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Updated Jan 19, 2022

In This Section
This section contains the following topics:
Topic
Topic Name
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1.  General Information on the Payment of Pension When a Dependent Is Incarcerated

Introduction
This topic contains general information regarding the payment of pension when a dependent is incarcerated, including

Change Date
February 5, 2018

VI.iii.1.C.1.a.  Discontinuing Pension Due to Excess Income After a Dependent’s Incarceration
According to 38 U.S.C. 1505(a), no pension shall be paid for an individual incarcerated for a felony or misdemeanor, beginning the 61st day of incarceration following conviction.
If a Veteran’s or surviving spouse’s entitlement to pension under the applicable income limitation is contingent on a sole dependent who is incarcerated in excess of 60 full days following conviction, discontinue the Veteran’s or surviving spouse’s pension.
The effective date of discontinuance is the 61st day of incarceration following conviction.  The end-of-month rule described in M21-1, Part VII, Subpart i, 1.C.4.b does not apply.
References:  For more information on

VI.iii.1.C.1.b.  Adjusting Pension Rate After a Dependent’s Incarceration
Pension payments to or for an individual incarcerated for a felony or misdemeanor will be discontinued on the 61st day of incarceration following conviction, under 38 CFR 3.666.
If payments are made to a Veteran or surviving spouse with one or more dependents, and a dependent is incarcerated for a period in excess of 60 full days following conviction, amend the Veteran’s or surviving spouse’s award to reflect the rate payable as if the incarcerated dependent did not exist.
The effective date of a reduction or discontinuance is the 61st day of incarceration.  The end-of-month rule described in M21-1, Part VII, Subpart i, 1.C.4.b does not apply.
Ignore any income of the incarcerated dependent and recalculate the countable income.
Exception:  In some instances, a Veteran’s or surviving spouse’s pension rate could increase if the incarcerated dependent had income.  In such cases, the delayed payment provision of 38 CFR 3.31 applies to the Veteran’s or surviving spouse’s increased pension rate.

VI.iii.1.C.1.c.  Resuming or Increasing Pension Due to a Dependent’s Release
If an incarcerated dependent is released, any resumption or increase of the Veteran’s or surviving spouse’s pension due to the release is effective from the date of release if the notice is received within one year after that date.
Otherwise, any resumption or increase is effective from the date that such notice is received.
Reference:  For more information on resuming pension benefits following release from incarceration, see 38 CFR 3.666(c).

2.  Discontinuing Survivors Pension When a Surviving Spouse Is Incarcerated

Introduction
This topic contains information on discontinuing the payment of Survivors Pension when a surviving spouse is incarcerated, including

Change Date
December 14, 2020

VI.iii.1.C.2.a.  Discontinuing Survivors Pension and Potential  Payments to a Child(ren)
38 CFR 3.666(b) requires VA to discontinue a surviving spouse’s pension effective the 61st day of incarceration following conviction of a felony or misdemeanor.
VA may pay pension to the Veteran’s child(ren) when a surviving spouse is incarcerated and the child(ren) meet the income requirements for Survivors Pension without consideration of the surviving spouse’s income.  Pay Survivors Pension at a rate as if the incarcerated surviving spouse did not exist.
Important:  Payments to a child(ren) are permissible only when the surviving spouse is receiving
  • current-law Survivors Pension and the child(ren) are in the custody of the surviving spouse at the time the surviving spouse is incarcerated, or
  • Section 306 Pension.
Exception:  VA may not pay pension to the dependent(s) of an incarcerated surviving spouse if the dependent is
  • a fugitive felon, as defined in 38 CFR 3.666(e)(2), or
  • incarcerated for conviction of a felony or misdemeanor.

VI.iii.1.C.2.b.  Processing Notice of the Incarceration of a Surviving Spouse
Follow the instructions in M21-1, Part VI, Subpart iii, 1.A.3.a, following receipt of notice that a surviving spouse in receipt of Survivors Pension has been incarcerated.
If VA is paying the surviving spouse for a child(ren), attach VA Form 21-0788, Information Regarding Apportionment of Beneficiary’s Award, to the notice of proposed adverse action referenced in Step 17 of the table in M21-1, Part VI, Subpart iii, 1.A.3.a and, in the notice,
  • advise the surviving spouse to furnish the name and address of the person or persons responsible for the child(ren)’s care during incarceration, and
  • inform the surviving spouse that VA may pay benefits to his/her child(ren) from as early as the 61st date of incarceration following conviction only if VA receives a completed and signed VA Form 21-0788 within one year after the date of the notice.
Note:  In many respects, the payment of an incarcerated surviving spouse’s pension to his/her child(ren) is treated like an apportionment.  Technically, however, it is not an apportionment of benefits.  A decision to pay an incarcerated surviving spouse’s pension to his/her child(ren) is not based on need, nor is the decision documented on VA Form 21-441, Special Apportionment Decision.

