## Section B. Adjustments Under 38 CFR 3.551 and 3.556

#### Overview

+------------+---------------------------------------------------------+
| ##         | > This section contains the following topics:           |
| ### In thi |                                                         |
| s Section  |                                                         |
+------------+---------------------------------------------------------+

  ---------- ------------------------------------------------ ------------
  Topic      Topic Name                                       See Page

  6          General Information on the Requirements for      6-B-2
             Reducing Pension Under 38 CFR 3.551              

  7          Reducing Pension Upon the Initial Admission of a 6-B-11
             Veteran                                          

  8          Reducing Pension Upon the Readmission of a       6-B-16
             Veteran                                          

  9          Adjusting Pension for Authorized Absences and    6-B-19
             Non-Bed Care Status                              

  10         Adjusting Pension When the Veteran Has           6-B-22
             Dependents                                       

  11         Restoring Previous Pension Rate Upon the         6-B-28
             Discharge of the Veteran                         
  ---------- ------------------------------------------------ ------------

#### 6. General Information on the Requirements for Reducing Pension Under 38 CFR 3.551 

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains general information on the        |
| roduction  | > requirements for reducing nonservice-connected        |
|            | > pension awards under 38 CFR 3.551 and 38 CFR 3.556.   |
|            | > It includes information on                            |
|            |                                                         |
|            | -   criteria for reducing pension of a veteran due to   |
|            |     hospitalization                                     |
|            |                                                         |
|            | -   benefits not subject to reduction under 38 CFR      |
|            |     3.551                                               |
|            |                                                         |
|            | -   awarding the greater benefit of pension or          |
|            |     compensation                                        |
|            |                                                         |
|            | -   screening AMIE or CAPRI reports to determine if     |
|            |     adjustment is required                              |
|            |                                                         |
|            | -   due process and controls for hospital adjustments   |
|            |                                                         |
|            | -   procedures for reducing pension due to              |
|            |     hospitalization                                     |
|            |                                                         |
|            | -   the provisions of *Public Law (PL)102-568* for      |
|            |     Improved Pension                                    |
|            |                                                         |
|            | -   adjusting awards involving additional allowance for |
|            |     aid and attendance (A&A)                            |
|            |                                                         |
|            | -   adjusting pension of incompetent veterans, and      |
|            |                                                         |
|            | -   cases involving entitlement to military retired     |
|            |     pay.                                                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > April 10, 2007                                        |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Generally, the provisions of [38 CFR                  |
| # a. Crite | > 3.551](http://                                        |
| ria for Re | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
| ducing Pen | > require a reduction of pension payments for a veteran |
| sion of a  | > who                                                   |
| Veteran Du |                                                         |
| e to Hospi | -   has not established dependents for VA purposes, and |
| talization |                                                         |
|            | -   is being furnished hospital, domiciliary or nursing |
|            |     home care by Department of Veterans Affairs (VA) or |
|            |     at VA expense.                                      |
|            |                                                         |
|            | > The following table summarizes the criteria for       |
|            | > reduction of Improved, Section 306, and Old Law       |
|            | > Pension.                                              |
+------------+---------------------------------------------------------+

Continued on next page

6\. General Information on the Requirements for Reducing Pension Under
38 CFR 3.551, Continued

  -----------------------------------------------------------------------
  a\. Criteria for Reducing Pension of a Veteran Due to Hospitalization
  (continued)

  -----------------------------------------------------------------------

+--------------------+-------------------------------------------------+
| Type of Pension    | Reduction for Inpatient Care at VA Expense      |
+--------------------+-------------------------------------------------+
| **Improved         | **Reduce pension to** **\$90** on the           |
| Pension** if the   |                                                 |
| veteran            | -   first day of the fourth month after the     |
|                    |     date of admission to domiciliary or nursing |
| -   is admitted    |     home care, or                               |
|     **on or after  |                                                 |
|     2/1/1990**, to | -   the first day of the month following        |
|     a              |     readmission if readmitted within six months |
|                    |     of a previous admission requiring           |
| ```{=html}         |     reduction.                                  |
| <!-- -->           |                                                 |
| ```                | ***Reference***: For more information about     |
| -   VA domiciliary | reduction of Improved Pension for periods of    |
|     or nursing     | hospitalization on or after February 1, 1990,   |
|     home, or       | see [38 CFR                                     |
|                    | 3.551(e)](http://www.warms                      |
| -   private        | .vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC). |
|     domiciliary or |                                                 |
|     nursing home   | ***Notes***:                                    |
|     at VA expense  |                                                 |
|                    | -   Pension is not reduced for admission to     |
| ```{=html}         |     hospital care.                              |
| <!-- -->           |                                                 |
| ```                | -   If transferred from hospital care to        |
| -   has no         |     nursing home or domiciliary care, the       |
|     dependents, or |     period of hospital care is not considered   |
|                    |     as nursing home or domiciliary care.        |
| -   has a spouse   |                                                 |
|     or child, but  | -   If transferred from nursing home or         |
|     is being paid  |     domiciliary care to hospital care and       |
|     pension as a   |     issued a complete discharge from the        |
|     veteran with   |     hospital or if hospitalized for more than   |
|     no dependents  |     six months, domiciliary or nursing home     |
|                    |     care is considered to have stopped          |
| ***Note***: A      |     effective the date of transfer to the       |
| veteran is         |     hospital care.                              |
| considered to have |                                                 |
| a dependent if he  | -   If transferred from a nursing home or       |
| or she has a child |     domiciliary to hospital care, then back to  |
| but does not       |     nursing home or domiciliary care, the       |
| receive pension    |     entire period is considered nursing home or |
| for the child      |     domiciliary care.                           |
| because it was     |                                                 |
| determined         | -   If transferred from domiciliary or nursing  |
| reasonable that    |     home care to hospital care and death occurs |
| some of the        |     while hospitalized, the entire period is    |
| child's estate be  |     considered nursing home or domiciliary      |
| consumed for       |     care.                                       |
| maintenance under  |                                                 |
| [38 CFR            | -   If a veteran is married, but paid as a      |
| 3                  |     veteran with no dependents, the withheld    |
| .274(b)](http://ww |     amount may be apportioned to the spouse     |
| w.warms.vba.va.gov |     under [38 CFR                               |
| /regs/38CFR/BOOKB/ |     3.454(b)(3)](http://www.warms               |
| PART3/S3_274.DOC). | .vba.va.gov/regs/38CFR/BOOKB/PART3/S3_454.DOC). |
+--------------------+-------------------------------------------------+

Continued on next page

6\. General Information on the Requirements for Reducing Pension Under
38 CFR 3.551, Continued

  -----------------------------------------------------------------------
  a\. Criteria for Reducing Pension of a Veteran Due to Hospitalization
  (continued)

  -----------------------------------------------------------------------

+--------------------+-------------------------------------------------+
| Type of Pension    | Reduction for Inpatient Care at VA Expense      |
+--------------------+-------------------------------------------------+
| **306 Pension** if | **Reduce pension to** **\$50** on the           |
| a veteran          |                                                 |
|                    | -   first day of the third month after          |
| -   is admitted to |     admission to hospital, nursing home, or     |
|     a              |     domiciliary care, or                        |
|                    |                                                 |
| ```{=html}         | -   first day of the month following            |
| <!-- -->           |     readmission is admitted within six months   |
| ```                |     of a previous admission requiring           |
| -   VA hospital,   |     reduction.                                  |
|     domiciliary,   |                                                 |
|     or nursing     | ***Reference***: For more information about     |
|     home, or       | reduction of Section 306 Pension for periods of |
|                    | hospitalization, see [38 CFR                    |
| -   private        | 3.551(c)](http://www.warms                      |
|     hospital,      | .vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC). |
|     domiciliary,   |                                                 |
|     or nursing     | ***Note***: If the veteran is married, but      |
|     home at VA     | receives pension as a veteran without           |
|     expense        | dependents, the pension withheld may be         |
|                    | apportioned to the veteran's spouse under [38   |
| ```{=html}         | CFR                                             |
| <!-- -->           | 3.454(b)(1)](http://www.warms                   |
| ```                | .vba.va.gov/regs/38CFR/BOOKB/PART3/S3_454.DOC). |
| -   has no         |                                                 |
|     dependents, or |                                                 |
|                    |                                                 |
| -   has            |                                                 |
|     dependents,    |                                                 |
|     but receives   |                                                 |
|     pension as a   |                                                 |
|     veteran with   |                                                 |
|     no dependents  |                                                 |
+--------------------+-------------------------------------------------+
| **Old Law          | Reduce pension on the first day of the seventh  |
| Pension** if a     | month after admission for hospitalization.      |
| veteran            |                                                 |
|                    | The reduced rate will be the greater of         |
| -   is admitted to |                                                 |
|     a              | -   **\$30**, or                                |
|                    |                                                 |
| ```{=html}         | -   **50%** or the amount payable during the    |
| <!-- -->           |     first six months of hospitalization.        |
| ```                |                                                 |
| -   VA hospital,   | ***Reference***: For more information about     |
|     domiciliary,   | reduction of Old Law Pension for periods of     |
|     or nursing     | hospitalization, see [38 CFR                    |
|     home, or       | 3.551(b)](http://www.warms                      |
|                    | .vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC). |
| -   private        |                                                 |
|     hospital,      | ***Notes***:                                    |
|     domiciliary,   |                                                 |
|     or nursing     | -   Readmission following a regular discharge   |
|     home at VA     |     is considered a new period of               |
|     expense, and   |     hospitalization.                            |
|                    |                                                 |
| ```{=html}         | -   Readmission within six months of an         |
| <!-- -->           |     irregular discharge is considered           |
| ```                |     continuous hospitalization from the         |
| -   has no         |     previous period of hospitalization.         |
|     dependent      |                                                 |
|     spouse, child, |                                                 |
|     or parent      |                                                 |
+--------------------+-------------------------------------------------+

