# Veterans Benefits Administration M21-1, Part IV

**Department of Veterans Affairs Change 194**

**Washington, DC 20420 April 1, 2004**

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

**Pages 10-i and 10-I-1 through 10-I-6:** Remove these pages and
substitute pages 10-i and 10-I-1 and 10-I-6, attached.

Paragraphs 10.01a.(2), 10.02b.(1) and (2) are amended to correct the
language of Change 173, which omitted the provision that if an
individual is disabled or dies from injury incurred while proceeding
directly to or directly from active duty for training or inactive duty
training, that person will be considered to have been on active duty for
training or inactive duty training, as applicable.

Outdated references to Target are corrected to BDN throughout the
chapter, and miscellaneous editorial corrections are made.

**Pages 23-i and 23-II-7 through 23-II-12:** Remove these pages and
substitute pages 23-i and 23-II-7 through 23-II-12, attached.

Paragraph 23.08b is revised to remove tractor from the list of other
conveyances because the type of conveyance authorized must require a
license to operate (38 U.S.C. 3903(b)).

Paragraph 23.08h(2) is revised to show factors that should be considered
when making an administrative decision regarding a claim for automobile
allowance for or other conveyance. Miscellaneous editorial corrections
are also made throughout 23.08 and 23.09.

**Pages 25-VI-1 through 25-VI-5**: Remove these pages and substitute
pages 25-VI-1 through 25-VI-6, attached.

Paragraph 25.09 is revised to show that annual clothing allowance
processing is now under the jurisdiction of the Veterans Health
Administration; however, regional offices will be responsible for
processing accrued clothing allowance claims filed as a result of a
deceased veteran. The paragraph has been reorganized to incorporate this
information. In addition, the paragraph is revised to show that the
regional office will be responsible for Notice of Disagreement (NOD) as
a result of its action prior to the transition of the clothing allowance
claims processing to VHA. All sections of the paragraph that made
specific reference to RO authorization actions are deleted or changed to
reflect the new jurisdiction. The term adjudicator is replaced with
Veterans Service Representative (VSR), and miscellaneous editorial
corrections are made.

> By Direction of the Under Secretary for Benefits
>
> Ronald J. Henke, Director
>
> Compensation and Pension Service

Distribution: RPC: 2068

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

LOCAL REPRODUCTION AUTHORIZED

**April 1, 2004 M21-1, Part IV**

**Change 194**

**CHAPTER 10. BASIC ELIGIBILITY DETERMINATIONS**

**CONTENTS**

PARAGRAPH PAGE

**SUBCHAPTER I. GENERAL**

10.01 Veteran Status 10-I-1

10.02 Duty Status of Reservists 10-I-2

10.03 National Guard Service 10-I-3

10.04 Verification of Service 10-I-4

10.05 Character of Discharge 10-I-6

**SUBCHAPTER II. DETERMINATIONS**

10.06 Benefit-Specific Eligibility Factors 10-II-1

10.07 Eligibility Determinations for Compensation 10-II-1

10.08 Eligibility Determinations for Pension 10-II-1

10.09 Eligibility Determinations for Death Benefits 10-II-1

10.10 Eligibility Determinations for Related Benefits 10-II-2

**10-i**

**April 1, 2004** **M21-1, Part IV**

**Change 194**

**CHAPTER 10. BASIC ELIGIBILITY DETERMINATIONS**

**SUBCHAPTER I. GENERAL**

**10.01 VETERAN STATUS**

a\. **Primary Factor.** The primary factor in determining basic
eligibility to Department of Veterans Affairs (VA) benefits is veteran
status. Live benefits are based on the claimant\'s veteran status. Death
benefits are based on the claimant\'s spouse, parent or child being a
veteran.

\(1\) Veteran means a person who served in the **ACTIVE** military,
naval or air service and who was discharged or released under conditions
other than dishonorable (38 CFR 3.1(d)).

2.  Active service includes:

-   active duty,

-   any period of active duty for training during which a person is
    disabled or dies from a disease or injury incurred or aggravated in
    line of duty, or

-   any period of inactive duty training during which a person is
    disabled or dies from an injury incurred or aggravated in line of
    duty, or is disabled or dies from a covered disease (myocardial
    infarction, cardiac arrest, or cerebrovascular accident) that
    occurred during such training.

\(3\) Any individual who is disabled or dies from an injury or covered
disease (myocardial infarction, cardiac arrest, or cerebrovascular
accident) incurred while proceeding directly to or returning directly
from such active duty for training or inactive duty training shall be
deemed to have been on active duty for training or inactive duty
training, as applicable.

References: 38 U.S.C. 101(24); 38 U.S.C. 106(d); [38 CFR
3.6(a]{.underline}); [38 CFR 3.6(e]{.underline}). See [38 CFR
3.6(b)]{.underline} for a definition of active duty.

b\. **Other Factors.** If initial review of the evidence available
establishes potential veteran status, consider the following secondary
eligibility criteria:

\(1\) Are the active service dates and character of discharge verified?
See paragraph [10.04]{.underline}.

\(2\) If the evidence does not show a discharge under conditions other
than dishonorable, has VA made a determination of character of
discharge? See paragraph [10.05]{.underline}.

\(3\) Are the benefit-specific eligibility factors met? See paragraphs
[10.06 through 10.10]{.underline}.

c\. **Service Department Findings Binding on VA with Respect to
Service.** In *Spencer v. West*, 98-363 (2000) the United States Court
of Appeals for Veterans Claims held that active service dates authorized
by the military are binding for active duty purposes in making
determinations to entitlement to benefits. In that case the veteran was
discharged as an alcohol abuse failure on February 14, 1983. Because of
problems with the urine specimen that formed the basis for his
discharge, a military correction board corrected his records to show
continuous active duty service until August 15, 1985. The Court held
that service connection could be established for a disability incurred
between February 14, 1983, and August 15, 1985.

**10-I-1**

**M21-1, Part IV April 1, 2004**

**Change 194**

**10.02 DUTY STATUS OF RESERVISTS**

a**. General.** At the beginning of an enlistment in the Reserves, an
individual is required to perform active duty for training for a period
of not less than 4 months. The remainder of the enlistment is spent as a
member of the Ready Reserves. See paragraph 10.03 for information about
National Guard service.

b\. **Reservist\'s Eligibility for Compensation and Pension.** There are
basically three ways a Reservist can meet the definition of \"veteran\"
for Compensation and Pension purposes:

\(1\) Die or become disabled from an injury or disease incurred or
aggravated in the line of duty during a period of active duty for
training, or from injury or covered disease (acute myocardial
infarction, cardiac arrest, or cerebrovascular accident) incurred while
the person was proceeding directly to or returning directly from a
period of active duty for training.

\(2\) Die or become disabled from an injury incurred or aggravated in
the line of duty during a period of inactive duty for training, or from
injury or covered disease (acute myocardial infarction, cardiac arrest,
or cerebrovascular accident) incurred either during such training or
while the person was proceeding directly to or returning directly from a
period of inactive duty for training.