VI.iii.1.C.2.c.  Form Claimants Must Submit to Request Payment of an Incarcerated Surviving Spouse’s Pension
Effective March 24, 2015, a claimant must submit VA Form 21-0788 to request payment of an incarcerated surviving spouse’s pension.
Notes:
  • VA will accept a completed and signed VA Form 21-0788 from
    • the surviving spouse
    • the surviving spouse’s child(ren), or
    • an individual responsible for the care of the surviving spouse’s child(ren) under age 18.
  • Under 38 CFR 3.666, a claimant may submit an intent to file (ITF) a claim for payment of an incarcerated surviving spouse’s pension.
References:  For more information on

VI.iii.1.C.2.d.  Determining the Effective Date of Payment of an Incarcerated Surviving Spouse’s Pension to His/Her Child(ren)
If VA receives a completed and signed VA Form 21-0788 or an ITF within one year after the date VA notified the surviving spouse of the child(ren)’s potential right to receive pension during the surviving spouse’s incarceration, the effective date of entitlement, if entitlement exists, is the 61st day of incarceration following conviction.  Otherwise, the effective date can be no earlier than the date VA receives the form or ITF.
Important:  If VA does not receive notice of a surviving spouse’s incarceration until after incarceration has ended, no pension is payable to the child(ren).  However, VA may still award pension to the child(ren) for the purpose of reducing the surviving spouse’s overpayment resulting from retroactive discontinuance of the surviving spouse’s benefits due to incarceration.  The child(ren) will not receive any actual payments.
Notes:
  • If there is a delay between the 61st day of incarceration following conviction and the date VA discontinues an incarcerated surviving spouse’s pension, avoid paying the child(ren) benefits VA has already overpaid to the surviving spouse by
    • ensuring the effective date of payment of pension to the child(ren) is no earlier than the first of the month following the month for which VA last paid the surviving spouse pension, and
    • applying any pension due the child(ren), for the period between the 61st day of incarceration following conviction and the first of the month following the month for which VA last paid the surviving spouse pension, to the surviving spouse’s overpayment.
  • Before applying benefits due the child(ren) to the surviving spouse’s overpayment, ensure VA has not already recouped or waived the overpayment.
 References:  For more information on

VI.iii.1.C.2.e.  Notifying a Child(ren) of the Temporary Nature of Entitlement
When notifying a child(ren) of VA’s decision to pay him/her(them) the surviving spouse’s pension during the surviving spouse’s period of incarceration, advise the child(ren) that
  • entitlement to the benefit is temporary
  • payments are subject to immediate discontinuance when incarceration ends, and
  • the child(ren) may submit a claim for an apportionment of the surviving spouse’s pension if the child(ren) and surviving spouse do not reside together after incarceration ends.

VI.iii.1.C.2.f.  Example:  Discontinuation of an Incarcerated Surviving Spouse’s Survivors Pension Award
Situation:
  • A surviving spouse in receipt of Survivors Pension was convicted on October 18, 2014, and remains incarcerated after conviction.
  • There is one eligible child in the legal custody of the surviving spouse.  The child was born on June 9, 1999.
  • On March 4, 2015, VA
    • sends notice of proposed adverse action to the surviving spouse, and
    • informs the surviving spouse and child of the child’s right to request payment of the surviving spouse’s pension.
  • On May 3, 2015, VA receives a completed and signed VA Form 21-0788 for payment of the surviving spouse’s benefits.  The child and custodian have no income.
  • On May 8, 2015, VA discontinues the surviving spouse’s pension effective December 17, 2014.
 Result:
  • Award the child $183.00 effective May 1, 2015 (the first of the month following the month for which VA last paid the surviving spouse pension).
  • Apply the benefits to which the surviving spouse’s child is entitled for the period December 17, 2014, to May 1, 2015, to the overpayment resulting from the retroactive adjustment to the surviving spouse’s award.
Reference:  For more information on calculating the 61st day of incarceration following conviction, see M21-1, Part VI, Subpart iii, 1.A.4.a.

VI.iii.1.C.2.g.    Cases in Which the Surviving Spouse’s Award Has Been Apportioned for a Child
If the surviving spouse’s award was already apportioned for a child(ren) prior to incarceration, do not change payments to or for the child(ren).  If current income and net worth information is not of record, ask the child(ren)’s custodian or the child(ren), if of the age of majority, to provide it within 30 days.
Exception:  Do not develop for income and net worth information from a child who is receiving Section 306 Pension unless it appears current-law pension would be to the child’s advantage.
Reference:  For information on adjusting apportionment awards, see M21-1, Part VII, Subpart iii, 1.B.

