61326 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 5 

RIN 2900–AL89 

Dependency and Indemnity 

Compensation Benefits 

AGENCY: Department of Veterans Affairs. 

ACTION: Proposed rule. 

SUMMARY: The Department of Veterans 

Affairs (VA) has published a series of 

Notices of Proposed Rulemaking 

(NPRM)s setting out new proposed 

regulations governing VA 

compensation, pension, burial and 

related benefits that would be located in 

a new part of the Code of Federal 

Regulations. This NPRM adds proposed 

regulations concerning dependency and 

indemnity compensation (DIC) for a 

veteran’s surviving spouse, children, 

and parents and general rules relating to 

proof of death and service-connected 

cause of death to that proposed new 

part. The intended effect of the 

proposed revisions is to assist claimants 

and VA personnel in locating and 

understanding these provisions. 

DATES: Comments must be received by 

VA on or before December 20, 2005. 

ADDRESSES: Written comments may be 

submitted by: mail or hand-delivery to 

Director, Regulations Management 

(00REG1), Department of Veterans 

Affairs, 810 Vermont Ave., NW., Room 

1068, Washington, DC 20420; fax to 

(202) 273–9026; e-mail to 

VAregulations@va.gov or through http:// 

www.Regulations.gov. Comments 

should indicate that they are submitted 

in response to ‘‘RIN 2900–AL89.’’ All 

comments received will be available for 

public inspection in the Office of 

Regulation Policy and Management, 

Room 1063B, between the hours of 8 

a.m. and 4:30 p.m., Monday through 

Friday (except holidays). Please call 

(202) 273–9515 for an appointment. 

FOR FURTHER INFORMATION CONTACT: Clay 

Witt, Chief, Regulations Rewrite Project 

(00REG2), Department of Veterans 

Affairs, 810 Vermont Avenue, NW., 

Washington, DC 20420, (202) 273–9515. 

SUPPLEMENTARY INFORMATION: The 

Secretary of Veterans Affairs has 

established an Office of Regulation 

Policy and Management to provide 

centralized management and 

coordination of VA’s rulemaking 

process. One of the major functions of 

this office is to oversee a Regulation 

Rewrite Project (the Project) to improve 

the clarity and consistency of existing 

VA regulations. The Project responds to 

a recommendation made in the October 

2001 ‘‘VA Claims Processing Task 

Force: Report to the Secretary of 

Veterans Affairs.’’ The Task Force 

recommended that the Compensation 

and Pension regulations be rewritten 

and reorganized in order to improve 

VA’s claims adjudication process. 

Therefore, the Project began its efforts 

by reviewing, reorganizing and 

redrafting the content of the regulations 

in 38 CFR part 3 governing the 

compensation and pension program of 

the Veterans Benefits Administration. 

These regulations are among the most 

difficult VA regulations for readers to 

understand and apply. 

Once rewritten, the proposed 

regulations will be published in several 

portions for public review and 

comment. This is one such portion. It 

includes proposed rules regarding DIC 

for a veteran’s surviving spouse, 

children, and parents and proposed 

rules relating to proof of death and 

service-connected cause of death. After 

review and consideration of public 

comments, final versions of these 

proposed regulations will ultimately be 

published in a new part 5 in 38 CFR. 

Outline 

Overview of New Part 5 Organization 

Overview of Proposed Subpart G 

Organization 

Table Comparing Current Part 3 Rules With 

Proposed Part 5 Rules 

Content of Proposed Regulations 

General Provisions 

5.500 Proof of death. 

5.501 Proving death by other means. 

5.502 Proving death after 7 years of 

continuous, unexplained absence. 

5.503 Establishing the date of death. 

5.504 Service-connected cause of death. 

Dependency and Indemnity Compensation— 

General 

5.510 Dependency and indemnity 

compensation—basic entitlement. 

5.511 Special monthly dependency and 

indemnity compensation. 

5.512 Eligibility for death compensation or 

death pension instead of dependency 

and indemnity compensation. 