\(3\) Perform full-time duty in the Armed Forces *other than active duty
for training***.**

c\. **Active or Inactive Duty for Training.** [38 CFR 3.6]{.underline}
describes active and inactive duty for training.

d\. **Full-Time Duty in the Uniformed Services**

\(1\) Since the 1960\'s the Reserve components have had several programs
such as the Active Guard Reserve (AGR) and the Active Duty Support (ADS)
Program in which members serve full-time in operational or support
positions but are never formally called to active duty. This type of
service, whether it lasts 1 day or 3 years, is classified by the service
departments as \"active duty for training (ACDUTRA).\"

\(2\) The term \"full-time duty in the uniformed services\" is not
defined in 38 U.S.C or 38 CFR. However, an opinion issued by the General
Counsel on November 9, 1988, makes it clear that, despite the
military\'s ACDUTRA classification, VA has the authority to declare
certain types of service performed by Reservists to be \"active duty\"
for the purposes of VA benefits. According to this opinion, Reservists
meet the definition of active duty if the facts of record establish that
the service was full-time and was for operational or support (as opposed
to training) purposes.

\(3\) Certain types of Reservist duty are clearly **NOT** \"full-time
duty in the armed forces.\" These include the following:

\(a\) Initial Active Duty (IADT)

\(b\) Annual Training (AT)

\(c\) Active Duty Training (ADT)

**10-I-2**

**April 1, 2004 M21-1, Part IV**

**Change 194**

\(4\) There are two other categories of Reservist duty which may or may
not constitute \"full-time duty in the armed forces.\" These categories
are Active Duty for Special Work (ADSW) and Active Duty (AD). They
generally imply that the Reservist is performing support duties rather
than training. ADSW is used for periods of less than 140 days service
and AD for longer periods.

e\. **Authorization Responsibilities.** Unless it is clear from the DD
214 that the Reservist\'s service is **NOT** \"full-time duty in the
armed forces,\" develop with the service department from the appropriate
component listed in part III, chapter 4. Request type of duty, full-time
status, and ask the service department to indicate whether the service
was operational or support duty or service for training purposes. If
verification is received showing the veteran\'s service was for
operational or support services, the service constitutes active duty. If
the evidence indicates the service was for training purposes, the
service does not qualify as active duty. This is ultimately a factual
determination to be made by Authorization.

f\. **Further Development.** After all development is done and the
information needed cannot be obtained from the service department,
contact the Compensation and Pension Service Procedures Development
Staff (212A) for further assistance. That staff will contact the service
department to determine if any evidence is available and from what
possible source.

**10.03 NATIONAL GUARD SERVICE (38 CFR 3.6(c) & (d) and 3.7(m))**

a\. **General.** The Army National Guard and the Air National Guard
operate full-time operational and support programs similar to the Ready
Reserves. However, section 101(22) of Title 38, United States Code,
provides separate definitions of \"active duty for training\" for Guard
personnel and Reservists. While the definition for Reservists permits
the interpretation that full-time duty **for purposes other than
training** is active military, naval or air service, the definition for
Guard personnel does **NOT** permit this interpretation. Therefore,
full-time operational/support service performed by Guard personnel in
ACDUTRA status does **NOT** qualify as active duty for purposes of VA
benefits **UNLESS** the member or former member has a service-connected
disease or injury that was incurred or aggravated during the ACDUTRA
period.

**EXCEPTION:** See paragraph 23.06 for special provisions as to basic
eligibility for Loan Guaranty benefits.

b\. **Qualifying Service**

\(1\) **Service Under Title 10 U.S.C.** If the Guard unit or the member
individually is \"activated\" under the authority of Title 10 U.S.C.,
members who report for active duty (service characterized as Federal
Active Duty) have qualifying service for Title 38 purposes until
deactivated. In some cases a member may be ordered to active duty for
training under the authority of 10 U.S.C. 672(d) which constitutes
\"active duty for training\" for Title 38 purposes. If an individual\'s
orders specify activation to temporary duty under Title 10, further
development regarding the purpose of the activation is not needed unless
there is evidence in file showing the purpose of the activation was to
train the individual. The order to Active Duty **MUST** state that
service is under Title 10 U.S.C.

(2) **Service Under Title 32 U.S.C.** Full-time National Guard service
    is \"active duty for training\" under 38 U.S.C. 101(22)(C) if
    performed under 32 U.S.C. 316, 502, 503, 504 or 505. This is true
    regardless of whether the member is performing operational duty or
    is undergoing training. Operational duty includes, for example, AGR
    (Active Guard Reserve) and ADS (Active Duty Support) service.
    National Guard service does not meet the definition of \"active
    military, naval, or air service\" in 38 U.S.C. 101(22) unless the
    member or former member is service disabled and therefore subject to
    an exception outlined in 38 U.S.C. 101(24) or 106(b)(3).

**10-I-3**

**M21-1, Part IV April 1, 2004**

**Change 194**

\(a\) The terms AGR and ADS apply to Guard personnel as well as to
Reservists serving in these capacities.

\(b\) Since 1964 there has been authority under 32 U.S.C. 502(f) to
assign National Guard members who provide full-time support to the
Reserve components to full-time operational duty even though they are
not activated.

3.  **Service Verification.** The type of National Guard service should
    be identified on the DD 214. If the information is not indicated on
    the DD 214, develop with the appropriate component listed in part
    III, chapter 4. On the 202 Screen in BDN, in the ADDITIONAL
    INFORMATION FIELD, specifically ask whether the orders stipulated
    service under Title 10 or under Title 32. If the DD 214 or the
    response to development with the service department indicates that
    service was under both Title 10 and Title 32, Title 10 service
    applies.

c\. **Discharge for Disability.** See paragraph 10.01a(2) and 38 CFR
3.6(a) for the definition of the term \"active military, naval or air
service.\" If a person is injured while performing \"active service\" in
the National Guard and the injury is compensable, this person meets the
definition of \"veteran\" if the person was discharged or released from
\"active service.\" As used in this definition, the term \"released\"
means return to civilian status even though not relieved from possible
liability to serve at a future time (38 U.S.C. 101(2)). The individual
does not have to be discharged or otherwise separated from the National
Guard.

**10.04 VERIFICATION OF SERVICE**

a\. **General.** Verify active service dates and character of discharge
first by a review of the available service department records or other
acceptable evidence of service in the claims folder.

\(1\) Request further verification or additional data on BDN 201 and 202
screens or VA Form 21-3101 only if the available evidence is incomplete
or information is questionable.

\(2\) If no service department records or other acceptable evidence is
available, request verification and information from the service
department as provided in part III, chapter 4.

b\. **Acceptable Evidence.** Consider only the following documentary
evidence of qualifying service, submitted after separation from service,
as adequate evidence of service for eligibility determinations:

\(1\) The original (copy 1) of the forms listed below. If the original
is received, photocopy it, authenticate it as a copy of the original
document and return the document to the claimant.

\(a\) DD Form 214 (only editions dated before 1 July 1979). The original
of the edition dated 1 July 1979 is not acceptable evidence because it
does not provide all required information for an eligibility
determination.

