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

## Department of Veterans Affairs Change 216 Erratum

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

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

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

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

Distribution: RPC: 2068

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

LOCAL REPRODUCTION AUTHORIZED

# April 26, 2005 M21-1, Part IV

**Change 216 Erratum**

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

Authority 38 U.S.C. 5101.

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

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

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

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

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

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

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

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

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

return the check or direct deposit.

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

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

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

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

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

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

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

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

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

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

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# M21-1, Part IV April 26, 2005

**Change 216 Erratum**

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

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

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

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

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

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

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

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

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

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

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

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

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

**(2) Surviving Spouse Entitled**

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# April 26, 2005 M21-1, Part IV

#  Change 216 Erratum

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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# M21-1, Part IV April 26, 2005

**Change 216 Erratum**

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

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

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

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

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

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

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

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

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

entitlement to this benefit and deferring the issue of service
connection for cause of death.

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

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

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

**c.** **Prohibition Against Duplication of Benefits.** If the claimant
receives money or property of value based on any cause of action for
damages for the death of the veteran as a result of a judicial or
administrative proceeding, settlement or compromise, DIC otherwise
payable must be recouped in an amount equal to the money received and
fair market value of the property received. Attorney\'s fees, court
costs and other expenses incident to the civil claim

are not deductible from the total amount awarded or accepted. This
requirement for recoupment exists even if the award or settlement was
made prior to passage of Public Law 95-479.

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

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

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

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

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