### Section F. Compensation Based on Individual Unemployability (IU)

#### Overview

+------------+---------------------------------------------------------+
| #          | > This section contains the following topics:           |
| #### In th |                                                         |
| is Section |                                                         |
+------------+---------------------------------------------------------+

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

  24           General Information on IU Claims               2-F-2

  25           Evaluating Evidence to Establish Entitlement   2-F-4
               to IU                                          

  26           Evaluating Evidence of Self-Employment or      2-F-8
               Employment With a Tightly Held Corporation     

  27           Preparing a Rating Decision Addressing the     2-F-10
               Issue of IU                                    

  28           Special Considerations in IU Claims            2-F-16

  29           Exhibit 1: Rating Decision Addressing the      2-F-24
               Veteran's Failure to Complete a Field          
               Examination                                    

  30           Exhibit 2: Rating Decision Addressing the      2-F-25
               Veteran's Failure to Respond to a Notice of    
               Proposed Adverse Action After Failure to       
               Complete a Field Examination                   

  31           Exhibit 3: Rating Decision Addressing the      2-F-26
               Subsequent Receipt of Evidence That Restores   
               IU After Failure to Complete a Field           
               Examination                                    

  32           Exhibit 4: Poverty Threshold Information       2-F-27
  ------------ ---------------------------------------------- ------------

#### 24. General Information on IU Claims

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains general information on individual |
| troduction | > unemployability (IU), including                       |
|            |                                                         |
|            | -   establishing entitlement to increased compensation  |
|            |     based on IU                                         |
|            |                                                         |
|            | -   considering a 100-percent evaluation                |
|            |                                                         |
|            | -   understanding ***unemployability*** vs.             |
|            |     ***unemployed*** and ***unemployable***, and        |
|            |                                                         |
|            | -   the definition of ***substantially gainful          |
|            |     employment.***                                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > December 13, 2005                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > To establish entitlement to compensation as if 100    |
| #### a. Es | > percent disabled based on individual unemployability  |
| tablishing | > (IU), a veteran must be unable to secure or retain    |
|  Entitleme | > employment by reason of service-connected (SC)        |
| nt to Incr | > disability. The veteran must be unemployable in fact  |
| eased Comp | > by reason of SC disability *and* *either*             |
| ensation B |                                                         |
| ased on IU | -   meet the schedular requirements of [38 CFR          |
|            |     4.16](http://                                       |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC), |
|            |     or                                                  |
|            |                                                         |
|            | -   have an extra-schedular evaluation approved by the  |
|            |     Compensation and Pension (C&P) Service (211B).      |
|            |                                                         |
|            | > ***Notes***:                                          |
|            |                                                         |
|            | -   IU is also referred to as *total disability based   |
|            |     on individual unemployability* (TDIU).              |
|            |                                                         |
|            | -   IU must be established on a factual basis.          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Decide whether the veteran meets the requirements for |
|  b. Consid | > a schedular 100-percent evaluation *before*           |
| ering a 10 | > considering the issue of IU.                          |
| 0 Percent  | >                                                       |
| Evaluation | > ***Note***: If a 100 percent SC evaluation is         |
|            | > awarded, any pending claim for a total disability     |
|            | > evaluation based on IU is moot.                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > The term ***unemployability*** is not synonymous with |
| #### c. Un | > the terms ***unemployed*** and ***unemployable*** for |
| derstandin | > the purpose of determining entitlement to increased   |
| g Unemploy | > compensation. A veteran may be unemployed or          |
| ability vs | > unemployable for a variety of reasons.                |
| . Unemploy | >                                                       |
| ed and Une | > A determination as to entitlement to a total          |
| mployable  | > evaluation based on unemployability is appropriate    |
|            | > only when a veteran's unemployability is a result of  |
|            | > SC disabilities.                                      |
+------------+---------------------------------------------------------+

Continued on next page

24\. General Information on IU Claims, Continued

+------------+---------------------------------------------------------+
| ###        | > ***Substantially gainful employment*** is defined as  |
| ## d. Defi | > employment at which non-disabled individuals earn     |
| nition: Su | > their livelihood with earnings comparable to the      |
| bstantiall | > particular occupation in the community where the      |
| y Gainful  | > veteran resides.                                      |
| Employment |                                                         |
+------------+---------------------------------------------------------+

#### 25. Evaluating Evidence to Establish Entitlement to IU

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on evaluating         |
| troduction | > evidence to establish entitlement to increased        |
|            | > compensation based on IU, including                   |
|            |                                                         |
|            | -   general evidence requirements                       |
|            |                                                         |
|            | -   medical evidence requirements                       |
|            |                                                         |
|            | -   handling incomplete medical evidence                |
|            |                                                         |
|            | -   employment history requirements                     |
|            |                                                         |
|            | -   requesting employment information from employers    |
|            |                                                         |
|            | -   when to obtain                                      |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   Social Security Administration (SSA) reports, and   |
|            |                                                         |
|            | -   vocational rehabilitation records                   |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   identifying reasonably raised claims of IU, and     |
|            |                                                         |
|            | -   processing reasonably raised claims of IU.          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > September 5, 2008                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > A completed *VA Form 21-8940, Veteran's Application   |
| General Ev | > for Increased Compensation Based on Unemployability*, |
| idence Req | > is required for a grant of IU. Use the information    |
| uirements  | > supplied by the veteran on this form as the basis for |
|            | > development of evidence to support the claim when     |
|            | > rating claims for IU.                                 |
|            | >                                                       |
|            | > The evidence should be sufficient to evaluate both    |
|            | > the veteran's                                         |
|            |                                                         |
|            | -   current degree of disability, and                   |
|            |                                                         |
|            | -   employment status.                                  |
|            |                                                         |
|            | > ***Important***: A claim for IU may consist of        |
|            |                                                         |
|            | -   *VA Form 21-8940*, or                               |
|            |                                                         |
|            | -   any written communication indicating a veteran is   |
|            |     unable to work because of SC disability.            |
+------------+---------------------------------------------------------+

Continued on next page

25\. Evaluating Evidence to Establish Entitlement to IU, Continued

+------------+---------------------------------------------------------+
| ##### b.   | > A claim for IU must contain sufficient medical        |
| Medical Ev | > evidence to support a current evaluation of the       |
| idence Req | > extent of all the veteran's disabilities.             |
| uirements  | >                                                       |
|            | > The evidence should reflect the veteran's condition   |
|            | > within the past 12 months and include, but need not   |
|            | > be limited to,                                        |
|            |                                                         |
|            | -   the results of VA examination(s)                    |
|            |                                                         |
|            | -   hospital reports, and/or                            |
|            |                                                         |
|            | -   outpatient treatment records.                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > If the medical evidence of record is incomplete or    |
|  c. Handli | > inconsistent, schedule a medical examination.         |
| ng Incompl | >                                                       |
| ete Medica | > Request special tests only when required for proper   |
| l Evidence | > evaluation of the degree of severity of relevant      |
|            | > disabilities.                                         |
|            | >                                                       |
|            | > ***Reference***: For more information on scheduling   |
|            | > examinations, see [M21-1MR, Part III, Subpart iv,     |
|            | > 3.B](../pt03_sp04_ch03_secB.xml#III.iv.3.B).          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d. E | > *VA Form 21-8940* requires the veteran to furnish an  |
| mployment  | > employment history for the                            |
| History Re |                                                         |
| quirements | -   five-year period preceding the date on which the    |
|            |     veteran claims to have become too disabled to work, |
|            |     and                                                 |
|            |                                                         |
|            | -   entire time after the date on which the veteran     |
|            |     claims to have become too disabled to work.         |
|            |                                                         |
|            | > ***Important***: *VA Form 21-8940* must contain the   |
|            | > veteran's work history.                               |
+------------+---------------------------------------------------------+

