## Section E. Improved Pension -- Basic Rate Determinations

#### Overview

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

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

  28           Determining the Monthly Rate of Payment        1-E-2

  29           Determining the Maximum Annual Pension Rate    1-E-6
               (MAPR)                                         

  30           Veterans Who Are Married to Each Other         1-E-8

  31           Surviving Child Entitled to Improved Death     1-E-10
               Pension in His/Her Own Right                   

  32           Income Classifications                         1-E-16

  33           Counting Income for Department of Veterans     1-E-19
               Affairs Purposes (IVAP)                        

  34           Counting Income During the Initial Period      1-E-30

  35           Award Notice to Claimant                       1-E-39

  36           Using Special Law (SL) Codes 14 and 18         1-E-41
  ------------ ---------------------------------------------- ------------

#### 28. Determining the Monthly Rate of Payment

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on determining the    |
| troduction | > monthly rate of Improved Pension payments. It         |
|            | > includes information on                               |
|            |                                                         |
|            | -   the changing rate of pension                        |
|            |                                                         |
|            | -   the knowledge needed to determine the monthly rate  |
|            |     of pension                                          |
|            |                                                         |
|            | -   determining the monthly rate of payment             |
|            |                                                         |
|            | -   rates paid less frequently than monthly             |
|            |                                                         |
|            | -   determining the payment schedule                    |
|            |                                                         |
|            | -   the beneficiary's election of monthly payments      |
|            |                                                         |
|            | -   changing the payment frequency to monthly payments  |
|            |     in the Benefits Delivery Network (BDN), and         |
|            |                                                         |
|            | -   the BDN release of retroactive payments.            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > An Improved Pension beneficiary's rate of pension     |
| ## a. Chan | > usually changes at least once a year and may change   |
| ging Rate  | > more often.                                           |
| of Pension | >                                                       |
|            | > In theory, the pension rate could change every month, |
|            | > but as a practical matter this does not often happen. |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > To determine an Improved Pension beneficiary's rate   |
| ### b. Kno | > of pension for any given month, the following two     |
| wledge Nee | > elements must be known for the month in question:     |
| ded to Det |                                                         |
| ermine Mon | -   the beneficiary's maximum annual pension rate       |
| thly Rate  |     (MAPR) in effect for that month, and                |
| of Pension |                                                         |
|            | -   the beneficiary's income for Department of Veterans |
|            |     Affairs purposes (IVAP) for that month.             |
+------------+---------------------------------------------------------+

Continued on next page

28\. Determining the Monthly Rate of Payment, Continued

+------------+---------------------------------------------------------+
| ##### c.   | > Follow the steps in the table below to determine the  |
|  Determini | > monthly rate of payment.                              |
| ng the Mon |                                                         |
| thly Rate  |                                                         |
| of Payment |                                                         |
+------------+---------------------------------------------------------+

  -------- --------------------------------------------------------------
  Step     Action

  1        Compute annual IVAP for the month.

  2        Locate the applicable MAPR for that month in [M21-1, Part I,
           Appendix B](http://warms.vba.va.gov/M21_1.html).

  3        Subtract the annual IVAP from the MAPR.

  4        Divide the result in Step 3 by 12 to get the monthly rate.
  -------- --------------------------------------------------------------

+-----------------------------------------------------------------------+
| > ***Note***: If IVAP equals or exceeds the MAPR, the rate payable is |
| > \$0.                                                                |
+-----------------------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d.   | > Improved Pension benefits are normally paid once each |
|  Rates Pai | > month. However, they are paid less frequently than    |
| d Less Fre | > monthly if the annual rate payable is less than       |
| quently Th | > \$228.                                                |
| an Monthly | >                                                       |
|            | > The net award amount for each payee (primary or       |
|            | > apportionee) determines if payments are made less     |
|            | > frequently than monthly, per [38 CFR                  |
|            | > 3.30](http://                                         |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_30.DOC). |
|            | >                                                       |
|            | > ***Reference***: For information about award notices  |
|            | > to claimants and beneficiaries, see M21-1MR, Part V,  |
|            | > Subpart iii, 1.E.35.                                  |
+------------+---------------------------------------------------------+

Continued on next page

28\. Determining the Monthly Rate of Payment, Continued

+------------+---------------------------------------------------------+
| #          | > Use the table below to determine the payment          |
| #### e. De | > schedule.                                             |
| termining  |                                                         |
| the Paymen |                                                         |
| t Schedule |                                                         |
+------------+---------------------------------------------------------+

+--------------------+-------------------------------------------------+
| If the annual rate | Then ...                                        |
| payable is ...     |                                                 |
+--------------------+-------------------------------------------------+
| at least \$144 but | payments are made every three months on or      |
| less than \$228    | about                                           |
|                    |                                                 |
|                    | -   March 1                                     |
|                    |                                                 |
|                    | -   June 1                                      |
|                    |                                                 |
|                    | -   September 1, and                            |
|                    |                                                 |
|                    | -   December 1.                                 |
+--------------------+-------------------------------------------------+
| at least \$72 but  | payments are made every six months on or about  |
| less than \$144    |                                                 |
|                    | -   June 1, and                                 |
|                    |                                                 |
|                    | -   December 1.                                 |
+--------------------+-------------------------------------------------+
| less than \$72     | payments are made annually on or about June 1.  |
+--------------------+-------------------------------------------------+
| less than \$1      | payments are not made.                          |
+--------------------+-------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Certain pensioners who also receive other Federal     |
| #### f. Be | > need-based benefits may wish to receive a monthly     |
| neficiary' | > pension check, even though their annual Improved      |
| s Election | > Pension rate is less than \$228 since                 |
|  of Monthl |                                                         |
| y Payments | -   Department of Veterans Affairs (VA) pension is      |
|            |     countable income for purposes of programs such as   |
|            |     Supplemental Security Income (SSI), and             |
|            |                                                         |
|            | -   small monthly VA pension checks may have less of an |
|            |     adverse effect on entitlement to other benefits     |
|            |     than larger quarterly or semiannual checks.         |
|            |                                                         |
|            | > The beneficiary may elect to receive monthly          |
|            | > payments, per [38 CFR                                 |
|            | > 3.30](http://                                         |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_30.DOC). |
|            | >                                                       |
|            | > ***Note***: Do *not* manipulate the amount of the     |
|            | > monthly VA payment so that the beneficiary may        |
|            | > receive non-VA need-based benefits.                   |
+------------+---------------------------------------------------------+

Continued on next page

28\. Determining the Monthly Rate of Payment, Continued

+------------+---------------------------------------------------------+
| #####      | > Follow the steps in the table below to change the     |
| g. Changin | > frequency of payments on receipt of a written request |
| g the Paym | > to pay monthly checks.                                |
| ent Freque |                                                         |
| ncy to Mon |                                                         |
| thly Payme |                                                         |
| nts in BDN |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | Access the M11 screen.                                       |
+-------+--------------------------------------------------------------+
| 2     | Locate the field between the PROCEEDS field and the BRANCH   |
|       | OF SERVICE field that displays the frequency of payment.     |
|       |                                                              |
|       | ***Note***: This field displays *SEMIAN* for semiannual, if  |
|       | benefits are being paid less frequently than monthly.        |
+-------+--------------------------------------------------------------+
| 3     | Enter "*MNTHLY"* in this field.                              |
|       |                                                              |
|       | ***Result***: This causes the computer to make monthly       |
|       | payments.                                                    |
+-------+--------------------------------------------------------------+

+-----------------------------------------------------------------------+
| > ***Note***: Payments that are less than \$1.00 per month will not   |
| > be made, per [38 CFR                                                |
| > 3.                                                                  |
| 30(f)](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_30.DOC). |
+-----------------------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The processing of an original, reopened, or amended   |
| # h. BDN R | > award that authorizes retroactive benefits releases   |
| elease of  | > all amounts payable through the date of last payment, |
| Retroactiv | > provided that the retroactive amount due is \$19 or   |
| e Payments | > greater.                                              |
|            | >                                                       |
|            | > If the retroactive amount is less than \$19, it is    |
|            | > included in the next regularly scheduled payment.     |
+------------+---------------------------------------------------------+

#### 29. Determining the Maximum Annual Pension Rate (MAPR)

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on determining the    |
| troduction | > MAPR. It includes                                     |
|            |                                                         |
|            | -   general information on MAPR, and                    |
|            |                                                         |
|            | -   information on                                      |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the cost-of-living increase in MAPR, and            |
|            |                                                         |
|            | -   Veterans with World War I (WWI) service.            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The MAPR for any given claimant is determined by      |
| a. General |                                                         |
|  Informati | -   the type of payee (veteran, surviving spouse, or    |
| on on MAPR |     child)                                              |
|            |                                                         |
|            | -   the number of established dependents, and           |
|            |                                                         |
|            | -   whether the beneficiary is eligible for the Aid and |
|            |     Attendance (A&A) or Housebound MAPR.                |
|            |                                                         |
|            | > A change in any of these factors, such as the loss of |
|            | > a dependent or grant of A&A, changes the MAPR and the |
|            | > amount of the pension payable, per [38 CFR            |
|            | > 3.23](http://                                         |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_23.DOC). |
|            | >                                                       |
|            | > ***Note***: A higher MAPR applies to a beneficiary    |
|            | > who is found in need of A&A or is Housebound. A&A and |
|            | > Housebound benefits are also referred to as Special   |
|            | > Monthly Pension (SMP).                                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b. C | > If Social Security (SS) benefits are increased as the |
| ost-of-Liv | > result of an SS cost-of-living adjustment (COLA),     |
| ing Increa | > Improved Pension MAPRs are increased by a like        |
| se in MAPR | > percentage at the same time, per [38 CFR              |
|            | > 3.24](http://                                         |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_24.DOC). |
|            | >                                                       |
|            | > ***References***: For                                 |
|            |                                                         |
|            | -   current and historical MAPRs, see [M21-1, Part I,   |
|            |     Appendix B](http://warms.vba.va.gov/M21_1.html),    |
|            |     and                                                 |
|            |                                                         |
|            | -   more information on adjustment of Improved Pension  |
|            |     based on a change of income due to an SS COLA, see  |
|            |     [*VAOPGCPREC                                        |
|            |                                                         |
|            |   21-90*](http://www1.va.gov/ogc/docs/PREC_21-90.doc).  |
+------------+---------------------------------------------------------+

