.5.15.b.  Burial and Last Illness Expenses and the RRB Survivors Benefit Reimbursement

If the RRB survivors benefit has been paid or is payable to reimburse a person who paid the decedent’s burial expenses, the accrued amount payable by VA is available only as
  • reimbursement for burial expenses in excess of those reimbursed by the RRB, and
  • reimbursement for the last illness expenses.
Note:  The RRB survivors benefit is payable as reimbursement for burial expenses only.  No offset is required in a claim for reimbursement for expenses of the last illness.

16.  Personal Funds and Accrued Benefits


Introduction

This topic contains information on personal funds, including

Change Date

June 4, 2004

VIII.5.16.a.  Borrowed Money Used to Pay the Expenses of Last Illness or Burial

Money borrowed to pay the expenses of the last illness, burial, funeral, and transportation of the deceased beneficiary is considered the personal funds of the person who received the loan and not the funds of the lender.

VIII.5.16.b.  Joint Accounts Used to Pay the Expenses of Last Illness or Burial

If the expenses of the last illness, burial, funeral, and transportation of the deceased beneficiary are paid from an account held jointly by the claimant and the decedent with the right of survivorship, consider that account to be the personal funds of the claimant.
In any case in which conflicting evidence is of record as to whether the account was held jointly with the right of survivorship, resolve the conflict by requiring the claimant to furnish a statement from an official of the bank.

VIII.5.16.c.  Acceptability of Statements

Accept a statement of account if it is receipted in accordance with accepted business practices, such as initialing or rubber-stamping.
An affidavit or other statement from the claimant, as opposed to the creditor, purporting to show payments is not acceptable in lieu of a receipt.
Bills or receipts submitted in support of a claim become part of the permanent record and are not returned.
Reference:  For more information on accrued award/disallowance processing, seeM21-1, Part VIII, 5.1.

17.  Jurisdiction and End Product (EP) Control

Introduction

This topic contains information on jurisdiction and EP control of requests for substitution, including

Change Date

February 19, 2019

VIII.5.17.a.Jurisdiction of Requests for Substitution

In general, PMCs have jurisdiction of accrued claims or request for substitution.
Exceptions:
  • All stand-alone accrued claims or requests for substitution (claims in which there is no associated claim for Dependency and Indemnity Compensation (DIC) or Survivors Pension) involving issues of service connection for the Veteran should be worked by the VSC of jurisdiction.
  • Some accrued claims or requests for substitution based on a deceased Veteran’s claim, request for decision review, or appeal when there is an associated claim for DIC or Survivors Pension.
Use the table below to decide which office has jurisdiction over an accrued claim or request for substitution based on a deceased Veteran’s claim, request for decision review, or appeal when there is an associated claim for DIC or Survivors Pension.
If the  Veteran’s claim, request for decision review, or appeal pending at the time of death is …
Then the claim, request for decision review, or appeal for substitution is worked by the …
intertwined with the cause of the Veteran’s death
Example:  The Veteran has a claim for service connection for coronary artery disease and the death certificate lists coronary artery disease as a contributing factor.
PMC of jurisdiction.
not intertwined with the cause of the Veteran’s death
Example:  The Veteran has a claim for service connection for a right knee condition.  The Veteran’s dies of a heart condition.
VSC of original jurisdiction.
Note:  If a PMC can grant DIC without making a decision on the Veteran’s claim for service connection at the time of death, then the accrued claim or request for substitution is notintertwined.  The accrued claim or request for substitution should be worked by the VSC of jurisdiction.

VIII.5.17.b.  EP Control for Substitution

Use end product (EP) 165 to record work credit for a request for substitution upon death of claimant when disposing of the accrued benefits claim.  Use the claim label Substitution of Claimant when establishing EP 165.
Note:  A second EP (either 140 or 190, as appropriate) is authorized when a survivor’s claim for death benefits is received in addition to the request for substitution.
Reference:  For more information on EP 165, see M21-4, Appendix B.

