**Veterans Benefits Administration M21-1, Part IV**

## Department of Veterans Affairs Change 216 Erratum

**Washington, DC 20420 April 26, 2005**

Veterans Benefits Manual M21-1, Part IV, "Authorization Procedures," is
changed as follows:

**Pages 26-I-5 through 26-I-8:** Remove these pages and substitute pages
26-I-5 through 26-I-8 attached.

Paragraph 26.01j is modified to include two additional examples of cases
requiring a determination as to a surviving spouse's entitlement to a
deceased veteran's benefit or rate of payment for the month of death.

Distribution: RPC: 2068

FD: EX: ASO and AR (included in RPC 2068)

LOCAL REPRODUCTION AUTHORIZED

**Veterans Benefits Administration M21-1, Part IV**

**Department of Veterans Affairs Change 216**

**Washington, DC 20420 April 5, 2005**

Veterans Benefits Manual M21-1, Part IV, "Authorization Procedures," is
changed as follows:

**Pages 26-i through 26-I-14:** Remove these pages and substitute pages
26-i through 26-I-14 attached.

Paragraph 26.01a(3) is modified to limit applications received after
September 30, 1984 to those in which the veteran's death was prior to
December 10, 2004.

Paragraph 26.01a(4) is added to provide for payment of death pension
from the first day of the month of the veterans death is the veteran
died on or after December 10, 2004 and the claim is received within one
year of death.

Paragraph 26.01c(5) is revised to clarify that the surviving spouse
could still be eligible for the month of death check under 38 CFR
3.20(c). Paragraph 26.01j has been added to provide examples of when to
pay the month of death check.

**Pages 26-I-23 through 26-I-24:** Remove these pages and substitute
pages 26-I-23 through\
26-I-24 attached.

Paragraph 26.13.3 is added to provide information about the transitional
benefit for surviving spouses, receiving DIC and having minor children
in their custody. This benefit is provided under Public Law 108-454 and
is effective January 1, 2005.

This transitional benefit is payable

-   only to surviving spouses with minor children

-   for no more than a maximum of two years

-   in addition to any other DIC payable.

By Direction of the Under Secretary for Benefits

Renée Szybala, Director

> Compensation and Pension Service

Distribution: RPC: 2068

FD: EX: ASO and AR (included in RPC 2068)

LOCAL REPRODUCTION AUTHORIZED

April 5, 2005 M21-1, Part IV

Change 216

CHAPTER 26. SPECIFIC DEATH AWARDS AND RELATED ACTIONS

**CONTENTS**

PARAGRAPH PAGE

**SUBCHAPTER I. GENERAL APPLICATIONS**

26.01 Initial Awards to Dependents upon Death of Veteran 26-I-1

26.02 Award to Survivor upon Death of Dependent of a Deceased Veteran
26-I-6

26.03 DIC Payable in NSC Death Cases (5 or 10 Years Total SC Disability)
26-I-7

26.04 Imprisonment in Penal Institutions 26-I-9

26.05 Apportionment Cases 26-I-12

26.06 DIC Awards to Children Pending Determination of Surviving
Spouse\'s Entitlement 26-I-14

26.07 Remarriage of a Surviving Spouse 26-I-16

26.08 Marriage of Child 26-I-20

26.09 Change of Law or VA Issue 26-I-21

26.10 Adjustment for Loss of Dependent\--End-of-Year Rule 26-I-21

26.11 Application of End-of-Month and End-of-Year Rule\--Increased
Income 26-I-21

26.12 Aid and Attendance Allowance for Surviving Spouses and Parents and
Housebound

Benefits for Surviving Spouses Entitled to DIC or Improved Pension
26-I-21

26.13 Election of Benefits 26-I-23

26.13.1 DIC Reform---Public Law 102-568 26-I-23

26.13.2 DIC Reform---Public Law 106-117 26-I-24

26.13.3 DIC Reform---Public Law 108-454 26-I-24

**SUBCHAPTER II. OFFICE OF PERSONNEL MANAGEMENT\--AWARDS**

**BARRED BY RECEIPT OF FEDERAL EMPLOYEES\' GROUP LIFE INSURANCE**

26.14 Scope 26-II-1

26.15 Obtaining Information 26-II-1

26.16 Simultaneous Development 26-II-1

26.17 Action on Reply from the Office of Personnel Management 26-II-1

**SUBCHAPTER III. SERVICE DEPARTMENTS\--ALLOWANCE,**

**ALLOTMENT OR SERVICE PAY\--38 U.S.C. 5110(j)**

26.18 Scope 26-III-1

26.19 Award Action 26-III-1

26.20 Effective Dates and Remarks 26-III-2

26.21 Corrections of Reports of Actual Death 26-III-3

26.22 Awards to Other Beneficiaries 26-III-4

26.23 Service Department Payment to Estates 26-III-4

**SUBCHAPTER IV. SERVICE DEPARTMENTS\--THE SURVIVOR BENEFIT PLAN**

26.24 Scope 26-IV-1

26.25 Death Pension Cases\--SBP Minimum Income Plan 26-IV-1

26.26 Dependency and Indemnity Compensation\--Offsets of Payments
26-IV-4

26.27 Notices to Service Departments 26-IV-8

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# April 5, 2005 M21-1, Part IV

**Change 216**

# SUBCHAPTER I. GENERAL APPLICATIONS

**26.01 INITIAL AWARDS TO DEPENDENTS UPON DEATH OF VETERAN**

**a.** **Effective Date Based on Death of a Veteran After Separation
From Service**

**(1)** **Death Before October 1, 1982.** If entitlement is established,
make original awards of death compensation, pension and DIC effective
the first day of the month in which the veteran died provided the claim
is filed within 1 year following the date of death; otherwise,
entitlement will be from the date of receipt of claim.

**(2)** **Death After September 30, 1982.** The procedures set forth in
subparagraph (1) above pertaining to the effective date still apply.
Effective October 1, 1982, the commencing date of payment for children
or parents may not be established for any period before the first day of
the calendar month following death of the veteran. The rate of benefits
payable and date of claim determine the commencing date of an award to a
surviving spouse of a veteran who died after September 30, 1982 (38 CFR
3.20b).

**(3)** **Applications Received After September 30, 1984, with Veteran's
Death Occurring Before December 10, 2004.** For applications received
after September 30, 1984, the effective date of an award of death
benefits is the first day of the month in which the veteran died, if the
death occurred prior to December 10, 2004, and the claim was filed
within 45 days after the date of death. Otherwise, entitlement will be
from the date of receipt of claim. The procedures set forth in
subparagraph a(2) above, referring to the commencing date of payment,
apply equally in these claims.

**(4)** **Death On or After December 10, 2004.** If entitlement to death
benefits is established, and the veteran died on or after December 10,
2004, the effective date is the first day of the month of death when
application is received within one year of the date of death. If the
claim is received more than one year from the date of death, entitlement
is from the date of receipt of claim.

**b.** **Effective Date Based on Death in Service.** Determine the
commencing date of benefits as provided in 38 CFR 3.400(c) and 38 CFR
3.31. See also subchapter III.