25\. Evaluating Evidence to Establish Entitlement to IU, Continued

+------------+---------------------------------------------------------+
| ##### e    | > Request each employer for whom the veteran worked     |
| . Requesti | > during the 12-month period prior to the date the      |
| ng Employm | > veteran last worked complete and return *VA Form      |
| ent Inform | > 21-4192*, *Request for Employment Information in      |
| ation From | > Connection with Claim for Disability Benefits*. At    |
|  Employers | > the same time, send a copy of *VA Form 21-4192* to    |
|            | > the veteran.                                          |
|            | >                                                       |
|            | > If *VA Form 21-4192* is not received from the         |
|            | > veteran's employer(s) within 60 days                  |
|            |                                                         |
|            | -   send a follow-up request to the employer(s) for *VA |
|            |     Form 21-4192*, allowing an additional 30 days for   |
|            |     response, and                                       |
|            |                                                         |
|            | -   notify the veteran that                             |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the employer has failed to respond to VA's request, |
|            |     and                                                 |
|            |                                                         |
|            | -   it is ultimately his/her responsibility to obtain   |
|            |     this information.                                   |
|            |                                                         |
|            | > ***Note***: If the information on *VA Form 21-4192*   |
|            | > only states that the veteran retired, then request    |
|            | > additional information as to whether the veteran's    |
|            | > retirement was by reason of disability. If so, ask    |
|            | > the employer to identify the nature of the disability |
|            | > for which the veteran was retired.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Obtain and consider complete copies of the Social     |
|  f. When t | > Security Administration (SSA) decision (grants and    |
| o Obtain S | > denials) and any supporting medical records when      |
| SA Reports |                                                         |
|            | -   evidence of record is insufficient to award         |
|            |     increased compensation based on IU, and             |
|            |                                                         |
|            | -   the veteran's claims folder shows that the veteran  |
|            |     has been examined or awarded disability benefits by |
|            |     SSA.                                                |
|            |                                                         |
|            | > ***Notes***:                                          |
|            |                                                         |
|            | -   Although decisions by SSA regarding a veteran's     |
|            |     unemployability are not controlling for VA          |
|            |     determinations (and vice versa), SSA's record may   |
|            |     indicate the level of impairment of the veteran's   |
|            |     SC disability.                                      |
|            |                                                         |
|            | -   When reviewing SSA records, pay close attention to  |
|            |     what disability resulted in a grant of SSA          |
|            |     benefits, and whether that disability is one for    |
|            |     which service connection has been granted.          |
|            |                                                         |
|            | > ***References***: For more information on             |
|            |                                                         |
|            | -   requesting information from SSA, see [M21-1MR, Part |
|            |     III, Subpart iii,                                   |
|            |     3.A](../pt03_sp03_ch03_secA.xml#III.iii.3.A), and   |
|            |                                                         |
|            | -   the effect of SSA decisions regarding               |
|            |     unemployability on VA determinations, see           |
|            |     *[Murincsak v.                                      |
|            |     Derwinski](h                                        |
|            | ttp://vbaw.vba.va.gov/bl/21/Advisory/CAVCDAD.htm#bmm),* |
|            |     2 Vet. App. 363 (1992).                             |
+------------+---------------------------------------------------------+

Continued on next page

25\. Evaluating Evidence to Establish Entitlement to IU, Continued

+------------+---------------------------------------------------------+
| ##### g    | > When a veteran's claims folder indicates that he/she  |
| . When to  | > was seen by the Vocational Rehabilitation and         |
| Obtain Voc | > Employment Service (VR&E), obtain and evaluate any    |
| ational Re | > records related to this contact.                      |
| habilitati | >                                                       |
| on Records | > The VR&E records may                                  |
|            |                                                         |
|            | -   document the veteran's participation in a training  |
|            |     program, or                                         |
|            |                                                         |
|            | -   show that training was not feasible or was          |
|            |     unsuccessful.                                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Reasonably raised claims for IU may arise in a        |
| ### h. Ide | > veteran's original claim or in a claim for an         |
| ntifying R | > increased rating. The Department of Veterans Affairs  |
| easonably  | > (VA) must consider a claim for IU if                  |
| Raised Cla |                                                         |
| ims for IU | -   the veteran's SC rating meets the minimum schedular |
|            |     criteria found in [38 CFR                           |
|            |     4.16(a)](http://                                    |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC), |
|            |     and                                                 |
|            |                                                         |
|            | -   there is evidence of current SC unemployability in  |
|            |     the veteran's claims folder or under VA control.    |
|            |                                                         |
|            | > ***Reference***: For more information on reasonably   |
|            | > raised claims for IU, see                             |
|            |                                                         |
|            | -   *[Norris v.                                         |
|            |     West](h                                             |
|            | ttp://vbaw.vba.va.gov/bl/21/Advisory/CAVCDAD.htm#bmn),* |
|            |     12 Vet. App. 413 (1999), and                        |
|            |                                                         |
|            | -   [VAOPGCPREC                                         |
|            |     6-99](http://www.va.gov/ogc/docs/prc6-99.doc).      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > When a reasonably raised claim for IU is identified,  |
| #### i. Pr | > and additional evidence is needed                     |
| ocessing R |                                                         |
| easonably  | -   rate all other claimed issues that can be decided   |
| Raised Cla |                                                         |
| ims for IU | -   show the issue of potential IU entitlement as       |
|            |     deferred in the rating decision                     |
|            |                                                         |
|            | -   develop the reasonably raised IU issue under the    |
|            |     *existing* end product, which will remain pending   |
|            |     until a merits determination of IU entitlement is   |
|            |     made, and                                           |
|            |                                                         |
|            | -   send the veteran a duty-to-notify/assist ("VCAA")   |
|            |     letter, enclosing *VA Form 21-8940* for completion. |
|            |                                                         |
|            | > ***Notes***:                                          |
|            |                                                         |
|            | -   Do *not* send a veteran *VA Form 21-8940* to        |
|            |     complete if                                         |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the schedular requirements of [38 CFR               |
|            |     4.16](http:/                                        |
|            | /www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC) |
|            |     are met, *but*                                      |
|            |                                                         |
|            | -   there is no evidence of SC unemployability.         |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   A subsequent formal rating decision will be         |
|            |     required to dispose of the issue of entitlement to  |
|            |     a total evaluation based on IU, even when the       |
|            |     veteran fails to return *VA Form 21-8940*.          |
+------------+---------------------------------------------------------+

#### 26. Evaluating Evidence of Self-Employment or Employment With a Tightly Held Corporation

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on evaluating         |
| troduction | > evidence of self-employment or employment with a      |
|            | > tightly held corporation. It includes information on  |
|            |                                                         |
|            | -   developing claims involving self-employed           |
|            |     individuals                                         |
|            |                                                         |
|            | -   deciding whether self-employed individuals are      |
|            |     unemployable due to a SC disability                 |
|            |                                                         |
|            | -   the definition of a ***tightly held corporation***, |
|            |     and                                                 |
|            |                                                         |
|            | -   evaluating evidence showing income from a tightly   |
|            |     held corporation.                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > September 5, 2008                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Development to produce the evidence necessary to      |
| ### a. Dev | > establish the degree to which SC disability has       |
| eloping Cl | > impaired the veteran's ability to engage in           |
| aims Invol | > self-employment *must* generally be more extensive    |
| ving Self- | > than development in cases in which the veteran worked |
| Employed I | > for others.                                           |
| ndividuals | >                                                       |
|            | > Request that the veteran furnish a statement          |
|            | > regarding the                                         |
|            |                                                         |
|            | -   types of work performed                             |
|            |                                                         |
|            | -   number of hours worked per week, and                |
|            |                                                         |
|            | -   amount of time lost in the previous 12 months due   |
|            |     to SC disabilities.                                 |
+------------+---------------------------------------------------------+

Continued on next page

26\. Evaluating Evidence of Self-Employment or Employment With a Tightly
Held Corporation, Continued

+------------+---------------------------------------------------------+
| ##### b.   | > When determining entitlement of self-employed         |
| Deciding W | > individuals to increased compensation based on IU,    |
| hether Sel | > consider the relationship between the frequency and   |
| f-Employed | > the type of service performed by the veteran for      |
|  Individua | > his/her business and the veteran's net and gross      |
| ls Are Une | > earnings for the past 12 months.                      |
| mployable  | >                                                       |
| Due To SC  | > Consider facts of the case, such as                   |
| Disability |                                                         |
|            | -   low gross earnings that support a finding of        |
|            |     marginal employment, especially when the amount of  |
|            |     time lost from work due to SC disablement is taken  |
|            |     into account, or                                    |
|            |                                                         |
|            | -   high gross earnings that indicate the veteran is    |
|            |     capable of engaging in a substantially gainful      |
|            |     occupation.                                         |
|            |                                                         |
|            | > ***Notes***:                                          |
|            |                                                         |
|            | -   Consider low net earnings in conjunction with gross |
|            |     income.                                             |
|            |                                                         |
|            | -   The inability to make a profit is not always        |
|            |     indicative of the inability to engage in            |
|            |     substantially gainful employment.                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > A ***tightly held*** ***corporation*** (or closely    |
|  c. Defini | > held corporation) is usually a family corporation. A  |
| tion: Tigh | > corporation bearing the veteran's name is usually     |
| tly Held C | > indicative of a tightly held corporation.             |
| orporation |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Since the veteran may control the amount of wages     |
|  d. Evalua | > paid to himself/herself, do not make a finding of     |
| ting Evide | > marginal employment solely on the basis of low wages. |
| nce Showin | >                                                       |
| g Income F | > Keep in mind that the issue for consideration is      |
| rom a Tigh | > whether the frequency and type of service performed   |
| tly Held C | > by the veteran equates to substantially gainful       |
| orporation | > employment. Therefore, consider evidence that the     |
|            | > veteran received, or was entitled to receive, other   |
|            | > remuneration from the corporation, such as stock      |
|            | > dividends or loans, in lieu of wages.                 |
|            | >                                                       |
|            | > ***Note***: If the reported wages appear low for the  |
|            | > work performed, request a field examination per       |
|            | > [M21-1MR, Part III, Subpart vi,                       |
|            | > 8.7](../pt03_sp06_ch08.xml#III.vi.8.7), to determine  |
|            | > the veteran's entitlement to the corporation and      |
|            | > corporate earnings.                                   |
+------------+---------------------------------------------------------+