Dependency and Indemnity Compensation— 

Eligibility Requirements and Payment Rules 

for Surviving Spouses and Children 

5.520 Dependency and indemnity 

compensation—time of marriage 

requirements for surviving spouses. 

5.521 [Reserved] 

5.522 Dependency and indemnity 

compensation benefits for survivors of 

certain veterans rated totally disabled at 

time of death—offset of wrongful death 

damages. 

5.523 [Reserved] 

5.524 Awards of dependency and 

indemnity compensation benefits to 

children when there is a retroactive 

award to a schoolchild. 

Dependency and Indemnity Compensation— 

Eligibility Requirements and Payment Rules 

for Parents 

5.530—Eligibility for, and payment of, 

parents’ dependency and indemnity 

compensation. 

5.531 General income rules. 

5.532 Deductions from income. 

5.533 Exclusions from income. 

5.534 When VA counts parents’ income. 

5.535 Adjustments to parents’ DIC when 

income is less than anticipated. 

5.536 Parents’ dependency and indemnity 

compensation rates. 

5.537 Payment intervals. 

Effective Dates 

Note: For information concerning proposed 

§§ 5.550 through 5.572, see 69 FR 59072 (Oct. 

1, 2004). 

5.573 Effective date for dependency and 

indemnity compensation rate 

adjustments when an additional survivor 

files an application. 

5.574 Effective dates of awards and 

discontinuances of special monthly 

dependency and indemnity 

compensation. 

Omission of rule in 38 CFR 3.22(h). 

Endnote Regarding Amendatory Language 

Paperwork Reduction Act 

Regulatory Flexibility Act 

Executive Order 12866 

Unfunded Mandates 

Catalog of Federal Domestic Assistance 

Numbers 

List of Subjects in 38 CFR Part 5 

Overview of New Part 5 Organization 

We plan to organize the part 5 

regulations so that all provisions 

governing a specific benefit are located 

in the same subpart, with general 

provisions pertaining to all 

compensation and pension benefits also 

grouped together. We believe this 

organization will allow claimants, 

beneficiaries, and their representatives, 

as well as VA personnel, to find 

information relating to a specific benefit 

more quickly than the organization 

provided in current part 3. 

The first major subdivision would be 

‘‘Subpart A—General Provisions.’’ It 

would include information regarding 

the scope of the regulations in new part 

5, delegations of authority, general 

definitions, and general policy 

provisions for this part. 

‘‘Subpart B—Service Requirements for 

Veterans’’ would include information 

regarding a veteran’s military service, 

including the minimum service 

requirement, types of service, periods of 

war, and service evidence requirements. 

This subpart was published as proposed 

on January 30, 2004. See 69 FR 4820. 

‘‘Subpart C—Adjudicative Process, 

General’’ would inform readers about 

claims and benefit application filing 

procedures, VA’s duties, rights and 

responsibilities of claimants and 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61327 

beneficiaries, general evidence 

requirements, and general effective 

dates for new awards, as well as 

revision of decisions and protection of 

VA ratings. This subpart will be 

published as three separate NPRMs due 

to its size. The first, concerning the 

duties of VA and the rights and 

responsibilities of claimants and 

beneficiaries, was published on May 10, 

2005. See 70 FR 24680. 

‘‘Subpart D—Dependents and 

Survivors’’ would inform readers how 

VA determines whether an individual is 

a dependent or a survivor for purposes 

of determining eligibility for VA 

benefits. It would also provide the 

evidence requirements for these 

determinations. 