Continued on next page

6\. General Information on the Requirements for Reducing Pension Under
38 CFR 3.551, Continued

+------------+---------------------------------------------------------+
| #          | > The provisions of [38 CFR                             |
| #### b. Be | > 3.551](http://                                        |
| nefits Not | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|  Subject t | > prohibit VA from reducing the following pension       |
| o Reductio | > benefits because of hospitalization.                  |
| n Under 38 |                                                         |
|  CFR 3.551 | -   Improved Pension if the veteran is an inpatient at  |
|            |     a VA hospital or hospitalized at VA expense on or   |
|            |     after February 1, 1990. Improved Pension is still   |
|            |     reduced for admission to a VA domiciliary or        |
|            |     nursing home                                        |
|            |                                                         |
|            | -   pension for any period during which a veteran is    |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   hospitalized for Hansen's disease                   |
|            |                                                         |
|            | -   maintained in a State soldiers' home                |
|            |                                                         |
|            | -   furnished hospital, domiciliary, or nursing home    |
|            |     care in a State home for which the only payment     |
|            |     made by VA is the per diem rate pursuant to [38     |
|            |     U.S.C.                                              |
|            |     1741](http://assembler.law.cornell.edu/             |
|            | uscode/html/uscode38/usc_sec_38_00001741----000-.html), |
|            |     or                                                  |
|            |                                                         |
|            | -   admitted to hospital or nursing home care for       |
|            |     rehabilitation after October 16, 1981, as outlined  |
|            |     in M21-1MR, Part III, Subpart v, 6.B.7.g            |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   pension for any period if the veteran establishes   |
|            |     the existence of a dependent                        |
|            |                                                         |
|            | -   Improved Pension if the veteran has a child, but is |
|            |     receiving pension as a veteran without a dependent  |
|            |     because it was determined reasonable that some part |
|            |     of the child's estate be consumed for the child's   |
|            |     maintenance under [38 CFR                           |
|            |     3.274(b)](http://w                                  |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_274.DOC), |
|            |     or                                                  |
|            |                                                         |
|            | -   Medal of Honor Special Pension.                     |
|            |                                                         |
|            | > ***Reference***: For information on Medal of Honor    |
|            | > Special Pension, see [M21-1MR, Part IX, Subpart ii,   |
|            | > 1.E.16.b](../pt09_sp02_ch01_secE.xml#IX.ii.1.E.16.b). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > If a veteran in receipt of pension subject to         |
| # c. Award | > reduction under [38 CFR                               |
| ing the Gr | > 3.551](http://                                        |
| eater Bene | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
| fit of Pen | > is also entitled to compensation, award the greater   |
| sion or Co | > benefit without necessity of a formal election for    |
| mpensation | > all periods involved.                                 |
|            | >                                                       |
|            | > ***Note:*** If Old Law or 306 Pension is reduced      |
|            | > under [38 CFR                                         |
|            | > 3.551](http://w                                       |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
|            | > review the evidence of record to see if it might be   |
|            | > advantageous for the payee to elect Improved Pension. |
+------------+---------------------------------------------------------+

Continued on next page

6\. General Information on the Requirements for Reducing Pension Under
38 CFR 3.551, Continued

+------------+---------------------------------------------------------+
| ##### d. S | > Use Options 7 (Discharge Report) and 11 (Special      |
| creening A | > Report for A&A/Pension) on the Automated Medical      |
| MIE or CAP | > Information Exchange (AMIE)/Compensation and Pension  |
| RI Reports | > Records Interchange (CAPRI) system to generate        |
|  to Determ | > reports for veteran pension beneficiaries who         |
| ine if Adj |                                                         |
| ustment Is | -   are still active patients, or                       |
|  Required  |                                                         |
|            | -   have been discharged at government expense.         |
|            |                                                         |
|            | > Screen each report across the Benefits Delivery       |
|            | > Network (BDN) to determine if an adjustment under [38 |
|            | > CFR                                                   |
|            | > 3.551](http://                                        |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|            | > is required.                                          |
|            | >                                                       |
|            | > ***Note***: Reports for claims located at pension     |
|            | > maintenance centers (PMC) are forwarded from home     |
|            | > regional offices (HROs) in accordance with M21-1MR,   |
|            | > Part V, Subpart iv, 2.1.g.                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### e.   | > Notice of proposed adverse action is required prior   |
|  Due Proce | > to any award adjustment. In order to provide proper   |
| ss and Con | > notification and establish proper controls            |
| trols for  |                                                         |
| Hospital A | -   prepare duplicate notices of proposed adverse       |
| djustments |     action, sending                                     |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   one notice to the veteran's address of record, and  |
|            |                                                         |
|            | -   one to the veteran at the medical facility          |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   clear an end product (EP) 135 with date of          |
|            |     admission as date of claim, and                     |
|            |                                                         |
|            | -   establish an EP 600 control to mature 65 days from  |
|            |     the date the notice of proposed adverse action is   |
|            |     sent.                                               |
|            |                                                         |
|            | > ***Reference***: For information on notice of         |
|            | > proposed adverse action requirements, see             |
|            |                                                         |
|            | -   VA's policy on due process notification at M21-1MR, |
|            |     Part I, 2.A.1.b                                     |
|            |                                                         |
|            | -   due process notification elements at M21-1MR, Part  |
|            |     III, Subpart v, 1.A.3.b                             |
|            |                                                         |
|            | -   information on retired pay election notification at |
|            |     M21-1MR, Part III, Subpart v, 5.A.3.b, and          |
|            |                                                         |
|            | -   information on due process for competency           |
|            |     determinations at M21-1MR, Part III, Subpart v,     |
|            |     9.B.6 (TBD) or [M21-1, Part IV,                     |
|            |     9.13](htt                                           |
|            | p://www.warms.vba.va.gov/admin21/m21_1/part4/ch09.doc). |
+------------+---------------------------------------------------------+

Continued on next page

6\. General Information on the Requirements for Reducing Pension Under
38 CFR 3.551, Continued

+------------+---------------------------------------------------------+
| ###        | > At the end of the control period, determine if the    |
| ## f. Proc | > veteran is still hospitalized by checking AMIE/CAPRI. |
| edures for | > If so,                                                |
|  Reducing  |                                                         |
| Pension Du | -   reduce pension benefits as required by [38 CFR      |
| e to Hospi |     3.551](http://                                      |
| talization | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|            |                                                         |
|            | -   send final notification to the veteran, and         |
|            |                                                         |
|            | -   use the table below for procedural system           |
|            |     information when processing the pension reduction.  |
+------------+---------------------------------------------------------+

+----------------------+-----------------------------------------------+
| Screen/Field         | Entry/Action                                  |
+----------------------+-----------------------------------------------+
| 403 screen           | If the 403 screen cannot be generated, it is  |
|                      | necessary to "build" the 403 screen by manual |
|                      | entry.                                        |
|                      |                                               |
|                      | The 403 screen may be generated by entering   |
|                      | on the 401 screen the date of admission in    |
|                      | the institutionalized veteran FROM date field |
|                      | beside the appropriate treatment facility     |
|                      | regional office (RO) number to effect         |
|                      | reduction. The TO date would be completed     |
|                      | with the date of release from inpatient care  |
|                      | if action is taken after the veteran is       |
|                      | discharged.                                   |
|                      |                                               |
|                      | ***Reference***: For more information, see    |
|                      |                                               |
|                      | -   [M21-1, Part V,                           |
|                      |     5.08b(1)](http://www.w                    |
|                      | arms.vba.va.gov/admin21/m21_1/part5/ch05.doc) |
|                      |     for completion of the 401 screen          |
|                      |                                               |
|                      | -   [M21-1, Part V,                           |
|                      |     6.01](http://www.w                        |
|                      | arms.vba.va.gov/admin21/m21_1/part5/ch06.doc) |
|                      |     for completion of the 403 screen, and     |
|                      |                                               |
|                      | -   the Consolidated Address and Territorial  |
|                      |     Bulletin 1-M, Section IV, for a list of   |
|                      |     RO numbers.                               |
+----------------------+-----------------------------------------------+