Continued on next page

29\. Determining the Maximum Annual Pension Rate (MAPR), Continued

+------------+---------------------------------------------------------+
| ####       | > Under [38 CFR                                         |
| # c. Veter | > 3.23(c)](http://                                      |
| ans With W | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_23.DOC), |
| WI (or Mex | > veterans with WWI service are entitled to a higher    |
| ican Borde | > MAPR. This higher MAPR applies only to veterans and   |
| r) Service | > is *not* a factor in death pension cases.             |
|            | >                                                       |
|            | > ***Note***: The higher MAPR also applied to Mexican   |
|            | > Border Period veterans; however, there are no         |
|            | > remaining veteran pensioners with such service.       |
|            | >                                                       |
|            | > ***Reference***: For more information on MAPRs, see   |
|            | > the rate charts in [M21-1, Part I, Appendix           |
|            | > B](http://warms.vba.va.gov/M21_1.html).               |
+------------+---------------------------------------------------------+

#### 30. Veterans Who Are Married to Each Other

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on veterans who are   |
| troduction | > married to each other. It includes information on     |
|            |                                                         |
|            | -   the combined rate payable                           |
|            |                                                         |
|            | -   the award procedures                                |
|            |                                                         |
|            | -   determining the file number to use                  |
|            |                                                         |
|            | -   estranged married veterans, and                     |
|            |                                                         |
|            | -   mandatory election from protected pension.          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a. C | > A special combined maximum annual pension rate        |
| ombined Ra | > applies to veterans who are married to each other.    |
| te Payable | > This is the same rate as for a veteran with a         |
|            | > dependent, unless both of the veterans are eligible   |
|            | > for SMP.                                              |
|            | >                                                       |
|            | > ***Reference***: For more information on the special  |
|            | > combined rate, see [M21-1, Part I, Appendix           |
|            | > B](http://warms.vba.va.gov/M21_1.html).               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Authorize payments in a veteran married to veteran    |
| b. Award P | > case on a single award unless one veteran requests    |
| rocedures  | > separate payments, or both veterans are eligible for  |
|            | > SMP.                                                  |
|            | >                                                       |
|            | > If separate payments are requested, compute the rate  |
|            | > payable by establishing the MAPR for each veteran as  |
|            | > one half of the special combined MAPR, including the  |
|            | > additional amount payable by reason of                |
|            |                                                         |
|            | -   the need for SMP                                    |
|            |                                                         |
|            | -   entitlement to WWI supplement, or                   |
|            |                                                         |
|            | -   dependency status.                                  |
|            |                                                         |
|            | > Reduce the MAPR for each spouse by one half of the    |
|            | > combined income.                                      |
+------------+---------------------------------------------------------+

Continued on next page

30\. Veterans Who Are Married to Each Other, Continued

+------------+---------------------------------------------------------+
| ####       | > Either file number may be used to establish a         |
| # c. Deter | > combined payment award.                               |
| mining the | >                                                       |
|  File Numb | > ***Exception***: In original or reopened cases when   |
| er to Use  | > one spouse has entitlement to the A&A, Housebound, or |
|            | > WWI allowance, establish the award under the file     |
|            | > number of the veteran with entitlement to the special |
|            | > benefit.                                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > If two veterans married to one another are estranged  |
|  d. Estran | > but one veteran is making a reasonable contribution   |
| ged Marrie | > to the support of the other, the combined Improved    |
| d Veterans | > Pension rate applies.                                 |
|            | >                                                       |
|            | > ***Note***: When two veterans married to one another  |
|            | > are estranged and neither veteran is reasonably       |
|            | > contributing to the other's support, the combined     |
|            | > Improved Pension rate does *not* apply.               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### e. M | > If one of two veterans married to each other is       |
| andatory E | > receiving Section 306 Pension or Old Law Pension      |
| lection Fr | > (Spouse A) and the other married veteran (Spouse B)   |
| om Protect | > files a claim for Improved Pension, Spouse A must     |
| ed Pension | > elect Improved Pension before Spouse B's Improved     |
|            | > Pension claim can be approved.                        |
|            | >                                                       |
|            | > The election of Improved Pension is effective from    |
|            | > the date of election (subject to [38 CFR              |
|            | > 3.31](http://w                                        |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_31.DOC)). |
|            | > However, use the effective date of Spouse B's         |
|            | > Improved Pension claim in determining the payment     |
|            | > date of the combined payment award.                   |
|            | >                                                       |
|            | > Pay only the available difference between Spouse A's  |
|            | > protected pension award and the combined payment      |
|            | > Improved Pension award for any overlapping periods.   |
|            | >                                                       |
|            | > If the combined payment award is prepared under       |
|            | > Spouse B's file number, a Type 1 withholding is       |
|            | > required to pay only the available difference.        |
+------------+---------------------------------------------------------+

#### 31. Surviving Child Entitled to Improved Death Pension in His/Her Own Right

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on a surviving child  |
| troduction | > entitled to Improved Death Pension in his/her own     |
|            | > right. It includes information on                     |
|            |                                                         |
|            | -   "legal custody" for Improved Pension purposes       |
|            |                                                         |
|            | -   custody continuing after the age of majority        |
|            |                                                         |
|            | -   a child *not* "in custody"                          |
|            |                                                         |
|            | -   the presumption of child custody                    |
|            |                                                         |
|            | -   determining a surviving child's rate when the child |
|            |     is not "in custody" or in the custody of an         |
|            |     institution, and                                    |
|            |                                                         |
|            | -   multiple surviving children in custody and two      |
|            |     examples of this situation.                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > A surviving child is entitled to Improved Pension in  |
| General In | > his/her own right only if                             |
| formation  |                                                         |
| on a Survi | -   he/she is not in the "custody" of the surviving     |
| ving Child |     spouse as the term "custody" is defined in [38 CFR  |
|  Entitled  |     3.57(d)](http://                                    |
| to Improve | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_57.DOC), |
| d Pension  |     or                                                  |
| in His/Her |                                                         |
|  Own Right | -   there is no surviving spouse who is eligible for    |
|            |     pension, for example, the surviving spouse is       |
|            |     deceased or remarried.                              |
|            |                                                         |
|            | > ***Important***: A child is not eligible for Improved |
|            | > Pension in his/her own right if he/she is in the      |
|            | > custody of an unremarried surviving spouse whose      |
|            | > income or net worth is excessive for Improved Pension |
|            | > purposes.                                             |
|            | >                                                       |
|            | > ***References***: For more information on             |
|            |                                                         |
|            | -   a child's independent pension eligibility, see [38  |
|            |     CFR                                                 |
|            |     3.24](http://                                       |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_24.DOC), |
|            |     and                                                 |
|            |                                                         |
|            | -   custody for Improved Pension purposes, see [38 CFR  |
|            |     3.57(d)](http://                                    |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_57.DOC). |
+------------+---------------------------------------------------------+

Continued on next page

31\. Surviving Child Entitled to Improved Death Pension in His/Her Own
Right, Continued

+------------+---------------------------------------------------------+
| ####       | > To find the MAPR for a surviving child claiming death |
| # b. "Lega | > pension, first determine whether the child is in the  |
| l Custody" | > legal custody of some person.                         |
|  for Impro | >                                                       |
| ved Pensio | > For purposes of Improved Pension, a child is in the   |
| n Purposes | > legal custody of the person who                       |
|            |                                                         |
|            | -   is legally responsible for the child's support, and |
|            |                                                         |
|            | -   has the right to exercise parental control over the |
|            |     child.                                              |
|            |                                                         |
|            | > Physical custody of the child is not determinative.   |
|            | >                                                       |
|            | > ***Reference***: For more information on the          |
|            | > definition of custody for Improved Pension purposes,  |
|            | > see [38 CFR                                           |
|            | > 3.57(d)](http://                                      |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_57.DOC). |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > The child "in custody" category includes the majority |
| ## c. Cust | > of child claimants. Child custody (for Improved       |
| ody Contin | > Pension purposes) is considered to continue after the |
| uing After | > child attains the age of majority under State law,    |
|  the Age o | > under [38 CFR                                         |
| f Majority | > 3.57(d)(3)](http://                                   |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_57.DOC). |
|            | >                                                       |
|            | > For VA Improved Pension, a child who is an adult for  |
|            | > State law purposes, for example, a 22-year-old        |
|            | > schoolchild or a 47-year-old helpless child, is       |
|            | > considered to be "in custody" of the person who had   |
|            |                                                         |
|            | -   legal responsibility for the child's support, and   |
|            |                                                         |
|            | -   the right to exercise parental control over the     |
|            |     child before the child attained the age of majority |
|            |     under State law.                                    |
|            |                                                         |
|            | > However, if there has been some intervening court     |
|            | > action specifically relieving the person of legal     |
|            | > responsibility for the child's support or removing    |
|            | > the person's right to exercise parental control over  |
|            | > the child, the child is no longer considered to be    |
|            | > "in custody" for Improved Pension purposes.           |
|            | >                                                       |
|            | > ***Note***: Even though a child may not actually live |
|            | > with a parent or legal guardian, the child is         |
|            | > considered to be in that person's custody unless      |
|            | > custody has been legally divested ("taken away") by   |
|            | > court action.                                         |
+------------+---------------------------------------------------------+

Continued on next page

31\. Surviving Child Entitled to Improved Death Pension in His/Her Own
Right, Continued

+------------+---------------------------------------------------------+
| #          | > Relatively few children are not in custody as defined |
| #### d. Ch | > in [38 CFR                                            |
| ild Not "I | > 3.57(d)](http://                                      |
| n Custody" | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_57.DOC). |
|            | > Normally, a child is in the custody of some person as |
|            | > the term "custody" is defined for Improved Pension.   |
|            | >                                                       |
|            | > A child is not in custody for Improved Pension        |
|            | > purposes if                                           |
|            |                                                         |
|            | -   both parents are dead and no guardian is appointed  |
|            |                                                         |
|            | -   parental rights are terminated by legal action and  |
|            |     the child is placed in the custody of an            |
|            |     institution or governmental agency, or              |
|            |                                                         |
|            | -   the child is emancipated by a court action.         |
|            |                                                         |
|            | > ***Note***: The fact that a child is                  |
|            | > institutionalized, even if pursuant to court order,   |
|            | > does *not* necessarily mean that the child is not "in |
|            | > custody." Unless some court action takes away the     |
|            | > parent's or guardian's right to exercise parental     |
|            | > control or legal responsibility for the child's       |
|            | > support, the child remains in the parent's or         |
|            | > guardian's custody while institutionalized.           |
+------------+---------------------------------------------------------+