\(b\) PHS Form 1867 (furnished by the Public Health Service).

\(c\) NOAA Form 56-16 (furnished by the National Oceanic and Atmospheric
Administration).

\(d\) Report of separation documents issued prior to the implementation
of DD Form 214 that include name, rank, service number, dates and
character of service and the veteran\'s signature.

\(2\) Any carbon copy of the original DD Form 214 (any edition) or other
report of separation document. Apply the following procedure to copies
of the 1 July 1979 edition of the DD Form 214:

**10-I-4**

**April 1, 2004 M21-1, Part IV**

**Change 194**

\(a\) If copy 3 of the DD Form 214 is received with a claim, photocopy
the document, authenticate the photocopy and forward the carbon copy to
VA Data Processing Center, VADS (391A), 1615 East Woodward Street,
Austin, Texas 78772. Annotate the photocopy \"Copy 3 sent to DPC
\[[date]{.underline}\].\"

\(b\) If copy 4 is submitted with a claim, photocopy the document,
authenticate it and return copy 4 to the claimant.

\(c\) If copy 5 is received, photocopy the document, authenticate it and
send the carbon copy to the U.S. Department of Labor, Unemployment
Insurance Systems Design Center, P.O. Box 44246, Capitol Station,

Baton Rouge, LA 70804. Annotate the photocopy \"Copy 5 sent to DOL
\[[date]{.underline}\].\"

\(d\) If copy 6, 7, or 8 is submitted with a claim, retain the copy in
the claims folder unless the claimant has requested its return. If
return is requested, follow the procedures above for copy 4.

**NOTE 1:** Authorized employees of the Veterans Service Center can
authenticate photocopies of DD Form 214.

**NOTE 2:** Copy 2 is retained by the appropriate service department as
the permanent record of the veteran\'s service.

\(3\) A copy or abstract of the DD Form 214 or equivalent certified by a
local or State government official whose office recorded the original
service document. However, a copy or abstract of the original (copy 1)
of DD Form 214 dated 1 July 1979 is not acceptable. See subparagraph
(1)(a) above.

**NOTE 3:** If the \"Remarks section of the DD Form 214 contains the
entry \"Continuous active military service: XX-XX-XX \[Date\],\" service
is verified from that date, irrespective of any later date shown in the
EOD section of the form. A DD Form 214 with such a \"Remarks\" entry is
acceptable proof of EOD and RAD dates. Enter these dates in BIRLS and
the Master Record.

c\. **Acceptable Alternative Evidence.** If evidence described in
paragraph b above is not received in support of a claim, verify military
service by a BINQ (BIRLS Inquiry) command to determine the character of
discharge and separation reason.

\(1\) The BIRLS VID Screen can be used as proof of service if all the
following apply:

\(a\) Character of service is HON or UHC.

\(b\) Branch of service code is **NOT** ARNG or ANG.

\(c\) Separation reason is SAT.

\(d\) There is a \"Y\" in the VADS field.

\(e\) The veteran\'s RAD is 6/1/68 or later.

\(2\) If there is no \"Y\" in the VADS field or the veteran\'s RAD is
not 6/1/68 or later, the VID screen can still be used as proof of
service when all the following apply:

\(a\) Character of service is HON or UHC.

\(b\) Branch of service code is **NOT** ARNG or ANG.

(c) Separation reason is SAT.

**10-I-5**

**M21-1, Part IV April 1, 2004**

**Change 194**

(d) There is a \"Y\" in the VER field.

d\. **Payment of Compensation Prior to Service Verification.** If the
evidence shows the veteran retired for length of service and medical
records are available but not all service periods are verified, use the
following procedure:

(1) Request verification from the appropriate service department of
    unverified service periods via the BDN 201 and 202 screens. Maintain
    a 60-day control.

\(2\) Send the claims file to the rating activity for action.

\(3\) If service connection is granted, prepare a compensation award.
Enter the unverified EOD date from service medical records or VA Form
21-526 in the \"EOD\" field on the BDN 301 screen. Update the BIRLS VID
screen to show the service dates used on the 301 screen, \"UNK\" in the
SEP RSN CODE field, and \"N\" in the VERIFIED field. Continue the end
product. If service connection is denied, prepare a disallowance and
clear the end product.

\(4\) If no response is received from the service department within 60
days, follow up. See part III, paragraph 4.04d. After the VA Form
21-3101 from the service department (or other acceptable proof of
service) is received, update the service data in BIRLS and the Master
Record. Then clear the end product control.

\(5\) This procedure applies [only]{.underline} to veterans who are
retired from the military for length of service.

e\. **Payment of Nonservice-Connected (NSC) Burial Benefits.** If,
during the veteran\'s lifetime, he or she was awarded VA compensation or
pension, use the same evidence of service relied on to authorize such
payment to pay NSC burial benefits, if otherwise in order. If there is
reason to doubt the correctness of the evidence, it must be verified
before payment can be authorized.

f\. **Denial.** If a claimant has submitted an alternate form of
evidence of service which cannot be accepted and his or her military
service cannot be verified, send a denial letter explaining the attempts
to verify service and describe the acceptable forms of evidence. Furnish
notice of procedural and appeal rights.

g\. **Travel time.** See part III, paragraph 2.08c.

h\. **Minimum Active Duty Service Requirement.** See part III, paragraph
2.08d.

**10.05 CHARACTER OF DISCHARGE**

See chapter 11, subchapter I, regarding determinations relating to
character and circumstances of discharge.

**10-I-6**

April 1, 2004 M21-1, Part IV

Change 194

CHAPTER 23. ELIGIBILITY REQUESTS AND DETERMINATIONS

**FOR SPECIAL PURPOSES**

**CONTENTS**

PARAGRAPH PAGE

**SUBCHAPTER I. DETERMINATION OF ELIGIBILITY FOR HOSPITAL,**

**DOMICILIARY, MEDICAL AND DENTAL CARE**

23.01 Responsibility for Processing Eligibility Requests 23-I-1

> 23.02 Processing of VA Form 10-7131 Relating to Hospital, Domiciliary
> or Medical Outpatient Care 23-I-1

23.03 Processing of VA Form 10-7131 for Dental Outpatient Treatment (38
U.S.C. 1712(a)(1) 23-I-6

23.04 Eligibility for Medical Treatment Tentatively Approved on Prima
Facie Evidence 23-I-10

23.05 Processing of VA Form 10-7131 Showing Positive Tuberculin
Reaction. 23-I-11

**SUBCHAPTER II. DETERMINATIONS FOR SPECIAL PURPOSES**

23.06 Eligibility for Loan Guaranty Benefits 23-II-1

23.07 Application for Specially Adapted Housing or Special Home
Adaptation Grant 23-II-4

23.08 Application for Automobile or Other Conveyance and Adaptive
Equipment 23-II-7

23.09 Eligibility for Vocational Rehabilitation (38 U.S.C. Ch. 31)
23-II-10

23.10 Eligibility for Vocational Rehabilitation Based on Service in
Allied

Forces (38 U.S.C. 109(b)) 23-II-12

23.11 Procedures for Handling Requests for Rating and Other

Information From Insurance Activity 23-II-13

23.12 Eligibility for Burial in a National Cemetery 23-II-16

23.13 Determination of Eligibility to Gratuitous Funds on Deposit in
PFOP 23-II-17

23.14 Eligibility Requests for Medical Care for Survivors and Dependents

of Certain Veterans (38 U.S.C. 1718---CHAMPVA) 23-II-17

# Appendix

Acronyms and Forms Used in Chapter 23 23-A-1

**23-i**

**April 1, 2004 M21-1, Part IV**

**Change 194**

**23.08 APPLICATION FOR AUTOMOBILE OR OTHER CONVEYANCE AND ADAPTIVE**

**EQUIPMENT**

a\. **Automobile Allowance and Adaptive Equipment.** The eligibility
requirements for veterans and service personnel to receive the
automobile allowance and adaptive equipment are contained in 38 U.S.C.
chapter 39.