#### 27. Preparing a Rating Decision Addressing the Issue of IU

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on preparing a rating |
| troduction | > decision addressing the issue of IU, including        |
|            |                                                         |
|            | -   considerations when deciding an IU claim            |
|            |                                                         |
|            | -   applying the concept of average impairment          |
|            |                                                         |
|            | -   considering multiple disabilities                   |
|            |                                                         |
|            | -   determining the effect of SC disabilities on        |
|            |     employability                                       |
|            |                                                         |
|            | -   the definition of ***marginal*** ***employment***   |
|            |                                                         |
|            | -   reasons for denying IU claims                       |
|            |                                                         |
|            | -   formally denying IU, and                            |
|            |                                                         |
|            | -   the information to include in the rating decision.  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > September 5, 2008                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a    | > When deciding an IU claim, the rating activity must   |
| . Consider | > take into account                                     |
| ations Whe |                                                         |
| n Rating a | -   the veteran's current physical and mental condition |
| n IU Claim |                                                         |
|            | -   the veteran's employment status, including          |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the nature of employment, and                       |
|            |                                                         |
|            | -   the reason employment was terminated, and           |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   whether                                             |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the disability requirements set forth in [38 CFR    |
|            |     4.16](http:/                                        |
|            | /www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC) |
|            |     are met, or                                         |
|            |                                                         |
|            | -   extra-schedular consideration under [38 CFR         |
|            |     3.321(b)(1)](http://                                |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_321.DOC) |
|            |     is warranted.                                       |
|            |                                                         |
|            | > ***Important***: Do not defer a decision as to the    |
|            | > schedular degree of disability pending receipt of     |
|            | > evidence sufficient to adjudicate the issue of IU.    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Apply the concept of average impairment in earning    |
| #### b. Ap | > capacity to determinations of the percentage of       |
| plying the | > disability.                                           |
|  Concept o | >                                                       |
| f Average  | > Do *not* apply the concept of average impairment in   |
| Impairment | > earning capacity to determinations regarding IU.      |
|  in Earnin |                                                         |
| g Capacity |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

27\. Preparing a Rating Decision Addressing the Issue of IU, Continued

+------------+---------------------------------------------------------+
| ##         | > Under certain circumstances, multiple disabilities    |
| ### c. Con | > may be considered one disability for the purpose of   |
| sidering M | > meeting the requirements of [38 CFR                   |
| ultiple Di | > 4.16](http://                                         |
| sabilities | www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC). |
|            | >                                                       |
|            | > ***Example***: Consider multiple disabilities         |
|            | > incurred while a prisoner of war (POW) and            |
|            | > disabilities incurred in action prior to, or          |
|            | > subsequent to, former POW status, as one disability.  |
|            | >                                                       |
|            | > ***Rationale***: POW status is a continuation of      |
|            | > action against the enemy.                             |
|            | >                                                       |
|            | > ***Reference***: For more information on rating       |
|            | > claims involving former POWs, see [M21-1MR, Part IV,  |
|            | > Subpart ii,                                           |
|            | > 2.E](../pt04_sp02_ch02_secE.xml#IV.ii.2.E).           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d    | > Determine whether the severity of the SC conditions   |
| . Determin | > precludes the veteran from obtaining or retaining     |
| ing the Ef | > substantially gainful employment.                     |
| fect of SC | >                                                       |
|  Disabilit | > Identify and isolate the effects of extraneous        |
| ies on Emp | > factors, such as                                      |
| loyability |                                                         |
|            | -   age                                                 |
|            |                                                         |
|            | -   nonservice-connected (NSC) disabilities             |
|            |                                                         |
|            | -   injuries occurring after military service           |
|            |                                                         |
|            | -   availability of work, or                            |
|            |                                                         |
|            | -   voluntary withdrawal from the labor market.         |
|            |                                                         |
|            | > ***Notes***: Include sufficient information in the    |
|            | > *Reasons for Decision* section of the rating decision |
|            | > to                                                    |
|            |                                                         |
|            | -   explain the reasoning behind the decision, either   |
|            |     favorable or unfavorable, and                       |
|            |                                                         |
|            | -   justify the conclusion.                             |
+------------+---------------------------------------------------------+

Continued on next page

27\. Preparing a Rating Decision Addressing the Issue of IU, Continued

+------------+---------------------------------------------------------+
| ##### e. D | > ***Marginal employment*** exists                      |
| efinition: |                                                         |
|  Marginal  | -   when a veteran's earned annual income does not      |
| Employment |     exceed the amount established by the U.S.           |
|            |     Department of Commerce, U.S. Census Bureau, as the  |
|            |     poverty threshold for one person, and/or            |
|            |                                                         |
|            | -   on a facts-found basis, and includes, but is not    |
|            |     limited to, employment in a protected environment,  |
|            |     such as a family business or sheltered workshop,    |
|            |     when earned annual income exceeds the poverty       |
|            |     threshold.                                          |
|            |                                                         |
|            | > ***Note***: The U.S. Census Bureau revises the        |
|            | > poverty thresholds annually. When the revised amounts |
|            | > are published, Veterans Benefits Administration (VBA) |
|            | > revises [M21-1MR, Part IV, Subpart ii,                |
|            | > 2.F.32.b](../pt04_sp02_ch02_secF#IV.ii.2.F.32.b).     |
|            | >                                                       |
|            | > ***Important***:                                      |
|            |                                                         |
|            | -   Do not consider marginal employment as              |
|            |     substantially gainful employment.                   |
|            |                                                         |
|            | -   Do not consider amounts received from participation |
|            |     in the Veterans Health Administration's (VHA's)     |
|            |     Compensated Work Therapy (CWT) Program as income    |
|            |     for IU purposes.                                    |
|            |                                                         |
|            | > ***Reference***: For more information on the poverty  |
|            | > threshold, see [M21-1MR, Part IV, Subpart ii,         |
|            | > 2.F.32](../pt04_sp02_ch02_secF#IV.ii.2.F.32).         |
+------------+---------------------------------------------------------+

Continued on next page

27\. Preparing a Rating Decision Addressing the Issue of IU, Continued

+------------+---------------------------------------------------------+
| ##### f.   | > Deny IU claims or reduce compensation that is based   |
|  Reasons f | > on a finding of IU only if the facts demonstrate that |
| or Denying | > the veteran                                           |
|  IU Claims |                                                         |
|            | -   is not precluded from obtaining gainful employment  |
|            |     by reason of SC disability                          |
|            |                                                         |
|            | -   has in fact obtained gainful employment, or         |
|            |                                                         |
|            | -   has failed to cooperate with development, such as   |
|            |     failing to return a competed *VA Form 21-8940* when |
|            |     requested.                                          |
|            |                                                         |
|            | ***Notes***:                                            |
|            |                                                         |
|            | -   The fact that a veteran is participating in a       |
|            |     program of rehabilitation does not preclude a       |
|            |     finding of IU.                                      |
|            |                                                         |
|            | -   The fact that a veteran has completed a program of  |
|            |     rehabilitation does not mandate a termination of IU |
|            |     unless sustained employment is also demonstrated.   |
|            |                                                         |
|            | -   When IU is claimed following a completed program of |
|            |     rehabilitation, pay special attention to evidence   |
|            |     of program results that indicate the veteran\'s     |
|            |     ability and willingness to engage in a              |
|            |     substantially gainful occupation.                   |
|            |                                                         |
|            | > ***Reference***: For more information on continuing a |
|            | > total evaluation based on IU, see [38 CFR             |
|            | > 3.343(c)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_343.DOC). |
+------------+---------------------------------------------------------+

Continued on next page

27\. Preparing a Rating Decision Addressing the Issue of IU, Continued

+------------+---------------------------------------------------------+
| ##### g.   | > Formally code the rating decision to indicate denial  |
|  Formally  | > of IU if                                              |
| Denying IU |                                                         |
|            | -   the veteran specifically claims entitlement to IU,  |
|            |     and                                                 |
|            |                                                         |
|            | -   any of the requirements for [38 CFR                 |
|            |     4.16](http:/                                        |
|            | /www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC) |
|            |     are not met.                                        |
|            |                                                         |
|            | > ***Note***: If the veteran disagrees with the         |
|            | > decision, the statement of the case (SOC) should cite |
|            | > the relevant portion of [38 CFR                       |
|            | > 4.16](http:/                                          |
|            | /www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC) |
|            | > as the authority of the denial.                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Use the information below to determine what           |
| # h. Infor | > information to include in the rating decision.        |
| mation to  |                                                         |
| Include in |                                                         |
|  the Ratin |                                                         |
| g Decision |                                                         |
+------------+---------------------------------------------------------+