Continued on next page

31\. Surviving Child Entitled to Improved Death Pension in His/Her Own
Right, Continued

+------------+---------------------------------------------------------+
| ##### e    | > In the absence of evidence that a parent or guardian  |
| . Presumpt | > has been divested of either the legal right to        |
| ion of Chi | > exercise parental control over the child or legal     |
| ld Custody | > responsibility for the child's support, presume that  |
|            | > the child is in the parent's or guardian's custody    |
|            | > for Improved Pension purposes.                        |
|            | >                                                       |
|            | > If a question arises as to whether or not some        |
|            | > positive legal action has divested an individual of   |
|            | > the legal right to exercise parental control over the |
|            | > child as well as legal responsibility for the child's |
|            | > support, request a legal opinion from the Regional    |
|            | > Counsel.                                              |
|            | >                                                       |
|            | > ***Reference***: For more information on the legal    |
|            | > right to exercise parental control, see M21-1MR, Part |
|            | > III, Subpart iii, 5.J.                                |
|            | >                                                       |
|            | > Under [38 CFR                                         |
|            | > 3.57(d)(3)](http://                                   |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_57.DOC), |
|            | > the request for a legal opinion should specifically   |
|            | > pose the question in terms of whether *positive legal |
|            | > action* has divested the parent or guardian of the    |
|            |                                                         |
|            | -   legal right to exercise parental control over the   |
|            |     child, or                                           |
|            |                                                         |
|            | -   legal responsibility for the child's support.       |
|            |                                                         |
|            | > This is because divestiture of legal custody by means |
|            | > other than a court order or agreement does not take   |
|            | > the child out of custody for Improved Pension         |
|            | > purposes.                                             |
+------------+---------------------------------------------------------+

Continued on next page

31\. Surviving Child Entitled to Improved Death Pension in His/Her Own
Right, Continued

+------------+---------------------------------------------------------+
| ##         | > If a child is *not* "in custody," *or* if the child   |
| ### f. Det | > is in the custody of an institution, determine the    |
| ermining S | > child's rate of Improved Pension by subtracting the   |
| urviving C | > child's IVAP from the child MAPR in the Improved      |
| hild's Rat | > Pension rate charts in [M21-1, Part I, Appendix       |
| e if the C | > B](http://warms.vba.va.gov/M21_1.html), per [38 CFR   |
| hild Is No | > 3.24](http://                                         |
| t "In Cust | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_24.DOC). |
| ody" or in | >                                                       |
|  the Custo | > Under [38 CFR                                         |
| dy of an I | > 3.57d(2)](http://                                     |
| nstitution | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_57.DOC), |
|            | > if the child is in custody, pay the *lesser* of the   |
|            | > following two MAPRs:                                  |
|            |                                                         |
|            | -   child alone MAPR reduced by the child's IVAP only,  |
|            |     *or*                                                |
|            |                                                         |
|            | -   surviving spouse and child MAPR reduced by the      |
|            |     combined IVAP of the                                |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   child                                               |
|            |                                                         |
|            | -   person having custody of the child, and             |
|            |                                                         |
|            | -   spouse of the person having custody of the child if |
|            |     the child is in the custody of a biological or      |
|            |     adoptive parent.                                    |
|            |                                                         |
|            | > ***Note***: The income of the spouse of a legal       |
|            | > guardian who is not the child's parent is not a       |
|            | > factor in determining IVAP.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### g    | > If two or more surviving children are in the custody  |
| . Multiple | > of a person and living with that person, make         |
|  Surviving | > payments through a consolidated award with no         |
|  Children  | > statement of the share for each child, per [38 CFR    |
| in Custody | > 3.24(c)(2)](http://                                   |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_24.DOC). |
|            | >                                                       |
|            | > Any child with IVAP greater than the MAPR for a child |
|            | > alone is not entitled to pension. Disregard the       |
|            | > income of any child with excessive income when        |
|            | > determining the eligibility of the other child        |
|            | > claimants.                                            |
|            | >                                                       |
|            | > ***Reference***: For more information about surviving |
|            | > child death pension payments, see [38 U.S.C.          |
|            | > 1542](http://straylight.law.cornell.edu/              |
|            | uscode/html/uscode38/usc_sec_38_00001542----000-.html). |
+------------+---------------------------------------------------------+

Continued on next page

31\. Surviving Child Entitled to Improved Death Pension in His/Her Own
Right, Continued

+------------+---------------------------------------------------------+
| #####      | > ***Situation***: The surviving child of a deceased    |
| h. Example | > veteran lives with a grandparent. The child is still  |
|  1: Surviv | > in the legal custody of his/her parent (remarried     |
| ing Child  | > surviving spouse of the veteran) but the child has    |
| in Custody | > little contact with the surviving parent. The child   |
|  but Not L | > has no income. The child's parent has income of       |
| iving With | > \$2,000 per year. The child's stepparent has income   |
|  Custodian | > of \$60,000 per year.                                 |
|            | >                                                       |
|            | > ***Result***: The child is entitled to Improved       |
|            | > Pension in his/her own right because                  |
|            |                                                         |
|            | -   the child is not in the custody of an eligible      |
|            |     surviving spouse, and                               |
|            |                                                         |
|            | -   under [38 U.S.C.                                    |
|            |     1542](http://straylight.law.cornell.edu/            |
|            | uscode/html/uscode38/usc_sec_38_00001542----000-.html), |
|            |     the income of the child's parent and stepparent     |
|            |     does not count because the child does not live with |
|            |     them.                                               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > ***Situation***: The surviving child of a veteran     |
| i. Example | > lives with the child's parent (remarried surviving    |
|  2: Surviv | > spouse) and stepparent. Neither the parent nor        |
| ing Child  | > stepparent has any countable income. The child        |
| in Custody | > receives a pension of \$650 per month from the        |
|            | > deceased veteran's former employer.                   |
|            | >                                                       |
|            | > ***Result***: The child is not entitled to Improved   |
|            | > Pension because the child's income exceeds the MAPR   |
|            | > for a child alone.                                    |
+------------+---------------------------------------------------------+

#### 32. Income Classifications

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on income             |
| troduction | > classifications. It includes information on           |
|            |                                                         |
|            | -   the rationale for classifying income                |
|            |                                                         |
|            | -   the types of income, and                            |
|            |                                                         |
|            | -   the definitions of the following types of income:   |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   nonrecurring income                                 |
|            |                                                         |
|            | -   recurring income                                    |
|            |                                                         |
|            | -   short-term recurring income, and                    |
|            |                                                         |
|            | -   irregular income.                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > Income is annualized for purposes of determining      |
| #### a. Ra | > entitlement to Improved Pension. This means that all  |
| tionale fo | > income must generally be counted for at least 12      |
| r Classify | > months.                                               |
| ing Income | >                                                       |
|            | > It is useful to classify income before attempting to  |
|            | > count it.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The following four income classifications are defined |
|  b. Types  | > in this topic:                                        |
| of Income  |                                                         |
|            | -   nonrecurring                                        |
|            |                                                         |
|            | -   recurring                                           |
|            |                                                         |
|            | -   short-term recurring, and                           |
|            |                                                         |
|            | -   irregular.                                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### c. D | > ***Nonrecurring income*** is essentially a one-time   |
| efinition: | > receipt of income. It is sometimes called "one-time   |
|  Nonrecurr | > income." The income recipient may receive             |
| ing Income | > nonrecurring income more than once during the income  |
|            | > year, but each receipt is a separate and distinct     |
|            | > event.                                                |
|            | >                                                       |
|            | > ***Reference***: For an example of how to count       |
|            | > nonrecurring income, see M21-1MR, Part V, Subpart     |
|            | > iii, 1.E.33.b.                                        |
+------------+---------------------------------------------------------+

Continued on next page

32\. Income Classifications, Continued

+------------+---------------------------------------------------------+
| ##### d    | > ***Recurring income*** is income that                 |
| . Definiti |                                                         |
| on: Recurr | -   comes to the income recipient on a regular basis,   |
| ing Income |     such as weekly or monthly, and                      |
|            |                                                         |
|            | -   is received in regular amounts.                     |
|            |                                                         |
|            | > A monthly SS check is the most common example of      |
|            | > recurring income.                                     |
|            | >                                                       |
|            | > For Improved Pension purposes, recurring type income, |
|            | > such as monthly SS payments, must be counted on the   |
|            | > VA award for at least 12 months to be considered      |
|            | > recurring income. Treat retroactive payments of       |
|            | > recurring type benefits as nonrecurring income.       |
|            | >                                                       |
|            | > ***Reference***: For an example of how to count       |
|            | > recurring income, see M21-1MR, Part V, Subpart iii,   |
|            | > 1.E.33.c.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### e.   | > ***Short-term recurring income*** is recurring income |
|  Definitio | > that has not been counted on the VA award for at      |
| n: Short-T | > least 12 months.                                      |
| erm Recurr | >                                                       |
| ing Income | > An example of short-term recurring income is regular  |
|            | > wages that are counted on the award for six months    |
|            | > when the beneficiary is laid off and the income       |
|            | > stops.                                                |
|            | >                                                       |
|            | > ***Note***: VA treats short-term recurring income as  |
|            | > nonrecurring income for income calculation purposes.  |
|            | > See [38 CFR                                           |
|            | > 3.271(a)(1)](http://w                                 |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_271.DOC). |
+------------+---------------------------------------------------------+

Continued on next page

32\. Income Classifications, Continued

+------------+---------------------------------------------------------+
| ##### f    | > ***Irregular income*** is an intermediate category of |
| . Definiti | > income that has characteristics of both recurring and |
| on: Irregu | > nonrecurring income. In general, irregular income is  |
| lar Income | > income that is received several times during an       |
|            | > income reporting period, but which comes at irregular |
|            | > intervals or in irregular amounts.                    |
|            | >                                                       |
|            | > Examples of irregular income include                  |
|            |                                                         |
|            | -   earned income from odd jobs, and                    |
|            |                                                         |
|            | -   interest income where the rate of return            |
|            |     fluctuates.                                         |
|            |                                                         |
|            | > Normally, irregular income is reported after the fact |
|            | > on the beneficiary's Eligibility Verification Report  |
|            | > (EVR).                                                |
|            | >                                                       |
|            | > ***Reference***: For examples of how to count         |
|            | > irregular income, see                                 |
|            |                                                         |
|            | -   M21-1MR, Part V, Subpart iii, 1.E.33.e              |
|            |                                                         |
|            | -   M21-1MR, Part V, Subpart iii, 1.E.33.f              |
|            |                                                         |
|            | -   M21-1MR, Part V, Subpart iii, 1.E.33.g, and         |
|            |                                                         |
|            | -   M21-1MR, Part V, Subpart iii, 1.E.33.h.             |
+------------+---------------------------------------------------------+