Continued on next page

6\. General Information on the Requirements for Reducing Pension Under
38 CFR 3.551, Continued

  -----------------------------------------------------------------------
  f\. Procedures for Reducing Pension Due to Hospitalization (continued)

  -----------------------------------------------------------------------

+----------------------+-----------------------------------------------+
| Screen/Field         | Entry/Action                                  |
+----------------------+-----------------------------------------------+
| IMMED field on the   | Use the IMMED field when the reduction is to  |
| 401 screen           | be effective as of the date entered in the    |
|                      | FROM date field. On the 401 screen, enter     |
|                      |                                               |
|                      | -   the appropriate date of reduction in the  |
|                      |     FROM date field                           |
|                      |                                               |
|                      | -   "*X*" in the IMMED field to effect        |
|                      |     reduction as of the FROM date entered,    |
|                      |     and                                       |
|                      |                                               |
|                      | -   if appropriate, the date of discharge     |
|                      |     from inpatient care in the TO date field. |
|                      |                                               |
|                      | ***Note***: In 306 Pension cases, if there    |
|                      | are any periods of authorized absence in      |
|                      | excess of 96 hours during institutionalized   |
|                      | care, it may be necessary to determine the    |
|                      | aggregate number of days of hospitalization   |
|                      | and adjust the dates of hospitalization       |
|                      | accordingly. See [38 CFR                      |
|                      | 3.551(f)](http://www.warms.v                  |
|                      | ba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC). |
|                      |                                               |
|                      | ***Example***: A veteran receiving 306        |
|                      | Pension was admitted to a VA domiciliary      |
|                      | October 27, 2006 and received a regular       |
|                      | discharge January 4, 2007. During the period  |
|                      | of hospitalization, the veteran had an        |
|                      | authorized absence of five days from December |
|                      | 17, 2006 through December 21, 2006. Adjusted  |
|                      | for the authorized absence, the computed      |
|                      | discharge date would be December 30, 2006.    |
|                      | Since 306 Pension is reduced from the first   |
|                      | day of the third calendar month following     |
|                      | admission (January 1, 2007, in this case), no |
|                      | reduction is necessary.                       |
+----------------------+-----------------------------------------------+
| REASON CODE field on | Enter reason code                             |
| the 403 screen       |                                               |
|                      | -   35, as of the date of reduction, and      |
|                      |                                               |
|                      | -   36, as of the date of restoration of      |
|                      |     benefits.                                 |
+----------------------+-----------------------------------------------+

Continued on next page

6\. General Information on the Requirements for Reducing Pension Under
38 CFR 3.551, Continued

  -----------------------------------------------------------------------
  f\. Procedures for Reducing Pension Due to Hospitalization (continued)

  -----------------------------------------------------------------------

+----------------------+-----------------------------------------------+
| Screen/Field         | Entry/Action                                  |
+----------------------+-----------------------------------------------+
| WITHHOLDING CODE     | Enter a                                       |
| field on the         |                                               |
|                      | -   Type 4 withholding code for Section 306   |
| 403 screen           |     and Improved Pension benefits, and        |
|                      |                                               |
|                      | -   Type 5 withholding code for Old Law       |
|                      |     Pension benefits.                         |
+----------------------+-----------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > Any Improved Pension in excess of the \$90 per month, |
| ## g. Prov | > to which the veteran would otherwise be entitled,     |
| ision of P | > must be deposited in a revolving fund at the VA       |
| L 102-568  | > medical facility furnishing nursing home care.        |
| for Improv | >                                                       |
| ed Pension | > These funds are made available to help defray the     |
|            | > operating expenses of the medical center.             |
|            | >                                                       |
|            | > ***Reference***: For more information on completing   |
|            | > the 401 screen with the medical facility number, see  |
|            | > [M21-1, Part V,                                       |
|            | > 5.08](htt                                             |
|            | p://www.warms.vba.va.gov/admin21/m21_1/part5/ch05.doc). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > For information on adjustments to compensation or     |
| h. Adjusti | > pension involving an Aid and Attendance (A&A)         |
| ng Awards  | > allowance, see M21-1MR, Part III, Subpart v,          |
| Involving  | > 6.C.12.a.                                             |
| Additional |                                                         |
|  Allowance |                                                         |
|  for Aid a |                                                         |
| nd Attenda |                                                         |
| nce (A&A)  |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### i. A | > The procedures in this section apply equally to cases |
| djusting P | > of competent and incompetent veterans. However, for   |
| ension of  | > additional actions required for hospitalized          |
| Incompeten | > incompetent veterans, see                             |
| t Veterans |                                                         |
|            | -   M21-1MR, Part III, Subpart v, 6.E.21.a, and         |
|            |                                                         |
|            | -   M21-1MR, Part III, Subpart v, 6.F.29.               |
+------------+---------------------------------------------------------+

Continued on next page

6\. General Information on the Requirements for Reducing Pension Under
38 CFR 3.551, Continued

+------------+---------------------------------------------------------+
| ##### j. C | > For adjustment of pension claims with special law     |
| ases Invol | > (SL) code 06 for military retirees, see M21-1MR, Part |
| ving Entit | > III, Subpart v, 5.B.8.a.                              |
| lement to  |                                                         |
| Military R |                                                         |
| etired Pay |                                                         |
+------------+---------------------------------------------------------+

#### 7. Reducing Pension Upon the Initial Admission of a Veteran

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on reducing an award  |
| troduction | > upon the initial admission of a veteran for treatment |
|            | > or care. It includes information on                   |
|            |                                                         |
|            | -   establishing a date of reduction for an original or |
|            |     reopened claim                                      |
|            |                                                         |
|            | -   reducing Improved Pension: admission before         |
|            |     February 1, 1990                                    |
|            |                                                         |
|            | -   reducing Improved Pension: admission after January  |
|            |     31, 1990                                            |
|            |                                                         |
|            | -   considering the classification of care when a       |
|            |     veteran is transferred                              |
|            |                                                         |
|            | -   reducing Section 306 Pension cases                  |
|            |                                                         |
|            | -   the impact of *PL 101-237* on Section 306 Pension   |
|            |     cases                                               |
|            |                                                         |
|            | -   requesting certification when a veteran is admitted |
|            |     to a nursing home for rehabilitation                |
|            |                                                         |
|            | -   establishing controls for future adjustment in      |
|            |     rehabilitation cases                                |
|            |                                                         |
|            | -   allowing for an extension of the rehabilitation     |
|            |     period                                              |
|            |                                                         |
|            | -   application of 38 CFR 3.551(h) when initial         |
|            |     admission is for other than rehabilitation          |
|            |                                                         |
|            | -   considering readmission after discharge, and        |
|            |                                                         |
|            | -   reducing Old Law Pension cases.                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > April 10, 2007                                        |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > When an original or reopened claim for disability     |
| a. Establi | > benefits is filed after admission for treatment or    |
| shing a Da | > care, the date controlling the date of reduction is   |
| te of Redu | > the date of admission, and not the inception date of  |
| ction for  | > entitlement to monetary benefits.                     |
| an Origina | >                                                       |
| l or Reope | > ***Reference***: For more information about the       |
| ned Claim  | > effective date of reduction of pension due to         |
|            | > hospitalization, see [38 CFR                          |
|            | > 3.501(i)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_501.DOC). |
|            | >                                                       |
|            | > ***Not***e: The effective date of reduction due to    |
|            | > hospitalization is determined independently of the    |
|            | > effective date for award of benefits, as determined   |
|            | > under [38 CFR                                         |
|            | > 3.400(b)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_400.DOC). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b. R | > Information on reducing an Improved Pension award     |
| educing Im | > because of hospitalization before February 1, 1990,   |
| proved Pen | > was previously discussed in the former M21-1, Part    |
| sion: Admi | > IV, 18.16 (b)(1).                                     |
| ssion Befo |                                                         |
| re Februar |                                                         |
| y 1, 1990  |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

7\. Reducing Pension Upon the Initial Admission of a Veteran, Continued

+------------+---------------------------------------------------------+
| ##### c.   | > Use the table below for information regarding         |
|  Reducing  | > reductions of Improved Pension for veterans who are   |
| Improved P | > admitted for treatment or care after January 31,      |
| ension: Ad | > 1990.                                                 |
| mission Af |                                                         |
| ter Januar |                                                         |
| y 31, 1990 |                                                         |
+------------+---------------------------------------------------------+

  ---------------------------- ---------------------------------------------------------------------------
  When a veteran \...          Then \...

