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

**Department of Veterans Affairs Change 193**

**Washington, DC 20420 March 11, 2004**

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

**Pages 25-VII-1 through 25-VII-2:** Remove these pages and substitute
pages 25-VII-1 through 25-VII-3 attached.

Subparagraph 25.11a. is amended to reflect that the Medal of Honor
pension rate was increased to \$1,000 effective September 1, 2003 and
that annual cost of living adjustments will begin on December 1, 2004.

Subparagraph 25.11c. is revised to delete the reference to a \$400 Medal
of Honor pension rate.

Subparagraph 25.11d. is added to provide instructions for awarding the
retroactive lump sum of Medal of Honor pension payment under 38 CFR
3.802(c).

These changes implement provisions of 38 CFR 3.802(c) and Public Law
107-330, The Veterans Benefits Act of 2002.

**Rescission**: Change 120

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

**March 11, 2004** **M21-1, Part IV**

**Change 193**

**SUBCHAPTER VII. SPECIAL BENEFITS**

**25.10 AWARDS UNDER GRADUATED TUBERCULOSIS (TB) RATINGS**

*Note:* Public Law 90-493 repealed sections 314(q) and 356 of Title 38,
U.S.C. which provided graduated ratings for inactive TB. The repealed
sections still apply to any veteran who was receiving or entitled to
receive compensation for TB on August 19, 1968 (38 CFR 3.959).

a\. **Routine Action.** If a rating board decision reduces a veteran\'s
evaluation for service-connected TB because it is inactive, prepare an
amended award to input the 2-year, 100-percent evaluation and the
graduated or residual evaluations assigned for the future.

\(1\) Use the first day of the current month for the first entry of
current award data.

\(2\) For periods of entitlement prior to July 1, 1970, show the
statutory rate of \$67 (\$54 rate if Peacetime prior to July 1, 1973).
Use reason code 34 and SMC code 36 on the future rate effective date for
the 30-percent evaluation.

\(3\) For July 1, 1970, and subsequent periods of entitlement, show the
greater rate for the 30-percent evaluation. Use reason code 37 for the
change if the period overlaps July 1, 1970. Do *not* enter or continue
SMC code 36 for any period during which a 30-percent evaluation is in
effect on or after July 1, 1970.

b\. **Notice of Award.** Inform the veteran of the award action and that
the 100-percent evaluation may be reduced at an earlier date if he or
she fails to report for an examination scheduled by VA or fails to
follow the prescribed treatment.

c\. **Graduation Reaches 0 Percent.** The monthly rate reduces to \$67
(\$54 PTE rate if prior to July 1, 1973) on the effective date of
graduation to the 0% evaluation. Use SMC 36 in the rating data with the
0% evaluation effective date. Use reason code 34 for the award line. If
there are other noncompensable disabilities, notify the veteran that
when the evaluation reduces to 0%, he or she may submit evidence from a
private physician if he or she believes the respiratory condition
warrants a compensable evaluation. This may entitle the veteran to 10
percent or more instead of 0 percent. Notify the veteran VA cannot grant
compensation in lieu of the statutory amount unless the disabilities
combine to provide an evaluation of at least 10 percent.

d\. **Notification to Outpatient Clinic.** If a veteran is granted the
2-year, 100-percent evaluation for inactive TB, notify the Chief,
Medical Administration Service, for the outpatient clinic responsible
for the veteran\'s followup care. Do not send the notice for veterans
granted the 1-year, 100-percent evaluation following attainment of
inactivity. In these cases, send the medical activity a copy of the
rating initially granting service connection for TB (pt. VI, par.
3.20c).

**25.11 AWARD OF MEDAL OF HONOR PENSION**

a\. **General.** If the service department or Department of
Transportation certifies a veteran or serviceperson is entitled to Medal
of Honor pension, add the Medal of Honor entitlement amount to any
current award or pay it as the sole benefit. Public Law 107-330
increased the Medal of Honor pension amount to \$1,000 per month
effective September 1, 2003, and provided for an annual cost of living
rate increase each December 1, beginning on December 1, 2004. The date
of entitlement to this benefit is the date the veteran makes written
application to the Secretary of the military branch in which he or she
served (38 CFR 3.802(b)). Date of payment, however, is determined in
accordance with provisions of 38 CFR 3.31. This special pension does not
deprive the veteran of entitlement to any other pension or any other
benefit, right or privilege under any laws of the United States. It is
not subject to reduction under 38 CFR 3.551 or termination under 38 CFR
3.557 (38 CFR 3.802).