**c.** **Monthly Rate - Surviving Spouse\'s Rate for Month of Death.**
If a surviving spouse files a claim which establishes entitlement
commencing the first day of the month of the veteran\'s death after
separation from service, determine the rate payable as follows:

**(1)** **Death on or After October 1, 1982.** Per 38 CFR 3.20(b), if
the veteran died after September 30, 1982, payment to the surviving
spouse for the month of death will only be made if the veteran\'s rate
for the month of death is greater than the monthly rate of death pension
or DIC to which the surviving spouse is entitled. Otherwise, payments of
death pension or DIC will commence the first day of the month following
death.

*Note 1:* Apportioned disability awards will be terminated
simultaneously with the veteran\'s award. See paragraph 19.15.

*Note 2:* If a veteran in receipt of military retired pay would have
been awarded the available difference for the month of death pending
total waiver of retired pay, the veteran\'s rate for the month of death
is the net rate the veteran would have received had death not occurred.
Even though the veteran\'s gross entitlement to VA benefits might have
exceeded the surviving spouse\'s rate, the surviving spouse is not
entitled to payment for the month of death if the veteran\'s net rate
would have been less than the rate payable to the surviving spouse in
his or her own right.

**(2) Death Before October 1, 1982.** Per 38 CFR 3.20(b), if the veteran
was receiving or was entitled to receive disability compensation,
pension or Medal of Honor pension at the time of death, and the veteran
died

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# M21-1, Part IV April 5, 2005

**Change 216**

after November 30, 1962, but before October 1, 1982, the rate payable
for the month of death under 38 CFR 3.20 will be whichever is greater:

\(a\) The monthly rate of the specific death benefit or

\(b\) The full rate payable to the veteran. The full rate payable to the
veteran includes additional compensation for dependents, special monthly
compensation, allowance for A&A or housebound status, Medal of Honor
pension and any apportioned shares. Use reason code 00 for this award
line as well as the first award line at the recurring specific death
benefits rate. Show the veteran\'s entitlement code for the special
rates awarded for the month of death, followed by the code for the
recurring rate authorized on the succeeding award lines.

**(3)** **Apportionment Required.** If the surviving spouse is entitled
to the veteran\'s disability rate for the month of death and the award
is to be apportioned, the child\'s apportioned share for the month of
death will be the same apportioned rate payable for such child for the
month after the month of death, based on the recurring death benefit
rate and not the veteran\'s disability rate. The surviving spouse\'s
benefit for the month of death will be the difference between the
veteran\'s disability rate and the child\'s apportioned share.

**(4)** **Veteran EOR Case.** If the veteran was receiving or entitled
to receive only emergency officers\' retirement pay, the surviving
spouse will not be eligible for payment of DIC or death pension for the
month of death. EOR unpaid through the date of death is payable as
accrued.

**(5)** **Restrictions.** 38 CFR 3.20 is applicable only to surviving
spouse awards and then only if entitlement to death benefits commences
the first day of the month of the death of a veteran who was receiving
or was entitled to receive payments of other than emergency officers\'
retirement pay. If entitlement commences after the first day of the
month of the death of the veteran, determine whether, under the
provisions of 38 CFR 3.20(c), the surviving spouse is entitled to the
veteran's compensation or pension for the month of the veteran's death.

\(a\) If the surviving spouse\'s entitlement is limited to death pension
commencing the first day of the year following the year in which the
veteran died because of excessive income during the year of death, 38
CFR 3.20 does not apply. Determine whether, under the provisions of 38
CFR 3.20(c), the surviving spouse is entitled to the veteran's
compensation or pension for the month of the veteran's death.

\(b\) If the surviving spouse\'s award of DIC or death pension commences
as of the first day of the month following the veteran\'s death (death
after September 30, 1982) or is effective as of the first day of the
month of the veteran\'s death (death after November 30, 1962 and before
October 1, 1982) and it is later determined the veteran was entitled to
a greater rate, prepare an amended award to pay the surviving spouse the
increased monthly rate for the month of death.

**d.** **Improved Pension and Reallocation of Social Security.** If
Social Security recipients are receiving the maximum family Social
Security benefit, there is generally a reallocation of benefits if a
member of the family loses entitlement. The total benefit is usually
reallocated equally to the remaining family members. No controls are
necessary in these cases. Follow the procedures and examples in
paragraph 16.27e.

**e.** **Action When ALL Dependents Do Not Apply (38 CFR 3.107)**

**(1)** **Claim by Surviving Spouse or Child.** Generally, award action
on a claim filed by a surviving spouse within 1 year following the date
of the veteran\'s death will neither be delayed simply because it is
shown that there is a child (not included in the claim of record) for
whom a claim has not been filed, nor, on a child\'s claim, if the
surviving spouse has not filed a claim. Make any necessary attempts to
locate such additional dependents for the purpose of furnishing an
application form. However, if a surviving spouse files a claim for
Improved Pension and does not include a child in custody or if a child
in custody of the surviving spouse files a claim for Improved Pension
without a claim from the surviving spouse,

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# April 5, 2005 M21-1, Part IV

##  Change 216

38 CFR 3.107 is not for application. Apply the family unit concept.
Prior to further action on the claim, inform the claimant the income,
net worth and dependency evidence for the other potential beneficiary
must be of record. Do not delay award action on a claim filed by or for
a child out of the legal custody of the surviving spouse pending receipt
of claims from the surviving spouse or other children.

(a) Until the expiration of the period within which a retroactive share
    may be awarded to such additional dependent for a period prior to
    the date of claim, any awards to persons who have filed a claim will
    be at the rates payable as though all dependents had filed a claim.

\(b\) If a surviving spouse has filed a claim, withhold the apportioned
shares for the child or children from the surviving spouse\'s award.
Conversely, if there is a surviving spouse who has not filed a claim,
award the apportioned share to a child for whom a claim is filed pending
timely claim by the surviving spouse. If there is no surviving spouse
and not all children have filed a claim, pay the appropriate share to
those who have filed based on the total number of potentially entitled
children.

\(c\) Maintain an appropriate control for retroactive adjustment of
approved awards in case a claim by or for the additional dependents is
not received by the expiration of the period allowed. An adjustment may
also be required prior to such time by the death or marriage of such
additional dependent or election by a child of another benefit prior to
filing a claim and establishing entitlement.

*Note:* Reliance on issuance of message code 880, NOT ALL W/H OR
DEPENDENTS BEING PAID, is not sufficient for control purposes.

\(d\) At the expiration of the control, if no claim has been made by the
additional dependents, amend the running awards to authorize the full
rate (share) from the award effective date with no change in reason
code.

**(2)** **Claim by Parent**

**(a)** **DIC Cases.** If there are two parents living and only one
parent has filed a claim, the mere continued existence of the other
parent (whose potential right continues until death or receipt of
evidence of a legal bar to entitlement, other than excessive income)
affects the rate payable to the claimant (38 CFR 3.251(a)(4)). If it is
determined the nonclaiming parent no longer has entitlement to DIC
because of abandonment of the veteran (par. 13.07) or because another
person, now deceased, was last in loco parentis, the claiming parent
would be allowed DIC at the rate payable as if there were only one
surviving parent. See part V, paragraph 6.06a for dependency codes.