b\. **Automobile or Other Conveyance.** A certificate of eligibility for
financial assistance in the purchase of a new or used automobile or
other conveyance (van, truck, jeep, station wagon, etc.) may be made to
a veteran, once in his or her lifetime, in an amount not exceeding the
amount specified in 38 U.S.C. 3902 if he/she meets the following
eligibility requirements (38 CFR 3.808(b)):

\(1\) One of the following disabilities must exist and be the result of
injury or disease incurred or aggravated during active military service:

\(a\) Loss or permanent loss of use of one or both feet.

\(b\) Loss or permanent loss of use of one or both hands.

\(c\) Permanent impairment of vision of both eyes --- central visual
acuity of 20/200 or less in the better eye, with corrective glasses, or
central visual acuity of more than 20/200 if there is a field defect in
which the peripheral field has contracted to such an extent that the
widest diameter of visual field has an angular distance no greater than
20 degrees in the better eye.

\(2\) Veterans not serving on active duty must be entitled to
compensation for the disability and the disability must be service
connected in accordance with the criteria in subparagraph (1) above.

*Note:* The law prohibits VA from making payments for automobile grants
directly to veterans. VA is required to pay the benefit to the seller of
the automobile.

c\. **Adaptive Equipment Only.** The eligibility requirement for
veterans to receive only adaptive equipment (not the automobile
allowance) is entitlement to disability compensation for ankylosis of
one or both knees or hips (38 U.S.C. 3902(b)(2)). The term \"adaptive
equipment\" includes, but is not limited to, power steering, power
brakes, power window lifts, power seats and special equipment necessary
to assist the eligible person into and out of the automobile or other
conveyance.

d\. **Disability Acquired Subsequent to Discharge.** Disability which is
acquired subsequent to

discharge from service as a result of treatment in a VA medical facility
or as a result of training under

38 U.S.C. chapter 31, even though compensation is payable under 38 CFR
3.800(a), does not qualify a veteran for these benefits (38 U.S.C.
1151). Entitlement to compensation under 38 U.S.C. 1160 does not qualify
for these benefits.

*Note:* Automobile adaptive equipment may be furnished to a chapter 31
beneficiary if VR&E determines the equipment is necessary to overcome an
employment handicap to which a service-connected disability materially
contributes and to achieve the goals of the program of rehabilitation.

e\. **Application for Automobile Allowance.** A formal claim on VA Form
21-4502, "Application for Automobile or Other Conveyance and Adaptive
Equipment," is required if the veteran or serviceperson is applying for
the automobile allowance. The application for an automobile or other
conveyance is deemed to be an application for the adaptive equipment
specified for the claimant\'s disability by directive of the Under
Secretary for Health. There is no time limit for filing a claim.

**23-II-7**

**M21-1, Part IV April 1, 2004**

**Change 194**

f\. **Application for Adaptive Equipment Based on Ankylosis.** If the
veteran is entitled to adaptive equipment only, a formal claim on a VA
Form 10-1394, "Application for Adaptive Equipment---Motor Vehicle," is
required. There is no time limit for filing a claim for adaptive
equipment based on ankylosis.

g\. **Notification of Potential Eligibility.** On all original or
reopened claims in which the requirements of 38 U.S.C. 3901 (38 CFR
3.808(b)) or 3902(b)(2) are initially met, the rating activity is
required to dispose of the issue of entitlement to automobile and
adaptive equipment or adaptive equipment only by use of rating code 61
or 61A on the disability rating. Code 62 is used for denial of this
benefit. See part VI, paragraph 4.08c. On receipt of the rating
decision, inform the claimant of potential eligibility and furnish the
appropriate form.

\(1\) If the veteran or serviceperson is eligible for the automobile
allowance, furnish a VA Form 21-4502 in duplicate for completion and
return of both copies.

\(2\) If the veteran is entitled to adaptive equipment only, furnish a
VA Form 10-1394 and instruct the veteran to complete all items in
section I, except items 5 and 6, and to specify the disability upon
which the claim is based in item 7E. Instruct the veteran to return the
completed VA Form 10-1394 to the nearest VA medical facility.

h\. **Application Received.** Review VA Form 21-4502 with the claims
folder to determine if the veteran or serviceperson is entitled.

\(1\) Review the BDN M15 screen to determine if prior payment has been
made. Display of \"Y\" in the \"Auto Allowance Paid\" field and display
of the terminal digit of the year in which the last payment was made in
the \"Auto Adaptive Equipment\" field will indicate prior payment of the
respective benefit. Also check the claims folder for evidence of prior
payment, i.e., a copy of VA Form 21-4502 annotated by the Finance
activity indicating payment. If the only evidence of prior payment is
the master record indicator, request the Finance activity to furnish the
date of the prior payment and the identity of the regional office that
processed it.

\(a\) If an application from a person on active duty is incomplete in
any essential part or the medical evidence or service status is
insufficiently documented, request the necessary evidence from him or
her.

\(b\) Refer the claim to the rating activity after any necessary
development if prior rating decisions do not establish existence of
qualifying service-connected disability. If a claim for other VA
benefits has not been filed, the rating activity will prepare a
memorandum rating. See part VI, paragraph 4.08.

\(c\) If an application is not approved, fully inform the claimant of
the evidence considered and the reason for denial. Furnish appellate
rights.

\(2\) If the \"Type of Conveyance Applied For\" on VA Form 21-4502 is
checked \"Other\" and specified, make a determination of approval or
disapproval of the type of conveyance prior to any other action on the
application. Prepare an administrative decision in the format prescribed
in paragraph 11.30 for the approval of the Veterans Service Center
Manager or designee, not lower than a Coach. In making the
determination, keep in mind that the purpose of the conveyance should be
for transportation, not recreation. Also, the type of conveyance must
require a license to operate (38 U.S.C. 3903(b)).

\(3\) Ordinarily, an application on VA Form 21-4502 will have been
completed and approved by Authorization to certify eligibility before
the claimant acquires possession of or title to the vehicle. However,
payment of the automobile allowance is not precluded if the vehicle was
purchased before the adjudicative action establishing eligibility
provided the claimant was actually eligible (the effective date of the
qualifying disability is controlling) on the date on which the claimant
signed the sales contract.