‘‘Subpart E—Claims for Service 

Connection and Disability 

Compensation’’ would define serviceconnected compensation, including 

direct and secondary service 

connection. This subpart would inform 

readers how VA determines entitlement 

to service connection. The subpart 

would also contain those provisions 

governing presumptions related to 

service connection, rating principles, 

and effective dates, as well as several 

special ratings. This subpart will be 

published as three separate NPRMs due 

to its size. The first, concerning 

presumptions related to service 

connection, was published on July 27, 

2004. See 69 FR 44614. 

‘‘Subpart F—Nonservice-Connected 

Disability Pensions and Death 

Pensions’’ would include information 

regarding the three types of nonserviceconnected pension: Improved Pension, 

Old-Law Pension, and Section 306 

Pension. This subpart would also 

include those provisions that state how 

to establish entitlement to each pension, 

and the effective dates governing each 

pension. This subpart will be published 

as two separate NPRMs due to its size. 

The portion concerning Old-Law 

Pension, Section 306 Pension, and 

elections of Improved Pension was 

published as proposed on December 27, 

2004. See 69 FR 77578. 

‘‘Subpart G—Dependency and 

Indemnity Compensation, Death 

Compensation, Accrued Benefits, and 

Special Rules Applicable Upon Death of 

a Beneficiary’’ would contain 

regulations governing claims for DIC; 

death compensation; accrued benefits; 

benefits awarded, but unpaid at death; 

and various special rules that apply to 

the disposition of VA benefits, or 

proceeds of VA benefits, when a 

beneficiary dies. This subpart would 

also include related definitions, 

effective-date rules, and rate-of-payment 

rules. This subpart will be published as 

two separate NPRMs due to its size. The 

portion concerning accrued benefits, 

special rules applicable upon the death 

of a beneficiary, and several effective 

date rules, was published as proposed 

on October 1, 2004. See 69 FR 59072. 

The portion concerning DIC benefits 

and general provisions relating to proof 

of death and service-connected cause of 

death is the subject of this NPRM. 

‘‘Subpart H—Special and Ancillary 

Benefits for Veterans, Dependents, and 

Survivors’’ would pertain to special and 

ancillary benefits available, including 

benefits for children with various birth 

defects. 

‘‘Subpart I—Benefits for Filipino 

Veterans and Survivors’’ would pertain 

to the various benefits available to 

Filipino veterans and their survivors. 

‘‘Subpart J—Burial Benefits’’ would 

pertain to burial allowances. 

‘‘Subpart K—Matters Affecting 

Receipt of Benefits’’ would contain 

provisions regarding bars to benefits, 

forfeiture of benefits, and renouncement 

of benefits. 

‘‘Subpart L—Payments and 

Adjustments to Payments’’ would 

include general rate-setting rules, 

several adjustment and resumption 

regulations, and election-of-benefit 

rules. Because of its size, proposed 

regulations in subpart L will be 

published in two separate NPRMs. 

The final subpart, ‘‘Subpart M—

Apportionments and Payments to 

Fiduciaries or Incarcerated 

Beneficiaries,’’ would include 

regulations governing apportionments, 

benefits for incarcerated beneficiaries, 

and guardianship. 

Some of the regulations in this NPRM 

cross-reference other compensation and 

pension regulations. If those regulations 

have been published in this or earlier 

NPRMs, we cite the proposed part 5 

section. We also include, in the relevant 

portion of the Supplementary 

Information, the Federal Register page 

where a proposed part 5 section 

published in an earlier NPRM may be 

found. However, where a regulation 

proposed in this NPRM would crossreference a proposed part 5 regulation 

that has not yet been published, we cite 

to the current part 3 regulation that 

deals with the same subject matter. The 

current part 3 section we cite may differ 

from its eventual part 5 counterpart in 

some respects, but we believe this 

method will assist readers in 

understanding these proposed 

regulations where no part 5 counterpart 

has yet been published. If there is no 

part 3 counterpart to a proposed part 5 

regulation that has not yet been 

published, we have inserted 

‘‘[regulation that will be published in a 

future Notice of Proposed Rulemaking]’’

where the part 5 regulation citation 

would be placed. 

In connection with this rulemaking, 

VA will accept comments relating to a 

prior rulemaking issued as a part of the 

Project, if the matter being commented 

on relates to both Notices of Proposed 

Rulemaking. VA will provide a separate 

opportunity for public comment on each 

segment of proposed part 5 regulations 

before adopting a final version of part 5. 