**(b)** **Death Compensation Cases.** If there are two parents and only
one has filed a claim, 38 CFR 3.107 does not require a withholding of
the share for another parent who has not filed a claim . Pay the parent
who has filed a claim the higher one-parent rate. Use appropriate
dependency coding to support this higher rate. See part V, paragraph
6.06a.

**f.** **Action on Receipt of Claim by Additional Dependent (38 CFR
3.650).** See 38 CFR 3.650 for rules used to determine the effective
date of entitlement for additional claimants and for the adjustment of
any running award from which a share should have been withheld under 38
CFR 3.107. If benefits were not withheld and a claim is received from
another member of the same class who apparently is entitled to share in
the same benefit (pending development), follow the due process
procedures of chapter 9 before reducing any running award. At the
expiration of the control period, reduce any running awards under reason
code 26 (dependent added) effective the date of last payment. If a
protest is received from a payee whose award is reduced, follow the
contested claims procedure in chapter 5. Do not use these rules in
Improved Pension cases as there is no withholding for additional
claimants.

\(1\) If it is determined the additional claimant is not entitled,
restore or release the full rate payable to persons on the rolls from
the date of reduction or entitlement.

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# M21-1, Part IV April 5, 2005

**Change 216**

\(2\) If the entitlement of an additional claimant is established, award
the claimant\'s full share effective the date of entitlement. Adjust any
running awards, as follows:

\(a\) If the additional claimant is entitled from a date before the date
of claim, reduce the running awards from the first day of the month
following the date of entitlement. Any resulting overpayment due to
failure to withhold benefits will be subject to recovery or waiver of
recovery.

\(b\) If the additional claimant is entitled only from the date of
claim, reduce the running awards from the first day of the calendar
month following date of claim or the date of last payment, whichever is
later. In these cases, consider a failure to reduce any running award as
due to administrative error and make adjustments under 38 CFR
3.500(b)(2) and 38 CFR 3.650(a)(2). Enter a notation \"Administrative
error, M21-1, part IV, paragraph 26.01e\" under Remarks on the award
form, and prepare an administrative decision in accordance with
paragraph 11.31b(1).

*Note:* For any case where the effective date of entitlement of the
additional claimant is before October 1, 1982, the date of reduction of
any running award will be effective date of entitlement (subpar. f(2)(a)
above) or date of claim or DLP, whichever is later (subpar. f(2)(b)
above).

**g.** **Adjustment of Existing Awards.** During otherwise required
adjudication, adjust cases encountered in which a claimant was awarded
less than the full rate because payments had been previously authorized
for another member of the same class under the foregoing subparagraphs.
Do this without regard to the requirements of 38 CFR 3.114(a). Authorize
the retroactive increase effective the commencing date of the award but
not prior to December 1, 1962. If the payee has died, the adjustment
amount may be payable as accrued subject to the 1-year limitation on
payment of accrued covering a retroactive period.

**h.** **Adjustments Based on Claims Filed With the Social Security
Administration (SSA).** An application filed with the SSA on or after
January 1, 1957, for survivors\' benefits because of the death of a
veteran constitutes a claim for VA death benefits even if VA Form
21-4182, "Application for Dependency and Indemnity Compensation or Death
Pension (Including Accrued Benefits and Death Compensation Where
Applicable) from the Department of Veterans Affairs," is not received by
VA (38 CFR 3.153). See part III, paragraphs 2.13 and 9.05.

\(1\) If VA Form 21-4182 has not been received at the time award action
is taken but it appears an earlier commencing date may be established on
the basis of an application allegedly filed with the SSA, ask the
appropriate Social Security payment center to verify the date the
application was filed with that agency. Upon receipt, adjust the
effective date of the award, if otherwise in order.

\(2\) If an award is made effective from the date of claim for VA
benefits filed more than 1 year after the date of death of the veteran
and there is no indication in the claims folder that a claim for
survivors\' benefits was or was not filed with the SSA, inform the
claimant of the possibility of adjustment to an earlier commencing date
if a claim for such benefits was filed prior to filing the application
with VA. If the claimant responds indicating such application was filed,
take action as prescribed in subparagraph h(1) above. The same criteria
apply to death pension claims received on or after October 1, 1984,
filed more than 45 days after the death of the veteran.

**i.** **Payment of the Veteran's Rate for the Month of Death under 38
CFR 3.20(c).** Under

Section 506 of Pub. L. 104-275, if the surviving spouse of a veteran who
dies after December 31, 1996, is not entitled to benefits for the month
of death, the surviving spouse is entitled to a 1-time payment of the
veteran's rate for the month of death. A merit determination for death
benefits is *not* required for non-entitlement to exist in this
circumstance.

\(1\) Consider any communication from the surviving spouse requesting
the veteran's rate for the

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# April 26, 2005 M21-1, Part IV

**Change 216 Erratum**

month of death as a claim for this benefit. This includes a request over
the phone or written notification.

Authority 38 U.S.C. 5101.

(a) Requests over the phone must be recorded on VA Form 119, "Report of
    Contact" and the caller

must provide oral verification satisfactory to the veteran's service
representative that the caller is the surviving spouse.

\(b\) If there is any question as to the validity of the surviving
spouse status, appropriate development should be undertaken.

(a) If a request for the veteran's rate for the month of death is
    accompanied by VA Form 21-534,

"Application for Dependency and Indemnity Compensation, Death Pension,
and Accrued Benefits," a merit determination for death benefits will be
made prior to awarding benefits under 38 CFR 3.20(c).

\(2\) Use a locally generated letter to send one of two possible
messages, depending on whether TINQ

(Treasury Inquiry) shows that the veteran's check or direct deposit has
been returned, either:

\(a\) We will re-issue payment to you; or

\(b\) Since you are entitled to the veteran's payment for the month of
death, you are not required to

return the check or direct deposit.

\(3\) In either instance, send the claims folder to Finance with the
following notation on OF 41:

"Surviving spouse entitled to 1-time payment of \[amount of monthly
compensation or pension received by the veteran at time of death\] per
38 CFR 3.209(c)." If payment has been returned, request Finance to
re-issue the payment to the surviving spouse (06A transaction). If
payment has not been returned, notify Finance that the overpayment
should be removed (08E transaction). Input of the 08E transaction must
be accomplished within 45 days of the debt being established. The
finance activity must notify the Debt Management Center (DMC) of the
action so that they can stop the reclamation process. If the debt has
been in the system for 60 days, DMC cannot stop the reclamation process
when the finance activity inputs the 08E transaction.

*Note:* If a surviving spouse files a claim for Dependency and Indemnity
Compensation (DIC) more than one year after the veteran's death, or
death pension more than 45 days after the veteran's death and
establishes entitlement, the claimant is still eligible for the
veteran's rate for the month of death under 38 CFR 3.20(c).