+----------------------------------+-----------------------------------+
| If ...                           | Then ...                          |
+----------------------------------+-----------------------------------+
| schedular requirements of [38    | provide an explanation of all     |
| CFR                              | pertinent subsidiary              |
| 4.1                              | determinations.                   |
| 6](http://www.warms.vba.va.gov/r |                                   |
| egs/38CFR/BOOKC/PART4/S4_16.DOC) |                                   |
| are met, but IU is denied        |                                   |
+----------------------------------+-----------------------------------+
| the veteran is considered        | explain the facts that are        |
| employable                       | pertinent to that conclusion.     |
+----------------------------------+-----------------------------------+
| schedular requirements of [38    | note the absence of a basis for   |
| CFR                              | submission of the case to         |
| 4.1                              | Compensation and Pension (C&P)    |
| 6](http://www.warms.vba.va.gov/r | Service (211B) for consideration  |
| egs/38CFR/BOOKC/PART4/S4_16.DOC) | of an extra-schedular rating, if  |
| are not met                      | applicable.                       |
|                                  |                                   |
|                                  | ***Reference***: For more         |
|                                  | information on extra-schedular    |
|                                  | submission, see                   |
|                                  |                                   |
|                                  | -   [38 CFR                       |
|                                  |     3.321(b)(                     |
|                                  | 1)](http://www.warms.vba.va.gov/r |
|                                  | egs/38CFR/BOOKB/PART3/S3_321.DOC) |
|                                  |                                   |
|                                  | -   [38 CFR                       |
|                                  |     4.16(                         |
|                                  | b)](http://www.warms.vba.va.gov/r |
|                                  | egs/38CFR/BOOKC/PART4/S4_16.DOC), |
|                                  |     and                           |
|                                  |                                   |
|                                  | -   [M21-1MR, Part IV, Subpart    |
|                                  |     ii,                           |
|                                  |     2.F.28.a](../pt0              |
|                                  | 4_sp02_ch02_secF#IV.ii.2.F.28.a). |
+----------------------------------+-----------------------------------+
| a veteran is considered          | > include                         |
| unemployable due to NSC factors  |                                   |
|                                  | -   an explanation of the reasons |
|                                  |     for this decision, and        |
|                                  |                                   |
|                                  | -   the reasoning for finding     |
|                                  |     that SC disabilities alone do |
|                                  |     not render the veteran        |
|                                  |     unemployable.                 |
+----------------------------------+-----------------------------------+

Continued on next page

27\. Preparing a Rating Decision Addressing the Issue of IU, Continued

  -----------------------------------------------------------------------
  h\. Information to Include in the Rating Decision (continued)

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

+----------------------------------+-----------------------------------+
| If ...                           | Then ...                          |
+----------------------------------+-----------------------------------+
| IU is established                | include an explanation or         |
|                                  | analysis of how impairment from   |
|                                  | SC disability supports the        |
|                                  | decision.                         |
|                                  |                                   |
|                                  | ***Important***: A conclusory     |
|                                  | statement alone that the criteria |
|                                  | for a total evaluation based on   |
|                                  | IU are met does *not* satisfy the |
|                                  | requirement to state the basis    |
|                                  | for the decision.                 |
+----------------------------------+-----------------------------------+
| permanency of the total          | dispose of the issue of           |
| disability IU evaluation is      | Dependents' Educational           |
| established                      | Assistance (DEA) under [38 U.S.C. |
|                                  | Chapter                           |
|                                  | 35](http://straylight.law.        |
|                                  | cornell.edu/uscode/html/uscode38/ |
|                                  | usc_sup_01_38_10_III_20_35.html), |
|                                  | regardless of whether or not      |
|                                  | there appear to be any potential  |
|                                  | dependents.                       |
|                                  |                                   |
|                                  | ***Note***: The rating conclusion |
|                                  | must include the statement,       |
|                                  | "*Basic eligibility under 38      |
|                                  | U.S.C. Chapter 35 is established  |
|                                  | from \[date\]."*                  |
+----------------------------------+-----------------------------------+

+-----------------------------------------------------------------------+
| > ***References***: For more information on                           |
|                                                                       |
| -   IU, see [38 CFR                                                   |
|                                                                       |
|  4.16](http://www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC), |
|     and                                                               |
|                                                                       |
| -   unemployability, see [38 CFR                                      |
|                                                                       |
| 4.18](http://www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_17a.DOC). |
+-----------------------------------------------------------------------+

#### 28. Special Considerations in IU Claims

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on special            |
| troduction | > considerations in IU claims, including                |
|            |                                                         |
|            | -   handling claims requiring CO approval               |
|            |                                                         |
|            | -   monitoring changes in employability status          |
|            |                                                         |
|            | -   when monitoring changes in employability status is  |
|            |     not required                                        |
|            |                                                         |
|            | -   dispatch and control for the return of *VA Form     |
|            |     21-4140, Employment Questionnaire*                  |
|            |                                                         |
|            | -   the action to take if *VA Form 21-4140*             |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   cannot be issued by Hines Information Technology    |
|            |     Center (ITC)                                        |
|            |                                                         |
|            | -   shows continued unemployability                     |
|            |                                                         |
|            | -   indicates the veteran may be employed, or           |
|            |                                                         |
|            | -   is not returned                                     |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   determining whether the veteran has sustained       |
|            |     gainful employment, and                             |
|            |                                                         |
|            | -   failure of the veteran to participate in a required |
|            |     field examination.                                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > September 5, 2008                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Submit any claim to CO (211B) for extra-schedular     |
| a. Handlin | > consideration if the schedular requirements of [38    |
| g Claims R | > CFR                                                   |
| equiring C | > 4.16](http:/                                          |
| O Approval | /www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC) |
|            | > are not met but the evidence of record supports a     |
|            | > finding that the veteran is unemployable by reason of |
|            | > SC disability.                                        |
|            | >                                                       |
|            | > The memorandum prepared to transmit claims folders to |
|            | > CO for review must provide the following:             |
|            |                                                         |
|            | -   a clear and succinct statement of the facts of the  |
|            |     case, including medical and lay evidence of         |
|            |     symptoms                                            |
|            |                                                         |
|            | -   a discussion of relevant laws and regulations, and  |
|            |                                                         |
|            | -   a statement of the issues to be resolved, as well   |
|            |     as the recommended evaluation(s).                   |
+------------+---------------------------------------------------------+

Continued on next page

28\. Special Considerations in IU Claims, Continued

+------------+---------------------------------------------------------+
| #          | > Changes in the employability of veterans for whom IU  |
| #### b. Mo | > is established is monitored through the               |
| nitoring C |                                                         |
| hanges in  | -   annual release of *VA Form 21-4140, Employment      |
| Employabil |     Questionnaire*, via the Benefits Delivery Network   |
| ity Status |     (BDN), and                                          |
|            |                                                         |
|            | -   Income Verification Match (IVM).                    |
|            |                                                         |
|            | > ***References***: For more information on             |
|            |                                                         |
|            | -   dispatch and control for the return of *VA Form     |
|            |     21-4140*, see [M21-1MR, Part IV, Subpart ii,        |
|            |     2.F.28.d](../pt04_sp02_ch02_secF#IV.ii.2.F.28.d),   |
|            |     and                                                 |
|            |                                                         |
|            | -   the IVM as it relates to awards based on IU, see    |
|            |     [M21-1MR, Part X, 9.12](../pt10_ch09.xml#X.9.12).   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > Monitoring changes in employability status is not     |
| ## c. When | > required when the veteran                             |
|  Monitorin |                                                         |
| g Changes  | -   is 69 years of age or older                         |
| in Employa |                                                         |
| bility Sta | -   has been rated totally disabled due to              |
| tus Is Not |     unemployability for a period of 20 continuous       |
|  Required  |     years, which protects the evaluation from future    |
|            |     reduction under [38 CFR                             |
|            |     3.951(b)](http://w                                  |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_950.DOC), |
|            |     or                                                  |
|            |                                                         |
|            | -   is assigned a 100-percent schedular evaluation.     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d.   | > The table below shows the steps involved in the       |
| Dispatch a | > dispatch and control for return of *VA Form 21-4140.* |
| nd Control |                                                         |
|  for Retur |                                                         |
| n of VA Fo |                                                         |
| rm 21-4140 |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | BDN generates a future diary under reason code 02,           |
|       | "Individual Unemployability Review," whenever a rating       |
|       | decision granting a total evaluation based on individual     |
|       | unemployability is processed.                                |
+-------+--------------------------------------------------------------+
| 2     | Hines Information Technology Center (ITC) issues *VA Form    |
|       | 21-4140* annually upon maturation of the future diary        |
|       | established under reason code 02.                            |
|       |                                                              |
|       | ***Note***: To control the release of the last *VA Form      |
|       | 21-4140*, BDN generates a master record diary under reason   |
|       | code 32, "Expiration of Employability Control," 19 years     |
|       | from the effective date of the grant of total benefits, or   |
|       | at age 69, whichever is earlier.                             |
+-------+--------------------------------------------------------------+