  having neither a dependent   under the provisions of [38 CFR
  spouse nor child is being    3.551(e)](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC),
  furnished domiciliary or     reduce pension to \$90 effective the first day of the fourth calendar month
  nursing home care by VA      following the month of admission.

  is furnished hospital care   effective February 1, 1990, the basic Improved Pension is no longer
  by VA                        reduced. However, special monthly pension for Aid and Attendance is still
                               reduced under [38 CFR
                               3.552](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_552.DOC).
  ---------------------------- ---------------------------------------------------------------------------

+------------+---------------------------------------------------------+
| ##### d    | > For Improved Pension reductions because of            |
| . Consider | > domiciliary or nursing home care, use the table below |
| ing the Cl | > to determine how to consider treatment or care for    |
| assificati | > reduction purposes when a veteran is transferred      |
| on of Care | > between VA institutions.                              |
|  When a Ve | >                                                       |
| teran Is T | > Reference: For more information on Improved Pension   |
| ransferred | > reductions, see [38 CFR                               |
|            | > 3.551(e)(4)](http://w                                 |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC). |
+------------+---------------------------------------------------------+

+----------------------------------+-----------------------------------+
| If a veteran \...                | Then \...                         |
+----------------------------------+-----------------------------------+
| -   is furnished hospital care   | do *not* consider the period of   |
|     by VA, and                   | hospital care as nursing home or  |
|                                  | domiciliary care.                 |
| -   is transferred to            |                                   |
|     VA-furnished nursing home or |                                   |
|     domiciliary care             |                                   |
+----------------------------------+-----------------------------------+
| -   is transferred from          | consider the care as continuous   |
|     VA-furnished nursing home or | nursing home or domiciliary care, |
|     domiciliary care to hospital | provided that the period of       |
|     care, and                    | hospitalization does not exceed   |
|                                  | six months.                       |
| -   is transferred back to       |                                   |
|     nursing home or domiciliary  |                                   |
|     care                         |                                   |
+----------------------------------+-----------------------------------+
| -   is transferred from          | consider the entire period of VA  |
|     VA-furnished domiciliary or  | care as domiciliary or nursing    |
|     nursing home care to         | home care.                        |
|     VA-furnished hospital care,  |                                   |
|     and                          |                                   |
|                                  |                                   |
| -   dies while under VA          |                                   |
|     furnished hospital care      |                                   |
+----------------------------------+-----------------------------------+

Continued on next page

7\. Reducing Pension Upon the Initial Admission of a Veteran, Continued

  -----------------------------------------------------------------------
  d\. Considering the Classification of Care When a Veteran Is
  Transferred (continued)

  -----------------------------------------------------------------------

+----------------------------------+-----------------------------------+
| If a veteran \...                | Then \...                         |
+----------------------------------+-----------------------------------+
| -   is completely discharged     | consider any nursing home or      |
|     from VA care following a     | domiciliary care as terminated    |
|     period of hospitalization,   | effective the date of transfer to |
|     or                           | the VA medical center (VAMC).     |
|                                  |                                   |
| -   is hospitalized for a period |                                   |
|     that exceeds six months      |                                   |
+----------------------------------+-----------------------------------+

+------------+---------------------------------------------------------+
| ###        | > Under [38 CFR                                         |
| ## e. Redu | > 3.551(c)](http://w                                    |
| cing Secti | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
| on 306 Pen | > when a veteran having neither dependent spouse nor    |
| sion Cases | > child is being furnished hospital, nursing home, or   |
|            | > domiciliary care by VA, reduce Section 306 Pension to |
|            | > \$50 effective the first day of the third calendar    |
|            | > month following the month of admission.               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > ***Background***                                      |
| f. Impact  | >                                                       |
| of Public  | > Before enactment of *PL 101-237*, the procedures for  |
| Law 101-23 | > reducing Section 306 Pension cases were the same as   |
| 7 on Secti | > the procedures used for reducing Improved Pension     |
| on 306 Pen | > cases before February 1, 1990.                        |
| sion Cases | >                                                       |
|            | > *VAOPGCPREC 19-90*, dated June 15, 1990, held that    |
|            | > the                                                   |
|            |                                                         |
|            | -   provisions of *PL 101-237*, which amended [38       |
|            |     U.S.C.                                              |
|            |     5503(a)](http://assembler.law.cornell.edu/          |
|            | uscode/html/uscode38/usc_sec_38_00005503----000-.html), |
|            |     apply *only* to veterans receiving Improved Pension |
|            |                                                         |
|            | -   provisions of *PL 95-588*, Section 307 were         |
|            |     incorrectly applied to veterans receiving Section   |
|            |     306 Pension, and                                    |
|            |                                                         |
|            | -   laws in effect before January 1, 1979, apply to     |
|            |     these Section 306 Pension cases.                    |
|            |                                                         |
|            | > ***Action***                                          |
|            | >                                                       |
|            | > Apply the regulations in effect before January 1,     |
|            | > 1979, to all retroactive, current, and future         |
|            | > reductions of Section 306 Pension. However, if        |
|            | > Section 306 Pension was previously reduced using      |
|            | > Improved Pension regulations, do not create           |
|            | > overpayments.                                         |
+------------+---------------------------------------------------------+

Continued on next page

7\. Reducing Pension Upon the Initial Admission of a Veteran, Continued

+------------+---------------------------------------------------------+
| ##### g.   | > On receipt of a report for an Improved Pension case   |
|  Requestin | > subject to reduction under [38 CFR                    |
| g Certific | > 3.551(e)](http://w                                    |
| ation When | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
|  a Veteran | > as it pertains to nursing home admissions, follow the |
|  Is Admitt | > procedures in M21-1MR, Part III, Subpart v, 6.A.2.b.  |
| ed to a Nu | > In addition to those procedures                       |
| rsing Home |                                                         |
|  for Rehab | -   request certification of participation in a         |
| ilitation  |     prescribed rehabilitation program, and              |
|            |                                                         |
|            | -   ask the VAMC to certify the beginning date of care  |
|            |     under the [38 U.S.C. Chapter 17, Section            |
|            |     1718](http://assembler.law.cornell.edu              |
|            | /uscode/html/uscode38/usc_sec_38_00001718----000-.html) |
|            |     rehabilitation program.                             |
|            |                                                         |
|            | > The VAMC should furnish the appropriate certification |
|            | > and also should furnish notification of               |
|            | > discontinuance of participation in such a             |
|            | > rehabilitation program, if discontinuance occurs      |
|            | > prior to discharge.                                   |
|            | >                                                       |
|            | > Consider status under the rehabilitation program as   |
|            | > continuing until the VAMC reports that the veteran's  |
|            | > participation in the rehabilitation program has       |
|            | > ended.                                                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Establish a control for 90 days from the date of      |
| h. Establi | > admission to review for a later reduction of Improved |
| shing Cont | > Pension, upon receipt of certification of             |
| rols for F | > participation in a [38 U.S.C. Chapter 17, Section     |
| uture Adju | > 1718](http://assembler.law.cornell.edu                |
| stment in  | /uscode/html/uscode38/usc_sec_38_00001718----000-.html) |
| Rehabilita | > program. For more information about delaying a        |
| tion Cases | > hospitalization reduction because of rehabilitation,  |
|            | > see M21-1MR, Part III, Subpart v, Chapter 6.B.7.i.    |
|            | >                                                       |
|            | > ***Reference***: For information on establishing a    |
|            | > diary control, see the *Share User Guide*.            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > If a VAMC certifies that a veteran receiving Improved |
| # i. Allow | > Pension is participating in a prescribed              |
| ing for an | > rehabilitation program under [38 U.S.C. Chapter 17,   |
|  Extension | > Section                                               |
|  of the Re | > 1718](http://assembler.law.cornell.edu/               |
| habilitati | uscode/html/uscode38/usc_sec_38_00001718----000-.html), |
| on Period  | > do not reduce pension due to VA-furnished nursing     |
|            | > home care for a period of up to three additional      |
|            | > calendar months after                                 |
|            |                                                         |
|            | -   the last day of the third month following the month |
|            |     of admission, or                                    |
|            |                                                         |
|            | -   the last day of the month of readmission to the     |
|            |     hospital or nursing home.                           |
|            |                                                         |
|            | > ***Reference***: For more information about           |
|            | > hospitalization for rehabilitation, see [38 CFR       |
|            | > 3.551(h)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC). |
+------------+---------------------------------------------------------+