*Note 2:* Payment as described under 38 CFR 3.20(c) should not be
confused with payment of the veteran's rate for the month of death under
38 CFR 3.20(b). Under 38 CFR 3.20(b), payment should be made to the
surviving spouse for the month of death on the original death award (see
36.01(a)).

\(4\) If, after payment under 38 CFR 3.20(c), the surviving spouse
subsequently becomes entitled to death

benefits from the date of the veteran's death at a rate higher than the
amount paid under 38 CFR 3.20(c), an offset should be established (38
CFR 3.20(b) and 3.31). Create the offset for recovery of the veteran's
rate for the month of death prior to the original award of DIC or death
pension.

\(a\) Withhold all benefits under Type 1 withholding from the date of
entitlement. Suppress the

award letter. After the award showing total withholding has been
authorized, route the claims folder to Finance for action to establish
the offset. Deliver these folders to Finance daily.

\(b\) When the folder is returned from Finance, ensure the offset
appears on the M01 screen. Process an amended award. Remove the
withholding (show "0" entry under Type Withholding) and pay full
benefits to which the surviving spouse is entitled.

**j. Four Types of Cases Requiring a Determination as to a Surviving
Spouse's Entitlement to a Deceased Veteran's Benefit or Rate of Payment
for the Month of Death.** If the veteran was in receipt of benefits at
the time of

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# M21-1, Part IV April 26, 2005

**Change 216 Erratum**

death and a merit determination regarding the surviving spouse's claim
for improved death pension or Dependency and Indemnity Compensation
(DIC) has been made, an additional determination must be made regarding
the surviving spouse's entitlement to the veteran's benefit or rate of
payment for the month of the veteran's death.

\(1\) A surviving spouse's entitlement to death benefits has been
established. The claim was received more than one year after the
veteran's death. The surviving spouse is entitled to the veteran's
benefit for the month of death under 38 CFR 3.20(c). Send OF 41 to
Finance (see 26.01i(3)). The provisions of § 3.20(b) do not apply, since
the surviving spouse was not entitled to death benefits for the month of
the veteran's death. Therefore, a comparison between the veteran's rate
of payment at the time of death and the surviving spouse's rate of
DIC/death pension is unnecessary.

\(2\) A surviving spouse's entitlement to death benefits has been
established. The claim was received within one year of the veteran's
death. The surviving spouse's rate of payment is greater than the
veteran's rate for the month of death. Per 38 CFR 3.20(b), DIC may not
be *paid* for the month in which the veteran died since the surviving
spouse's rate of DIC is greater. However, under the provisions of 38 CFR
3.20(c), the surviving spouse is entitled to the benefit the veteran
would have received that same month, but for his/her death.

\(3\) A surviving spouse's entitlement to death benefits has been
established. The claim was received within one year of the veteran's
death. The surviving spouse's rate of payment is less than the veteran's
rate for the month of the veteran's death. The surviving spouse is
entitled to the veteran's rate for the month of death under 38 CFR
3.20(b). Payment for the month of death is included in the original
award to the surviving spouse.

\(4\) The surviving spouse's entitlement to death benefits has been
denied. The surviving spouse is entitled to the veteran's benefit for
the month of death under 38 CFR 3.20(c)(1). Send OF 41 to Finance (see
26.01i(3)).

**26.02 AWARD TO SURVIVOR UPON DEATH OF DEPENDENT OF A DECEASED
VETERAN**

**a. General.** Upon receipt of an acceptable statement or evidence of
death of a payee, discontinue the award to the deceased payee using
reason code 22, Death of Person Entitled.

\(1\) If evidence is required to establish continued entitlement for one
or more surviving beneficiaries, do not change his or her payments
pending receipt of the required evidence within the 60-day control
period established for this purpose. If the evidence is not received by
the expiration of the control period, terminate any affected awards
(reason code 16) as of date of last payment. Notice is required, as well
as the right to appeal.

\(2\) If necessary evidence is received within 1 year of the request,
adjust or reopen any award to a surviving payee as of the effective date
of termination of the decedent\'s award (38 CFR 3.651). Include an
appropriate notation in \"Remarks\" as to the date of death and name and
relationship of the deceased. Enter the applicable dependency codes to
reflect the change in the number of dependents on which the entitlement
is based.

\(3\) Unless a statement furnishing month and year of death may be
accepted under 38 CFR 3.213, proof of death of the payee meeting the
requirements of 38 CFR 3.211 will be required in all cases.

**b.** **Death of a Surviving Spouse.** Terminate the surviving
spouse\'s award using reason code 22 effective the first day of the
month of death. The provisions of subparagraph 26.07e relating to
remarriage of a surviving spouse are for equal application in
establishing the entitlement of children in cases involving the death of
a surviving spouse.

**c.** **Death of a Child.** Terminate payment of any benefits or share
of benefits to a deceased child effective the first day of the month of
death (38 CFR 3.500(g)(1)). Adjust awards to surviving beneficiaries as
provided below.

**(1)** **No Surviving SpouseConsolidated Award to Children.** Adjust
the consolidated award to pay the rates payable to the surviving
children by reason of exclusion of the deceased child. The effective
date will be the first day of the month of death unless an increase in
Total Benefits is payable, in which case the effective date will be the
first day of the calendar month following the death of the child.

**(2) Surviving Spouse Entitled**

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# April 26, 2005 M21-1, Part IV

#  Change 216 Erratum

**(a)** **DIC Being Paid to Child Over Age 18, Now Deceased or Separate
Entitlement Under Improved Pension.** Since the award to such a child is
a separate and additional benefit, do not adjust the award to the
surviving spouse or to any other children.

**(b)** **Apportioned Award.** If the deceased child was receiving an
apportioned share of a surviving spouse\'s

award, adjust the surviving spouse\'s award under the end-of-month rule
to authorize payment to the surviving spouse of the amount not paid to
the deceased child (38 CFR 3.500(n)(2)). If the deceased child was not
the only apportionee, make a special apportionment authorizing the
increased shares to the surviving children based on the reduced
dependency code from the date of termination of the deceased child\'s
award. The surviving spouse\'s share will be the balance remaining of
the total amount payable based on the continued dependency code,
including the deceased child, until the appropriate effective date for
reduction or termination required to reflect loss of the dependent (par.
25.07c).

**(c)** **Child Included in Surviving Spouse\'s Award.** If the award to
a surviving spouse included an additional amount for the deceased child,
effect reduction or termination of the payee 10 award as provided in
paragraph 26.08b.

**d.** **Death of a Parent**

\(1\) For DIC cases, see paragraph 16.18.

\(2\) For death compensation cases, see paragraph 13.15d(1).

**26.03 DIC PAYABLE IN NSC DEATH CASES (5 OR 10 YEARS TOTAL SC
DISABILITY)**

**a. General.** If a veteran was in receipt of or entitled to receive
disability compensation for service-connected disability totally
disabling for 10 or more years immediately preceding death or
continuously for a period of not less than 5 years from time of
discharge until death, pay DIC to a surviving spouse or children in the
same manner as if death were service connected. A total rating based on
individual unemployability meets the total disability requirement (38
CFR 3.22).