Continued on next page

28\. Special Considerations in IU Claims, Continued

  -----------------------------------------------------------------------
  d\. Dispatch and Control for Return of VA Form 21-4140 (continued)

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

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 3     | BDN establishes a future diary 34 to control for the return  |
|       | of *VA Form 4140* two months from the month it is issued     |
|       | from Hines ITC.                                              |
|       |                                                              |
|       | ***Note***: If the future diary 34 is not cleared timely,    |
|       | BDN issues *VA Form 21-6560, Notice of Benefit Transaction   |
|       | (Hines)*, message code 631, "Diaried Action Due, reason code |
|       | 02."                                                         |
+-------+--------------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### e    | > When Hines ITC cannot issue *VA Form 21-4140*, BDN    |
| . Action t | > generates a *VA Form 20-8270, C&P Master Record --    |
| o Take Whe | > Audit Writeout (Hines)*, with message code 631 or     |
| n Hines IT | > 882, "Employability Letter Not Sent."                 |
| C Cannot I | >                                                       |
| ssue VA Fo | > Upon receipt of the writeout, immediately send the    |
| rm 21-4140 | > veteran *VA Form 21-4140-1, Employment                |
|            | > Questionnaire*.                                       |
|            | >                                                       |
|            | > To control for the return of *VA Form 21-4140-1*,     |
|            | > Hines ITC establishes a future diary under reason     |
|            | > code 34 for four months from the month in which *VA   |
|            | > Form 20-8270* was issued.                             |
|            | >                                                       |
|            | > ***Note***: As a local option, a regional office (RO) |
|            | > may establish a future diary under end product (EP)   |
|            | > 310 upon receipt of a writeout with either message    |
|            | > code 631 or 882.                                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > When reviewing the completed *VA Form 21-4140* or *VA |
|  f. Action | > Form 21-4140-1*, if the veteran has checked "NO,"     |
|  to Take i | > indicating he or she has not been employed in the     |
| f VA Form  | > past 12 months (block 3) and signed the form, the     |
| 21-4140 or | > Triage Team should                                    |
|  VA Form 2 |                                                         |
| 1-4140-1 S | -   file the completed questionnaire in the claims      |
| hows Conti |     folder, and                                         |
| nued Unemp |                                                         |
| loyability | -   clear                                               |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   EP 692, using the PCLR command, and                 |
|            |                                                         |
|            | -   the future diary established under reason code 34,  |
|            |     using the DIAR command.                             |
|            |                                                         |
|            | > ***Note***: Do not refer the claims folder to the     |
|            | > rating activity.                                      |
+------------+---------------------------------------------------------+

Continued on next page

28\. Special Considerations in IU Claims, Continued

+------------+---------------------------------------------------------+
| ###        | > The table below shows the action taken by the Triage  |
| ## g. Acti | > Team if the veteran checked "YES" for block 3 on *VA  |
| on Taken b | > Form 21-4140* (or *VA Form 21-4140-1)*, or indicated  |
| y the Tria | > employment during the past 12 months in "*Section I - |
| ge Team if | > Employment Certification."*                           |
|  VA Form 2 |                                                         |
| 1-4140 Ind |                                                         |
| icates Vet |                                                         |
| eran May B |                                                         |
| e Employed |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------+-----------------------------------+
| If/When ...                       | Then the Triage Team will ...     |
+-----------------------------------+-----------------------------------+
| *VA Form 21-4140* shows that the  | -   clear the future diary        |
| veteran regained employment       |     established under reason code |
| during the past 12 months         |     34                            |
|                                   |                                   |
|                                   | -   establish a future diary      |
|                                   |     under EP 310, entering a      |
|                                   |     suspense date 12 months from  |
|                                   |     the month in which the        |
|                                   |     veteran regained employment,  |
|                                   |     and                           |
|                                   |                                   |
|                                   | -   notify the veteran that the   |
|                                   |     total evaluation will         |
|                                   |     continue at the present, but  |
|                                   |     VA will reconsider            |
|                                   |     entitlement to a total        |
|                                   |     evaluation in the future.     |
|                                   |                                   |
|                                   | ***References***: For more        |
|                                   | information on                    |
|                                   |                                   |
|                                   | -   establishing a future diary,  |
|                                   |     see M21-1, Part V,            |
|                                   |     16.02h(13), (14), and (16)    |
|                                   |                                   |
|                                   | -   sustained employment, see [38 |
|                                   |     CFR                           |
|                                   |     3.343(c)(2                    |
|                                   | )](http://www.warms.vba.va.gov/re |
|                                   | gs/38CFR/BOOKB/PART3/S3_343.DOC), |
|                                   |     and                           |
|                                   |                                   |
|                                   | -   the action to take when the   |
|                                   |     future diary matures, see     |
|                                   |     [M21-1MR, Part IV, Subpart    |
|                                   |     ii,                           |
|                                   |     2.F.28.h](../pt04_sp          |
|                                   | 02_ch02_secF.xml#IV.ii.2.F.28.h). |
+-----------------------------------+-----------------------------------+
| *VA Form 21-4140* shows the       | -   clear the future diary        |
| veteran has been gainfully        |     established under reason code |
| employed for 12 or more           |     34                            |
| consecutive months                |                                   |
|                                   | -   establish EP 310, and         |
|                                   |                                   |
|                                   | -   refer the case to the rating  |
|                                   |     activity.                     |
|                                   |                                   |
|                                   | ***Note***: If the income shown   |
|                                   | is marginal per [M21-1MR, Part    |
|                                   | IV, Subpart ii,                   |
|                                   | 2.F.27.e](../pt04_sp              |
|                                   | 02_ch02_secF.xml#IV.ii.2.F.27.e), |
|                                   | do *not*                          |
|                                   |                                   |
|                                   | -   consider the veteran to be    |
|                                   |     gainfully employed, or        |
|                                   |                                   |
|                                   | -   refer the case to the rating  |
|                                   |     activity.                     |
+-----------------------------------+-----------------------------------+

Continued on next page

28\. Special Considerations in IU Claims, Continued

+------------+---------------------------------------------------------+
| ####       | When the future diary established under EP 310 matures, |
| # h. Deter | the authorization activity will develop to determine    |
| mining Whe | whether the veteran has sustained gainful employment    |
| ther the V | for 12 or more consecutive months.                      |
| eteran Has |                                                         |
|  Sustained | > The table below shows the action to take after        |
|  Gainful E | > development is completed.                             |
| mployment  |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------+-----------------------------------+
| If ...                            | Then ...                          |
+-----------------------------------+-----------------------------------+
| -   evidence shows gainful        | refer the claims folder to the    |
|     employment has continued for  | rating activity under EP 310.     |
|     12 or more consecutive        |                                   |
|     months, or                    |                                   |
|                                   |                                   |
| -   the veteran failed to furnish |                                   |
|     the information requested to  |                                   |
|     determine employment status   |                                   |
+-----------------------------------+-----------------------------------+
| evidence does not show gainful    | -   clear EP 310, using the PCLR  |
| employment has continued for 12   |     command, and                  |
| or more consecutive months        |                                   |
|                                   | -   notify the veteran of         |
|                                   |     continued entitlement to a    |
|                                   |     total evaluation.             |
+-----------------------------------+-----------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The table below shows the action taken if *VA Form    |
| i. Action  | > 21-4140* is not returned.                             |
| Taken if V |                                                         |
| A Form 21- |                                                         |
| 4140 Is No |                                                         |
| t Returned |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | The authorization activity                                   |
|       |                                                              |
|       | -   establishes EP 310 control, and                          |
|       |                                                              |
|       | -   refers the claims folder to the rating activity.         |
+-------+--------------------------------------------------------------+
| 2     | The rating activity prepares a rating decision proposing to  |
|       | reduce the veteran to the appropriate schedular evaluation   |
|       | for failure to return *VA Form 21-4140.*                     |
+-------+--------------------------------------------------------------+

Continued on next page

28\. Special Considerations in IU Claims, Continued

  -----------------------------------------------------------------------
  i\. Action Taken if VA Form 21-4140 Is Not Returned (continued)