Overview of Proposed Subpart G 

Organization 

As its title, ‘‘Dependency and 

Indemnity Compensation, Accrued 

Benefits, Death Compensation Benefits, 

and Special Rules Applicable Upon 

Death of a Beneficiary,’’ suggests, 

proposed subpart G will address a broad 

range of VA death benefits. Because of 

its length, subpart G will be published 

in two separate NPRMs. This NPRM 

pertains to those regulations governing 

DIC benefits and general provisions 

relating to proof of death and serviceconnected cause of death. Although 

these regulations have been 

substantially restructured and rewritten 

for greater clarity and ease of use, most 

of the basic concepts contained in these 

proposed regulations are the same as in 

their existing counterparts in 38 CFR 

part 3. However, a few substantive 

changes are proposed. 

Table Comparing Current Part 3 Rules 

With Proposed Part 5 Rules 

The following table shows the 

relationship between the current 

regulations in part 3 and the proposed 

regulations contained in this NPRM: 

Proposed part 5 section or paragraph 

Based in whole or in 

part on 38 CFR part 3 

section or paragraph 

5.500(a) ..................... New. 

5.500(b) ..................... 3.211(a). 

5.500(c)(1) ................. 3.211(d)(1). 

5.500(c)(2) ................. 3.211(d)(2). 

5.500(c)(3) ................. 3.211(d)(3). 

5.500(d) ..................... 3.211(b). 

5.500(e) ..................... 3.211(c). 

5.501(a) ..................... New. 

5.501(b) ..................... 3.211(e), first sentence. 

5.501(c) ..................... 3.211(e), second sentence. 

5.501(d) ..................... 3.211(f) and (g). 

5.502(a) ..................... 3.212(a). 

5.502(b) ..................... 3.212(b). 

5.502(c) ..................... 3.212(b) and (c). 

5.503(a) ..................... New. 

5.503(b) ..................... 3.212(a). 

5.503(c) ..................... New. 

5.504(a) ..................... New. 

5.504(b) ..................... New. 

5.504(c)(1) ................. New. 

5.504(c)(2) ................. 3.312(c)(3) and (c)(4). 

5.510(a) ..................... 3.5(a). 

61328 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

Proposed part 5 section or paragraph 

Based in whole or in 

part on 38 CFR part 3 

section or paragraph 

5.510(b), except for 

(b)(1)(ii).

New. 

5.510(b)(1)(ii) ............ 3.5(b). 

5.510(c) ..................... 3.5(d). 

5.510(d) ..................... 3.251(a)(1). 

5.511(a) ..................... 3.351(a)(3), (a)(4), 

(b), and (c)(3). 

5.511(b) ..................... 3.351(c)(1) and (c)(2). 

5.511(c) ..................... 3.351(e). 

5.512 ......................... 3.5(c). 

5.520(a) ..................... New. 

5.520(b)(1)(i) ............. Introduction to 3.54. 

5.520(b)(1)(ii) ............ 3.54(c)(2). 

5.520(b)(1)(iii) ............ 3.54(c)(3). 

5.520(b)(1)(iv) ........... 3.54(c)(1) 

5.520(b)(2) ................ New. 

5.521 ......................... Reserved. 

5.522(a) and (b) ........ 3.22(e). 

5.522(c)(1) ................. New. 

5.522(c)(2) ................. 3.22(g). 

5.522(c)(3) ................. New. 

5.522(c)(4) ................. 3.22(f). 

5.522(c)(5) ................. 3.22(g). 

5.522(d) ..................... 3.22(g). 

5.523 ......................... Reserved. 

5.524(a), except for 

(a)(1).

3.650(c)(2). 

5.524(a)(1) ................ 3.650(c)(1). 

5.524(b) and (c) ........ 3.650(c)(1). 

5.530 ......................... New. 

5.531(a) ..................... 3.251(b), Introduction 

to 3.262(a). 

5.531(b)(1) ................ Introduction to 

3.262(a). 