Continued on next page

7\. Reducing Pension Upon the Initial Admission of a Veteran, Continued

+------------+---------------------------------------------------------+
| i\.        | > After 90 days from admission, send a follow-up        |
| Allowing   | > inquiry through AMIE/CAPRI to verify the status of    |
| for an     | > the veteran's rehabilitation program.                 |
| Extension  | >                                                       |
| of the     | > ***Note***: Generally, rehabilitation services should |
| Reha       | > not take more than the additional three months. Under |
| bilitation | > [38 CFR                                               |
| Period     | > 3.551(h)(2)](http://w                                 |
| (          | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
| continued) | > if the veteran remains hospitalized or in a nursing   |
|            | > home for rehabilitation beyond this time period, the  |
|            | > Chief Medical Director or designee must certify that  |
|            | > the need for furnishing continued care is to provide  |
|            | > the veteran with a program of rehabilitation designed |
|            | > to restore the veteran's ability to function within   |
|            | > the veteran's family and community.                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### j. A | > When a veteran receiving Improved Pension is admitted |
| pplication | > to VA-furnished nursing home care for purposes other  |
|  of 38 CFR | > than rehabilitation, [38 CFR                          |
|  3.551(h)  | > 3.551(h)](http://                                     |
| When the I | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
| nitial Adm | > applies if, at a later time during the continuous     |
| ission Is  | > period of care, the primary purpose of care becomes   |
| for Other  | > that of rehabilitation.                               |
| Than Rehab |                                                         |
| ilitation  |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### k.   | > After discharge from a rehabilitation program,        |
|  Consideri | > consider a readmission within six months that is      |
| ng Readmis |                                                         |
| sion After | -   for additional rehabilitation, as an extension of   |
|  Discharge |     the initial period of rehabilitation, and           |
|            |                                                         |
|            | -   for purposes other than that of further             |
|            |     rehabilitation, as an initial admission to the      |
|            |     nursing home.                                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### l.   | > Under [38 CFR                                         |
| Reducing O | > 3.551(b)](http://w                                    |
| ld Law Pen | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
| sion Cases | > when a veteran in receipt of Old Law Pension, having  |
|            | > neither spouse, child, nor dependent parent, has      |
|            | > received six full months of treatment or care         |
|            |                                                         |
|            | -   reduce the award effective the first day of the     |
|            |     seventh calendar month following admission, and     |
|            |                                                         |
|            | -   pay a maximum monthly amount of \$30 or 50 percent  |
|            |     of the amount payable during the six-month period,  |
|            |     whichever is greater.                               |
+------------+---------------------------------------------------------+

#### 8. Reducing Pension Upon the Readmission of a Veteran

+------------+---------------------------------------------------------+
| ##### Int  | > This topic contains information on reducing an award  |
| roduction  | > when a veteran is readmitted for treatment or care.   |
|            | > It includes information on                            |
|            |                                                         |
|            | -   reducing Improved Pension: readmission before       |
|            |     February 1, 1990                                    |
|            |                                                         |
|            | -   reducing Improved Pension: readmission after        |
|            |     January 31, 1990                                    |
|            |                                                         |
|            | -   reducing Section 306 Pension cases                  |
|            |                                                         |
|            | -   handling an Old Law Pension case: regular discharge |
|            |     or discharge to outpatient care, and                |
|            |                                                         |
|            | -   handling an Old Law Pension case: irregular         |
|            |     discharge.                                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > April 10, 2007                                        |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Information on reducing an Improved Pension award     |
| ### a. Red | > when a veteran was readmitted for treatment or care   |
| ucing Impr | > before February 1, 1990 was discussed in the former   |
| oved Pensi | > M21-1, Part IV, 18.17(a)(1).                          |
| on: Readmi |                                                         |
| ssion Befo |                                                         |
| re Februar |                                                         |
| y 1, 1990  |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b. R | > Use the table below to take appropriate action when   |
| educing Im |                                                         |
| proved Pen | -   a prior period of VA-furnished nursing home or      |
| sion: Read |     domiciliary care was terminated for any reason, and |
| mission Af |                                                         |
| ter Januar | -   a notice of readmission of a veteran receiving      |
| y 31, 1990 |     Improved Pension subject to reduction under [38 CFR |
|            |     3.551(e)](http://                                   |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|            |     is received.                                        |
+------------+---------------------------------------------------------+

  ------------------------------------- -----------------------------------------------------------------------------
  If the readmission occurs \...        Then \...

  *within* the six-month period         reduce payments to \$90 under [38 CFR
  following termination of a prior      3.551(e)(2)](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC)
  three full calendar month period of   effective as of the first day of the month following the month of
  treatment or care by VA in a nursing  readmission.
  home or domiciliary                   

  *after* six months have elapsed       reduce payments as of first day of the month following the third full month
  following a prior period of treatment after readmission. For example, a veteran readmitted to a VA domiciliary May
  or care by VA in a nursing home or    20, 2006, would have the Improved pension reduced September 1, 2006.
  domiciliary                           
  ------------------------------------- -----------------------------------------------------------------------------

Continued on next page

8\. Reducing Pension Upon the Readmission of a Veteran, Continued

  -----------------------------------------------------------------------
  b\. Reducing Improved Pension: Readmission After January 31, 1990
  (continued)

  -----------------------------------------------------------------------

  --------------------------------------------------------------------------- ---------------------------------
  If the readmission occurs \...                                              Then \...

  *after* a period of treatment or care by VA of less than three full         consider the readmission an
  calendar months in a nursing home or domiciliary (before reduction action   initial admission, regardless of
  under [38 CFR                                                               the reason for termination of the
  3.551(e)](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC))   prior period of care.
  --------------------------------------------------------------------------- ---------------------------------

+------------+---------------------------------------------------------+
| ##### c    | > Use the table below to take appropriate action in a   |
| . Reducing | > Section 306 Pension case when a                       |
|  Section 3 |                                                         |
| 06 Pension | -   prior period of VA-furnished care was terminated    |
|            |     for any reason, and                                 |
|            |                                                         |
|            | -   notice of readmission of a veteran receiving        |
|            |     pension subject to reduction under [38 CFR          |
|            |     3.551(c)](http://                                   |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|            |     is received.                                        |
+------------+---------------------------------------------------------+

  --------------------------------------------------------------------------- --------------------------------------------------------------------------
  If the readmission occurs \...                                              Then \...

  *within* the six-month period following termination of a prior two full     reduce payments to \$50 under the provisions of [38 CFR
  calendar month period of care by VA in a hospital, nursing home, or         3.551(c)](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC)
  domiciliary                                                                 effective as of the first of the month following the month of readmission.

  *after* six months have elapsed following a prior period of treatment or    reduce payments effective the first day of the third month following the
  care by VA in a hospital, nursing home, or domiciliary                      month of readmission.

  *after* a period of treatment or care by VA of less than two full calendar  consider the readmission an initial admission, regardless of the reason
  months in a hospital, nursing home, or domiciliary (before reduction action for termination of the prior period of care.
  under [38 CFR                                                               
  3.551(c)](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC))   
  --------------------------------------------------------------------------- --------------------------------------------------------------------------

+------------+---------------------------------------------------------+
| ##         | > Under [38 CFR                                         |
| ### d. Han | > 3.551(b)(2)](http://w                                 |
| dling an O | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
| ld Law Pen | > in an Old Law Pension case, when the prior period of  |
| sion Case: | > treatment or care was terminated by a regular         |
|  Regular D | > discharge or a discharge to outpatient care, a        |
| ischarge o | > readmission the next day to the same or any other VA  |
| r Discharg | > institution begins a new period of hospitalization,   |
| e to Outpa | > unless the veteran was released for purposes of       |
| tient Care | > admission to another VA institution.                  |
+------------+---------------------------------------------------------+

Continued on next page

8\. Reducing Pension Upon the Readmission of a Veteran, Continued

+------------+---------------------------------------------------------+
| ##         | > Use the table below to take appropriate action on an  |
| ### e. Han | > award in an Old Law Pension case when there has been  |
| dling an O | > an irregular discharge.                               |
| ld Law Pen |                                                         |
| sion Case: |                                                         |
|  Irregular |                                                         |
|  Discharge |                                                         |
+------------+---------------------------------------------------------+