**25-VII-1**

**M21-1, Part IV March 11, 2004**

**Change 193**

b\. **Sole Benefit.** If Medal of Honor pension is the sole benefit
paid, enter the date of receipt of the Medal of Honor in the MEDAL OF
HONOR field on the 401 screen to support the award. Prepare the award on
the 403 screen with special law code 01 (pt. V, par. 6.09a(1)) and the
compensation entitlement code applicable to the period of service
involved. Annotate the award document to show Medal of Honor pension is
awarded as the sole benefit.

c\. **Paid as Additional Benefit.** Prepare awards of compensation or
pension which include Medal of Honor pension with the data required to
justify the compensation or pension benefit authorized. Add the Medal of
Honor pension amount payable under 38 U.S.C. 1562 to the compensation or
pension rate authorized.

\(1\) Enter special law code 01 and annotate the award document citing
the fact of and authority for paying the Medal of Honor pension as an
additional benefit. See part V, paragraph 6.09b regarding the order of
precedence for entries in the special law code field.

\(2\) If the Medal of Honor pension becomes the sole benefit payable,
amend the award to terminate the other benefits and change the
entitlement code if required.

d\. **Retroactive Lump Sum Payment Under 38 CFR 3.802(c)**

\(1\) **Background.** Section 304 of Public Law 107-330 authorized a
retroactive lump sum payment of Medal of Honor pension from the first
day of the month after the date of the event which qualified the veteran
for receipt of the Medal of Honor. The lump sum is payable to veterans
who were receiving Medal of Honor pension as of October 1, 2003, and to
veterans who were added to the Medal of Honor pension rolls after
October 1, 2003. (38 CFR 3.802(c))

\(2\) **Calculating the Amount Payable**

\(a\) Calculate the retroactive lump sum amount by using the Medal of
Honor pension rate in effect from the first day of the month after the
date of the event to the last day of the month preceding the month in
which the award of Medal of Honor pension is effective. See Part I,
Appendix B.

\(b\) If cases are routinely encountered in which the veteran was
receiving Medal of Honor pension as of October 1, 2003, review the file
to determine whether a retroactive lump sum is payable. If the veteran
has already been paid from the first day of the month after the date of
the qualifying event, a retroactive lump sum payment is not warranted.

\(3\) **Referral to Finance Activity.** If payment of a retroactive lump
sum is in order, refer the file to the Finance Activity for issuance of
an 06A one-time payment under 38 CFR 3.802(c). Inform the veteran of the
reason for the retroactive payment and explain how it was calculated.

**25.12 NAVAL PENSION**

a\. **General.** Naval pension is not a VA benefit. Payment of naval
pension is authorized to certain veterans who served in the Navy or
Marine Corps by a certification from the Secretary of the Navy. These
certifications indicate the amount of naval pension to pay in each case.
The benefit is subject to adjustment under 38 CFR 3.551. If the veteran
is admitted to a Naval Hospital, the allowance payable during the period
of hospitalization is paid to the Secretary of the Navy for maintenance
of the hospital. Naval pension cannot be paid concurrently with VA
pension or compensation unless the concurrent payments were initially
authorized prior to July 14, 1943 (38 CFR 3.803(b)). Naval pension is
not apportionable under VA

regulations because it is not a VA benefit (10 U.S.C. 6159 and 6160
govern benefit payment authority). Use special law code 02 with naval
pension awards (pt V, par. 6.09a(2)) and annotate the amount of naval
pension on the award document.

**25-VII-2**

**March 11, 2004 M21-1, Part IV**

**Change 193**

b\. **Jurisdiction.** The Washington regional office (WRO) has exclusive
and permanent jurisdiction of these cases.

c\. **Rate**

\(1\) Under the provisions of 10 U.S.C. 6159, naval pension is paid at a
monthly rate equal to one half the pay at time of discharge for an
enlisted person or petty officer, disabled from sea service, who had 20
years or more service.

**Note:** Public Law 91-482 repealed Section 6159 effective October 21,
1970. However, a savings provision allowed continued entitlement to a
pension under that section if the person was entitled as of October 20,
1971.

\(2\) Section 6160 of Title 10, United States Code, provides for payment
of naval pension to an enlisted person or petty officer, disabled and in
need, who had 10 years service. The amount payable is determined by the
Secretary of the Navy according to need. When paid concurrently, the
naval pension may not exceed one fourth the rate of pension or
compensation payable exclusive of any additional amounts for dependents
or as special monthly compensation.

**25-VII-3**