*Note:* Disability acquired after discharge from service as a result of
treatment in a VA medical facility or as a result of vocational
rehabilitation training under any VA-administered law (38 U.S.C. 1151),
or disability compensation granted for paired organs or extremities
under 38 U.S.C. 1160 qualifies for entitlement to DIC under 38 U.S.C.
1318. Entitlement to DIC under the provisions of 38 U.S.C. 1318 in the
same manner as if death were service connected does not, however,
establish entitlement to other benefits based on service-connected death
(e.g., the \$1,500 burial allowance). The provisions of 38 U.S.C. 1318
establish potential entitlement ONLY to benefits under chapter 13 of
title 38.

\(1\) If the cause of death is found to have been the result of the
veteran\'s own willful misconduct (see par.

11.04) or the veteran\'s death is wrongfully and intentionally caused by
the claimant (see par. 11.09a), DIC is not payable.

\(2\) In order to establish entitlement to DIC under 38 U.S.C. 1318, a
surviving spouse must have been married to the veteran for at least 1
year immediately preceding the veteran\'s death or for any period if a
child was born of the marriage or was born to them before the marriage.

\(3\) A surviving spouse may be considered for nonservice-connected
pension if entitlement to DIC cannot be established because the
veteran\'s death was due to the veteran\'s willful misconduct.

\(4\) On February 3, 1998, the Court of Appeals for Veterans Claims
(Court) issued an order in

*Blount v. West,* Vet.App. 97-947. Surviving spouses in receipt of death
pension benefits prior to Pub. L. 95-479 were not notified by VA of
their potential entitlement to DIC benefits under section 1318, even
though veterans were advised of potential entitlements to other benefits
established by Pub. L. 95-479. The Court suggested that VA take steps to
notify all VA death pension recipients of the availability of DIC
benefits pursuant to 38 U.S.C. 1318.

26-I-7

# M21-1, Part IV April 26, 2005

**Change 216 Erratum**

\(a\) Since section 1318 was effective October 1, 1978, and would have
been considered in all cases where the veteran's death was on or after
that date, notice of this change has been limited to survivors of
veterans who died on or before September 30, 1978.

\(b\) If a claim is received from a surviving spouse where the veteran's
death occurred on or before

September 30, 1978, review the claims folder to determine if DIC
benefits under the provisions of section 1318 should be granted.

**b.** **Rating Required.** Refer the case to the rating activity to
determine if the cause of death was service connected. See part III,
paragraph 3.07.

\(1\) The rating activity will review all cases in which the veteran was
rated totally disabled at time of death for consideration as to service
connection for cause of death.

\(a\) If service connection for cause of death is denied, the rating
activity must consider entitlement to payment as if death were service
connected.

[1]{.underline}. If the rating denies service connection for cause of
death but grants entitlement to payment as if death were service
connected, prepare an award using SL code 19 and annotate the award to
read \"DIC awarded per 38 U.S.C. 1318 based on rating dated

[2]{.underline}. If the rating denies entitlement to both service
connection for cause of death and to payment as if death were service
connected, any disallowance or pension award prepared must contain a
remark that these issues were considered.

\(b\) If development is needed to dispose of the issue of service
connection for cause of death and eligibility to payment as if death
were service connected exists, the rating activity must prepare a rating
decision granting entitlement to this benefit and deferring the issue of
service connection for cause of death.

[1]{.underline}. In such a case prepare an award using SL code 19 and
annotate it \"Decision of SC death deferred.\"

[2]{.underline}. If subsequent rating action establishes service
connection for death, remove the SL code 19 and notify the beneficiary
of the change in status.

\(2\) If a veteran was rated totally disabled due to service-connected
disability for the required period but was not in receipt of
compensation due to receipt of retired pay, refer the case to the rating
activity for a determination as to whether or not total benefits would
have been payable for the entire period.

**c.** **Prohibition Against Duplication of Benefits.** If the claimant
receives money or property of value based on any cause of action for
damages for the death of the veteran as a result of a judicial or
administrative proceeding, settlement or compromise, DIC otherwise
payable must be recouped in an amount equal to the money received and
fair market value of the property received. Attorney\'s fees, court
costs and other expenses incident to the civil claim are not deductible
from the total amount awarded or accepted. This requirement for
recoupment exists even if the award or settlement was made prior to
passage of Public Law 95-479.

\(1\) Even if the claimant has made a positive statement that a claim
has been or will be made through court action or administrative
channels, take award action otherwise in order. The offset required in
the event of a judgment, compromise or administrative award will not be
made effective prior to the first day of the month following the month
such judgment, compromise or administrative award is granted.

\(a\) Spell out the offset requirements of the law in the award letter.

\(b\) Upon initiation of recoupment, inform the claimant that, although
no payment of DIC may be made until the amount received is recouped, the
claimant must keep VA informed of his or her current address, marital
and dependency changes so that there will be no delay in resuming
benefits.

\(2\) Prepare awards in the regular format pursuant to instructions in
part V, chapter 6. In addition, the following specific instructions
apply:

26-I-8

**April 5, 2005 Part IV**

######  Change 216

\(a\) Show no withholding code or amounts on the award. This allows
payment to be made automatically when the full amount to be offset has
been recouped.

\(b\) Show the amount of offset on the award form with the statement
\"Subject to offset of \$[      ]{.underline} under 38 U.S.C. 1318.\"

\(c\) Route the claims folder, with Optional Form 41 attached, to
Finance, instructing that activity to establish a 30B accounts
receivable for the amount to be recouped with a deduction for the full
amount of the award.

**26.04 IMPRISONMENT IN PENAL INSTITUTIONS**

**a. Discontinuance or Reduction Because of Imprisonment.** Reduce DIC
or death compensation payments or discontinue pension payments to a
surviving spouse, child or parent pursuant to 38 CFR 3.665 (38 U.S.C.
5313) or 3.666 (38 U.S.C. 1505) under the applicable provisions of
paragraph 25.04 relating to imprisoned veterans.

**b.** **Surviving Spouse Imprisoned - Discontinuance of Pension.** In
the termination notice, inform an imprisoned surviving spouse who was
receiving or entitled to receive pension on account of a child or
children of the effect such imprisonment will have on their rights and
advise him or her to furnish information concerning the child\'s or
children\'s individual incomes, net worths and the name and address of
the person or persons responsible for their care during the
imprisonment.

(1) Pay pension to or for a child or children effective the 61st day of
    the surviving spouse\'s imprisonment

in the same manner and at the rate payable as if there were no surviving
spouse, provided the combined income of the child and the custodian is
not excessive and net worth does not constitute a bar.

\(2\) If the surviving spouse\'s award was apportioned for a child, do
not change payments to or for such child. If current evidence is not of
record, request income and net worth evidence from the child\'s
custodian or the child, if of age of majority, such evidence to be
received within 60 days.

(a) If the reply shows a bar to entitlement due to excessive income or
    value of estate, discontinue the apportioned award as of date of
    last payment using reason code 11, Excess Income, or 12, Excess Net
    Worth, as appropriate.