#### 33. Counting Income for Department of Veterans Affairs Purposes (IVAP)

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on calculating IVAP.  |
| troduction | > It includes information on                            |
|            |                                                         |
|            | -   counting                                            |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   nonrecurring income and two examples                |
|            |                                                         |
|            | -   recurring income                                    |
|            |                                                         |
|            | -   irregular income and three examples                 |
|            |                                                         |
|            | -   short-term income, and                              |
|            |                                                         |
|            | -   hard-to-classify income                             |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   irregular income and original or reopened awards    |
|            |                                                         |
|            | -   irregular income and the end-of-the-month rule      |
|            |                                                         |
|            | -   reclassifying income as irregular income            |
|            |                                                         |
|            | -   income received before the effective date of the    |
|            |     award and one example                               |
|            |                                                         |
|            | -   income received before date of death                |
|            |                                                         |
|            | -   when the date of the receipt of income is not known |
|            |                                                         |
|            | -   determining when income is received, and            |
|            |                                                         |
|            | -   renouncement of benefits under 38 CFR 3.106(c).     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a    | > Count nonrecurring income for 12 months from the      |
| . Counting | > first day of the month after the month during which   |
|  Nonrecurr | > the income is received.                               |
| ing Income |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b.   | > A veteran receives a \$500 SS retroactive check on    |
|  Example 1 | > March 14, 2006. Count this income starting April 1,   |
| : Counting | > 2006, and remove it April 1, 2007.                    |
|  Nonrecurr | >                                                       |
| ing Income | > ***Note***: If the nonrecurring income causes the     |
|            | > award to be discontinued, [38 CFR                     |
|            | > 3.31](http:/                                          |
|            | /www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_31.DOC) |
|            | > applies to a reopened award and the beneficiary is    |
|            | > ineligible for 13 months.                             |
|            | >                                                       |
|            | > ***Reference***: For more information about the       |
|            | > payment period, see M21-1MR, Part V, Subpart iii,     |
|            | > 1.A.7.                                                |
+------------+---------------------------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| ##### c.   | > ***Situation***: A single veteran has \$9,000 per     |
|  Example 2 | > year in recurring income. The veteran receives        |
| : Counting | > one-time income of \$500 on March 14, 2006, and a     |
|  Nonrecurr | > second one-time income of \$600 on July 20, 2006.     |
| ing Income | >                                                       |
|            | > ***Result***: Adjust the award as shown in the table  |
|            | > below:                                                |
+------------+---------------------------------------------------------+

  --------------- ------------- -------------- ---------------------------
  Date            Rate          IVAP           Reason

  04-01-2006      \$89.00       9500           \$500 nonrecurring income
                                               received March 14, 2006.

  08-01-2006      \$39.00       10100          \$600 nonrecurring income
                                               received July 20, 2006.

  12-01-2006      \$69.00       10100          Cost-of-living adjustment
                                               (COLA).

  04-01-2007      \$110.00      9600           \$500 removed.

  08-01-2007      \$160.00      9000           \$600 removed.
  --------------- ------------- -------------- ---------------------------

+-----------------------------------------------------------------------+
| > ***Note***: [38 CFR                                                 |
| > 3.31](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_31.DOC) |
| > does not apply to the rate changes on April 1, 2007, and August 1,  |
| > 2007.                                                               |
+-----------------------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Count recurring income on an open-ended basis from    |
| # d. Count | > the first day of the month after the month during     |
| ing Recurr | > which the recurring income is first received. If      |
| ing Income | > there is a change in recurring income, adjust the     |
|            | > award effective the first day of the month after the  |
|            | > change occurs.                                        |
|            | >                                                       |
|            | > ***Example***: A veteran receives a retirement check  |
|            | > in the amount of \$200 on March 14, 2006. The veteran |
|            | > expects to receive a \$200 check on or about the 14th |
|            | > of each month for the indefinite future. Increase     |
|            | > IVAP by \$2,400 (\$200 x 12) effective April 1, 2006. |
+------------+---------------------------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| ####       | > When irregular income is initially received from a    |
| # e. Count | > particular source, count it for 12 months from the    |
| ing Irregu | > first day of the month after the month during which   |
| lar Income | > it is first received. Thereafter, count irregular     |
|            | > income for 12 months from the beginning of the EVR    |
|            | > reporting period during which it is received.         |
|            | >                                                       |
|            | > Count the lower amount of irregular income during any |
|            | > overlapping periods. However, if the irregular income |
|            | > for the calendar year is zero, then count the         |
|            | > irregular income for the full 12 month period.        |
|            | >                                                       |
|            | > ***Note***: A claimant could be in receipt of         |
|            | > multiple types of irregular income. Do *not* lump     |
|            | > together different types of irregular income, for     |
|            | > example, interest income and odd-job income. However, |
|            | > it is permissible to lump together the same type of   |
|            | > irregular income from multiple sources, for example,  |
|            | > interest income from multiple banks or odd-job income |
|            | > from multiple employers.                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > ***Situation***: A veteran has been paid Improved     |
|  f. Exampl | > pension based on interest income of \$600 per year.   |
| e 1: Count | > The veteran's EVR shows receipt of only \$500         |
| ing Irregu | > interest during the EVR reporting period of calendar  |
| lar Income | > year 2006.                                            |
|            | >                                                       |
|            | > ***Result***: Adjust from January 1, 2006, subject to |
|            | > [38 CFR                                               |
|            | > 3.31](http:/                                          |
|            | /www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_31.DOC) |
|            | > (that is, adjust from February 1, 2006, if the change |
|            | > in income causes the pension rate for January 1,      |
|            | > 2006, to exceed the December 2005 rate.)              |
+------------+---------------------------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| #####      | > ***Situation***: The veteran turns 65 and applies for |
|  g. Exampl | > pension on March 14, 2005. On his application the     |
| e 2: Count | > veteran reported that he expected to receive interest |
| ing Irregu | > income of \$50 per year. The \$50 was counted on his  |
| lar Income | > award on an open-ended basis from April 1, 2005. On   |
|            | > his EVR the veteran reports having received interest  |
|            | > income of \$80 between April 1, 2005, and December    |
|            | > 31, 2005. He expects to receive interest income of    |
|            | > \$90 during 2006.                                     |
|            | >                                                       |
|            | > ***Result***: If the EVR is worked before March 2006, |
|            | > count \$50 from April 1, 2005, and \$90 from April 1, |
|            | > 2006. Establish a future diary to send the veteran an |
|            | > EVR form during March 2006. The letter accompanying   |
|            | > the EVR form should request the amount of interest    |
|            | > received during the initial period (March 14, 2005,   |
|            | > through March 31, 2006).                              |
|            | >                                                       |
|            | > If development reveals that the veteran received      |
|            | > interest income of \$80 during the period March 14,   |
|            | > 2005, through March 31, 2006, adjust to pay based on  |
|            | > interest income of \$80 from April 1, 2005, and       |
|            | > interest income of \$90 from April 1, 2006. If the    |
|            | > EVR at the end of 2006 shows that the veteran         |
|            | > actually received interest income of \$60 during      |
|            | > calendar year 2006, adjust to pay based on IVAP of    |
|            | > \$60 from January 1, 2006, subject to [38 CFR         |
|            | > 3.31](http://                                         |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_31.DOC). |
+------------+---------------------------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| #####      | > ***Situation***: The veteran is rated permanently and |
|  h. Exampl | > totally disabled from August 7, 2005. The veteran is  |
| e 3: Count | > paid based on \$0 IVAP. On October 28, 2005, the      |
| ing Irregu | > veteran reports that he started receiving interest    |
| lar Income | > income of \$100 per year on September 29, 2005. The   |
|            | > award is adjusted to count IVAP of \$100 on an        |
|            | > open-ended basis from October 1, 2005. On his 2006    |
|            | > EVR, the veteran reports having received interest     |
|            | > income of \$75 during the period January 1, 2006,     |
|            | > through December 31, 2006.                            |
|            | >                                                       |
|            | > ***Result***: Develop to find out how much interest   |
|            | > was received during the period September 29, 2005,    |
|            | > through August 31, 2006. If development reveals that  |
|            | > the veteran received \$80 interest during the period  |
|            | > of September 29, 2005, through August 31, 2006,       |
|            | > adjust the award as shown in the table below:         |
+------------+---------------------------------------------------------+