+----------------------------------+-----------------------------------+
| If \...                          | Then \...                         |
+----------------------------------+-----------------------------------+
| -   the readmission occurs       | -   consider the readmission a    |
|     *within* six months from the |     continuation of that prior    |
|     date of the previous         |     period of hospitalization,    |
|     admission                    |     and                           |
|                                  |                                   |
| -   the prior hospitalization    | -   do *not* reduce benefits      |
|     was terminated by an         |     before the first day of the   |
|     irregular discharge, and     |     seventh calendar month        |
|                                  |     following the month of        |
| -   payments have been restored  |     original admission, exclusive |
|     at the full rate under [38   |     of authorized absences.       |
|     CFR                          |                                   |
|     3.556(d)                     |                                   |
| ](http://www.warms.vba.va.gov/re |                                   |
| gs/38CFR/BOOKB/PART3/S3_556.DOC) |                                   |
+----------------------------------+-----------------------------------+
| -   the readmission occurs six   | consider the readmission a new    |
|     months or more *after* the   | admission, per [38 CFR            |
|     date of the previous         | 3.551(b)(3                        |
|     admission                    | )](http://www.warms.vba.va.gov/re |
|                                  | gs/38CFR/BOOKB/PART3/S3_551.DOC). |
| -   the prior hospitalization    |                                   |
|     was terminated by an         |                                   |
|     irregular discharge, and     |                                   |
|                                  |                                   |
| -   payments have been restored  |                                   |
|     at the full rate under [38   |                                   |
|     CFR                          |                                   |
|     3.556(d)                     |                                   |
| ](http://www.warms.vba.va.gov/re |                                   |
| gs/38CFR/BOOKB/PART3/S3_556.DOC) |                                   |
+----------------------------------+-----------------------------------+
| the readmission occurs           | -   consider the period, while in |
|                                  |     an irregular discharge        |
| -   *within* six months from the |     status, as a continuing       |
|     date of the initial          |     period of treatment or care,  |
|     admission, and               |     and                           |
|                                  |                                   |
| -   before reduction action      | -   reduce the award as of the    |
|     under [38 CFR                |     first day of the seventh      |
|     3.551(b)(1)                  |     calendar month following the  |
| ](http://www.warms.vba.va.gov/re |     month of the initial          |
| gs/38CFR/BOOKB/PART3/S3_551.DOC) |     admission, exclusive of       |
|                                  |     *only* authorized absences.   |
+----------------------------------+-----------------------------------+
| the readmission occurs six       | follow the procedures provided    |
| months or more *after* the       | for an initial admission in       |
| irregular discharge              | M21-1MR, Part III, Subpart v,     |
|                                  | 6.B.7.l.                          |
+----------------------------------+-----------------------------------+

#### 9. Adjusting Pension for Authorized Absences and Non-Bed Care Status

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on adjusting an award |
| troduction | > for authorized absences and non-bed care status. It   |
|            | > includes information on                               |
|            |                                                         |
|            | -   adjusting for authorized absences in Section 306    |
|            |     Pension cases                                       |
|            |                                                         |
|            | -   restoring the full rate for absences of 30 days or  |
|            |     more                                                |
|            |                                                         |
|            | -   reducing Section 306 or Old Law Pension upon a      |
|            |     veteran's return from an authorized absence         |
|            |                                                         |
|            | -   adjusting an award for absences of less than 30     |
|            |     days, and                                           |
|            |                                                         |
|            | -   restoring full pension rates because of hardship.   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > April 10, 2007                                        |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > For the purpose of computing periods of               |
| ### a. Adj | > hospitalization for Section 306 Pension cases, under  |
| usting for | > the provisions of [38 CFR                             |
|  Authorize | > 3.551(f)](http://w                                    |
| d Absences | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
|  in Sectio | > authorized absences                                   |
| n 306 Pens |                                                         |
| ion Cases  | -   of 96 hours or less are included as periods of      |
|            |     hospitalization, and                                |
|            |                                                         |
|            | -   in excess of 96 hours are excluded.                 |
|            |                                                         |
|            | > ***Note***: Absences of 96 hours or less are not      |
|            | > reported to the RO.                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Upon receipt of notice showing that an authorized     |
|  b. Restor | > absence of 30 days or more has been granted to a      |
| ing the Fu | > competent veteran, take prompt action without         |
| ll Rate fo | > awaiting expiration of the 30 days, per [38 CFR       |
| r Absences | > 3.556(a)](http://w                                    |
|  of 30 Day | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_556.DOC). |
| s or More  | >                                                       |
|            | > Use the table below to determine the appropriate      |
|            | > action to take.                                       |
+------------+---------------------------------------------------------+

+-----------------------+----------------------------------------------+
| If the award involves | Then amend the award to \...                 |
| \...                  |                                              |
+-----------------------+----------------------------------------------+
| Section 306 Pension   | authorize the full monthly rate, including,  |
|                       | if payable, the Housebound rate or allowance |
|                       | for A&A, effective as of the date of         |
|                       | departure.                                   |
|                       |                                              |
|                       | ***Note***: This applies unless it is        |
|                       | determined that an apportionment for an      |
|                       | estranged spouse should be continued.        |
+-----------------------+----------------------------------------------+

Continued on next page

9\. Adjusting Pension for Authorized Absences and Non-Bed Care Status,
Continued

  -----------------------------------------------------------------------
  b\. Restoring the Full Rate for Absences of 30 Days or More (continued)

  -----------------------------------------------------------------------

+-----------------------+----------------------------------------------+
| If the award involves | Then amend the award to \...                 |
| \...                  |                                              |
+-----------------------+----------------------------------------------+
| Old Law pension       | -   retroactively restore the full rate,     |
|                       |     excluding any allowance for A&A,         |
|                       |     effective as of the date of reduction,   |
|                       |     and                                      |
|                       |                                              |
|                       | -   restore the allowance for regular A&A,   |
|                       |     effective as of the date of departure.   |
+-----------------------+----------------------------------------------+

+------------+---------------------------------------------------------+
| ##### c. R | > Upon receipt of notice that a veteran has returned to |
| educing Se | > the hospital, reduce either a Section 306 Pension     |
| ction 306  | > award (if still in order) or an Old Law Pension award |
| or Old Law | > effective the date of return.                         |
|  Pension U | >                                                       |
| pon a Vete | > ***Reference***: For information on adjustment of     |
| ran's Retu | > awards for incompetent veterans, see M21-1MR, Part    |
| rn From an | > III, Subpart v, 6.E.27.                               |
|  Authorize |                                                         |
| d Absence  |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Except as provided in M21-1MR, Part III, Subpart v,   |
| #### d. Ad | > 6.B.9.e, do *not* restore the veteran's full pension  |
| justing an | > rate if the veteran has not been discharged from VA   |
|  Award for | > furnished hospitalization and has been absent less    |
|  Absences  | > than 30 days, counting the day of departure, per [38  |
| of Less Th | > CFR                                                   |
| an 30 Days | > 3.556(b)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_556.DOC). |
|            | >                                                       |
|            | > ***Note***: Improved Pension is not adjusted for      |
|            | > inpatient hospital care at VA expense after January   |
|            | > 31, 1990, but nursing home or domiciliary care is     |
|            | > subject to reduction.                                 |
|            | >                                                       |
|            | > ***References***: For information on                  |
|            |                                                         |
|            | -   restoring awards on discharge, see M21-1MR, Part    |
|            |     III, Subpart v, 6.B.11.a, and                       |
|            |                                                         |
|            | -   adjustments in A&A cases, see M21-1MR, Part III,    |
|            |     Subpart v, 6.C.15.                                  |
+------------+---------------------------------------------------------+

Continued on next page

9\. Adjusting Pension for Authorized Absences and Non-Bed Care Status,
Continued

+------------+---------------------------------------------------------+
| ##### e.   | > As an exception to the requirement outlined in        |
|  Restoring | > M21-1MR, Part III, Subpart v, 6.B.9.d, restore the    |
|  Full Pens | > veteran's full pension rate prior to discharge to     |
| ion Rates  | > authorize the full rate covering the cumulative       |
| Because of | > number of days of absences of less than 30 days if    |
|  Hardship  | > the following conditions are met:                     |
|            |                                                         |
|            | -   the veteran has been receiving treatment or care    |
|            |     for more than six months                            |
|            |                                                         |
|            | -   the periods of absence for which adjustment is      |
|            |     claimed cumulatively exceed a total of 30 days, and |
|            |                                                         |
|            | -   a request for such an adjustment over the signature |
|            |     of the Chief, Medical Administration Service (MAS)  |
|            |     has been received stating                           |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the inclusive dates of each period of absence, and  |
|            |                                                         |
|            | -   that the adjustment is necessary to meet the        |
|            |     financial needs of the veteran, per [38 CFR         |
|            |     3.556(c)](http://w                                  |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_556.DOC). |
+------------+---------------------------------------------------------+

#### 10. Adjusting Pension When the Veteran Has Dependents

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on adjusting an award |
| troduction | > when the veteran has dependents. It includes          |
|            | > information on                                        |
|            |                                                         |
|            | -   establishing the relationship of an alleged         |
|            |     dependent                                           |
|            |                                                         |
|            | -   action to take when evidence is or is not received  |
|            |                                                         |
|            | -   an apportionment to an estranged spouse             |
|            |                                                         |
|            | -   the loss of a dependent when the only dependent is  |
|            |     a child                                             |
|            |                                                         |
|            | -   the unscheduled loss of a dependent in Section 306  |
|            |     and Old Law Pension cases                           |
|            |                                                         |
|            | -   the acquisition of dependents during                |
|            |     hospitalization, and                                |
|            |                                                         |
|            | -   awards to dependents of incompetent veterans.       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > April 10, 2007                                        |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > If records indicate that a veteran has a dependent    |
| ### a. Est | > that has *not* been established as a dependent for VA |
| ablishing  | > purposes, request evidence of relationship. Such      |
| the Relati | > evidence may consist of a birth certificate or        |
| onship of  | > marriage certificate, and the income and net worth    |
| an Alleged | > status.                                               |
|  Dependent | >                                                       |
|            | > ***Reference***: For information about developing for |
|            | > dependents, see M21-1MR, Part III, Subpart III,       |
|            | > 5.A.1.c.                                              |
+------------+---------------------------------------------------------+