\(b\) If no reply is received at the expiration of the control period,
discontinue payments as of date of last payment using reason code 16,
Failure To Furnish Evidence. Inform the child\'s custodian or the child,
as appropriate, of the reason for the discontinuance. Include appellate
rights in the notification.

\(c\) If satisfactory income evidence is received, award the child the
full (nonapportioned) rate. Use reason code 40.

\(d\) In Improved Pension cases, adjusting an apportioned award to a
child in the legal custody of the surviving spouse may result in either
a termination or reduction in the child\'s award. This adjustment will
be effective the later of either the date of last payment or the date of
termination of the surviving spouse\'s award.

\(e\) In Section 306 and Old Law cases, any award to children either in
or out of the surviving spouse\'s custody will be at the Improved
Pension rates.

**c.** **Surviving Spouse Imprisoned - Reduction of DIC or Death
Compensation.** In the award notice, provide an imprisoned surviving
spouse who has eligible children with notification that apportionment
may be made to the children, and request the surviving spouse to advise
whether an apportionment is desired. Request that the surviving spouse
furnish the name and address of the person or persons responsible for
the children\'s care during the imprisonment. See paragraph 25.04b(4)
regarding apportionment criteria.

26-I-9

**M21-1, Part IV April 5, 2005**

**Change 216**

\(1\) If an apportionment is authorized, award payment effective the
61st day of the surviving spouse\'s imprisonment.

\(2\) Limit the amount of the apportionment to the amount of payment not
payable while the surviving spouse is imprisoned.

**d.** **Child Imprisoned - Pension.** Adjust any award to a surviving
spouse or another child or children in Section 306 and Old Law cases who
have continued entitlement (reason code 28) effective the 61st day of a
child\'s imprisonment as if the imprisoned child did not exist.

\(1\) If the only eligible child is imprisoned, the surviving spouse\'s
status becomes the same as that of a surviving spouse without children
and is subject to income limitations as such.

\(2\) If the annual income questionnaire or other current evidence
reflecting income is available, make a decision on that evidence. If
such evidence is insufficient or not on hand, or if a borderline
situation is indicated, undertake development as required in
subparagraph b(2) above. Such development is not needed if there is at
least one other eligible child.

**e.** **Child Imprisoned - DIC or Death Compensation Cases.** If there
is an eligible surviving spouse or any other children, apportion the
amounts not paid to the imprisoned child to the surviving spouse or
children.

\(1\) If an apportionment is authorized, award payment effective the
61st day of the child\'s

imprisonment. See paragraph 25.04b(4) and part V, paragraph 6.09a(10).

\(2\) If there is no eligible surviving spouse or any other children,
adjust the award to one half of the veteran\'s 10-percent rate using
special law code 10 without a withholding. See part V, paragraph
6.09a(10).

**f. Parent Imprisoned.** If two parents are both entitled to DIC and
were living together prior to the time the DIC payable to one parent was
reduced due to incarceration, consider them as two parents not living
together for the purpose of determining entitlement to DIC. Should the
imprisoned parent\'s award be less than half of the veteran\'s
10-percent rate, do not adjust the award. For these cases, a parent\'s
DIC award will be subject to reduction below the incarcerated rate due
to increased income or a parent\'s death compensation award would be
subject to termination should net worth become excessive. Maintain
current income and net worth data as in other parent cases.

**g.** **Recommencement of Payments and Other Related Readjustments**

**(1)** **General.** Upon receipt of notice from any reliable source
that an imprisoned surviving spouse,

child or parent has been released from prison, resume DIC, death
compensation or pension payments, if otherwise in order, effective the
date of release if notification is received within 1 year thereof.
Otherwise, the effective date will be the date of receipt of notice (38
CFR 3.666(c)).

**(2)** **Release of Imprisoned Surviving Spouse With Eligible Child.**
For pension cases request evidence of the surviving spouse\'s income and
net worth, and, in all cases, information as to if the child or children
are remaining in his or her custody. On the release of a beneficiary who
was receiving Section 306 or Old Law benefits prior to imprisonment,
continue to pay this benefit provided the income and net worth are
within the applicable limits.

**(a)** **Children\'s Awards**

26-I-10

# April 5, 2005 M21-1, Part IV

**Change 216**

[1]{.underline}. Adjust awards to children who were not in the surviving
spouse\'s custody at the time of imprisonment, except in Improved
Pension cases, to the apportioned rate effective the dates provided in
subparagraph g(1) above, or, if an overpayment would result, date of
last payment.

[2]{.underline}. Discontinue any award to a child or children who are
restored to the surviving spouse\'s custody as of the effective date of
the surviving spouse\'s award or, if an overpayment would result, date
of last payment.

[3]{.underline}. Use reason code 40 on all actions adjusting or
terminating children\'s awards under this subparagraph.

**(b)** **Surviving Spouse\'s Award.** The surviving spouse\'s award
will be subject to any payments made to or for a child or children
subsequent to the effective date of reentitlement. Award the surviving
spouse the difference between the rate paid to the children and the
total payable through the date of last payment.

**(3)** **Release of Imprisoned Child**

**(a)** **Surviving Spouse Entitled.** If the imprisoned child is
released, adjust the surviving spouse\'s award under reason code 28 to
include this child as of the date provided in subparagraph g(1) above.

[1]{.underline}. If the imprisoned child was the only child and the
surviving spouse\'s pension award was discontinued because of income
exceeding the limitation for a surviving spouse alone, resumption from
the date of release will be contingent on timely submission of evidence
reestablishing entitlement.

[2]{.underline}. If the imprisoned child is released and legally out of
the surviving spouse\'s custody, adjust any Old Law surviving spouse\'s
awards and apportioned awards for any other children as provided in

subparagraph g(2) above.

**(b)** **No Surviving Spouse - Another Child or Children.** Adjust all
awards under reason code 28 as of the date of release or receipt of
notice of release or, if an overpayment would result, from date of last
payment. Adjust as provided above.

*Example 1:* Widow in receipt of Improved Pension imprisoned 10-18-90.
Only one eligible child in legal custody of the widow. Born 6-9-78.
Child was receiving apportionment of \$40 monthly; child and custodian
have no income.

Widow\'s Improved Pension award is terminated on 406 screen effective
12-18-90.

### Child\'s Award

403 DISABILITY/DEATH AWARD

FILE NUMBER END PRODUCT NAME

DATE RSN RATE DISAB DEPEN S H INC SLC EC WITHHOLD DED-OFFSET

12/18/90 40 101.00 81/81 0000 2D

6/9/96 24 00.00

*Note:* Use a locally generated letter to inform the custodian of the
basis for the change.

*Note:* Enter complete income information for the child and any person
legally responsible for the child\'s support.

26-I-11

# M21-1, Part IV April 5, 2005

**Change 216**

*Example 2:* Widow, in example 1, released 6-20-91. Entitlement
reestablished and award action taken 8-7-91. DLP 8-1-91. Widow has
income of \$1000.