\(4\) The transfer of possession of a vehicle under a contract amounting
to a lease does not qualify for the automobile allowance under 38 U.S.C.
3902(a). The principal criterion for determining if a given arrangement
is a purchase of an automobile and not merely a lease is whether the
veteran and vendor are absolutely bound, at the outset, to a purchase
and sale at some time. If the veteran retains the option of considering
the payments as rent an is not obligated to purchase

**23-II-8**

# April 1, 2004 M21-1, Part IV

##  Change 194

the vehicle at the end of the lease period, or if the dealer retains the
right to take the car back, even after the veteran meets all the
payments due, the agreement should be regarded as a lease rather than a
purchase contract.

i\. **Favorable Determination of Entitlement.** When entitlement
criteria in 38 CFR 3.808 are met, complete section II, "Certificate of
Eligibility," on VA Form 21-4502. Enter all qualifying disabilities in
section II. The VA Form 21-4502 must be signed by the Veterans Service
Center Manager or his or her designee no lower than a Coach.

\(1\) Release the original of VA Form 21-4502 to the applicant with the
list of adaptive equipment unless referral to outpatient clinic is
required under subparagraph j below.

\(2\) Place the file copy in the claims folder.

j\. **Referral to Outpatient Clinic**

\(1\) Annotate the copy of VA Form 21-4502 to show the date and place of
referral and file in the claims folder.

\(2\) After determination of any adaptive equipment for such \"other\"
vehicle, VA Form 21-4502 and supplemental authorization on VA Form
10-1394 will be released to the applicant by the outpatient clinic.

\(a\) **Adaptive Equipment.** Prior or subsequent to approval of an
initial application for automobile or for repair, replacement or
reinstallation of adaptive equipment, refer all claims for such
equipment to the outpatient clinic serving the applicant\'s residence
for consideration by the designee of the Under Secretary for Health.
This includes any case in which an application for automobile or other
conveyance has been approved.

k\. **Recording and Reporting.** When the original VA Form 21-4502 with
section III completed by the claimant is returned and scheduled for
payment, the Finance activity will prominently annotate the copy of the
application in the claims folder to show the voucher schedule number,
date, amount authorized for payment and the initials of the voucher
auditor. Permanently retain the copy of the VA Form 21-4502 in the award
section of the claims folder, annotated as indicated above, in order to
prevent duplicate payment in the event a subsequent claim is received.
The Finance activity will also record the payment in the master record
and forward a copy of the completed VA Form 21-4502 to the outpatient
clinic of jurisdiction.

\(1\) **Other Conveyance.** In any case in which the applicant is found
eligible for a conveyance other than an automobile or similar vehicle,
complete and approve section II of VA Form 21-4502 (subpar. i above) and
refer the form to the outpatient clinic with a copy of the rating
decision.

l\. **Processing Adaptive Equipment Eligibility Data Requests.**
Requests for eligibility data for reimbursement for adaptive equipment
for a vehicle acquired prior to receipt of the automobile allowance will
be received in duplicate from the medical center or outpatient clinic.
The request will identify the claimant and the reason for the request,
i.e., \"Was claimant eligible under 38 U.S.C. 3902 on \[date\]?\" (date
expense was incurred for purchase, installation, repair, or
reinstallation of adaptive equipment). On receipt of the request, review
the claims folder to determine eligibility as follows:

\(1\) If the claimant has not previously filed a claim for the
automobile allowance and adaptive equipment, determine basic eligibility
as stated in subparagraph h above.

\(2\) If evidence of entitlement or nonentitlement is of record or after
a determination of basic eligibility has been made, determine the
eligibility of the claimant for an automobile allowance on the date
furnished by the medical facility and annotate the request form to show,
\"Claimant \[was\]\[was not\] eligible

**23-II-9**

**M21-1, Part IV April 1, 2004**

**Change 194**

on \[date\]\" \[date furnished by the medical facility\]. File the copy
of the eligibility request in the claims

folder and return the original to the requester.

\(a\) If a request for eligibility for adaptive equipment only is
received based on service-connected ankylosis, review the claims folder
to determine if the veteran is entitled. Annotate the request to show
eligibility because of service-connected ankylosis of one or both knees
or hips or that the veteran is not eligible. Furnish a copy of the
rating decision if eligibility is established.

m\. **Notice of Disagreement or Substantive Appeal Received.** If a
claimant files a Notice of Disagreement or substantive appeal because of
the denial of a claim for the automobile allowance and adaptive
equipment, apply the following procedures:

\(1\) If the disallowance resulted from the denial of basic eligibility,
authorization will furnish the statement of the case and certify the
appeal.

\(2\) If the claimant has established basic eligibility to the
automobile allowance and adaptive equipment and the issue is the result
of disallowance by the Medical activity for certain adaptive equipment,
transfer the claims folder to the medical facility for preparation of a
statement of the case.

\(a\) The medical facility will return the statement of the case and
claims folder to authorization for release of the statement of the case.

\(b\) If a substantive appeal is filed, forward the claims folder to the
Medical activity for processing and certification of the appeal.

**23.09 ELIGIBILITY FOR VOCATIONAL REHABILITATION (38 U.S.C. CH. 31)**

a\. **General.** On receipt of VA Form 28-1900, "Disabled Veteran\'s
Application for Vocational Rehabilitation," review the BIRLS and BDN
systems and the most recent disability rating, if any, in the veteran\'s
claims folder to determine eligibility.

b\. **20 Percent or More Eligibility Criterion.** If VA receives an
original vocational rehabilitation and employment application from a
veteran on or after November 1, 1990, the veteran generally must have at
least a 20 percent combined service-connected disability evaluation to
meet the eligibility criteria. For servicepersons hospitalized pending
discharge to be eligible, they must have service-connected disabilities
which will likely be at least 20-percent disabling. Eligibility to
compensation based solely on special monthly compensation (38 U.S.C.
1114(k) or former subsection (q)) does not meet chapter 31 eligibility
criteria for claims filed after November 1, 1990.

c\. **Less than 20 Percent Eligibility Criterion.** Effective October 1,
1993, eligibility to vocational rehabilitation may also be established
if a veteran has a service-connected disability evaluated 10 percent
disabling and the Vocational Rehabilitation and Employment Service
determines that he/she has a serious employment handicap. Although a
statutory award under 38 U.S.C. 1114(k) or former subsection (q) does
not meet the 10 percent evaluation requirement, entitlement under 38 CFR
3.324 would.

d\. **Retention of Eligibility Acquired Prior to November 1, 1990.** Any
individual with a service-connected disability evaluated greater than
zero percent but less than 20 percent who applied for vocational
rehabilitation prior to November 1, 1990, retains basic eligibility.
This includes individuals who withdrew claims, who did not complete an
evaluation or for whom VA denied entitlement to vocational
rehabilitation. It also includes individuals whom VA found entitled and
those eligible based solely on 38 U.S.C. 1114(k) or (q).

e\. **Record Search.** If an application for vocational rehabilitation
is received from a claimant with service-connected disabilities
evaluated greater than zero percent but less than 20 percent, review
BIRLS

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**April 1, 2004 M21-1, Part IV**

**Change 194**

and the BDN to see if there is information that VA established an R&E
folder or a chapter 31 master record prior to November 1, 1990. If so,
the individual has basic eligibility. If review of BIRLS and the BDN is
negative, obtain the claims folder to search for an indication of an
earlier application for vocational rehabilitation. Evidence on the
outside of a claims folder of the creation of an R&E folder prior to
November 1, 1990, is sufficient proof of the earlier application. If
necessary, check the claims folder for a VA Form 28-1900, "Disabled
Veterans Application for Vocational Rehabilitation," with a date of
receipt prior to November 1, 1990.