Continued on next page

10\. Adjusting Pension When the Veteran Has Dependents, Continued

+------------+---------------------------------------------------------+
| ##### b.   | > Use the table below to determine the appropriate      |
| Action to  | > action to take when evidence that constitutes proof   |
| Take When  | > of relationship is or is not received.                |
| Evidence I |                                                         |
| s or Is No |                                                         |
| t Received |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------+----------------------------------------+
| If the evidence             | Then \...                              |
| establishing a dependent    |                                        |
| \...                        |                                        |
+-----------------------------+----------------------------------------+
| *is* received               | use *VA Form 21-653, Notice of Change  |
|                             | of Beneficiary Receiving Hospital or   |
|                             | Domiciliary Care*, to notify the       |
|                             | medical center of the change in        |
|                             | dependency status.                     |
+-----------------------------+----------------------------------------+
| *is* received               | authorize the full rate effective the  |
|                             | date of reduction.                     |
| -   after reduction, and    |                                        |
|                             |                                        |
| -   *within* one year of    |                                        |
|     the date of request     |                                        |
+-----------------------------+----------------------------------------+
| *is* received               | authorize the full-rate effective the  |
|                             | date of receipt of such evidence, per  |
| -   after reduction, and    | [38 CFR                                |
|                             | 3.551(g)](http://www.warms.vba.va.g    |
| -   *more* than one year    | ov/regs/38CFR/BOOKB/PART3/S3_551.DOC). |
|     from the date of        |                                        |
|     request                 |                                        |
+-----------------------------+----------------------------------------+
| *is not* received           | reduce the award, as appropriate under |
|                             |                                        |
|                             | -   [38 CFR                            |
|                             |     3.551(c)](http://www.warms.vba.va. |
|                             | gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|                             |     for Section 306 Pension, or        |
|                             |                                        |
|                             | -   [38 CFR                            |
|                             |     3.551(e)](http://www.warms.vba.va. |
|                             | gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|                             |     for Improved Pension after January |
|                             |     31, 1990.                          |
+-----------------------------+----------------------------------------+

+-----------------------------------------------------------------------+
| ***Notes***:                                                          |
|                                                                       |
| -   In Improved Pension cases, authorize the additional amounts       |
|     payable for dependents.                                           |
|                                                                       |
| -   Although an additional amount may not be paid under Section 306   |
|     Pension for a dependent who cannot be established on or before    |
|     December 31, 1978, the existence of such a dependent is           |
|     controlling for purposes of reduction under [38 CFR               |
|     3.55                                                              |
| 1(c)](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC). |
|                                                                       |
| -   An apportionment may be payable to an unestablished dependent,    |
|     even if additional pension is not being paid for that dependent.  |
+-----------------------------------------------------------------------+

Continued on next page

10\. Adjusting Pension When the Veteran Has Dependents, Continued

+------------+---------------------------------------------------------+
| #####      | > Per [38 CFR                                           |
|  c. Apport | > 3.454(b)](http://w                                    |
| ionment to | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_454.DOC), |
|  an Estran | > apportion all or part of the money retained under a   |
| ged Spouse | > Type 4 withholding to an estranged spouse when        |
|            |                                                         |
|            | -   the veteran's pension under [38 U.S.C.              |
|            |     1521(b)](http://assembler.law.cornell.edu           |
|            | /uscode/html/uscode38/usc_sec_38_00001521----000-.html) |
|            |     (the rate for a veteran with no dependents) is      |
|            |     reduced because of VA-furnished care                |
|            |                                                         |
|            | -   a claim for apportionment is received on behalf of  |
|            |     an estranged spouse, and                            |
|            |                                                         |
|            | -   there is an affirmative showing of hardship.        |
|            |                                                         |
|            | > When adjusting the veteran's award,                   |
|            |                                                         |
|            | -   do not make the effective date of the apportionment |
|            |     before the date of claim                            |
|            |                                                         |
|            | -   if the total Type 4 withholding is not apportioned, |
|            |     annotate the document to show the amount of         |
|            |     withholding attributable to Type 1 and Type 4       |
|            |                                                         |
|            | -   change the Type 4 withholding code on the veteran's |
|            |     award to a Type 1 withholding code, and             |
|            |                                                         |
|            | -   input the difference between the hospitalized rate  |
|            |     and the full pension rate into the withholding      |
|            |     amount field, even if the total amount withheld is  |
|            |     not apportioned.                                    |
|            |                                                         |
|            | > When the veteran is discharged, review the            |
|            | > apportionment based on all the facts and equities to  |
|            | > determine if it should be continued, modified or      |
|            | > discontinued. If the apportionment is continued or    |
|            | > modified on the basis of establishing dependency of   |
|            | > the apportionee, a readmission may not necessitate a  |
|            | > reduction under [38 CFR                               |
|            | > 3.551(c)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
|            | > [38 CFR                                               |
|            | > 3.551(d)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
|            | > or [38 CFR                                            |
|            | > 3.551(e)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC). |
|            | >                                                       |
|            | > Reference: For more information about withholding     |
|            | > codes, see [M21-1, Part V,                            |
|            | > 6.11b](htt                                            |
|            | p://www.warms.vba.va.gov/admin21/m21_1/part5/ch06.doc). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > If a veteran has a dependent child                    |
| ## d. Loss |                                                         |
|  of a Depe | -   who was                                             |
| ndent When |                                                         |
|  the Only  | ```{=html}                                              |
| Dependent  | <!-- -->                                                |
| Is a Child | ```                                                     |
|            | -   under age 18                                        |
|            |                                                         |
|            | -   over age 18, attending an approved course of        |
|            |     instruction, or                                     |
|            |                                                         |
|            | -   receiving Dependents' Educational Assistance (DEA)  |
|            |     benefits for whom additional compensation is not    |
|            |     payable, and                                        |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   who then                                            |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   reaches the age of 18, or                           |
|            |                                                         |
|            | -   completes the course of instruction, then           |
|            |                                                         |
|            | > reduce the award under [38 CFR                        |
|            | > 3.551](http://                                        |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|            | > after expiration of the required period.              |
+------------+---------------------------------------------------------+

Continued on next page

10\. Adjusting Pension When the Veteran Has Dependents, Continued

+------------+---------------------------------------------------------+
| d\. Loss   | > Use the table below to determine the appropriate      |
| of a       | > expiration of the required period.                    |
| Dependent  |                                                         |
| When the   |                                                         |
| Only       |                                                         |
| Dependent  |                                                         |
| Is a Child |                                                         |
| (          |                                                         |
| continued) |                                                         |
+------------+---------------------------------------------------------+

  --------------------------- -------------------------------------------
  If the benefit is \...      Then reduce pension as of \...

  Section 306 Pension         the first day of the third month following
                              the month in which the veteran is without a
                              dependent.

  Improved Pension            the first day of the fourth month following
                              the month in which the veteran is without a
                              dependent.

  Old Law Pension             the first day of the seventh month
                              following the month in which the veteran is
                              without a dependent.
  --------------------------- -------------------------------------------

+------------+---------------------------------------------------------+
| #          | > Follow the steps in the table below when a veteran    |
| #### e. Un | > has an unscheduled loss of a dependent in a Section   |
| scheduled  | > 306 or Old Law Pension case.                          |
| Loss of a  |                                                         |
| Dependent  |                                                         |
| in Section |                                                         |
|  306 and O |                                                         |
| ld Law Pen |                                                         |
| sion Cases |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | Upon the loss of the dependent, apply the provisions of [38  |
|       | CFR                                                          |
|       | 3.551(b)](ht                                                 |
|       | tp://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|       | and [38 CFR                                                  |
|       | 3.551(c)](ht                                                 |
|       | tp://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC) |
|       | on the basis of the veteran's factual status as "without a   |
|       | dependent" at the time of admission or at the time of loss   |
|       | of the dependent, whichever is later.                        |
|       |                                                              |
|       | ***Note***: If a Section 306 or Old Law Pension recipient    |
|       | entitled to end-of-year protection for loss of a dependent   |
|       | is discharged prior to the end of the calendar year, the     |
|       | veteran's pension award will be treated as if the dependent  |
|       | continues to exist to the end of the year.                   |
|       |                                                              |
|       | -   Adjustment for hospitalization will not take place until |
|       |     the first day of the next year, when the dependent is    |
|       |     removed and the reduction for hospitalization is made.   |
|       |                                                              |
|       | -   If the veteran is discharged from hospitalization before |
|       |     the end of the year, no hospitalization adjustment will  |
|       |     be made.                                                 |
+-------+--------------------------------------------------------------+