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

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 3     | The authorization activity                                   |
|       |                                                              |
|       | -   notifies the veteran of the proposed reduction in        |
|       |     accordance with [M21-1MR, Part I,                        |
|       |     2.B](../pt01_ch02_secB.xml#I.2.B), including             |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   the date the proposed action will be effective           |
|       |                                                              |
|       | -   the reduced rate of compensation, and                    |
|       |                                                              |
|       | -   the proposed loss of entitlement to Dependents'          |
|       |     Educational Assistance (DEA) under [38 U.S.C. Chapter    |
|       |     35](http://straylight.law.corne                          |
|       | ll.edu/uscode/html/uscode38/usc_sup_01_38_10_III_20_35.html) |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   clears the pending EP 310, and                           |
|       |                                                              |
|       | -   establishes an EP 600 to control the claim during the    |
|       |     due process period.                                      |
|       |                                                              |
|       | ***Note***: The effective date of the reduction will be no   |
|       | earlier than the first day of the month following the end of |
|       | the 60-day due process period. Be sure to properly notify    |
|       | the veteran's designated representative of the proposal.     |
+-------+--------------------------------------------------------------+
| 4     | After the due process period expires, and there has been no  |
|       | response to the notification, under EP 600                   |
|       |                                                              |
|       | -   reduce the award effective the date of the last payment  |
|       |     (see [38 CFR                                             |
|       |     3.501(f)](htt                                            |
|       | p://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_501.DOC)) |
|       |     or the date specified in the notice of proposed adverse  |
|       |     action, whichever is later                               |
|       |                                                              |
|       | -   notify the veteran of the reduction and loss of          |
|       |     entitlement to DEA                                       |
|       |                                                              |
|       | -   advise the regional processing office (RPO) of           |
|       |     jurisdiction of the loss of entitlement to DEA, if a [38 |
|       |     U.S.C. Chapter                                           |
|       |     35](http://straylight.law.corne                          |
|       | ll.edu/uscode/html/uscode38/usc_sup_01_38_10_III_20_35.html) |
|       |     record exists under the veteran's claim number, and      |
|       |                                                              |
|       | -   refer the claims folder to the rating activity for a     |
|       |     rating decision to implement the reduction to the        |
|       |     schedular evaluation.                                    |
|       |                                                              |
|       | ***Note***: The notification letter should also advise the   |
|       | veteran that if VA receives evidence establishing continued  |
|       | unemployability within one year of the date of the           |
|       | notification letter, the total evaluation based on           |
|       | unemployability will be restored from the date of reduction. |
|       |                                                              |
|       | ***References***: For more information on                    |
|       |                                                              |
|       | -   RPO jurisdiction, see [M21-1MR, Part IX, Subpart ii,     |
|       |     2.11](../pt09_sp02_ch02.xml#IX.ii.2.11), and             |
|       |                                                              |
|       | -   action taken if the veteran responds during the due      |
|       |     process period, see [M21-1MR, Part IV, Subpart ii,       |
|       |     2.F.28.j](../pt04_sp02_ch02_secF#IV.ii.2.F.28.j).        |
+-------+--------------------------------------------------------------+

Continued on next page

28\. Special Considerations in IU Claims, Continued

+------------+---------------------------------------------------------+
| ##         | > Use the table below to determine the action taken if  |
| ### j. Act | > the veteran responds or returns *VA Form 21-4140*     |
| ion Taken  | > during the due process period.                        |
| if the Vet |                                                         |
| eran Respo |                                                         |
| nds or Ret |                                                         |
| urns VA Fo |                                                         |
| rm 21-4140 |                                                         |
|  During th |                                                         |
| e Due Proc |                                                         |
| ess Period |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------+-----------------------------------+
| If VA Form 21-4140 or other       | Then ...                          |
| evidence shows ...                |                                   |
+-----------------------------------+-----------------------------------+
| continued unemployability         | -   refer the claims folder to    |
|                                   |     the rating activity to        |
|                                   |     prepare a rating decision     |
|                                   |     continuing the prior          |
|                                   |     evaluation, and               |
|                                   |                                   |
|                                   | -   clear the EP 600 when         |
|                                   |     notifying the veteran of the  |
|                                   |     rating decision.              |
+-----------------------------------+-----------------------------------+
| possible gainful employment       | -   if employment has continued   |
|                                   |     for 12 or more months, refer  |
|                                   |     the claims folder to the      |
|                                   |     rating activity under EP 600, |
|                                   |     or                            |
|                                   |                                   |
|                                   | -   if employment has continued   |
|                                   |     for fewer than 12 consecutive |
|                                   |     months                        |
|                                   |                                   |
|                                   | ```{=html}                        |
|                                   | <!-- -->                          |
|                                   | ```                               |
|                                   | -   clear the EP 600              |
|                                   |                                   |
|                                   | -   establish a future diary      |
|                                   |     under EP 310, entering a      |
|                                   |     suspense date 12 months from  |
|                                   |     the month in which the        |
|                                   |     veteran regained employment   |
|                                   |                                   |
|                                   | ```{=html}                        |
|                                   | <!-- -->                          |
|                                   | ```                               |
|                                   | -   notify the veteran that       |
|                                   |                                   |
|                                   | ```{=html}                        |
|                                   | <!-- -->                          |
|                                   | ```                               |
|                                   | -   the total evaluation will     |
|                                   |     continue at the present, but  |
|                                   |                                   |
|                                   | -   VA will reconsider            |
|                                   |     entitlement to a total        |
|                                   |     evaluation in the future.     |
|                                   |                                   |
|                                   | ***Reference***: For information  |
|                                   | on the action to take when the    |
|                                   | future diary matures, see         |
|                                   | [M21-1MR, Part IV, Subpart ii,    |
|                                   | 2.F.28.h](../pt0                  |
|                                   | 4_sp02_ch02_secF#IV.ii.2.F.28.h). |
+-----------------------------------+-----------------------------------+

Continued on next page

28\. Special Considerations in IU Claims, Continued

+------------+---------------------------------------------------------+
| ###        | > Follow the steps in the table below when the veteran  |
| ## k. Fail | > fails to participate in a required field examination. |
| ure to Coo |                                                         |
| perate Wit |                                                         |
| h a Requir |                                                         |
| ed Field E |                                                         |
| xamination |                                                         |
+------------+---------------------------------------------------------+