+----------------+---------------+------------------------------------+
| Date           | IVAP          | Reason                             |
+----------------+---------------+------------------------------------+
| 09-01-2005     | 0             | No income from August 7, 2005      |
+----------------+---------------+------------------------------------+
| 10-01-2005     | 80            | \$80 interest from September 29,   |
|                |               | 2005                               |
+----------------+---------------+------------------------------------+
| 02-01-2006     | 75            | \$75 interest from January 1, 2006 |
|                |               |                                    |
|                |               | ***Note***: [38 CFR                |
|                |               | 3.31](http://www.warms.vba.va.gov  |
|                |               | /regs/38CFR/BOOKB/PART3/S3_31.DOC) |
|                |               | applies.                           |
+----------------+---------------+------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| ##### i    | > For an original or reopened award after a period of   |
| . Irregula | > nonentitlement, count irregular income received       |
| r Income a | > between the effective date and the payment date over  |
| nd Origina | > the duration of the initial period.                   |
| l or Reope | >                                                       |
| ned Awards | > ***Example***:                                        |
|            | >                                                       |
|            | > ***Situation***: A veteran turns 65 and claims        |
|            | > pension on December 14, 2005. The initial EVR         |
|            | > reporting period is December 14, 2005, through        |
|            | > December 31, 2006. On the EVR, the veteran reports    |
|            | > having received income from babysitting in the amount |
|            | > of \$500 during the period January 1, 2006, through   |
|            | > December 31, 2006. The veteran does not anticipate    |
|            | > receiving income from any source in 2007.             |
|            | >                                                       |
|            | > Further development reveals that a total of \$630 in  |
|            | > babysitting income was received between December 14,  |
|            | > 2005, and January 1, 2007. The income was received at |
|            | > various times and in various amounts during the       |
|            | > period in question (irregular income).                |
|            | >                                                       |
|            | > ***Result***: Increase IVAP to \$630 from January 1,  |
|            | > 2006, and reduce IVAP to \$0 from February 1, 2007    |
|            | > ([38 CFR                                              |
|            | > 3.31](http:/                                          |
|            | /www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_31.DOC) |
|            | > ).                                                    |
|            | >                                                       |
|            | > ***Reference***: For a definition of the term         |
|            | > ***initial period***, see M21-1MR, Part V, Subpart    |
|            | > iii, 1.E.34.a.                                        |
+------------+---------------------------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| #####      | > Per [38 CFR                                           |
|  j. Irregu | > 3.660(a)(2)](http://w                                 |
| lar Income | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_660.DOC), |
|  and the E | > whenever reduction of a running Improved Pension      |
| nd-of-the- | > award is required because of an increase in income,   |
| Month Rule | > the reduction is effective the end of the month in    |
|            | > which the increase occurred. However, this            |
|            | > "end-of-the-month rule" does *not* apply to decreased |
|            | > rates attributable to increases in irregular income   |
|            | > (that is, when VA is already counting irregular       |
|            | > income) when there is no discretely identifiable date |
|            | > of receipt.                                           |
|            | >                                                       |
|            | > ***Example***:                                        |
|            | >                                                       |
|            | > ***Situation***: The veteran is being paid on \$80    |
|            | > IVAP from interest. The veteran's EVR covers calendar |
|            | > year 2006. On the EVR, the veteran reports having     |
|            | > received interest income of \$90.                     |
|            | >                                                       |
|            | > ***Result***: Count interest income of \$90 from      |
|            | > January 1, 2006.                                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### k.   | > In some instances, income that is initially           |
| Reclassify | > characterized as recurring income is reclassified as  |
| ing Income | > irregular income after the fact.                      |
|  as Irregu | >                                                       |
| lar Income | > ***Example***:                                        |
|            | >                                                       |
|            | > ***Situation***: A surviving spouse's original award  |
|            | > is payable from May 1, 2005. The surviving spouse     |
|            | > reports anticipated earnings of \$200 per month. The  |
|            | > award is made based on IVAP of \$2,400 (recurring     |
|            | > income). During May 2006, VA receives the surviving   |
|            | > spouse's EVR showing that the surviving spouse        |
|            |                                                         |
|            | -   was laid off in August 2005                         |
|            |                                                         |
|            | -   got another job in September 2005 making \$300 per  |
|            |     month                                               |
|            |                                                         |
|            | -   quit in October 2005                                |
|            |                                                         |
|            | -   earned \$250 in March 2006, and                     |
|            |                                                         |
|            | -   is presently unemployed.                            |
|            |                                                         |
|            | > Total earnings during the period May 1, 2005, through |
|            | > April 30, 2006, came to \$1,650.                      |
|            | >                                                       |
|            | > ***Result***: Recharacterize the recurring income as  |
|            | > irregular income and change the IVAP to \$1,650       |
|            | > effective May 1, 2005.                                |
|            | >                                                       |
|            | > If the surviving spouse anticipates no other income   |
|            | > for the period May 1, 2006, through April 30, 2007,   |
|            | > IVAP of \$1,650 should be carried forward until June  |
|            | > 1, 2006, when IVAP goes to \$0.                       |
+------------+---------------------------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| #####      | > Treat short-term recurring income like nonrecurring   |
|  l. Counti | > income and count the total amount received for 12     |
| ng Short-T | > months from the first of the month after it was       |
| erm Recurr | > initially received.                                   |
| ing Income | >                                                       |
|            | > ***Example***:                                        |
|            | >                                                       |
|            | > ***Situation***: A veteran started receiving earned   |
|            | > income of \$200 per month, effective March 14, 2006.  |
|            | > The veteran has no other income. The award was        |
|            | > adjusted effective April 1, 2006, to count \$2,400 on |
|            | > an open-ended basis. The veteran later reports losing |
|            | > the job and states that the last check was received   |
|            | > on July 14, 2006. The total earnings received were    |
|            | > \$1,000.                                              |
|            | >                                                       |
|            | > ***Result***: Count \$1,000 for the period April 1,   |
|            | > 2006, through March 31, 2007. Remove the income on    |
|            | > April 1, 2007.                                        |
|            | >                                                       |
|            | > ***Reference***: For more information on treating     |
|            | > short-term recurring income like nonrecurring income, |
|            | > see [38 CFR                                           |
|            | > 3.271(a)(1)](http://w                                 |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_271.DOC). |
+------------+---------------------------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| ####       | > Not all income fits neatly into one of the four       |
| # m. Count | > categories listed in M21-1MR, Part V, Subpart iii,    |
| ing Hard-t | > 1.E.32. There are instances where it is not clear     |
| o-Classify | > whether a claimant has received irregular income, or  |
|            | > multiple occurrences of nonrecurring.                 |
| ##         | >                                                       |
| ### Income | > ***Example***:                                        |
|            | >                                                       |
|            | > ***Question***: If a veteran does occasional seasonal |
|            | > labor and receives three \$500 checks during the      |
|            | > 12-month EVR reporting period, should it be treated   |
|            | > as                                                    |
|            |                                                         |
|            | -   three instances of nonrecurring income with three   |
|            |     separate income adjustments, or                     |
|            |                                                         |
|            | -   irregular income and counted for the duration of    |
|            |     the EVR reporting period during which it was        |
|            |     received?                                           |
|            |                                                         |
|            | > ***Answer***: Situations like this amount to a        |
|            | > judgment call by the Veterans Service Representative  |
|            | > (VSR) working the case. The important principle is    |
|            | > that all income must be counted for 12 months, unless |
|            | > an overlapping period is involved in the case of      |
|            | > irregular income. It often makes little difference to |
|            | > the claimant whether \$500 is counted for three       |
|            | > separate 12-month periods or \$1,500 is counted for   |
|            | > one 12-month period. However, if alternative          |
|            | > computation methods would have significantly          |
|            | > different results for the claimant, use the method    |
|            | > that is to the claimant's advantage.                  |
|            | >                                                       |
|            | > ***Exception***: There is an exception to the general |
|            | > rule that all income must be counted for 12 months.   |
|            | > When a dependent with income is removed from the      |
|            | > award, the dependent's income is removed with the     |
|            | > dependent even if this means that the income is       |
|            | > counted for fewer than 12 months.                     |
|            | >                                                       |
|            | > ***Reference***: For more information about removing  |
|            | > a dependent from an award, see M21-1MR, Part V,       |
|            | > Subpart iii, 1.F.39.                                  |
+------------+---------------------------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| ###        | > Do *not* count income received before the effective   |
| ## n. Inco | > date of an original or reopened award. (For death     |
| me Receive | > pension cases, do not count income received between   |
| d Before t | > the effective date and the date of the veteran's      |
| he Effecti | > death.) The effective date is the date a claimant is  |
| ve Date of | > entitled to benefits without regard to [38 CFR        |
|  the Award | > 3.31](http://                                         |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_31.DOC). |
|            | >                                                       |
|            | > However, if the claimant would have been entitled to  |
|            | > Improved Pension but Improved Pension is not paid     |
|            | > solely because income exceeds the MAPR, apply the     |
|            | > normal income-counting procedures to any income       |
|            | > received or expenses paid after the date that would   |
|            | > have been the effective date, had income not exceeded |
|            | > the MAPR.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > ***Situation***: A veteran files an original pension  |
| # o. Examp | > claim on June 10, 2005. The veteran reports having    |
| le: Income | > received a stock certificate of \$10,000 on June 3,   |
|  Received  | > 2005. VA determines that the veteran is entitled to   |
| Before Eff | > pension effective June 10, 2005.                      |
| ective Dat | >                                                       |
| e of Award | > ***Result***: Disregard the \$10,000 in determining   |
|            | > the veteran's entitlement to pension, since it was    |
|            | > received before the date of the veteran's award.      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > In death cases, do *not* count income received before |
|  p. Income | > the date of the veteran's death, even if it is        |
|  Received  | > received after the effective date of the award.       |
| Before Dat | >                                                       |
| e of Death | > ***Example***:                                        |
|            | >                                                       |
|            | > ***Situation***: The veteran died on March 20, 2006.  |
|            | > The surviving spouse files an original pension claim  |
|            | > on February 2, 2007. The surviving spouse reports     |
|            | > receipt of a \$10,000 inheritance on March 19, 2006.  |
|            | >                                                       |
|            | > ***Result***: The effective date of the award under   |
|            | > [38 CFR                                               |
|            | > 3.400(c)(3)(ii)](http://                              |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_400.DOC) |
|            | > is March 1, 2006. Disregard the \$10,000 in           |
|            | > determining the surviving spouse's entitlement to     |
|            | > pension. Although it was received after the effective |
|            | > date, it was received before the date of the          |
|            | > veteran's death.                                      |
+------------+---------------------------------------------------------+

Continued on next page

33\. Counting Income for Department of Veterans Affairs Purposes (IVAP),
Continued

+------------+---------------------------------------------------------+
| ####       | > Always determine the EVR reporting period during      |
| # q. Date  | > which income is received. If this information is not  |
| of Receipt | > of record, initiate development.                      |
|  of Income | >                                                       |
|  Not Known | > For original and reopened awards, count the income    |
|            | > from the effective date of the award if the actual    |
|            | > date of receipt is not shown on the application. If   |
|            | > the beneficiary later reports the actual date of      |
|            | > receipt of income, adjust the award.                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Income is considered to have been received for VA     |
| # r. Deter | > purposes when cash or something that could be         |
| mining Whe | > converted into cash comes into the possession of the  |
| n Income I | > recipient. The fact that non-cash income comes into   |
| s Received | > the recipient's possession on a weekend or holiday    |
|            | > (when it would be difficult or impossible to convert  |
|            | > it into cash) makes no difference.                    |
|            | >                                                       |
|            | > Likewise, banking practices which prevent the         |
|            | > recipient from drawing on a check for a certain       |
|            | > period of time are irrelevant to determining the date |
|            | > of receipt of income. However, a post-dated check is  |
|            | > not considered to have been received before the date  |
|            | > of the check, even though it might be in the          |
|            | > recipient's possession earlier. Electronically        |
|            | > transferred income is considered to have been         |
|            | > received by the recipient on the date that it is      |
|            | > credited to the recipient's account.                  |
|            | >                                                       |
|            | > ***Example***: The veteran is notified on September   |
|            | > 29, 2006, that he has inherited \$10,000. The veteran |
|            | > receives the \$10,000 check on October 28, 2006. The  |
|            | > \$10,000 is considered to have been received on       |
|            | > October 28, 2006.                                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Under [38 CFR                                         |
|  s. Renoun | > 3.106(c)](http://                                     |
| cement of  | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_106.DOC) |
| Benefits U |                                                         |
| nder 38 CF | -   an application for Improved Pension filed within    |
| R 3.106(c) |     one year after renouncement of that benefit is not  |
|            |     treated as an original application, and             |
|            |                                                         |
|            | -   benefits are payable as if the renouncement had not |
|            |     occurred.                                           |
|            |                                                         |
|            | > This provision, which was effective November 2, 1994, |
|            | > the date of enactment of *Public Law (PL) 103-446*    |
|            |                                                         |
|            | -   allows VA to include income received in that one    |
|            |     year period as income for VA purposes, and          |
|            |                                                         |
|            | -   precludes the planned renouncement of the benefit   |
|            |     prior to receipt of nonrecurring income in order to |
|            |     avoid having that nonrecurring income used to       |
|            |     calculate IVAP.                                     |
+------------+---------------------------------------------------------+