Continued on next page

10\. Adjusting Pension When the Veteran Has Dependents, Continued

  -----------------------------------------------------------------------
  e\. Unscheduled Loss of a Dependent in Section 306 and Old Law Pension
  Cases (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 2     | Use *VA Form 21-653, Notice of Change of Beneficiary         |
|       | Receiving Hospital or Domiciliary Care* to notify the        |
|       | institution of the status change.                            |
+-------+--------------------------------------------------------------+
| 3     | Prepare the award under standard procedures                  |
|       |                                                              |
|       | -   reducing payment, using a Type 4 or 5 withholding, as    |
|       |     appropriate (see withholding codes in [M21-1, Part V,    |
|       |     6.11b]                                                   |
|       | (http://www.warms.vba.va.gov/admin21/m21_1/part5/ch06.doc)), |
|       |     and                                                      |
|       |                                                              |
|       | -   showing the reduced rate and (factual) dependency code   |
|       |     00 for a veteran without a dependent.                    |
+-------+--------------------------------------------------------------+
| 4     | Make the appropriate change on the 304 screen to remove the  |
|       | spouse or child and implement the hospital reduction as of   |
|       | the first day of the following year.                         |
+-------+--------------------------------------------------------------+
| 5     | Is income now excessive for a veteran without a dependent?   |
|       |                                                              |
|       | -   If *yes*, provide for termination of the award at the    |
|       |     end of the year using SL code 18 (see SL codes in        |
|       |     [M21-1, Part V,                                          |
|       |     6.09]                                                    |
|       | (http://www.warms.vba.va.gov/admin21/m21_1/part5/ch06.doc)). |
|       |                                                              |
|       | -   If *no*, go to Step 6.                                   |
+-------+--------------------------------------------------------------+
| 6     | If the veteran is released from hospitalization before       |
|       | either the end of the calendar year of loss, or an earlier   |
|       | scheduled reduction for an only dependent child reaching age |
|       | 18 or terminating school                                     |
|       |                                                              |
|       | -   consider the veteran as having this dependent until the  |
|       |     end of that year (or earlier scheduled date)             |
|       |                                                              |
|       | -   be sure, in protected pension cases to                   |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   zero out the Type 4 or 5 withholding                     |
|       |                                                              |
|       | -   do not reduce the pension to the hospitalized rate, and  |
|       |                                                              |
|       | -   reflect the existence of a dependent subject to the      |
|       |     end-of-year rule with the dependency code entry, and     |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   use a reason code 56, 24, or 25, as appropriate, on the  |
|       |     end-of-year future award line (see reason codes in       |
|       |     [M21-1, Part I, Appendix C, Table                        |
|       |     F]                                                       |
|       | (http://www.warms.vba.va.gov/admin21/m21_1/part1/appc.doc)). |
|       |                                                              |
|       | ***Reference***: For information on which reason code to     |
|       | use, see M21-1MR, Part III, Subpart iii, 5.F.36.e.           |
+-------+--------------------------------------------------------------+

Continued on next page

10\. Adjusting Pension When the Veteran Has Dependents, Continued

+------------+---------------------------------------------------------+
| ##### f    | > When a veteran without dependents is hospitalized     |
| . Acquisit | > and, following admission to the institution, becomes  |
| ion of Dep | > a veteran *with* dependents, authorize the            |
| endents Du | > appropriate payment rate of Improved Pension or       |
| ring Hospi | > restore the full December 31, 1978, amount of Section |
| talization | > 306 or Old Law Pension, as appropriate, effective as  |
|            | > of the date that he/she acquired the dependent, but   |
|            | > not prior to the date of acquisition of such a        |
|            | > dependent.                                            |
|            | >                                                       |
|            | > ***Example***: The effective date should not be prior |
|            | > to the date of marriage or the birth of a child on    |
|            | > which the veteran acquired a new dependent.           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > For information on awards to dependents of            |
| # g. Award | > incompetent veterans, see M21-1MR, Part III, Subpart  |
| s to Depen | > v, 6.E.25.                                            |
| dents of I |                                                         |
| ncompetent | ***Note***: This issue was previously discussed in the  |
|  Veterans  | former M21-1, Part IV, 18.40, and M21-1, Part IV,       |
|            | 18.41.                                                  |
+------------+---------------------------------------------------------+

#### 11. Restoring Previous Pension Rate Upon the Discharge of the Veteran

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on restoring an award |
| troduction | > when a veteran is discharged from treatment or care.  |
|            | > It includes information on                            |
|            |                                                         |
|            | -   restoring awards in Section 306 or Improved Pension |
|            |     cases                                               |
|            |                                                         |
|            | -   restoring awards in Old Law Pension cases with      |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   a regular discharge or discharge to outpatient      |
|            |     care, or                                            |
|            |                                                         |
|            | -   an irregular discharge, and                         |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   restoring awards to incompetent veterans.           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > April 10, 2007                                        |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > On receipt of a discharge report showing termination  |
| a. Restori | > of hospitalization, domiciliary, or nursing home care |
| ng Awards  | > in a Section 306 or Improved Pension case             |
| in Section |                                                         |
|  306 or Im | -   restore full pension, including A&A, effective the  |
| proved Pen |     date of release                                     |
| sion Cases |                                                         |
|            | -   use reason code 36, and                             |
|            |                                                         |
|            | -   zero out the Type 4 withholding.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Use the table below to determine the appropriate      |
| #### b. Re | > action to take to restore an award in an Old Law      |
| storing Aw | > Pension case when the veteran has received            |
| ards in Ol |                                                         |
| d Law Pens | -   a regular discharge or discharge to outpatient      |
| ion Cases  |     care, or                                            |
|            |                                                         |
|            | -   an irregular discharge.                             |
+------------+---------------------------------------------------------+

+----------------------+-----------------------------------------------+
| If the veteran has   | Then \...                                     |
| received \...        |                                               |
+----------------------+-----------------------------------------------+
| -   a regular        | -   adjust the award to release all amounts   |
|     discharge, or    |     withheld under [38 CFR                    |
|                      |     3.551(b)](http://www.warms.v              |
| -   a discharge to   | ba.va.gov/regs/38CFR/BOOKB/PART3/S3_551.DOC), |
|     outpatient care  |     excluding additional allowance for A&A    |
|                      |     withheld under [38 CFR                    |
|                      |     3.552](http://www.warms.v                 |
|                      | ba.va.gov/regs/38CFR/BOOKB/PART3/S3_552.DOC), |
|                      |     and                                       |
|                      |                                               |
|                      | -   restore full benefits per [38 CFR         |
|                      |     3.556](http://www.warms.v                 |
|                      | ba.va.gov/regs/38CFR/BOOKB/PART3/S3_556.DOC). |
+----------------------+-----------------------------------------------+

Continued on next page

11\. Restoring Previous Pension Rate Upon the Discharge of the Veteran,
Continued

  -----------------------------------------------------------------------
  b\. Restoring Awards in Old Law Pension Cases (continued)

  -----------------------------------------------------------------------

+---------------------+------------------------------------------------+
| If the veteran has  | Then ...                                       |
| received ...        |                                                |
+---------------------+------------------------------------------------+
| an irregular        | -   amend the award to pay the full monthly    |
| discharge           |     rate effective only from the date of       |
|                     |     release                                    |
| ***Note***: an      |                                                |
| irregular discharge | -   do *not* restore amounts withheld prior to |
| is a release from   |     the expiration of six months following an  |
| inpatient treatment |     irregular discharge, unless the veteran's  |
| against medical     |     hospitalization is resumed and terminated  |
| advice.             |     by a regular discharge prior to the        |
|                     |     expiration of such a period per [38 CFR    |
|                     |     3.556(d)](http://www.warms.                |
|                     | vba.va.gov/regs/38CFR/BOOKB/PART3/S3_556.DOC), |
|                     |     and                                        |
|                     |                                                |
|                     | -   establish a diary control for this         |
|                     |     purpose.                                   |
+---------------------+------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### c.   | > Do *not* restore amounts withheld prior to the        |
| Restoring  | > expiration of six months following a rating of        |
| Awards to  | > competency, per [38 CFR                               |
| Incompeten | > 3.556(e)](http://w                                    |
| t Veterans | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_556.DOC). |
|            | >                                                       |
|            | > ***Reference***: For more information on restoring    |
|            | > awards after a rating of competency when there is a   |
|            | > court-appointed fiduciary, see M21-1MR, Part III,     |
|            | > Subpart v, 6.E.28.d.                                  |
+------------+---------------------------------------------------------+