\(1\) **Evidence from Claimant.** If the claimant submits a copy of a
properly date-stamped application for vocational rehabilitation benefits
showing VA received the claim prior to November 1, 1990, accept the
evidence as adequate proof. Also, accept as adequate proof VA
correspondence which indicates the veteran filed a claim for vocational
rehabilitation prior to November 1, 1990.

*Note:* An application date-stamped by a service organization does not
meet this evidentiary requirement.

\(2\) **Claimant Asserts Prior Claim, but Submits No Acceptable
Evidence.** If a claimant indicates he filed an application for
vocational rehabilitation benefits prior to November 1, 1990, but does
not provide acceptable evidence, send a copy of the claimant\'s
statement to the Vocational Rehabilitation and Employment (VR&E)
Service. They will forward a copy of the statement through the Deputy
Under Secretary for Field Operations to the Director of the Vocational
Rehabilitation and Employment Service (281). The Vocational
Rehabilitation and Employment Service will then review purged data for
the prior existence of a chapter 31 master record and inform the
regional office of the finding. At the time of the referral to Central
Office, the VR&E Division will inform the claimant of the referral and
the projected delay in resolving the claim.

e\. **Record Search Positive.** For positive determinations, complete
Generate Eligibility Determination (GED) processing and forward the
claim to the VR&E Division.

f\. **Record Search Negative.** If the existence of an application for
vocational rehabilitation benefits prior to November 1, 1990, cannot be
verified for a claimant with greater than zero percent but less than 20
percent service-connected disability, enter an \"X\" in the 29 OTHER
field on the BDN 208 disallowance screen and in REMARKS insert:
\"COMPENSABLE UNDER 20 PERCENT WITH INITIAL APPLICATION 11/1/90 OR
LATER.\" Prepare a locally generated letter describing in full the
evidence considered and the reasons for the determination. Provide
appellate rights and procedures.

g\. **Referral for Memorandum Rating.** Referral for a memorandum rating
(pt. VI, par. 4.02) to determine if the claimant\'s service-connected
disabilities would be 20 percent or more disabling is required under any
of the following circumstances:

\(1\) VA Form 28-1900 is filed by a serviceperson who is awaiting
discharge for disability.

\(2\) VA Form 28-1900 is filed by a veteran, but no claim for
compensation was ever filed.

\(3\) VA Form 28-1900 and VA Form 21-526 were filed and both are in a
pending status, service department medical records adequate for
memorandum rating purposes were received, but action on the claim for
compensation was deferred pending receipt of an examination report or
other necessary development.

h\. **Service Personnel Awaiting Separation for Disability.** If a VA
Form 28-1900 is filed by a serviceperson who is in a military hospital
awaiting discharge from service (subpar. g(1) above), the application is
accompanied by readily available service department medical records and,
if available, a current hospital report. If additional specific records
are required, request them from that hospital. After the memorandum
rating is completed, duplicate all of the records furnished by the
hospital for the claims

> **23-II-11**

**M21-1, Part IV April 1, 2004**

**Change 194**

folder, then return the originals to the hospital.

*Note:* Compensation granted under 38 U.S.C. 1151 does not establish
entitlement to benefits under 38 U.S.C. CH. 31.

**23.10 ELIGIBILITY FOR VOCATIONAL REHABILITATION BASED ON SERVICE IN
ALLIED FORCES (38 U.S.C. 109(b))**

a\. **Development.** Jurisdiction in these cases is within the exclusive
and permanent jurisdiction of the Washington Regional Office (WRO) (pt.
II, subpar. 4.01c(11).

\(1\) Prior to referral to the WRO for rating action, the office of
original jurisdiction will obtain a written authorization from the
veteran for the release of his or her medical records by the Allied
Government.

\(2\) Upon receipt in the WRO, if additional service records are
necessary, prepare VA Form 21-3101 for dispatch through the Director,
Compensation and Pension Service (21), Central Office, with the
veteran\'s authorization for the release of the medical records
attached. Prepare the request for information on VA Form 21-3101 in the
following form:

\"In order to determine service connection and degree of any disability
the applicant may have, under laws administered by the Department of
Veterans Affairs, please furnish:

\(a\) A copy of the veteran\'s examination at enlistment.

\(b\) A copy of the veteran\'s examination at discharge.

\(c\) Copies of all medical or clinical records.

\(d\) Copies of physical examinations made after discharge in connection
with any claim based on disability which may be of record.

\(e\) Percentage rating of veteran\'s disability.

\(f\) Amount of disability compensation or pension which is currently
being paid.

\(g\) Verification that the veteran has neither applied for nor received
the same or similar benefit from the government in whose armed forces he
or she served.

b\. **Referral to Rating Activity.** When the necessary report is
received, refer the file to the rating activity for a memorandum rating
establishing the disability or disabilities that are service connected
and the percentage evaluation of each. See part VI, paragraph 4.02.

c\. **Return to Authorization.** After completion of the rating, return
the file to Authorization for action in accordance with existing
procedures. If further development is needed, establish an appropriate
diary and prepare necessary correspondence or take other required
action.

**23-II-12**

**April 1, 2004 M21-1, Part IV**

**Change 194**

**SUBCHAPTER VI. CLOTHING ALLOWANCE**

**25.09 ANNUAL CLOTHING ALLOWANCE**

a\. **General.** Under 38 U.S.C. 1162, VA may pay an annual clothing
allowance to each veteran who applies if the veteran has a
service-connected disability or condition or a disability compensable
under 38 U.S.C. 1151 or 38 U.S.C 1160 that requires he or she wear or
use a prosthetic or orthopedic device that wears out or tears clothing
(38 CFR 3.810). The clothing allowance may also be paid if the veteran
uses, for a service-connected skin condition, medication prescribed by a
physician which causes irreparable damage to the veteran\'s
outergarments.

\(1\) Irreparable damage does not include stains that are removable
through regular laundering or dry cleaning.

\(2\) Approval of a claim based on use of medication requires a medical
determination.

\(3\) A skin condition requiring use of medication is not considered
static, and a redetermination is required each year.

b\. **Jurisdiction for Processing Annual Clothing Allowance Claim**. In
August 2003, the Veterans Benefit Administration (VBA) transitioned the
processing of annual clothing allowance claims to the Veterans Health
Administration (VHA). Therefore, any annual clothing allowance claim
received by the regional office should be forwarded to the VA Medical
Center or Outpatient Clinic of jurisdiction, for the attention of the
Prosthetic and Sensory Aids Service.