+-------+---+--------------------+------------------------------------+---+
| Step  | A |                    |                                    |   |
|       | c |                    |                                    |   |
|       | t |                    |                                    |   |
|       | i |                    |                                    |   |
|       | o |                    |                                    |   |
|       | n |                    |                                    |   |
+-------+---+--------------------+------------------------------------+---+
| 1     | P |                    |                                    |   |
|       | r |                    |                                    |   |
|       | e |                    |                                    |   |
|       | p |                    |                                    |   |
|       | a |                    |                                    |   |
|       | r |                    |                                    |   |
|       | e |                    |                                    |   |
|       | a |                    |                                    |   |
|       | r |                    |                                    |   |
|       | a |                    |                                    |   |
|       | t |                    |                                    |   |
|       | i |                    |                                    |   |
|       | n |                    |                                    |   |
|       | g |                    |                                    |   |
|       | d |                    |                                    |   |
|       | e |                    |                                    |   |
|       | c |                    |                                    |   |
|       | i |                    |                                    |   |
|       | s |                    |                                    |   |
|       | i |                    |                                    |   |
|       | o |                    |                                    |   |
|       | n |                    |                                    |   |
|       | p |                    |                                    |   |
|       | r |                    |                                    |   |
|       | o |                    |                                    |   |
|       | p |                    |                                    |   |
|       | o |                    |                                    |   |
|       | s |                    |                                    |   |
|       | i |                    |                                    |   |
|       | n |                    |                                    |   |
|       | g |                    |                                    |   |
|       | a |                    |                                    |   |
|       | r |                    |                                    |   |
|       | e |                    |                                    |   |
|       | d |                    |                                    |   |
|       | u |                    |                                    |   |
|       | c |                    |                                    |   |
|       | e |                    |                                    |   |
|       | d |                    |                                    |   |
|       | e |                    |                                    |   |
|       | v |                    |                                    |   |
|       | a |                    |                                    |   |
|       | l |                    |                                    |   |
|       | u |                    |                                    |   |
|       | a |                    |                                    |   |
|       | t |                    |                                    |   |
|       | i |                    |                                    |   |
|       | o |                    |                                    |   |
|       | n |                    |                                    |   |
|       | u |                    |                                    |   |
|       | s |                    |                                    |   |
|       | i |                    |                                    |   |
|       | n |                    |                                    |   |
|       | g |                    |                                    |   |
|       | t |                    |                                    |   |
|       | h |                    |                                    |   |
|       | e |                    |                                    |   |
|       | f |                    |                                    |   |
|       | o |                    |                                    |   |
|       | r |                    |                                    |   |
|       | m |                    |                                    |   |
|       | a |                    |                                    |   |
|       | t |                    |                                    |   |
|       | i |                    |                                    |   |
|       | n |                    |                                    |   |
|       | [ |                    |                                    |   |
|       | M |                    |                                    |   |
|       | 2 |                    |                                    |   |
|       | 1 |                    |                                    |   |
|       | - |                    |                                    |   |
|       | 1 |                    |                                    |   |
|       | M |                    |                                    |   |
|       | R |                    |                                    |   |
|       | , |                    |                                    |   |
|       | P |                    |                                    |   |
|       | a |                    |                                    |   |
|       | r |                    |                                    |   |
|       | t |                    |                                    |   |
|       | I |                    |                                    |   |
|       | V |                    |                                    |   |
|       | , |                    |                                    |   |
|       | S |                    |                                    |   |
|       | u |                    |                                    |   |
|       | b |                    |                                    |   |
|       | p |                    |                                    |   |
|       | a |                    |                                    |   |
|       | r |                    |                                    |   |
|       | t |                    |                                    |   |
|       | i |                    |                                    |   |
|       | i |                    |                                    |   |
|       | , |                    |                                    |   |
|       | 2 |                    |                                    |   |
|       | . |                    |                                    |   |
|       | F |                    |                                    |   |
|       | . |                    |                                    |   |
|       | 2 |                    |                                    |   |
|       | 9 |                    |                                    |   |
|       | ] |                    |                                    |   |
|       | ( |                    |                                    |   |
|       | . |                    |                                    |   |
|       | . |                    |                                    |   |
|       | / |                    |                                    |   |
|       | p |                    |                                    |   |
|       | t |                    |                                    |   |
|       | 0 |                    |                                    |   |
|       | 4 |                    |                                    |   |
|       | _ |                    |                                    |   |
|       | s |                    |                                    |   |
|       | p |                    |                                    |   |
|       | 0 |                    |                                    |   |
|       | 2 |                    |                                    |   |
|       | _ |                    |                                    |   |
|       | c |                    |                                    |   |
|       | h |                    |                                    |   |
|       | 0 |                    |                                    |   |
|       | 2 |                    |                                    |   |
|       | _ |                    |                                    |   |
|       | s |                    |                                    |   |
|       | e |                    |                                    |   |
|       | c |                    |                                    |   |
|       | F |                    |                                    |   |
|       | # |                    |                                    |   |
|       | I |                    |                                    |   |
|       | V |                    |                                    |   |
|       | . |                    |                                    |   |
|       | i |                    |                                    |   |
|       | i |                    |                                    |   |
|       | . |                    |                                    |   |
|       | 2 |                    |                                    |   |
|       | . |                    |                                    |   |
|       | F |                    |                                    |   |
|       | . |                    |                                    |   |
|       | 2 |                    |                                    |   |
|       | 9 |                    |                                    |   |
|       | ) |                    |                                    |   |
|       | . |                    |                                    |   |
+-------+---+--------------------+------------------------------------+---+
| 2     | U |                    |                                    |   |
|       | s |                    |                                    |   |
|       | e |                    |                                    |   |
|       | t |                    |                                    |   |
|       | h |                    |                                    |   |
|       | e |                    |                                    |   |
|       | t |                    |                                    |   |
|       | a |                    |                                    |   |
|       | b |                    |                                    |   |
|       | l |                    |                                    |   |
|       | e |                    |                                    |   |
|       | b |                    |                                    |   |
|       | e |                    |                                    |   |
|       | l |                    |                                    |   |
|       | o |                    |                                    |   |
|       | w |                    |                                    |   |
|       | t |                    |                                    |   |
|       | o |                    |                                    |   |
|       | d |                    |                                    |   |
|       | e |                    |                                    |   |
|       | t |                    |                                    |   |
|       | e |                    |                                    |   |
|       | r |                    |                                    |   |
|       | m |                    |                                    |   |
|       | i |                    |                                    |   |
|       | n |                    |                                    |   |
|       | e |                    |                                    |   |
|       | t |                    |                                    |   |
|       | h |                    |                                    |   |
|       | e |                    |                                    |   |
|       | a |                    |                                    |   |
|       | c |                    |                                    |   |
|       | t |                    |                                    |   |
|       | i |                    |                                    |   |
|       | o |                    |                                    |   |
|       | n |                    |                                    |   |
|       | t |                    |                                    |   |
|       | o |                    |                                    |   |
|       | t |                    |                                    |   |
|       | a |                    |                                    |   |
|       | k |                    |                                    |   |
|       | e |                    |                                    |   |
|       | u |                    |                                    |   |
|       | p |                    |                                    |   |
|       | o |                    |                                    |   |
|       | n |                    |                                    |   |
|       | r |                    |                                    |   |
|       | e |                    |                                    |   |
|       | c |                    |                                    |   |
|       | e |                    |                                    |   |
|       | i |                    |                                    |   |
|       | p |                    |                                    |   |
|       | t |                    |                                    |   |
|       | o |                    |                                    |   |
|       | f |                    |                                    |   |
|       | t |                    |                                    |   |
|       | h |                    |                                    |   |
|       | e |                    |                                    |   |
|       | v |                    |                                    |   |
|       | e |                    |                                    |   |
|       | t |                    |                                    |   |
|       | e |                    |                                    |   |
|       | r |                    |                                    |   |
|       | a |                    |                                    |   |
|       | n |                    |                                    |   |
|       | ' |                    |                                    |   |
|       | s |                    |                                    |   |
|       | r |                    |                                    |   |
|       | e |                    |                                    |   |
|       | s |                    |                                    |   |
|       | p |                    |                                    |   |
|       | o |                    |                                    |   |
|       | n |                    |                                    |   |
|       | s |                    |                                    |   |
|       | e |                    |                                    |   |
|       | t |                    |                                    |   |
|       | o |                    |                                    |   |
|       | t |                    |                                    |   |
|       | h |                    |                                    |   |
|       | e |                    |                                    |   |
|       | n |                    |                                    |   |
|       | o |                    |                                    |   |
|       | t |                    |                                    |   |
|       | i |                    |                                    |   |
|       | c |                    |                                    |   |
|       | e |                    |                                    |   |
|       | o |                    |                                    |   |
|       | f |                    |                                    |   |
|       | p |                    |                                    |   |
|       | r |                    |                                    |   |
|       | o |                    |                                    |   |
|       | p |                    |                                    |   |
|       | o |                    |                                    |   |
|       | s |                    |                                    |   |
|       | e |                    |                                    |   |
|       | d |                    |                                    |   |
|       | a |                    |                                    |   |
|       | d |                    |                                    |   |
|       | v |                    |                                    |   |
|       | e |                    |                                    |   |
|       | r |                    |                                    |   |
|       | s |                    |                                    |   |
|       | e |                    |                                    |   |
|       | a |                    |                                    |   |
|       | c |                    |                                    |   |
|       | t |                    |                                    |   |
|       | i |                    |                                    |   |
|       | o |                    |                                    |   |
|       | n |                    |                                    |   |
|       | . |                    |                                    |   |
+-------+---+--------------------+------------------------------------+---+
|       |   | **If the veteran   | **Then ...**                       |   |
|       |   | ...**              |                                    |   |
+-------+---+--------------------+------------------------------------+---+
|       |   | fails to respond   | prepare a rating decision to       |   |
|       |   | to the notice of   | reduce the current evaluation      |   |
|       |   | proposed adverse   | using the format in [M21-1MR, Part |   |
|       |   | action             | IV, Subpart ii,                    |   |
|       |   |                    | 2.F.30](../                        |   |
|       |   |                    | pt04_sp02_ch02_secF#IV.ii.2.F.30). |   |
+-------+---+--------------------+------------------------------------+---+
|       |   | is willing to      | -   defer the rating action to     |   |
|       |   | participate in the |     reduce the evaluation          |   |
|       |   | field examination  |                                    |   |
|       |   | prior to reduction | -   reschedule the examination,    |   |
|       |   | to the schedular   |     and                            |   |
|       |   | evaluation         |                                    |   |
|       |   |                    | -   inform the veteran that        |   |
|       |   |                    |                                    |   |
|       |   |                    | ```{=html}                         |   |
|       |   |                    | <!-- -->                           |   |
|       |   |                    | ```                                |   |
|       |   |                    | -   further failure to cooperate   |   |
|       |   |                    |     will be cause for a reduction  |   |
|       |   |                    |     to the schedular evaluation,   |   |
|       |   |                    |     and                            |   |
|       |   |                    |                                    |   |
|       |   |                    | -   the total evaluation based on  |   |
|       |   |                    |     IU would not be restored until |   |
|       |   |                    |     the field examination had been |   |
|       |   |                    |     completed and the report       |   |
|       |   |                    |     reviewed.                      |   |
+-------+---+--------------------+------------------------------------+---+
|       |   | sends evidence     | prepare a rating decision using    |   |
|       |   | which warrants     | the format in [M21-1MR, Part IV,   |   |
|       |   | continuation of a  | Subpart ii,                        |   |
|       |   | total rating based | 2.F.31](../                        |   |
|       |   | on continued       | pt04_sp02_ch02_secF#IV.ii.2.F.31). |   |
|       |   | unemployability    |                                    |   |
+-------+---+--------------------+------------------------------------+---+
|       |   |                    |                                    |   |
+-------+---+--------------------+------------------------------------+---+