VIII.5.17.c.  Disposition of the EP Control

EP 165 can be cleared if
  • no action is required on the VA’s part on the request for substitution, and
  • the substitute claimant has been notified of the decision pertaining to
    • the request for substitution, and
    • accrued benefits.

VIII.5.17.d.  EP Control For Pending LegacyAppeals

Use the table below to take action on a pending legacy appeal.
Step
Action
1
Establish an EP 165 with a Substitution of Claimant claim label.  Use the date VA received the substitution claim as the date of claim (DOC).
2
If a DIC claim is received, an EP 140.  Establish the EP with a DOC using the date VA received the DIC claim.
3

Establish an EP 170. An EP 170 or 070 is required for control of the legacyappeal which may need further review by the Board of Veterans’ Appeals (BVA) after the RO makes a decision.  The EP 170/070 runs concurrently with the 165.

Follow the below table for control of the substitution appeal.

If…
Then…
The legacy NOD, VA Form 9Appeal to Board of Veterans’ Appeals, or Remand is still pending in VACOLS and an EP 170 or 070 is pending
Note:  If the VACOLS record is pending but the appropriate EP was missing, establish the 070 or 170.
Update the VACOLS record for Substitution (name of substitute, etc.).
The VACOLS record was dispatched and the EP was cancelled due to death of appellant
  • Reactivate the appeal (NOD,  VA Form 9, or remand) in VACOLS, and update for Substitution
  • Establish an EP 170 (for NOD or VA Form 9) or 070 (for remand)
Reference:  For more information on EP 165, see M21-4, Appendix B.
4
Adjudicate the claim for substitution as appropriate.
5
Fully adjudicate the claim for DIC, granting or denying the claim as appropriate. Do not allow the EP 147 to remain pending.

VIII.5.17.e.  Examples: Disposing of the Controlling EP for Legacy Appeals

Situation 1:
A review of the file shows a Decision Review Officer (DRO) issued a statement of the case (SOC) on 07/03/2015 for the denial of service connection for left shoulder condition, initially denied in a notification dated 01/03/2015.  The Veteran died on 08/13/2015 and VA subsequently received VA Form 21P-534, Application for Dependency and Indemnity Compensation, Death Pension and Accrued Benefits by a Surviving Spouse or Child (Including Death Compensation if Applicable), on 09/28/2015 from the surviving spouse.  The death certificate shows the Veteran died of complications related to diabetes mellitus, type II for which service connection was granted in a rating decision issued during the Veteran’s lifetime.  A review of the file shows accrued benefits are not currently payable.
Result 1:
Take the following actions:
  • grant DIC and ancillary benefits
  • grant the request to (using the legacy appeals process) substitute, providing the substitute claimant the
    • right to appeal the original claimant’s continued denial of left shoulder condition,
    • time remaining to file the appeal
  • deny the accrued benefits, providing the claimant
    • the right to appeal the decision on accrued benefits, and
    • appeal rights, and
  • clear the appropriate EP(s).
Situation 2:
A review of a file shows that an NOD with a corresponding EP 170 is pending.  The NOD is for the denial of service connection for left shoulder condition, initially denied in a notification dated 01/03/2015.  The Veteran filed an NOD on 06/15/2015, died on 08/13/2015 and VA subsequently received VA Form 21P-534, on 09/28/2015 from the surviving spouse.  The death certificate shows the Veteran died of complications related to diabetes mellitus, type II for which service connection was granted in a rating decision issued during the Veteran’s lifetime.
Result 2:
Take the following actions:
  • grant DIC and ancillary benefits
  • grant the request to substitute, providing the claimant with notice that they are now substituting for the Veteran for the pending NOD.
  • If applicable, grant the accrued benefit, or if the denial is continued, send an SOC and provide the claimant a VA Form 9, and
  • clear the appropriate EP(s).
02-09-16_KeyChanges_M21-1VIII_5.doc May 18, 2019 320 KB
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6-7-18_Key-Changes_M21-1VIII_5.docx May 18, 2019 98 KB
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