#### 34. Counting Income During the Initial Period

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on counting income    |
| troduction | > during the initial period. It includes a definition   |
|            | > of ***initial period*** and information on            |
|            |                                                         |
|            | -   counting irregular income                           |
|            |                                                         |
|            | -   deductible medical expenses                         |
|            |                                                         |
|            | -   EVR reporting and two examples                      |
|            |                                                         |
|            | -   income changes during the initial 12 months of the  |
|            |     award and two examples                              |
|            |                                                         |
|            | -   counting the initial 12 months of income for        |
|            |     disallowed claims                                   |
|            |                                                         |
|            | -   counting the second 12 months of income for         |
|            |     disallowed claims, and                              |
|            |                                                         |
|            | -   four overall examples of counting income during the |
|            |     initial period.                                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a. D | > The ***initial period*** is defined as the period     |
| efinition: | > extending from the effective date of the award, or    |
|            | > later date of the veteran's death, through the end of |
| ##### Init | > the month that is 12 months from the month during     |
| ial Period | > which pension entitlement arose.                      |
|            | >                                                       |
|            | > ***Examples***:                                       |
|            |                                                         |
|            | -   Live pension: If the claim is received on October   |
|            |     14, 2006, then the initial period is October 14,    |
|            |     2006, through October 31, 2007.                     |
|            |                                                         |
|            | -   Death pension: If the veteran died on May 2, 2006,  |
|            |     and the claim is received                           |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   on August 4, 2006 (within one year after the date   |
|            |     of death), then the initial period is May 2, 2006,  |
|            |     through May 31, 2007, or                            |
|            |                                                         |
|            | -   on August 4, 2007 (more than one year after the     |
|            |     date of death), then the initial period is August   |
|            |     4, 2007, through August 31, 2008.                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > If irregular income is involved, income received      |
| # b. Count | > during a period of more than 12 months (the initial   |
| ing Irregu | > period) may be a factor in determining initial year   |
| lar Income | > IVAP for original awards and reopened awards after a  |
|            | > period of nonentitlement.                             |
+------------+---------------------------------------------------------+

Continued on next page

34\. Counting Income During the Initial Period, Continued

+------------+---------------------------------------------------------+
| #####      | > Deductible medical expenses paid during the initial   |
| c. Deducti | > period are allowed for the first 12 months of the     |
| ble Medica | > award.                                                |
| l Expenses | >                                                       |
|            | > ***Note***: Because EVR reporting is on a calendar    |
|            | > year basis, the initial year overlaps the first       |
|            | > calendar year unless the date of entitlement is in    |
|            | > December. *Count the lower amount of irregular income |
|            | > and allow the higher amount of medical expenses       |
|            | > during periods of overlap.*                           |
|            | >                                                       |
|            | > If a surviving spouse is entitled to the veteran's    |
|            | > rate for the month of death under [38 CFR             |
|            | > 3.20](http://                                         |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_20.DOC), |
|            | > deductible medical expenses are allowed for the first |
|            | > 13 months of the award although they affect the IVAP  |
|            | > for only 12 months.                                   |
|            | >                                                       |
|            | > ***Important***: In death pension cases, do *not*     |
|            | > deduct unreimbursed medical expenses paid by the      |
|            | > surviving spouse between the effective date of the    |
|            | > death pension award (first day of the month of the    |
|            | > veteran's death) and the date of the veteran's death. |
|            | > However, the expenses may be deducted as final        |
|            | > expenses, if they are related to the veteran's last   |
|            | > illness.                                              |
|            | >                                                       |
|            | > ***References***: For more information on             |
|            |                                                         |
|            | -   medical expense deductions, see M21-1MR, Part V,    |
|            |     Subpart iii, 1.G.42, and                            |
|            |                                                         |
|            | -   irregular income, see M21-1MR, Part V, Subpart iii, |
|            |     1.E.32.e.                                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > The initial EVR does not cover original or reopened   |
| ### d. EVR | > awards processed in September through December of the |
|  Reporting | > current year.                                         |
|            | >                                                       |
|            | > Develop a claim fully if                              |
|            |                                                         |
|            | -   the initial period includes months for which no EVR |
|            |     was issued, and                                     |
|            |                                                         |
|            | -   there is a positive indication that income was      |
|            |     received or expenses paid during the months for     |
|            |     which no EVR was issued.                            |
+------------+---------------------------------------------------------+

Continued on next page

34\. Counting Income During the Initial Period, Continued

+------------+---------------------------------------------------------+
| ###        | > A veteran with no dependents is permanently and       |
| ## e. Exam | > totally disabled effective March 14, 2005. Use the    |
| ple 1: EVR | > guidelines below to determine the veteran's IVAP.     |
|  Reporting |                                                         |
|            | -   If the veteran is receiving monthly recurring       |
|            |     income on March 14, 2005, enter the monthly income  |
|            |     into the computer system with no end date. The      |
|            |     system will multiply the monthly income by 12 and   |
|            |     count it on an open-ended basis.                    |
|            |                                                         |
|            | -   If the veteran receives irregular income between    |
|            |     March 14, 2005, and April 1, 2006, count it for the |
|            |     period April 1, 2005, through March 31, 2006.       |
|            |                                                         |
|            | -   Include all deductible medical expenses paid during |
|            |     the period March 14, 2005, through March 31, 2006,  |
|            |     in calculating IVAP for the period April 1, 2005,   |
|            |     through March 31, 2006.                             |
|            |                                                         |
|            | -   If the veteran starts receiving recurring income on |
|            |     June 15, 2005, that ends in October 2005, count the |
|            |     total amount received as short-term recurring       |
|            |     income from July 1, 2005, through June 30, 2006.    |
|            |                                                         |
|            | -   If the veteran receives nonrecurring income on      |
|            |     December 5, 2006, count it from January 1, 2007,    |
|            |     through December 31, 2007.                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### f.   | > The table below shows the effective dates and reasons |
| Example 1: | > for the IVAP changes described above in M21-1MR, Part |
|  EVR Repor | > V, Subpart iii, 1.E.34.e.                             |
| ting -- IV |                                                         |
| AP Changes |                                                         |
+------------+---------------------------------------------------------+

  ------------- ----------- ----------------------------------------------
  Date          IVAP        Reason for IVAP Change

  04-01-2005    3200        \$200 monthly recurring income plus \$1,000
                            irregular income received March 24, 2005.
                            Initial period deductible medical expenses of
                            \$708.

  07-01-2005    4700        \$1,500 short-term recurring income first
                            received June 15, 2005.

  12-01-2005    4720        Medical deductible expense change.

  04-01-2006    3900        Irregular income removed. Initial year
                            deductible medical expenses removed.

  07-01-2006    2400        Short-term recurring income removed.

  01-01-2007    2700        \$300 nonrecurring income received December 5,
                            2006.

  01-01-2008    2400        Nonrecurring income removed. (13-month rule
                            does not apply.)
  ------------- ----------- ----------------------------------------------

Continued on next page

34\. Counting Income During the Initial Period, Continued

+------------+---------------------------------------------------------+
| ###        | > ***Situation***: The veteran was receiving disability |
| ## g. Exam | > compensation of \$954 per month prior to his death on |
| ple 2: EVR | > April 7, 2006. The surviving spouse files an original |
|  Reporting | > claim on July 5, 2006, and is found to be entitled to |
|            | > Improved Pension at the rate of \$200 per month.      |
|            | >                                                       |
|            | > ***Result***: Pay \$954 for the month of April 1,     |
|            | > 2006, (the veteran's compensation rate for the month  |
|            | > of death) and pay \$200 per month, effective May 1,   |
|            | > 2006. In this case, the payment date is the same as   |
|            | > the effective date, because [38 CFR                   |
|            | > 3.31](http:/                                          |
|            | /www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_31.DOC) |
|            | > does not apply when the veteran's rate is payable for |
|            | > the month of death under [38 CFR                      |
|            | > 3.20](http://                                         |
|            | www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_20.DOC). |
|            | >                                                       |
|            | > Assuming an award processing date prior to September  |
|            | > 2006, the surviving spouse's EVR for the period May   |
|            | > 1, 2006, through December 31, 2006, shows payment of  |
|            | > \$500 in medical expenses. The award to increase the  |
|            | > rate of pension should be made with a payment date of |
|            | > May 1, 2006. The \$500 in medical expenses should be  |
|            | > removed effective May 1, 2007.                        |
|            | >                                                       |
|            | > If the surviving spouse later reports additional      |
|            | > medical expenses paid between January 1, 2007, and    |
|            | > May 1, 2007, amend the award to allow total medical   |
|            | > expenses paid during the period April 7, 2006,        |
|            | > through April 30, 2007, for the initial period.       |
+------------+---------------------------------------------------------+