#### 29. Exhibit 1: Rating Decision Addressing a Veteran's Failure to Complete a Field Examination 

+------------+---------------------------------------------------------+
| ##### C    | > September 5, 2008                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > An example of a rating decision addressing a          |
|  a. Rating | > veteran's failure to complete a field examination is  |
|  Decision: | > below.                                                |
|  Failure t |                                                         |
| o Complete |                                                         |
|  a Field E |                                                         |
| xamination |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > **DECISION:** A reduction to the schedular evaluation shown below   |
| > is proposed because of the veteran's failure to cooperate with a    |
| > required field examination.                                         |
| >                                                                     |
| > **EVIDENCE:** Notice of Failure to Cooperate with field examiner.   |
| >                                                                     |
| > **REASONS FOR DECISION:** A total disability rating has been in     |
| > effect because of unemployability. Notice has been received that    |
| > the veteran refused to cooperate in completing a required field     |
| > examination.                                                        |
| >                                                                     |
| > **JURISDICTION:** Field Examiner Notification                       |
| >                                                                     |
| > SUBJECT TO COMPENSATION (1.SC)                                      |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline}             |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline}             |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline}             |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline}             |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline}             |
| >                                                                     |
| > COMBINED EVALUATION FOR COMPENSATION:                               |
| >                                                                     |
| > Individual Unemployability from [          ]{.underline}            |
| >                                                                     |
| > NOT SERVICE CONNECTED/NOT SUBJECT TO COMPENSATION (8.NSC)           |
+-----------------------------------------------------------------------+

#### 30. Exhibit 2: Rating Decision Addressing a Veteran's Failure to Respond to a Notice of Proposed Adverse Action After Failure to Complete a Field Examination

+------------+---------------------------------------------------------+
| ##### C    | > September 5, 2008                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > An example of a rating decision addressing a          |
| ## a. Rati | > veteran's failure to respond to a notice of proposed  |
| ng Decisio | > adverse action after failure to complete a field      |
| n: Failure | > examination is below.                                 |
|  to Respon |                                                         |
| d to a Not |                                                         |
| ice of Pro |                                                         |
| posed Adve |                                                         |
| rse Action |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > **DECISION:** Reduction to the schedular evaluation is in order     |
| > because of the veteran's failure to cooperate in the completion of  |
| > a required field examination.                                       |
| >                                                                     |
| > **EVIDENCE:** Notice of Failure to Cooperate with field examiner.   |
| >                                                                     |
| > **REASONS FOR DECISION:** A total disability rating has been in     |
| > effect because of unemployability. Notice has been received that    |
| > the veteran failed to cooperate with a required field examination   |
| > and the veteran failed to respond to the notice of proposed adverse |
| > action sent [          ]{.underline}.                               |
| >                                                                     |
| > **JURISDICTION:** Field Examiner Notification                       |
| >                                                                     |
| > SUBJECT TO COMPENSATION (1.SC)                                      |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > COMBINED EVALUATION FOR COMPENSATION:                               |
| >                                                                     |
| > Individual Unemployability from [          ]{.underline} to         |
| > [           ]{.underline}                                           |
| >                                                                     |
| > NOT SERVICE CONNECTED/NOT SUBJECT TO COMPENSATION (8.NSC)           |
| >                                                                     |
| > [          ]{.underline}                                            |
| >                                                                     |
| > [          ]{.underline}                                            |
+-----------------------------------------------------------------------+

#### 31. Exhibit 3: Rating Decision Addressing the Subsequent Receipt of Evidence That Restores IU After Failure to Complete a Field Examination

+------------+---------------------------------------------------------+
| ##### C    | > September 5, 2008                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > An example of a rating decision addressing the        |
| # a. Ratin | > subsequent receipt of evidence that restores IU after |
| g Decision | > failure to complete a field examination is below.     |
| : Subseque |                                                         |
| nt Receipt |                                                         |
|  of Eviden |                                                         |
| ce That Re |                                                         |
| stores IU  |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > **DECISION:** The total rating based on unemployability is          |
| > restored.                                                           |
| >                                                                     |
| > **ISSUE:** Total Disability Because of Unemployability              |
| >                                                                     |
| > **EVIDENCE:** Report of Field Examination 12/11/95                  |
| >                                                                     |
| > **REASONS FOR DECISION:** Veteran's total disability rating because |
| > of unemployability was reduced to the schedular evaluation because  |
| > of the lack of cooperation in completing a required field           |
| > examination. Sufficient evidence, including completion of the field |
| > examination, has been received establishing continuing              |
| > unemployability.                                                    |
| >                                                                     |
| > **JURISDICTION:** Completion of Field Examination                   |
| >                                                                     |
| > SUBJECT TO COMPENSATION (1.SC)                                      |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > [          ]{.underline} [                ]{.underline} from        |
| > [               ]{.underline}                                       |
| >                                                                     |
| > COMBINED EVALUATION FOR COMPENSATION                                |
| >                                                                     |
| > Individual Unemployability from [          ]{.underline}            |
| >                                                                     |
| > NOT SERVICE CONNECTED/NOT SUBJECT TO COMPENSATION (8.NSC)           |
+-----------------------------------------------------------------------+

#### 32. Exhibit 4: Poverty Threshold Information

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on the poverty        |
| troduction | > threshold, including information on                   |
|            |                                                         |
|            | -   marginal employment based on income below the       |
|            |     poverty level, and                                  |
|            |                                                         |
|            | -   the poverty threshold for one person.               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > September 5, 2008                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > [38 CFR                                               |
|  Marginal  | > 4.16(a)](http:/                                       |
| Employment | /www.warms.vba.va.gov/regs/38CFR/BOOKC/PART4/S4_16.DOC) |
|  Based on  | > provides that marginal employment is generally deemed |
| Income Bel | > to exist when a veteran's earned income does not      |
| ow the Pov | > exceed the amount established by the U.S. Census      |
| erty Level | > Bureau as the poverty level for one person.           |
|            | >                                                       |
|            | > ***Reference***: For more information on the U.S.     |
|            | > Census Bureau's poverty thresholds, see               |
|            | >                                                       |
|            | <http://www.census.gov/hhes/www/poverty/threshld.html>. |
+------------+---------------------------------------------------------+

Continued on next page

32\. Exhibit 4: Poverty Threshold Information, Continued

+------------+---------------------------------------------------------+
| #          | > The table below lists the poverty threshold for one   |
| #### b. Po | > person by year.                                       |
| verty Thre |                                                         |
| shold for  |                                                         |
| One Person |                                                         |
+------------+---------------------------------------------------------+

+----------------------------------+-----------------------------------+
| Calendar Year                    | Amount                            |
+----------------------------------+-----------------------------------+
| 1989                             | \$6,310                           |
+----------------------------------+-----------------------------------+
| 1990                             | \$6,652                           |
+----------------------------------+-----------------------------------+
| 1991                             | \$6,932                           |
+----------------------------------+-----------------------------------+
| 1992                             | \$7,143                           |
+----------------------------------+-----------------------------------+
| 1993                             | \$7,363                           |
+----------------------------------+-----------------------------------+
| 1994                             | \$7,547                           |
+----------------------------------+-----------------------------------+
| > 1995                           | \$7,763                           |
+----------------------------------+-----------------------------------+
| > 1996                           | \$7,995                           |
+----------------------------------+-----------------------------------+
| > 1997                           | \$8,183                           |
+----------------------------------+-----------------------------------+
| > 1998                           | \$8,316                           |
+----------------------------------+-----------------------------------+
| > 1999                           | \$8,501                           |
+----------------------------------+-----------------------------------+
| > 2000                           | \$8,794                           |
+----------------------------------+-----------------------------------+
| > 2001                           | \$9,039                           |
+----------------------------------+-----------------------------------+
| > 2002                           | \$9,183                           |
+----------------------------------+-----------------------------------+
| > 2003                           | \$9,393                           |
+----------------------------------+-----------------------------------+
| > 2004                           | \$9,645                           |
+----------------------------------+-----------------------------------+
| > 2005                           | \$9,973                           |
+----------------------------------+-----------------------------------+
| > 2006                           | \$10,294                          |
+----------------------------------+-----------------------------------+