***Exception:*** **Accrued Clothing Allowance**. Claims for accrued
clothing allowance due and payable in the case of veterans who met the
eligibility requirements as of the August 1 date prior to death either
based on rating decision, or evidence in file at date of death, are to
be processed by the regional offices of jurisdiction. The regional
offices should not refer these claims to the VHA.

c\. **Claim.** Consider any communication from a veteran describing the
device or medication used because of the service-connected or 38 U.S.C.
1151 or 38 U.S.C. 1160 disability/condition and requesting payment of
the clothing allowance a claim for clothing allowance benefit.

d\. **Soliciting Claims for Clothing Allowance.** If a rating decision
establishes service connection for anatomical loss or loss of use of a
hand or foot, inform the veteran of potential eligibility for the
clothing allowance. Send the veteran VA Form 21-8678 (soon to be VA Form
10-8678), Application for Annual Clothing Allowance. If the veteran
returns the application, forward it to the VA Medical Center or
Outpatient Clinic of jurisdiction, for the attention of Prosthetic and
Sensory Aids Service.

e\. **Determination of Entitlement.** In order to establish and
authorize initial and recurring for a current or next ACAP, as
appropriate, the following criteria should be met:

\(1\) The disability is a service-connected anatomical loss or loss of
use of a hand or foot.

\(2\) The veteran certifies, because of that disability, he or she wears
or uses an artificial limb, rigid extremity brace, wheelchair or
crutches.

**25-VI-1**

**M21-1, Part IV April 1, 2004**

**Change 194**

\(3\) The use of the prosthetic or orthopedic device is not contradicted
by medical evidence of record.

\(4\) Eligibility in claims based on other service-connected
disabilities or other devices, appliances or medication, and claims
involving contradictory medical evidence of usage requires a
determination by the designee of a VA outpatient clinic Director.

\(5\) A veteran receiving retired pay is not required to waive any
portion of it to receive the clothing allowance.

\(6\) Authorize payment of clothing allowance to a hospitalized veteran
(competent or incompetent) who is otherwise entitled. The provisions of
38 CFR 3.557 do not apply to payment of clothing allowance.

**NOTE:** If an application for clothing allowance is received but no
claim for compensation has been filed, forward VA Form 21-526,
"Veteran\'s Application for Compensation or Pension," to the claimant.
Inform the veteran service connection for the disability requiring the
use of the prosthetic or orthopedic device or for a skin condition is a
prerequisite for consideration of entitlement to the annual clothing
allowance. If the veteran returns VA From 21-526, forward the annual
clothing allowance application to the VA Medical Center or Outpatient
Clinic of jurisdiction, for the attention of Prosthetic and Sensory Aids
Service. Annotate on the clothing allowance application that a
compensation claim is pending. However, if the veteran returns only the
clothing allowance application, forward it to the VA Medical Center or
Outpatient Clinic of jurisdiction, for the attention of Prosthetic and
Sensory Aids Service.

f\. **Continuing Entitlement.** Presume a service-connected anatomical
loss or loss of use of a hand or foot requires use of a prosthetic or
orthopedic device that wears out or tears clothing. Consider continued
eligibility for subsequent years to be established so recurring annual
payments are released without need for a supplemental claim.

g\. **Annual Clothing Allowance Payment.** VA issues the Annual Clothing
Allowance Payment (ACAP) to veterans with existing eligibility on
August 1. Each ACAP requires entitlement on August 1 of the year for
which payment is made, e.g., a veteran eligible as of August 1, 2003, is
entitled to receive the 2003 ACAP. The pay date for authorized recurring
ACAPs based on recorded master record data is the first of September.
Processing authorization for payment of a current or future ACAP
establishes a C&P master record code to provide recurring annual
payments or a computer-generated development letter/application for a
subsequent ACAP. See part V, chapter 11 for more information on ACAPs.

h\. **Processing for Payment**

\(1\) **Entitled for Current ACAP.** Computer payment on an award of
initial entitlement or a redetermination of entitlement to ACAP for each
year is made September 1 of that year or on the processing of the
clothing allowance transaction, whichever is later.

\(2\) **Initial Entitlement for Subsequent Year ACAP.** If a veteran\'s
entitlement is effective after August 1 of a specific year, he or she is
not entitled to that year\'s ACAP.

\(a\) In such cases, eligibility for initial payment for the next ACAP
may be established under criteria of subparagraph (e) above or based on
medical determination pursuant to subparagraph (e) above.

**25-VI-2**

**April 1, 2004 M21-1, Part IV**

###  Change 194

\(b\) Process VA Form 21-8679 to provide computer identification and
payment September 1 of the year authorized and to provide for subsequent
payments on a recurring basis or issuance of a computer-generated
letter/application for redetermination, as appropriate.

\(3\) **Redetermination of Eligibility.** Master records set to require
annual redetermination of eligibility are identified at the end of July
to generate a computer letter/application for completion by the veteran.

\(a\) The clothing allowance is payable as of August 1, of each year.
Eligibility must be shown as of August 1, and the application must be
received before August 1, of the next year.

\(b\) No control is maintained for receipt of the completed application.

**NOTE:** Authorization of clothing allowance to veterans who are not
receiving compensation because they are receiving retired pay or for
some other reason (no type A master record exists) can be made only for
the current annual payment, not on a recurring basis. If continuing
eligibility is established on a factual basis, payment of the next and
succeeding ACAPs may be made on ascertaining the veteran\'s current
address. A redetermination of eligibility on the basis of the subsequent
claim is not required if the initial approval was based on a static
qualifying disability. Maintain local control for the appropriate action
as of August 1 of the next year. See part V, chapter 11 for additional
information.

i\. **Preparation of Awards and Disallowances.** In all cases, approvals
(initial or redetermined) and terminations or disallowances require
completion of part II, VA Form 21-8679, by a Veterans Service
Representative (VSR) for approval by an authorizer. See Part V, Chapter
11 for detailed information on computer processing of clothing allowance
claims.

\(1\) **Awards.** See Part V, paragraph 11.02.

\(2\) **Terminations.** See Part V, paragraph 11.03.

\(3\) **Disallowances.** For disallowances, complete block 3, part II,
in cases as required by medical determination or where there are only
nonservice-connected disabilities. File this noneligibility
determination on the inside left flap of the claims folder without any
input transaction since these denials are not master record data. Use a
locally prepared letter to inform the claimant of the decision and of
his or her right to appeal.