Continued on next page

34\. Counting Income During the Initial Period, Continued

+------------+---------------------------------------------------------+
| ##### h    | > If there is a change in income that occurs after the  |
| . Income C | > effective date of the award, apply the                |
| hanges Dur | > income-counting principles found here in this topic.  |
| ing Initia | > This means that an original or reopened award might   |
| l 12 Month | > be discontinued after having run fewer than 12        |
| s of Award | > months.                                               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### i.   | > In Examples 1 and 2 below, it makes no difference     |
|  Example 1 | > whether or not the award is running at the time VA    |
| : Income C | > learns of the retroactive payment. The income         |
| hanges Dur | > counting procedures found in this topic apply equally |
| ing Initia | > to original, reopened, and running awards.            |
| l 12 Month | >                                                       |
| s of Award | > ***Example 1***:                                      |
|            | >                                                       |
|            | > ***Situation***: A surviving spouse is entitled to    |
|            | > death pension with an effective date of March 15,     |
|            | > 2006. The award is payable from April 1, 2006. The    |
|            | > award is based on IVAP of \$0. The surviving spouse   |
|            | > receives a retirement check for \$800 on July 3,      |
|            | > 2006. It represents a \$600 retroactive check and the |
|            | > regular \$200 check for July. The surviving spouse    |
|            | > expects to receive \$200 each month in the future     |
|            | > from this source.                                     |
|            | >                                                       |
|            | > ***Result***: Pay based on IVAP of \$0 from April 1,  |
|            | > 2006. Increase IVAP to \$3,000 effective August 1,    |
|            | > 2006 (12 x \$200= \$2,400 + \$600 retroactive).       |
|            | > Reduce IVAP to \$2,400, effective August 1, 2007,     |
|            | > when the \$600 retroactive comes off the award.       |
|            | >                                                       |
|            | > ***Award***: The table below shows the date and       |
|            | > reason for the IVAP changes in Example 1.             |
+------------+---------------------------------------------------------+

  -------------- ------------ --------------------------------------------
  Date           IVAP         Reason

  04-01-2006     0            Entitlement is effective from date of claim,
                              March 15, 2006. (Claim received more than
                              one year after veteran's death.)

  08-01-2006     3000         Retirement check received July 3, 2006.
                              Count \$600 nonrecurring plus \$200 per
                              month recurring (\$2,400).

  08-01-2007     2400         Remove nonrecurring income.
  -------------- ------------ --------------------------------------------

Continued on next page

34\. Counting Income During the Initial Period, Continued

+------------+---------------------------------------------------------+
| ##### j.   | > ***Example 2***:                                      |
| Example 2: | >                                                       |
|  Income Ch | > ***Situation***: A surviving spouse is entitled to    |
| anges Duri | > death pension with an effective date of March 15,     |
| ng Initial | > 2006. The award is payable from April 1, 2006. The    |
|  12 Months | > award is based on IVAP of \$0. The surviving spouse   |
|  of Award  | > receives a retirement check for \$3,000 on July 3,    |
|            | > 2006. It represents a \$2,500 retroactive check and   |
|            | > the regular \$500 check for July. The surviving       |
|            | > spouse expects to receive \$500 each month in the     |
|            | > future from this source.                              |
|            | >                                                       |
|            | > ***Note***: If the surviving spouse re-establishes    |
|            | > entitlement effective August 1, 2007, the payment     |
|            | > date would be September 1, 2007, per [38 CFR          |
|            | > 3.31](http:/                                          |
|            | /www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_31.DOC) |
|            | > and [*VAOGCPREC                                       |
|            | > 02-89*](http://www1.va.gov/ogc/docs/PREC_02-89.doc).  |
|            | >                                                       |
|            | > ***Result***: Stop the award effective August 1,      |
|            | > 2006, because IVAP of \$8,500 exceeds the applicable  |
|            | > MAPR. If there are no other changes in the surviving  |
|            | > spouse's income, entitlement exists effective August  |
|            | > 1, 2007, when the \$2,500 retroactive payment has     |
|            | > been counted for 12 months.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > A corollary of the rule that all income must be       |
| #### k. Co | > counted for 12 months on Improved Pension awards is   |
| unting the | > the principle that income that bars payment of        |
|  Initial 1 | > Improved Pension must be considered for a full 12     |
| 2 Months o | > months from the first of the month after the          |
| f Income f | > effective date.                                       |
| or Disallo | >                                                       |
| wed Claims | > ***Example***:                                        |
|            | >                                                       |
|            | > ***Situation***:                                      |
|            |                                                         |
|            | -   May 10, 2005: Veteran died.                         |
|            |                                                         |
|            | -   June 10, 2006: Surviving spouse files original      |
|            |     pension claim. Pension denied because of monthly    |
|            |     wages of \$1,200.                                   |
|            |                                                         |
|            | -   May 1, 2007: Surviving spouse re-applies for        |
|            |     pension. She states she has no income because she   |
|            |     lost her job in November 2006. She received \$8,400 |
|            |     between June 10, 2006, and November 2006.           |
|            |                                                         |
|            | > ***Result***: The \$8,400 short-term recurring income |
|            | > must be counted for a full 12 months from July 1,     |
|            | > 2006, through June 30, 2007. An award can be made     |
|            | > based on IVAP of \$0 with a payment date of July 1,   |
|            | > 2007. The period June 30, 2007, through June 30,      |
|            | > 2008, then becomes the surviving spouse's initial     |
|            | > period for the purposes of claiming medical expenses. |
|            | >                                                       |
|            | > ***Note***: In the initial denial letter, inform the  |
|            | > surviving spouse that she has until January 1, 2009,  |
|            | > to claim unreimbursed medical expenses to establish   |
|            | > entitlement from June 10, 2006.                       |
+------------+---------------------------------------------------------+

Continued on next page

34\. Counting Income During the Initial Period, Continued

+------------+---------------------------------------------------------+
| ##### l. C | > Under [38 CFR                                         |
| ounting th | > 3.660(b)(2)](http://w                                 |
| e Second 1 | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_660.DOC), |
| 2 Months o | > a claimant has two 12-month periods to submit         |
| f Income f | > evidence establishing entitlement to benefits for the |
| or Disallo | > second 12-month period after denial of a claim        |
| wed Claims | > because income exceeds the limit during the initial   |
|            | > period.                                               |
|            | >                                                       |
|            | > ***Note***: This time limit is actually shorter than  |
|            | > the time limit to establish entitlement for the       |
|            | > initial period.                                       |
|            | >                                                       |
|            | > Therefore, if a claim has been denied because income  |
|            | > for the initial period exceeded the MAPR, evaluate    |
|            | > income for the second 12-month period to determine if |
|            | > entitlement exists. If income is below the MAPR for   |
|            | > the second 12-month period, pay from the beginning of |
|            | > that period.                                          |
|            | >                                                       |
|            | > ***Example***: A 65 year-old veteran files an         |
|            | > original claim on March 14, 2005. The claim is denied |
|            | > because the veteran receives disability retirement of |
|            | > \$950 per month.                                      |
|            | >                                                       |
|            | > On September 29, 2006, the veteran reports that the   |
|            | > last disability check was received on September 3,    |
|            | > 2006. The veteran also reports winning \$500 in a     |
|            | > lottery on June 16, 2006. The veteran asks to be paid |
|            | > based on IVAP of \$0 from October 1, 2006.            |
|            | >                                                       |
|            | > In this case, income was excessive for the initial    |
|            | > period of March 14, 2005, through March 31, 2006.     |
|            | > Therefore, the veteran's entitlement for the second   |
|            | > 12-month period must be based on income received from |
|            | > April 1, 2006, through March 30, 2007. During this    |
|            | > period, the veteran received disability retirement of |
|            | > \$5,700 and lottery winnings of \$500.                |
|            | >                                                       |
|            | > ***Result***: The table below shows the effective     |
|            | > dates and reasons for the changes in IVAP.            |
+------------+---------------------------------------------------------+

  ------------ ---------- ------------------------------------------------
  Date         IVAP       Reason

  04-01-2006   5700       Entitlement from beginning of second 12-month
                          period. Short-term recurring income of
                          \$950/month retirement income times 6 months.

  07-01-2006   6200       Add \$500 lottery winnings received June 2006.

  04-01-2007   500        Remove \$5,700 short-term recurring income.

  07-01-2007   0          Remove \$500 lottery winnings.
  ------------ ---------- ------------------------------------------------

+-----------------------------------------------------------------------+
| > ***Reference***: For more information on the time limit to          |
| > establish entitlement under [38 CFR                                 |
| > 3.600(b                                                             |
| )(2)](http://www.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_600.DOC), |
| > see M21-1MR, Part V, Subpart iii, 1.A.5.                            |
+-----------------------------------------------------------------------+

Continued on next page

34\. Counting Income During the Initial Period, Continued

+------------+---------------------------------------------------------+
| #          | > ***Situation***: The veteran's date of entitlement to |
| #### m. Ex | > pension is March 14, 2005. Before the award is        |
| ample 1: C | > authorized, the veteran reports receipt of SS on      |
| ounting In | > February 13, 2005. The veteran is entitled to SS from |
| come Durin | > December 2004. The first check includes a monthly     |
| g the Init | > payment of \$200 and retroactive payment of \$400.    |
| ial Period | >                                                       |
|            | > ***Result***: Count the \$200 monthly SS payment      |
|            | > (recurring income) on an open-ended basis from the    |
|            | > effective date of the award. Disregard the \$400      |
|            | > retroactive payment (nonrecurring income) because it  |
|            | > was received before date of entitlement to VA         |
|            | > pension, March 14, 2005.                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > ***Situation***: A surviving spouse is entitled to    |
| #### n. Ex | > pension from March 14, 2005. Before the award is      |
| ample 2: C | > authorized, the surviving spouse reports receipt of   |
| ounting In | > SS on July 19, 2005. The surviving spouse is entitled |
| come Durin | > to SS from February 2005. The surviving spouse        |
| g the Init | > receives a monthly SS check of \$200 and a            |
| ial Period | > retroactive payment in the amount of \$1,200.         |
|            | >                                                       |
|            | > ***Result***: The table below shows the effective     |
|            | > dates and reasons for the changes in IVAP.            |
+------------+---------------------------------------------------------+

  ------------- ---------- -----------------------------------------------
  Date          IVAP       Reason

  04-01-2005    0          Entitlement effective 03-14-2005.

  08-01-2005    3600       \$200 monthly recurring income plus retroactive
                           SS payment of \$1,200.