VI.iii.1.C.2.h.  Paying or Discontinuing a Pension Award to a Child(ren)
Follow the instructions in the table below after the earlier of the following occur:
If the evidence …
Then …
indicates there is a bar to entitlement due to excessive income or net worth
discontinue the apportioned award effective the 61st day of the surviving spouse’s incarceration following conviction.
indicates
  • the combined income of the child and custodian is not excessive, and
  • net worth does not constitute a bar
pay pension to or for a child(ren) effective the 61st day of the surviving spouse’s incarceration following conviction in the same manner and at the rate payable as if there were no surviving spouse.
is not received by the expiration of the response period
discontinue payments effective the 61st day of the surviving spouse’s incarceration.
Note:  When preparing the corresponding decision notice,

VI.iii.1.C.2.i.  Adjusting a Child(ren)’s Award in Survivors Pension Cases
In current-law Survivors Pension cases, adjusting an apportioned award to a child in the legal custody of the surviving spouse may result in either a discontinuance of or reduction in the child’s award.  This adjustment is effective the later of either the
  • 61st day of the surviving spouse’s incarceration following conviction, or
  • date of discontinuance of the surviving spouse’s award.

VI.iii.1.C.2.j.  Handling Section 306 Pension Cases
When the surviving spouse is receiving Section 306 Pension, any award to children either in or out of the surviving spouse’s custody is at the current-law pension rates.

3.  Reduction of DIC When a Surviving Spouse Is Incarcerated

Introduction
This topic contains information on reducing DIC for an incarcerated surviving spouse, including

Change Date
December 14, 2020

VI.iii.1.C.3.a.  Right of a Child(ren) to an Apportionment When the Surviving Spouse Is Incarcerated
A person incarcerated for conviction of a felony may not receive full Dependency and Indemnity Compensation (DIC) after 60 full days of incarceration, under 38 CFR 3.665(a).  Payment is reduced to one-half the rate that is payable to a Veteran for a service-connected (SC) disability VA has rated 10-percent disabling, according to 38 CFR 3.665(d)(3).
Follow the instructions in M21-1, Part VI, Subpart iii, 1.A.3.a, following receipt of notice that a surviving spouse in receipt of DIC has been incarcerated.
VA may apportion to a child(ren) all or part of the DIC no longer payable to the surviving spouse.  Apportionment claimants must submit VA Form 21-0788 or an ITF (similar to the requirement expressed in M21-1, Part VI, Subpart iii, 1.C.2.c).
Note:  If an apportionment is awarded, inform the apportionee of the temporary nature of the apportionment (similar to the instructions in M21-1, Part VI, Subpart iii, 1.C.2.e).
Reference:  For more information on the right of a child(ren) to receive an apportionment of DIC when the surviving spouse is incarcerated, see

VI.iii.1.C.3.b.   Determining the Effective Date of an Apportionment of DIC Due to Incarceration
If VA receives a completed and signed VA Form 21-0788 or ITF within one year after the date VA notified the surviving spouse of the right of a child(ren) to receive a DIC apportionment during the surviving spouse’s incarceration, the effective date of entitlement, if entitlement exists, is the 61st day of incarceration following conviction.  Otherwise, the effective date can be no earlier than the date VA receives the form or ITF.
Important:  If VA does not receive notice of a surviving spouse’s incarceration until after incarceration has ended, no DIC apportionment is payable.  VA may award an apportionment, but only for the purpose of reducing the overpayment resulting from retroactive reduction of the surviving spouse’s benefits due to incarceration.  The child(ren) will not receive any actual payments.
Notes:
  • If there is a delay between the 61st day of incarceration following conviction and the date VA reduces an incarcerated surviving spouse’s DIC, avoid apportioning benefits to the child(ren) that VA has already overpaid to the surviving spouse by
    • ensuring the effective date of payment of the DIC apportionment to the child(ren) is no earlier than the first of the month following the month for which VA last paid the surviving spouse his/her full rate of DIC, and
    • applying any benefits due the child(ren) (as an apportionment), for the period between the 61st day of incarceration following conviction and the first of the month following the month for which VA last paid the surviving spouse his/her full rate of DIC, to the surviving spouse’s overpayment.
  • Before applying benefits due the child(ren) (as an apportionment) to the surviving spouse’s overpayment, ensure VA has not already recouped or waived the overpayment.
Reference:  For more information on the procedure for reducing/eliminating an overpayment resulting from a beneficiary’s incarceration, see M21-1, Part VI, Subpart iii, 1.B.1.g.

VI.iii.1.C.3.c.  Determining the Amount of DIC to Apportion to a Child(ren)
Only the amount of DIC that is not payable to the surviving spouse while he/she is incarcerated is subject to apportionment.  Of that amount, determine the amount of DIC, if any, to apportion based on the child(ren)’s individual need.
Consider the following when evaluating individual need:
  • child(ren)’s income and living expenses
  • the amount of DIC available for apportionment
  • needs and expenses of other children, and
  • special needs of any child.
Note:  Follow the instructions in M21-1, Part VII, Subpart iii, 1.A.3.g for proper documentation and approval of the apportionment decision.
Reference:  DIC is apportioned under the provisions of 38 CFR 3.665(e)(2).