5.531(b)(2)(i) ............. 3.261(a)(7). 

5.531(b)(2)(ii) ............ 3.261(a)(26). 

5.531(b)(2)(iii) ............ 3.262(h). 

5.531(c) ..................... Introduction to 

3.262(b) and 

3.262(b)(1). 

5.531(d)(1) and (d)(2) 3.262(k)(1) and (k)(2). 

5.531(d)(3) ................ New. 

5.531(d)(4) ................ 3.262(k)(1). 

5.531(e) ..................... 3.260(b). 

5.532(a) ..................... 3.262(a)(2) and 

(a)(3). 

5.532(b) ..................... 3.262(j)(4). 

5.532(c) ..................... 3.262(o) and (p). 

5.532(d) ..................... Introduction to 

3.262(l), 3.262(l)(4). 

5.532(e) ..................... 3.261(a)(22), and 

3.262(a)(1). 

5.533(a) ..................... 3.261(a)(12). 

5.533(b) ..................... 3.262(c), (d), and (f). 

5.533(c) and (d) ........ 3.261(a)(20). 

5.533(e) ..................... 3.262(f). 

5.533(f) ...................... 3.261(a)(13). 

5.533(g) ..................... Introduction to 

3.262(e), (e)(4), (f), 

(g), (i)(2), (j)(1), 

(j)(2), and (j)(4). 

5.533(h) ..................... Introduction to 

3.262(t), (t)(1). 

5.533(i) ...................... 3.262(k)(5). 

5.533(j) ...................... 3.261(a)(31). 

5.533(k) ..................... 3.262(w). 

5.533(l) through (n) ... New. 

5.533(o) ..................... 3.262(a)(2), last sentence. 

5.533(p) ..................... 3.261(a)(22). 

5.533(q) ..................... New. 

Proposed part 5 section or paragraph 

Based in whole or in 

part on 38 CFR part 3 

section or paragraph 

5.534(a) ..................... 3.251(b) and Introduction to 3.260. 

5.534(b) ..................... 3.260(c), (d), and (f). 

5.534(c) ..................... 3.260(f). 

5.535 ......................... 3.660(b), Introduction 

and (b)(1). 

5.536(a) ..................... 3.25. 

5.536(b) ..................... 3.25, 3.27(b) and (d). 

5.536(c) ..................... 3.251(a)(2). 

5.536(d) ..................... 3.251(a)(4). 

5.536(e) ..................... 3.251(a)(5). 

5.536(f)(1) ................. 3.25(a), (c), and (d). 

5.536(f)(2) ................. 3.25(e). 

5.536(g) ..................... 3.260(f). 

5.536(h) ..................... 3.704(b). 

5.537 ......................... Introduction to 3.30 

and 3.30(e). 

5.573(a) ..................... Introduction to 

3.650(a). 

5.573(b)(1) ................ 3.650(a)(1). 

5.573(b)(2) ................ 3.650(a)(2). 

5.573(c) ..................... 3.650(b). 

5.573(d) ..................... Unnumbered paragraph in 3.650(a). 

5.573(e) ..................... Introduction to 

3.650(a). 

5.574(a) ..................... 3.402(c) and 3.404. 

5.574(b)(1) ................ 3.502(e)(1) and 

3.504. 

5.574(b)(2) ................ New. 

Readers who use this table to compare 

existing regulatory provisions with the 

proposed provisions, and who observe a 

substantive difference between them, 

should consult the text that appears 

later in this document for an 

explanation of significant changes in 

each regulation. Not every paragraph of 

every current part 3 section regarding 

the subject matter of this rulemaking is 

accounted for in the table. In some 

instances other portions of the part 3 

sections that are addressed in these 

proposed regulations will appear in 

subparts of part 5 that are being 

published separately for public 

comment. For example, a reader might 

find a reference to paragraph (a) of a 

part 3 section in the table, but no 

reference to paragraph (b) of that section 

because paragraph (b) will be addressed 

in a separate NPRM. The table also does 

not include provisions from part 3 

regulations that will not be repeated in 

part 5. Such provisions are discussed 

specifically under the appropriate part 5 

heading in this preamble. Readers are 

invited to comment on the proposed 

part 5 provisions and also on our 

proposals to omit those part 3 

provisions from part 5. 