  08-01-2006    2400       Remove nonrecurring income.
  ------------- ---------- -----------------------------------------------

+------------+---------------------------------------------------------+
| #          | > ***Situation***: The veteran is entitled to pension   |
| #### o. Ex | > from March 14, 2005. After the award is running, the  |
| ample 3: C | > veteran reports anticipated receipt of SS in the      |
| ounting In | > amount of \$200 per month starting August 7, 2005.    |
| come Durin | >                                                       |
| g the Init | > ***Result***: Count \$200 monthly SS (\$2,400) from   |
| ial Period | > September 1, 2005.                                    |
+------------+---------------------------------------------------------+

Continued on next page

34\. Counting Income During the Initial Period, Continued

+------------+---------------------------------------------------------+
| #          | > ***Situation***: The veteran died on July 19, 2006.   |
| #### p. Ex | > The surviving spouse files a pension claim on August  |
| ample 4: C | > 2, 2006. The surviving spouse reports the following   |
| ounting In | > one-time income:                                      |
| come Durin |                                                         |
| g the Init | -   \$500 received on June 30, 2006                     |
| ial Period |                                                         |
|            | -   \$500 received on July 17, 2006, and                |
|            |                                                         |
|            | -   \$500 received on July 29, 2006.                    |
|            |                                                         |
|            | > ***Result***: Disregard the \$500 received on June    |
|            | > 30, 2006, since it was received before the effective  |
|            | > date (July 1, 2006). Disregard the \$500 received on  |
|            | > July 17, 2006, because it was received before the     |
|            | > veteran's death (although after the effective date).  |
|            | > Pay based on IVAP of \$500 from August 1, 2006.       |
|            | > Reduce IVAP to \$0 effective August 1, 2007.          |
+------------+---------------------------------------------------------+

#### 35. Award Notice to Claimant

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on the award notice   |
| troduction | > to the claimant. It includes information on           |
|            |                                                         |
|            | -   award letters for a monthly rate of                 |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   \$19 or more, or                                    |
|            |                                                         |
|            | -   less than \$19                                      |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the suggested text for locally-generated award      |
|            |     letters when the monthly rate is less than \$19,    |
|            |     and                                                 |
|            |                                                         |
|            | -   the beneficiary's election of monthly payments.     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Ch   | > February 13, 2007                                     |
| ange Date  |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > If the monthly rate is \$19 or greater, the Benefits  |
|  a. Award  | > Delivery Network (BDN) releases payments monthly.     |
| Letters fo | >                                                       |
| r Monthly  | > BDN-generated letter provides sufficient notice to    |
| Rate of \$ | > the claimant unless specific circumstances            |
| 19 or More | > necessitate the use of a locally-generated letter.    |
|            | >                                                       |
|            | > ***Note***: The BDN letters do not provide the        |
|            | > correct time limits to submit income evidence to      |
|            | > increase the pension rate under [38 CFR               |
|            | > 3.660(b)](http://w                                    |
|            | ww.warms.vba.va.gov/regs/38CFR/BOOKB/PART3/S3_660.DOC). |
|            | > However, a BDN letter may still be used if, in the    |
|            | > judgment of the VSR, the beneficiary would not be     |
|            | > disadvantaged.                                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b    | > If the gross monthly rate of pension entitlement (not |
| . Award Le | > necessarily the award amount) is less than \$19,      |
| tters for  | > payment (after the initial retroactive payment) is    |
| Monthly Ra | > released                                              |
| te of Less |                                                         |
|  Than \$19 | -   quarterly                                           |
|            |                                                         |
|            | -   semiannually, or                                    |
|            |                                                         |
|            | -   annually.                                           |
|            |                                                         |
|            | > In BDN-generated letters, the amount of rate payable  |
|            | > is expressed in annual rather than monthly terms.     |
+------------+---------------------------------------------------------+

Continued on next page

35\. Award Notice to Claimant, Continued

+------------+---------------------------------------------------------+
| #####      | > If a locally-generated letter is required, and the    |
|  c. Sugges | > monthly rate is less than \$19, use the following     |
| ted Text f | > suggested language.                                   |
| or Locally | >                                                       |
| -Generated | > "*Under the Improved Pension program, the maximum     |
|  Award Let | > annual pension rate for a person in your              |
| ters When  | > circumstances is* **\[insert applicable maximum       |
| Monthly Ra | > annual pension rate\]**. *This amount is reduced by   |
| te Is Less | > your income for VA purposes. Since your income for VA |
|  Than \$19 | > purposes is* **\[insert IVAP\]**, *you are entitled   |
|            | > to pension at the annual rate of* **\[insert rate\]** |
|            | > *effective* **\[insert date\]**. *If the annual       |
|            | > amount of pension payable is less than \$228, it is   |
|            | > paid either quarterly, semiannually or annually. In   |
|            | > your case, you will receive a check on or about*      |
|            | > **\[insert date\]** *for the amount due for the       |
|            | > period* **\[insert date\]** *through* **\[insert      |
|            | > date\]**. *Thereafter, you will be paid*              |
|            | > **\[once/twice/four times\]** *a year on or about*    |
|            | > **\[insert date\]**."                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > A pensioner whose annual rate is less than \$228 may  |
| #### d. Be | > elect to receive a monthly pension check. If a        |
| neficiary' | > claimant whose annual rate is less than \$228         |
| s Election | > inquires about monthly payments, advise him/her that  |
|  of Monthl | > such payments are made on written request.            |
| y Payments | >                                                       |
|            | > There is no requirement to routinely inform           |
|            | > beneficiaries of this option.                         |
|            | >                                                       |
|            | > ***Reference***: For more information on determining  |
|            | > the monthly rate, see M21-1MR, Part V, Subpart iii,   |
|            | > 1.E.28.                                               |
+------------+---------------------------------------------------------+

#### 36. Using Special Law (SL) Codes 14 and 18

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on using special law  |
| troduction | > (SL) codes 14 and 18. It includes information on      |
|            |                                                         |
|            | -   the purpose of SL codes 14 and 18                   |
|            |                                                         |
|            | -   using SL codes 14 and 18 on awards and two          |
|            |     examples, and                                       |
|            |                                                         |
|            | -   BDN requirements.                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > February 13, 2007                                     |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > Special law (SL) codes 14 and 18 prevent the central  |
|  Purpose o | > system income segment from auditing against current   |
| f SL Codes | > award line IVAP and direct it to audit future award   |
|  14 and 18 | > line IVAP.                                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > Use SL code                                           |
| ## b. Usin |                                                         |
| g SL Codes | -   14 on original and reopened awards, and             |
|  14 and 18 |                                                         |
|  on Awards | -   18 on amended awards.                               |
|            |                                                         |
|            | > To prevent an error condition, use either SL code 14  |
|            | > or 18 if there is a future income change unrelated to |
|            | > a dependency change. If the future income change is   |
|            | > because of a dependency change, an SL code is not     |
|            | > required.                                             |
|            | >                                                       |
|            | > Zero out SL codes 14 and 18 on the award line         |
|            | > representing the last income change that is unrelated |
|            | > to a dependency change.                               |
+------------+---------------------------------------------------------+

Continued on next page

36\. Using Special Law (SL) Codes 14 and 18, Continued

+------------+---------------------------------------------------------+
| #####      | > BDN awards carry separate 306 screens (income         |
|  c. BDN Re | > screens) corresponding to each award line which       |
| quirements | > reflects an income change. Although the BDN system    |
|            | > contains multiple income segments, the central system |
|            | > computer at Hines Information Technology Center (ITC) |
|            | > has only a single income segment for audit against    |
|            | > the current award line.                               |
|            | >                                                       |
|            | > The central system income segment (S field)           |
|            |                                                         |
|            | -   retains income information from the 306 screen with |
|            |     the latest date, and                                |
|            |                                                         |
|            | -   attempts to compare it with IVAP on the current     |
|            |     award line.                                         |
|            |                                                         |
|            | > If there are no future income changes, the 306 screen |
|            | > with the latest date corresponds to the current award |
|            | > line. However, if there are future income changes,    |
|            | > the central system income segment (taken from the 306 |
|            | > screen with the latest date) does not agree with the  |
|            | > current award line and an error condition exists.     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > ***Situation***: A veteran is receiving pension based |
| # d. Examp | > on \$0 IVAP. On December 29, 2006, the veteran        |
| le 1: Usin | > reports having received a \$1,000 lump-sum payment on |
| g SL Codes | > December 13, 2006. The award has two lines:           |
|  14 and 18 |                                                         |
|  on Awards | -   a January 1, 2007, line with IVAP of \$1,000, and   |
|            |                                                         |
|            | -   a January 1, 2008, line with IVAP of \$0.           |
|            |                                                         |
|            | > ***Result***: The 306 screen for January 1, 2007,     |
|            | > reflects IVAP of \$1,000. The 306 screen for January  |
|            | > 1, 2008, shows no income. Data from the 306 screen    |
|            | > for January 1, 2008, go into the central system       |
|            | > income segment. This segment tries to audit against   |
|            | > the current award line. Because the current award     |
|            | > line shows IVAP of \$1,000, and the 306 screen for    |
|            | > January 1, 2008, shows IVAP of \$0, an error          |
|            | > condition is created.                                 |
|            | >                                                       |
|            | > To prevent generation of an audit message, use SL     |
|            | > code 18 on the January 1, 2007, line and zero it out  |
|            | > on the January 1, 2008, line. This directs the        |
|            | > central system income segment to audit against the    |
|            | > January 1, 2008, award line.                          |
+------------+---------------------------------------------------------+

Continued on next page

36\. Using Special Law (SL) Codes 14 and 18, Continued

+------------+---------------------------------------------------------+
| ##### e.   | > The table below shows the date, IVAP change, and      |
|  Example 2 | > reason for the use of SL code 18 for the example in   |
| : Using SL | > M21-1MR, Part V, Subpart iii, 1.E.36.d.               |
|  Codes 14  |                                                         |
| and 18 on  |                                                         |
| Awards --  |                                                         |
| Date, IVAP |                                                         |
|  Change, a |                                                         |
| nd Reason  |                                                         |
+------------+---------------------------------------------------------+

+-----------+---------+-----------+-----------------------------------+
| Date      | IVAP    | SL Code   | Reason                            |
+-----------+---------+-----------+-----------------------------------+
| 0         | 1000    | 18        | Use SL code 18 for a future       |
| 1-01-2007 |         |           | income change when the award is   |
|           |         |           | running.                          |
|           |         |           |                                   |
|           |         |           | ***Note***: Use SL code 14 on an  |
|           |         |           | original or reopened award.       |
+-----------+---------+-----------+-----------------------------------+
| 0         | 0       | 00        | Zero out the SL code on the award |
| 1-01-2008 |         |           | line representing the most recent |
|           |         |           | income change unrelated to a      |
|           |         |           | dependency change.                |
+-----------+---------+-----------+-----------------------------------+