4.  Adjusting DIC Awards When a Surviving Child Is Incarcerated

Introduction

Change Date
March 26, 2019

VI.iii.1.C.4.a.  Apportioning an Award When There Is an Eligible Surviving Spouse or Another Child(ren)
If a surviving child is incarcerated for more than 60 days for a felony, DIC shall be one-half the rate of compensation that would be payable for an SC disability that is 10-percent disabling, under 38 CFR 3.665(d)(3).
If a surviving child is incarcerated for a felony and there is an eligible surviving spouse or another child(ren), apportion the amounts not paid to the incarcerated child to the surviving spouse or other child(ren).  Determine entitlement to the apportionment based on the needs of the surviving spouse or remaining child(ren).
References:  For information on the

VI.iii.1.C.4.b.  Award Action When an Apportionment Is Authorized
If an apportionment is authorized, pay it effective the 61st day of the child’s incarceration following conviction for a felony if VA receives a completed and signed VA Form 21-0788 or ITF within one year after the date VA notified the surviving spouse or other child(ren) of his/her(their) right to an apportionment.  Otherwise, the effective date can be no earlier than the date VA received the form or ITF.
Note:  Follow the instructions in M21-1, Part VII, Subpart iii, 1.A.3.g for proper documentation and approval of the apportionment decision.
Reference:  For more information on apportioning DIC awards, see  M21-1, Part VI, Subpart iii, 1.C.3.

VI.iii.1.C.4.c.  Adjusting an Award When There Are No Other Eligible Survivors
If there is no eligible surviving spouse or any other child(ren), adjust the award to one half of the rate payable for an SC disability that is 10-percent disabling.

5.  Adjusting Awards When a Parent Is Incarcerated

Introduction
This topic contains information on adjusting benefit awards when a parent of a Veteran is incarcerated, including

Change Date
March 26, 2019

VI.iii.1.C.5.a.  Determining Entitlement for Two Parents
If a parent is incarcerated for more than 60 days following conviction for a felony, the amount of DIC payable to the incarcerated parent shall be no more than one-half the rate of compensation that would be payable for an SC disability that is 10-percent disabling, under 38 CFR 3.665(d)(3).
If two parents are both entitled to DIC and were living together prior to the time the DIC payable to one parent was reduced due to incarceration, consider them as two parents not living together for the purpose of determining entitlement to DIC, under 38 CFR 3.665(l).
Reference:  For more information on adjusting Parents’ DIC awards, see M21-1, Part IX, Subpart iii, 1.D.

VI.iii.1.C.5.b.  Handling a Parent’s Award That Is Less Than Half of the Rate Payable for an SC Disability That Is 10-Percent Disabling
If the incarcerated parent’s award is less than half of the rate payable for an SC disability that is 10-percent disabling, do not adjust the award.  For these cases, a parent’s DIC award is subject to reduction below the incarcerated rate due to increased income.
Note:  Maintain current income data as in other Parents’ DIC cases.

6.  Incarceration of Apportionees and Custodians of Apportionees

Introduction
This topic contains instructions for handling notice of incarceration of a(n)

Change Date
December 14, 2020

VI.iii.1.C.6.a.  Incarceration of an Apportionee
VA may not apportion
  • disability compensation or DIC to an individual who is incarcerated more than 60 days following conviction of a felony, or
  • pension to an individual who is incarcerated more than 60 days following conviction of a felony or misdemeanor.
Follow the steps in the table below when an apportionment must be discontinued based on the policy expressed in the above paragraph.
Exception:  If the incarcerated individual is both an apportionee and the custodian of one or more other apportionees, follow the instructions in M21-1, Part VI, Subpart iii, 1.C.6.c.
Step
Action
1
Follow the applicable instructions in the table in M21-1, Part VI, Subpart iii, 1.A.3.a, that culminate with preparation of a notice of proposed adverse action in Step 17, treating the incarcerated apportionee as an incarcerated beneficiary.
2
Did the apportionee respond to the notice of proposed adverse action within 65 days?
  • If yes, go to the next step.
  • If no, go to Step 5.
3
Did the apportionee request a hearing within 30 days of the date of the notice of proposed adverse action?
  • If yes,
    • hold the hearing and obtain any relevant evidence the apportionee identifies during the hearing, and
    • go to the next step.
  • If no, go to the next step.
4
Does the evidence of record show that discontinuation of the apportionment is in order?
  • If yes, go to the next step.
  • If no,
    • clear the pending end product 600
    • notify the apportionee that VA will not take the action it proposed, and
    • disregard the remaining steps in this table.
5
Discontinue the apportionment effective the 61st day of incarceration following conviction.  (The benefits VA had been apportioning to the incarcerated apportionee are now payable to the primary beneficiary.)
Important:  If the incarcerated apportionee is one of multiple apportionees to whom VA is apportioning benefits from the same primary beneficiary, do not discontinue the apportionment or change the amount of benefits VA is apportioning to the apportionees that are not incarcerated.
6
Notify the apportionee of the action taken.
Notes:
  • In the decision notice, inform the apportionee that he/she may reapply for an apportionment after the period of incarceration ends by submitting VA Form 21-0788.
  • The effective date of the new apportionment, if granted, is the date incarceration ended if VA receives the claim within one year of that date.  Otherwise, the effective date is the date VA received the claim.
7
Use the table below to determine the actions to take based on the type of VA benefit being apportioned.
If VA was apportioning …
Then…
disability compensation to the apportionee
no further action is required.
Note:  VA may continue to pay additional compensation to a Veteran for an incarcerated dependent.
DIC to the apportionee
follow the instructions in M21-1, Part VI, Subpart iii, 1.C.4.
pension to the apportionee
follow the instructions in M21-1, Part VI, Subpart iii, 1.C.1.