**Child\'s Award** DISABILITY/DEATH AWARD

FILE NUMBER END PRODUCT NAME

DATE RSN RATE EC DISAB DEPEN S H INC SLC WITHHOLD DED-OFFSET

8/1/91 40 40.00 2D 11/81 0000

6/9/96 24 00.00

### Widow\'s Award

403 DISABILITY/DEATH AWARD

FILE NUMBER END PRODUCT NAME

DATE RSN RATE EC DISAB DEPEN S H INC SLC WITHHOLD DED-OFFSET

6/20/91 60 337.00 2D 11/10 1000 1-101.00

8/1/91 27 398.00 1-40.00

6/9/96 44 315.00 l0/10 0

*Note:* Use a locally generated letter to inform both the surviving
spouse and the custodian of the basis for the awards.

**(4)** **Release of Imprisoned Parent - DIC.** For those cases where an
imprisoned parent\'s payment status was changed from that of two DIC
parents living together to two parents not living together, upon release
from imprisonment restore payment status to that of two DIC parents
living together. Presume the parents are reunited unless there is
evidence to the contrary.

**26.05 APPORTIONMENT CASES**

**a.** **General.** Subject to the applicable provisions of 38 CFR
3.450, apportion death benefits in accordance with 38 CFR 3.459 through
3.461, effective as provided by 38 CFR 3.400(e), except awards may be
specially apportioned under 38 CFR 3.451 if warranted by the equities
and demonstrated hardship.

Other than as provided in subparagraph b below, the instructions in this
paragraph are intended only for cases involving regular apportionments.
See subparagraph b below for Improved Pension cases.

**b.** **Special Apportionments.** The provisions of 38 CFR 3.451 and
3.460(c) and paragraph 19.05, insofar as they are applicable, are for
equal application in Improved death pension cases, including the
provisions for treatment of appeals as contested claims. The formal
memorandum required by paragraph 19.03 in disability cases will be
required in Improved death pension cases. Assign special law code 13 in
special apportionment cases except for Improved Pension, Spanish
American War, Indian and Civil War apportionments.

**c.** **Rates Payable.** Regular apportionments of Section 306 and Old
Law death pension and compensation will be at the rates provided by the
appropriate table in appendix B, subject to the provision that a
consolidated award for *all* the children will be at the full statutory
rate less only the amount provided as the surviving spouse\'s share. In
pension cases VA might pay the children a few pennies more by taking the
total children\'s share from the chart rather than multiplying the share
for each child by the number of children. See part V, paragraph 6.01.

\(1\) Add the additional amount payable for any child or children in
custody to the surviving spouse\'s

26-I-12

**April 5, 2005 M21-1, Part IV**

**Change 216**

share, except that any amounts payable for a child in the surviving
spouse\'s custody but living with someone else may be apportioned if the
surviving spouse is not reasonably contributing to the child\'s support
(38 CFR 3.450(e)). Deduct any amounts payable for children not in
custody from the surviving spouse\'s award and show this as a type 1
withholding.

\(2\) The additional amount awarded because of the surviving spouse\'s
need for A&A or housebound is *not* apportionable (38 CFR 3.459 (b),
3.460 and 3.461(b)(2)).

d\. **Child Leaves Surviving Spouse\'s Custody, Section 306.** Take the
following action upon receipt of notice that a child has left the
custody of the surviving spouse:

\(1\) If notification is received from the surviving spouse, reduce the
surviving spouse\'s award under reason code 27 effective the first of
the following month or date of last payment, whichever is the earlier
(38 CFR 3.400(e)(2)). Withhold the amount payable as an apportioned
share to such child. Under paragraph 17.01, pay the child from the same
effective date.

\(2\) If notification is received from a third-party source, follow the
due process provisions of chapter 9 before taking action under
subparagraph c(1) above.

e\. **Termination of Apportionment.** In addition to terminations
provided by future ending dates required in anticipation of a child\'s
18th birthday, termination of schooling or the 23rd birthday of a
schoolchild, terminate apportionments and adjust or terminate the
surviving spouse\'s award on the occurrence of one of the following:

\(1\) **Child\'s Entitlement Terminates**

\(a\) **Child Returns to Surviving Spouse\'s Custody.** Adjust awards
using reason code 27, as of date of last payment to or for the child (38
CFR 3.500(d)(1)).

\(b\) **Death of Child.** See paragraph 26.02c.

\(c\) **Marriage of Child.** See paragraph 26.08.

\(d\) **Unanticipated Termination of School.** See paragraph 14.03 and
38 CFR 3.667(c).

\(e\) **Election of DEA Benefits.** See paragraph 14.13.

\(f\) **Election to Receive Benefits in a Dual Parent Case.** See
paragraph 20.60.

\(g\) **Imprisonment in Pension Cases.** See paragraph 26.04.

\(h\) **Election of Improved Pension Benefits.** See paragraph 20.07.

\(2\) **Surviving Spouse\'s Entitlement Terminates**

\(a\) **Remarriage of Surviving Spouse.** See paragraph 26.07e.

\(b\) **Death of Surviving Spouse.** See paragraph 26.02b.

\(c\) **Excessive Income or Net Worth.** See paragraphs 16.11 and 16.38.

\(d\) **Failure to Return Income Questionnaire.** See paragraph 29.11.

\(e\) **Imprisonment in Pension Cases.** See paragraph 26.04b.

26-I-13

### M21-1, Part IV April 5, 2005

###### Change 216

**26.06 DIC AWARDS TO CHILDREN PENDING DETERMINATION OF SURVIVING**

**SPOUSE\'S ENTITLEMENT**

a\. **General.** If determination of a surviving spouse\'s entitlement
will be unduly delayed in a claim involving children, award benefits for
such child or children if and when their entitlement can be established.

b\. **All Children in Custody.** Award benefits to the surviving spouse
claimant under either payee 11 or 31 as custodian under 38 CFR 3.850(c).
See paragraph 17.14. If all children are in custody of the surviving
spouse, make payment at the children only rates.

*Note:* If one or more of the children leaves the custody of the
surviving spouse before a final determination is made as to the
surviving spouse\'s entitlement, initiate the procedure outlined in
subparagraph c below as of DLP.

c\. **Child or Children Not in Custody.** If there is a child not in the
surviving spouse\'s custody, apportionment is required.

\(1\) If it is necessary to prepare VA Form 21-592, "Request for
Appointment of a Fiduciary, Custodian or Guardian," for children not in
custody, note on the form that any awards to children will be made
pending a determination of the surviving spouse\'s entitlement and that
benefits awarded may be subject to adjustment.

\(2\) Determine the rate payable from the apportionment schedule for
children as if the surviving spouse were entitled.

*Example 1:* Veteran dies 4/15/93 and the surviving spouse\'s
entitlement is pending. There are two children not in custody of the
surviving spouse.

Payee 31 Award

403 DISABILITY/DEATH AWARD

FILE NUMBER END PRODUCT NAME

DATE RSN RATE EC DISAB DEPEN S H INC SLC WITHHOLD DED-OFFSET

5-1-93 00 200.00 47 12/82

10-1-93 37 300.00 12/82

8-7-94 24 150.00 12/81

10-1-94 37 200.00 12/81

8-8-96 24 00.00

*Example 2:* Same facts as Example 1, except one child in custody of the
surviving spouse and one child out of custody.