\(4\) **Philippine Cases.** Claims authorized for veterans of the U.S.
Army and Regular Scouts will be paid in dollars. Persons who enlisted
under section 14, Public Law 190, 79th Congress (Act of October 6, 1945)
(Other Philippine Scouts, Commonwealth Army of the Philippines,
Guerrilla Service) are to be paid at a rate in Philippine pesos
equivalent to \$.50 for each dollar authorized under the law. The Manila
Treasury Disbursing Office will make payment.

j\. **Incarceration.** Section 502 of Public Law 104-275 limits the
clothing allowance for veterans incarcerated for over 60 days if they
receive clothing at no cost from the penal institution. General Counsel
has held that the restriction on payment of clothing allowance does not
apply for the initial 60 days of any separate period of incarceration.
Therefore, the annual clothing allowance amount must be reduced by
1/365th for each day of incarceration after the initial 60 days of
incarceration during the 12-month period

**25-VI-3**

**M21-1, Part IV April 1, 2004**

**Change 194**

preceding the August 1 determination of clothing allowance eligibility.
See paragraph e below. If the

veteran is incarcerated for the entire clothing allowance year (8/1
through 7/31), no allowance is payable for that year (assuming the
veteran's incarceration commenced more than 60 days prior to 8/1). If
the veteran is initially incarcerated or is released from incarceration
during the clothing allowance year, the veteran receives partial
clothing allowance payment. Partial clothing allowance payments for
years during

which the veteran is incarcerated are not subject to rounding to even
dollars. Therefore, partial year payments will be made in dollars and
cents. In the absence of evidence to the contrary, presume that
incarcerated veterans receive clothing at no cost from the penal
institution.

\(1\) Section 502 of Public Law 104-275 is effective October 9, 1996.
Therefore, a veteran incarcerated after October 8, 1996, and before
August 1, 1997, is subject to reduction of the 1997 clothing allowance
for the number of days incarcerated during this period. Reduction for
the 1998 clothing allowance is determined by the number of days
incarcerated during the period August 1, 1997, through July 31, 1998.
However, do not reduce the clothing allowance for the initial 60 days of
any period of incarceration.

\(2\) During the last processing cycle of July, VA Form 20-8270 with
Message 777G, REVIEW FOR CLOTHING ALLOWANCE ADJUSTMENT, will be issued
for all claimants entitled to clothing allowance whose Master Record
indicates current or past incarceration. The system will suppress the
automatic release of clothing allowance to these selected claimants
pending review and action by the regional office.

\(3\) The message 777G writeout must be worked by the last processing
cycle of August to release a payment. If no input is done by that time,
a clothing allowance payment will not be issued. The following describes
the actions required on these cases. See paragraph j(7) below for
special processing procedures.

\(4\) Review the claims folder to determine the incarceration or release
date for the claimant. Access the M18 Clothing Allowance --- Reduction
for Incarceration Screen to authorize payment by entering CORR,
password, M18 and file number on the Ready Screen. The M18 Screen will
allow you to enter up to four sets of BEGINNING and ENDING dates. This
screen will only allow dates that fall within the current clothing
allowance year (August 1 --- July 31). The M18 Screen may also be
accessed by entering M18 in the Next Screen field of any C&P Screen (M11
--- M16) or the M00, Menu Screen under the CORR command.

\(a\) **Previously Incarcerated**. If the claimant has been released
from incarceration, enter the date of release in the ENDING DATE OF
INCARCERATION field. This will release a payment for the period from the
date entered through July 31 of the current year.

\(b\) **Currently Incarcerated**. Enter the date of the 61^st^ day of
incarceration in the BEGINNING DATE OF INCARCERATION field. When the
61^st^ day of incarceration is earlier than October 9, 2003, enter
10-8-2003 in the BEGINNING DATE field. If still incarcerated on July 31,
this is the only required entry. The system will adjust the payment to
pay from August 1 to the date entered.

**NOTE:** Should the 61^st^ day of incarceration and the release date
both fall in the same clothing allowance year, enter both the BEGINNING
and ENDING dates on the screen. This will result in a payment for the
period August 1 to the BEGINNING date and the period from the ENDING
date through July 31.

**25-VI-4**

**April 1, 2004 M21-1, Part IV**

**Change 194**

\(5\) Upon entry of the M18 Screen, the system will calculate the number
of days payable for the clothing allowance year and redisplay the screen
with this information. If this number is correct, hit enter to continue.
If not, make the corrections in the BEGINNING and ENDING fields and
reenter the screen. The system will recompute the number of days and
display the results for review and reentry. When the screen is completed
and entered with no changes to the generated number of days, a tear
sheet will be generated for award purposes.

\(6\) It is important that the M15 INCARCERATION IND field be updated
each time the award is adjusted for incarceration or release from
incarceration (paragraph 25.04a(6)). This transaction updates the
indicators in the Master Record that allow for generation of the
writeouts for clothing allowance adjustments as well as other
statistical reports. Further information on use of the CORR command is
found in M21-1 Part V, Chapter 18.

\(7\) During the month of July, writeouts will be generated for all
claimants whose records indicate clothing allowance entitlement and
current or previous incarceration. If the claimant was released from
incarceration prior to August 1 of the previous year, access the M18
Screen and enter the date of release in the ENDING DATE field. This will
release a payment for the full year and reset the incarceration
indicator so the case will not be selected again in future years. Screen
edits have been modified to allow a date that precedes the current
clothing allowance year.

k\. **Notice of Disagreement or Substantive Appeal.** The following
procedures apply to notices of disagreement (NOD) or substantive appeals
taken from the denial of claims for annual clothing allowance under 38
U.S.C. 1162:

\(1\) The Medical Center or Outpatient Clinic is responsible for
furnishing statements of the case (SOC) and certifying appeals arising
from its decisions denying or terminating eligibility on the basis of no
service-connected conditions, or not meeting the criteria specified in
25.09a, and in cases involving an issue of effective date of
entitlement.

\(a\) If a substantive appeal is filed, the outpatient clinic of
jurisdiction will be responsible for processing and certifying the
appeal.

\(b\) The clinic will complete VA Form 1-8, "Certification of Appeal,"
record and forward it to the Board of Veterans' Appeals.

\(2\) The Veterans Service Center is responsible for furnishing
statements of the case (SOC) and certifying appeals arising from RO
decisions denying or terminating eligibility on the basis of no
service-connected conditions and in cases involving an issue of
effective date of entitlement for those decisions promulgated prior to
the transitioning of the processing of ACAP to VHA in August 2003.

\(a\) If an NOD or substantive appeal arises from a medical
determination (VA Form 21-8679, part I), transfer the claims folder to
the outpatient clinic of jurisdiction for preparation of the SOC or
SSOC.

\(b\) The clinic will return the claims folder and SOC to the Veterans
Service Center for release of the SOC to the veteran.

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**M21-1, Part IV April 1, 2004**

**Change 194**

\(c\) If a substantive appeal is filed, forward the claims folder to the
outpatient clinic of jurisdiction for processing and certifying the
appeal.

\(d\) The clinic will return the claims folder and completed VA Form
1-8, "Certification of Appeal," to the Veterans Service Center for
forwarding to the Board of Veterans' Appeals.

l\. **Accrued Clothing Allowance.** The lump-sum clothing allowance is
due and payable in the case of a veteran meeting the eligibility
requirements as of the August 1 date prior to death based on rating
decision or evidence in file at date of death. The full lump sum is
payable without pro rata accumulation for any portion of a year. Payment
of this accrual is governed by the provisions of chapter 27, subchapter
II or III, as applicable.

**25-VI-6**