VI.iii.1.C.6.b.  Incarceration of a Custodian Who Is Not an Apportionee
VA may not issue payments to an apportionee’s custodian if the custodian has been incarcerated for any reason for more than 60 days.
Follow the steps in the table below when
  • payments to an apportionee’s custodian must be discontinued based on the policy expressed in the above paragraph, and
  • the custodian is not one of the apportionees.
Step
Action
1
Has the custodian’s period of incarceration ended?
  • If yes, go to the next step.
  • If no, go to Step 3.
2
Was(Were) the apportionee(s) reunited with the custodian?
  • If yes,
    • take no further action, and
    • disregard the remaining steps in this table.
  • If no, go to the next step.
3
Attempt to determine who is now the custodian of the apportionee(s).  Such attempts would include asking the custodian and primary beneficiary whether they know the name and address of the new custodian.
Notes:
  • Contact the primary beneficiary by letter only if attempts to contact him/her by telephone are unsuccessful.
  • Contact the custodian by letter at his/her last known address.
Reference:  Follow the instructions in M21-1, Part III, Subpart i, 2.D.1 for
  • requesting information by letter, and
  • documenting successful and unsuccessful attempts to obtain information by telephone.
4
Send notice of VA’s proposal to discontinue the apportionment, effective the first day of the month following a 60-day period that begins with the date of the notice, to the
  • incarcerated custodian at his/her last known address, and
  • new custodian of the apportionee(s), if the new custodian’s name and address are known.
Note:  In the notice of proposed adverse action, invite the apportionee(s) (or the new custodian of the apportionee(s)) to submit a new claim for an apportionment by completing and returning VA Form 21-0788.
Reference:  For more information on issuing notice of a proposed adverse action, see M21-1, Part X, Subpart ii, 3.A.
5
Did VA receive a response to the notice of proposed adverse action within 65 days?
  • If yes, go to the next step.
  • If no, go to Step 8.
6
Did VA receive a request for a hearing within 30 days of the date of the notice of proposed adverse action?
  • If yes,
    • hold the hearing and obtain any relevant evidence identified during the hearing, and
    • go to the next step.
  • If no, go to the next step.
7
Does the evidence of record show that discontinuation of the apportionment is still in order?
  • If yes, go to the next step,
  • If no,
    • notify the custodian of the apportionee(s) that VA will not take the action it proposed, and
    • disregard the remaining steps in this table.
Example:  Discontinuation of the apportionment would not be in order if
  • the period of the custodian’s incarceration has ended, and
  • the custodian is reunited with the apportionee(s).
Important:  The submission of a new claim for an apportionment (as referenced in Step 4) may not serve as the basis for a decision to continue the apportionment referenced in this step.  If the apportionee(s) (or new custodian of the apportionee(s)) submit(s) a new claim for an apportionment in response to the notice of proposed adverse action, follow the instructions in the note box at the bottom of this table after completing Steps 8 and 9.
8
Discontinue the apportionment effective the first day of the month following the month for which VA last paid the apportionment.  (The benefits VA had been apportioning to the apportionee(s) are now payable to the primary beneficiary.)
9
Follow the instructions in M21-1, Part VI, Subpart i, 1.B.1 for notifying the incarcerated custodian (and the new custodian of the apportionee(s), if the new custodian’s name and address are known) of the action taken.
Important:
  • Upon receipt of the VA Form 21-0788 referenced in Step 4 of the procedure described in the above table, process the new claim for an apportionment according to the instructions in M21-1, Part VII, Subpart iii, 1.A.
  • The effective date of the new apportionment, if granted, is the date the prior apportionment ended, if VA receives the new claim for an apportionment within one year of the date of the decision notice referenced in Step 9 of the procedure described in the above table.