Payee 11 (child out of custody)

403 DISABILITY DEATH AWARD

FILE NUMBER END PRODUCT NAME

DATE RSN RATE EC DISAB DEPEN S H INC SLC WITHHOLD DED-OFFSET

5-1-93 00 100.00 47 12/81

10-1-93 37 150.00 12/81

8-7-94 24 00.00

26-I-14

**April 5, 2005 M21-1, Part IV**

**Change 216**

\(3\) After the 60-day predetermination period expires or all
development associated with a personal hearing is completed (if the
beneficiary requests the hearing within 30 days of the predetermination
notice), whichever is later, refer the case to the rating board for
reconsideration. If the facts contained in the proposed rating were
complete, they need not be repeated in the final formal rating decision
but need only be referenced by citing the proposed decision by date. If
additional evidence has been submitted, it should be specifically
disposed of in the final rating. If the final rating affirms the
proposed action, terminate the additional allowance effective date of
last payment (38 CFR 3.502(e)(1)).

**26.13 ELECTION OF BENEFITS**

Change a beneficiary\'s entitlement from one type of benefit to another
by amended award action using reason code 30. Reflect the change in
entitlement code as provided in part V, paragraph 6.07c. Detailed
instructions for effecting these changes in specific types of cases are
furnished in other paragraphs as follows:

a\. An election by the surviving spouse or child, if there is no
surviving spouse entitled, or by a parent, from death compensation to
DIC. See chapter 20, subchapter IX.

b\. Payment of DIC or death compensation after a prior award of death
pension benefits. See part III, paragraphs 3.07b and 3.09e.

c\. Possible change in entitlement of a child in receipt of an
apportioned share of Section 306 or Old Law pension to Improved Pension
upon the termination of the surviving spouse\'s entitlement. See
paragraphs 20.47 and 26.07e.

d\. An election by the surviving spouse or child, if there is no
surviving spouse entitled, from Section 306 or Old Law pension to
Improved Pension. See chapter 20, subchapter VIII.

**26.13.1 DIC REFORM\--PUBLIC LAW 101-568**

The Veterans\' Benefits Act of 1992, Pub. L. 102-568, reformed the DIC
program effective January l, l993.

**a. Veteran Died Prior to January l, l993.** If the veteran died prior
to January l, l993, DIC shall be paid to a surviving spouse based on the
pay grade of the person upon whose death entitlement is predicated, at
monthly rates set forth in the table under 38 U.S.C. 1311a(3) **OR**
payment as determined under 38 U.S.C. 1311a(1) and (2), whichever
provides the greater benefit.

**b. Veteran Died On or After January l, l993**. If the veteran died on
or after January l, l993, DIC shall be paid to a surviving spouse at the
basic monthly rate as provided under 38 U.S.C. 1311a(1). An additional
monthly allowance shall be paid as established under 38 U.S.C. 1311a(2)
if, at the time of the veteran\'s death, the veteran was in receipt of
or entitled to receive compensation for a service-connected disability
rated totally disabling (including a rating based on individual
unemployability) for a continuous period of at least 8 years immediately
preceding death **AND** the surviving spouse was married to the veteran
for those same 8 years. Both requirements must be met in order to
establish entitlement to this supplemental allowance. Determinations
will be made based on evidence in file, or deemed in file, at the time
of the veteran's death. See Part VI, paragraph 5.06c.

**c. Allowance for Dependent Children\--38 U.S.C. 1311(b).** A surviving
spouse shall be paid an additional monthly allowance for each child
under age 18. The DIC apportionment rates approved by the Under
Secretary for Benefits under 38 CFR 3.461(b) will be the additional
allowance received for each child, except where hardship is shown to
exist and special apportionment consideration under 38 CFR 3.451 is
warranted.

26-I-23

**M21-1, Part IV April 5, 2005**

**Change 216**

**26.13.2 DIC REFORM---PUBLIC LAW 106-117**

**a. Payment of Ancillary Benefits.** Section 502 of Pub. L. 106-117
restores entitlement to health care benefits under 38 U.S.C. Chapter 17
(CHAMPVA), Chapter 35 education benefits, and housing loans under 38
U.S.C. Chapter 37 if the remarriage has been terminated by death or
divorce. This provision of the law also applies to a surviving spouse
who has ceased living with another person and holding himself or herself
out openly to the public as that person's spouse. This provision of the
law is effective December 1, 1999. These benefits are *not* payable for
the period from October 1, 1998, through November 30, 1999.

**b**. **Payment of DIC under 38 U.S.C. 1318 for Former Prisoners of War
(POW).** Section 501 of Pub. L. 106-117 authorizes payment of DIC to the
survivors of former POWs who died after September 30, 1999, and who were
rated totally disabled for a service-connected disability continuously
for a period of not less than one year immediately preceding death. This
provision is effective November 30, 1999.

Use special law code 25 in these cases.

**26.13.3 DIC REFORM---PUBLIC LAW 108-454**

The Veterans\' Benefits Act of 2004, Public Law 108-454, reformed the
DIC program effective January l, 2005.

**a. Payment of Additional DIC Benefits.** Section 301 of Public Law
108-454 authorizes payment of an additional monthly amount to a
surviving spouse receiving DIC with one or more minor children on the
award.

> \(1\) An additional monthly amount of \$250.00 is payable to a
> surviving spouse, if

-   Original entitlement to DIC was granted within the last two years,
    and

-   One or more children under age 18 are on the surviving spouse's
    award.

\(2\) 38 U.S.C. 1311, Section 301(b), which provides for the additional
payment, was enacted January 1, 2005. If a surviving spouse is entitled
from the date of enactment, payments may not be made before February 1,
2005.

\(3\) The additional amount only applies to the months occurring during
the two-year period beginning from the date entitlement to DIC began.
Entitlement terminates at the end of the two-year period or when the
last minor child on the surviving spouse's award reaches the age of 18
or is removed from the award, whichever occurs first.

\(4\) Only **one** additional monthly amount (\$250.00) is payable,
regardless of the number of minor children on the surviving spouse's
award.

*Example 1:* A surviving spouse with at least one child under the age of
18 was awarded DIC, effective July 1, 2004. The two-year period from the
date of initial entitlement ends June 30, 2006. The surviving spouse
would be entitled to the additional \$250.00 monthly amount from January
1, 2005, through June 30, 2006. (Payments from February 1, 2005, to July
1, 2006.)

*Example 2:* A surviving spouse with at least one child under the age of
18 was awarded DIC, effective February 1, 2003. The two-year period from
date of initial entitlement ends January 31, 2005. In this case, the
surviving spouse would be entitled to the additional \$250.00 for one
month, from January 1, 2005, through January 31, 2005.

a.  **Identification of claims involving the additional monthly DIC and
    work credit for adjustment.**

\(1\) Use special law code 28 to identify DIC claims in which the
additional monthly amount is being paid.

\(2\) Use end product 690 if adjusting an award exclusively to add this
benefit.

**26-I-24**