VI.iii.1.C.6.c.  Incarceration of a Custodian Who Is Also an Apportionee
VA may not issue payments to an apportionee’s custodian if the custodian has been incarcerated for any reason for more than 60 days.
Follow the steps in the table below when
  • payments to an apportionee’s custodian must be discontinued based on the policy expressed in the above paragraph, and
  • the custodian is also one of the apportionees.
Step
Action
1
What type of benefit is VA apportioning to the custodian?
  • If VA is apportioning disability compensation to the custodian, proceed to the next step.
  • If VA is apportioning pension to the custodian, go to Step 3.
2
Was the custodian convicted for a felony?
  • If yes, go to Step 13.
  • If no, go to Step 4.
3
Was the custodian convicted for a felony or misdemeanor?
  • If yes, go to Step 13.
  • If no, go to the next step.
4
Has the custodian’s period of incarceration ended?
  • If yes, go to the next step.
  • If no, go to Step 6.
5
Was(Were) the apportionee(s) reunited with the custodian?
  • If yes,
    • take no further action, and
    • disregard the remaining steps in this table.
  • If no, go to the next step.
6
Attempt to determine who is now the custodian of the apportionee(s).  Such attempts would include asking the custodian and primary beneficiary whether they know the name and address of the new custodian.
Notes:
  • Contact the primary beneficiary by letter only if attempts to contact him/her by telephone are unsuccessful.
  • Contact the custodian by letter at his/her last known address.
Reference:  Follow the instructions in M21-1, Part III, Subpart i, 2.D.1 for
  • requesting information by letter, and
  • documenting successful and unsuccessful attempts to obtain information by telephone.
7
  • Prepare notice of VA’s proposal to stop apportioning benefits to the apportionee(s) that is(are) not incarcerated yet fall under the custodial purview of the incarcerated custodian, effective the first day of the month following a 60-day period that begins with the date of the notice.
  • Send the notice of proposed adverse action to
    • the incarcerated custodian at his/her last known address, and
    • the new custodian of the apportionee(s), if the new custodian’s name and address are known.
Notes:
  • In the notice of proposed adverse action, invite the apportionee(s) (or the new custodian of the apportionee(s)) to submit a new claim for an apportionment by completing and returning VA Form 21-0788.
  • The custodian referenced in this step is still entitled to an apportionment.  Propose to discontinue only the apportionment to the apportionee(s) that is(are) not incarcerated.  This is necessary because the
    • incarcerated apportionee may no longer serve as a custodian, and
    • net worth and monthly income and expenses of the new custodian might preclude VA from paying an apportionment to the apportionees that are not incarcerated.
Reference:  For more information on issuing notice of a proposed adverse action, see M21-1, Part X, Subpart ii, 3.A.
8
Did VA receive a response to the notice of proposed adverse action within 65 days?
  • If yes, go to the next step.
  • If no, go to Step 11.
9
Did VA receive a request for a hearing within 30 days of the date of the notice of proposed adverse action?
  • If yes,
    • hold the hearing and obtain any relevant evidence identified during the hearing, and
    • go to the next step.
  • If no, go to the next step.
10
Does the evidence of record show that discontinuation of the apportionment to the apportionees that are not incarcerated is still in order?
  • If yes, go to the next step.
  • If no,
    • notify the custodian of the apportionee(s) that VA will not take the action it proposed, and
    • disregard the remaining steps in this table.
Example:  Discontinuation of the apportionment would not be in order if
  • the period of the custodian’s incarceration has ended, and
  • the custodian is reunited with the apportionee(s).
Important:  The submission of a new claim for an apportionment (as referenced in Step 7) may not serve as the basis for a decision to continue the apportionment referenced in this step.  If the apportionee(s) (or new custodian of the apportionee(s)) submit(s) a new claim for an apportionment in response to the notice of proposed adverse action, follow the instructions in the note box at the bottom of this table after completing Steps 11 and 12.
11
Discontinue the apportionment to the apportionee(s) that is(are) not incarcerated effective the first day of the month following the month for which VA last paid the apportionment.  (The benefits VA had been apportioning to the apportionee(s) that is(are) not incarcerated are now payable to the primary beneficiary).
Important:  Do not change the amount of benefits VA is apportioning to the incarcerated custodian solely because VA discontinued the apportionment to the apportionee(s) that is(are) not incarcerated.
12
  • Follow the instructions in M21-1, Part VI, Subpart i, 1.B.1 for notifying the incarcerated custodian (and the new custodian of the apportionee(s), if the new custodian’s name and address are known) of the action taken.
  • Disregard the remaining steps in this table.
13
Send notice of VA’s proposal to discontinue the apportionment (of the custodian and the apportionee(s) under his/her custodial purview) effective the 61st day of incarceration following conviction to the custodian’s last known address.
Note:  In the notice of proposed adverse action,
  • invite the apportionee(s) that is(are) not incarcerated to submit a new claim for an apportionment by completing and returning VA Form 21-0788, and
  • ask the incarcerated custodian for the name and address of the new custodian.
Reference:  For more information on issuing notice of a proposed adverse action, see M21-1, Part X, Subpart ii, 3.A.
14
Make other attempts to determine who is now the custodian of the apportionee(s).  Such attempts would include contacting the primary beneficiary and asking him/her for the name and address of the new custodian.
Note:  If/When the name and address of the new custodian is obtained, invite the new custodian to submit a new claim for an apportionment by completing and returning VA Form 21-0788.
15
Did VA receive a response to the notice of proposed adverse action within 65 days?
  • If yes, go to the next step.
  • If no, go to Step 18.
16
Did VA receive a request for a hearing within 30 days of the date of the notice of proposed adverse action?
  • If yes,
    • hold the hearing and obtain any relevant evidence identified during the hearing, and
    • go to the next step.
  • If no, go to the next step.
17
Does the evidence of record show that discontinuation of the apportionment is in order?
  • If yes, go to the next step.
  • If no,
    • notify the custodian that VA will not take the action it proposed, and
    • disregard the remaining steps in this table.
Important:  The submission of a new claim for an apportionment (as referenced in Steps 13 and 14) may not serve as the basis for a decision to continue the apportionment referenced in this step.  If the apportionee(s) (or new custodian of the apportionee(s)) submit(s) a new claim for an apportionment, follow the instructions in the note box at the bottom of this table after completing Steps 18, 19, and 20.
18
Discontinue the apportionment effective the 61st day of incarceration following conviction.  (The benefits VA had been apportioning to the apportionee(s) are now payable to the primary beneficiary.)
19
Follow the instruction in M21-1, Part VI, Subpart i, 1.B.1 for notifying the incarcerated custodian (and the new custodian of the apportionee(s), if the new custodian’s name and address are known) of the action taken.
Notes:
  • In the decision notice, inform the custodian that he/she may reapply for an apportionment after the period of incarceration ends by submitting VA Form 21-0788.
  • The effective date of the new apportionment, if granted, is the date incarceration ended if VA receives the claim within one year of that date.  Otherwise, the effective date is the date VA received the claim.
20
If VA was apportioning pension to the incarcerated custodian, follow the instructions in M21-1, Part VI, Subpart iii, 1.C.1.
Important:
  • Upon receipt of the VA Form 21-0788 referenced in Step 7 or Steps 13 and 14 of the procedure described in the above table, process the new claim for an apportionment according to the instructions in M21-1, Part VII, Subpart iii, 1.A.
  • The effective date of the new apportionment, if granted, is the date the prior apportionment ended, if VA receives the new claim for an apportionment within one year of the date VA notified the custodian of VA’s decision to discontinue the prior apportionment.

7.  Resuming Payments or Making Award Adjustments After a Surviving Spouse’s Incarceration Ends

Introduction
This topic contains information on resuming payments or making award adjustments after a surviving spouse’s incarceration ends, including

Change Date
December 14, 2020

VI.iii.1.C.7.a.  Resuming Payments After Receiving Notice of a Surviving Spouse’s Release
After receiving notice from any official source that an incarcerated surviving spouse has been released, resume DIC or pension payments under 38 CFR 3.666(c).
The effective date is either
  • the date of release, if notification is received within one year, or
  • the date of receipt of the notice, if notification is not received within one year after release.
Note:  VA does not require the submission of a specific form to
  • report that incarceration has ended, or
  • request a resumption of benefits after incarceration has ended.
Reference:  For more information on resuming benefits after incarceration ends, see M21-1, Part VI, Subpart iii, 1.A.5.

VI.iii.1.C.7.b.  Requesting Financial Information When a Surviving Spouse With an Eligible Child(ren) Is Released
Following the release of a surviving spouse who was receiving pension prior to incarceration and has an eligible child(ren), request
  • evidence of the surviving spouse’s income and net worth, and
  • information as to whether or not the child(ren) remain in his/her custody.
Note:  Following the release of a beneficiary who was receiving Section 306 Pension prior to incarceration, continue to pay this benefit provided his/her income and net worth are within the applicable limits.

VI.iii.1.C.7.c.  Adjusting a Child’s Award When He/She Was Not in the Surviving Spouse’s Custody at the Time of Incarceration
Adjust an award to a child who was not in the surviving spouse’s custody at the time of incarceration, except in current-law pension cases, to the apportioned rate effective the date of release, if notification is received within one year.  Otherwise, the effective date is the
  • date of receipt of notice, or
  • date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share, if an overpayment would result.

VI.iii.1.C.7.d.  Discontinuing a Child’s Award When He/She Is Restored to the Surviving Spouse’s Custody
Discontinue an award to a child who is restored to the surviving spouse’s custody effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.

VI.iii.1.C.7.e.  Determining a Surviving Spouse’s Award
The surviving spouse’s award is subject to adjustment for any payments made to or for a child(ren) subsequent to the effective date of entitlement.
For the period between the date incarceration ended and the first of the month following the month for which VA last paid benefits to the child(ren), pay the surviving spouse the difference between
  • the full amount of benefits to which he/she is entitled, and
  • the amount of benefits VA paid to the child(ren) during the same period of time.
After taking the action described in the preceding paragraph, resume payment of the full amount of benefits to which the surviving spouse is entitled effective the date in the LAST PAID DATE field on the AWARD INFORMATION tab in Share.

VI.iii.1.C.7.f.  Notification Upon Release From Incarceration
Notify both the surviving spouse and the child(ren) of the adjustments made to their individual awards, according to the instructions in M21-1, Part VI, Subpart i, 1.B.1.
Inform the child(ren) that he/she(they) may submit a claim for an apportionment of the surviving spouse’s benefits if, after incarceration, the surviving spouse no longer resides with the child(ren).  Include a blank VA Form 21-0788 with the decision notice to the child(ren).
Note:  Because the child(ren) have already been placed on notice of the temporary nature of his/her(their) entitlement (in accordance with the instructions in M21-1, Part VI, Subpart iii, 1.C.2.e), there is no need to provide notice of proposed adverse action to the child(ren) before making the adjustments.

VI.iii.1.C.7.g.  Example: Adjustment of Surviving Spouse’s Award After Incarceration Ends
Situation:
  • A surviving spouse in receipt of Survivors Pension was convicted on October 18, 2012, and remained incarcerated after conviction.
  • The surviving spouse has a child who was born on June 9, 1998.  VA has been paying pension to the child since after the surviving spouse’s incarceration.
  • On July 3, 2014, VA received notice the surviving spouse was released on June 20, 2014.
  • The full amount of pension payable to the surviving spouse, based on no household income and one dependent, is $925.00.
  • VA last paid pension to the child in the amount of $180.00 for the month of June 2014.
 Result:
  • Discontinue the payment of pension to the child effective July 1, 2014.
  • Resume the payment of pension to the surviving spouse in the amounts and from the dates shown below:
    • $745.00 from June 20, 2014 (this represents the difference between the full rate of pension payable to the surviving spouse on this date and the amount of pension VA had been paying to the child each month), and
    • $925.00 from July 1, 2014.
  • Notify the surviving spouse and child (in separate letters) of the adjustments made to their individual awards.

8.  Resuming Payments or Making Award Adjustments After a Child’s or Parent’s Incarceration Ends

Introduction
This topic contains information on resuming payments or making award adjustments after a child’s or parent’s incarceration ends, including

Change Date
December 14, 2020

VI.iii.1.C.8.a.  Adjusting an Award When an Incarcerated Child Is Released
After a child’s incarceration ends,
  • adjust the surviving spouse’s award to include this child, and
  • resume DIC or pension payments effective either
    • the date of release, if VA received notice of the child’s release within one year of this date, or
    • the date VA received the notice, if VA did not receive notice within one year of the date of release.

VI.iii.1.C.8.b.  Resuming a Pension Award When an Incarcerated Child Is the Only Child
If the incarcerated child was the only child, and the surviving spouse’s pension award was discontinued because his/her income exceeded the limit for a surviving spouse with no dependents, resumption from the date of release is contingent upon the timely submission of evidence reestablishing entitlement.

VI.iii.1.C.8.c.  Adjusting an Award When an Incarcerated Child Who is Not Legally in the Surviving Spouse’s Custody Is Released
If the incarcerated child is released and legally out of the surviving spouse’s custody,
  • adjust the apportioned awards of any other children, and
  • resume the payment of benefits, provided all eligibility factors are met.

VI.iii.1.C.8.d.  Adjusting an Award When There Is No Surviving Spouse, but There Is Another Surviving Child(ren)
After a child’s incarceration ends, adjust all awards effective the
  • date of release, if VA received notice of release within one year of the release date
  • date of receipt of the notice of release, if VA did not receive notice of release within one year of the release date, or
  • first of the month following the month for which VA last paid the beneficiary, if an overpayment would result.
Adjust the apportioned awards of any other children and continue to pay benefits, provided all eligibility factors are met.

VI.iii.1.C.8.e.    Restoring Payments When There Is a Change in an Incarcerated Parent’s Payment Status
For those DIC cases in which an incarcerated parent’s payment status was changed from that of two parents living together to two parents not living together, upon release from incarceration, restore the payment status to that of two parents living together.
Note:  Presume the parents are reunited unless there is evidence to the contrary.

9.  General Information on the Payment of Accrued When a Claimant Is Incarcerated

Change Date
 January 19, 2022

VI.iii.1.C.9.a.  Paying Accrued to Incarcerated Individuals
Accrued payments may be paid in full to an eligible claimant that is incarcerated.  These one-time, lump sum payments are not subject to the reductions of 38 U.S.C. 5313, which limits payments of running monthly awards to individuals incarcerated for conviction of a felony.
Note:  Full payment of a Nehmer award can also be made to an incarcerated Nehmer class member.
Reference:  For more information on the payment of benefits under the Nehmer stipulation, see M21-1, Part VIII, Subpart i, 2.A–C.