Content of Proposed Regulations 

General Provisions 

5.500 Proof of death. 

Proposed § 5.500 is a reorganization of 

rules in current § 3.211(a) through (d), 

which describe the kinds of evidence 

that would suffice as proof of death 

applicable in most cases. Section 

5.500(a) is new. Section 5.500(a)(1) 

states the purpose of § 5.500. Section 

5.500(a)(2) provides a rule for applying 

§ 5.500, specifically that VA will accept 

the evidence described in any relevant 

paragraph of § 5.500 as proof of death. 

This rule reflects current VA practice 

and clarifies that the various methods of 

proving death set out in § 5.500 are 

alternatives. 

Current § 3.211(d) describes various 

forms of proof of death VA will accept 

when an individual dies abroad. Section 

3.211(d)(3) lists ‘‘[a]n official report of 

death from the head of the department 

concerned, where the deceased person 

was, at the time of death, a civilian 

employee of such department.’’ We 

propose instead to describe this 

acceptable form of proof of death, in 

§ 5.500(c)(3), as ‘‘[a]n official report of 

death of a civilian employee of the U.S. 

Government from the employing U.S. 

Government entity.’’ This revision 

serves to clarify that the rule applies to 

a U.S. Government employee and that it 

is not limited to employing Federal 

entities that are cabinet departments. 

Further, reports of death need not 

necessarily come from the head of the 

employing entity. VA’s concern is that 

such a report is an authentic official 

report of the Federal entity. Implicit in 

the requirement for an official report is 

that the report will have been issued by 

a person authorized to issue it, but that 

person will not necessarily be the 

person who is the head of the 

employing entity. 

5.501 Proving death by other means. 

Proposed § 5.501 is based on current 

§ 3.211(e) through (g) and long-standing 

VA practice. It states the rules on how 

to prove death where the evidence 

described in proposed § 5.500 is not 

available. It includes new § 5.501(a), 

which describes the scope of the 

section. 

Proposed § 5.501(d)(2) clarifies how 

VA determines whether death has 

occurred in those cases where a body 

has not been recovered, or the body 

cannot be identified. Current § 3.211(f) 

provides that ‘‘[w]here it is indicated 

that the veteran died under 

circumstances which precluded 

recovery or identification of the body, 

the fact of death should be established 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61329 

by the best evidence, which from the 

nature of the case must be supposed to 

exist.’’ The ‘‘best evidence’’ requirement 

is not explained. However, it is longstanding VA practice to consider 

statements from the claimant and other 

witnesses describing the facts that led 

them to believe that the person in 

question died. We also note that this 

portion of the regulation should provide 

information regarding what to do when 

the death of any person, not just a 

veteran, is relevant and the body cannot 

be recovered or identified. Proposed 

§ 5.501(d)(2) addresses these issues by 

broadening the scope of this portion of 

the regulation to cover the death of any 

person whose body cannot be recovered 

or identified and by clarifying the kinds 

of evidence VA considers in this 

situation. 

Current § 3.211(f) refers to ‘‘an 

official’’ authorized to approve a finding 

of the fact of death. Proposed 

§ 5.501(d)(3) clarifies that this means an 

authorized VA official. 

Current § 3.211(e) requires the 

submission of affidavits to prove the fact 

of death. In line with VA’s current 

practice of accepting somewhat less 

formal means of proof in most instances, 

proposed § 5.501 permits the 

submission of either certified statements 

or affidavits. (We note that ‘‘certified 

statement’’ will be defined in subpart A 

of part 5, which will be the subject of 

a separate NPRM.) 

5.502 Proving death after 7 years of 

continuous, unexplained absence. 

Proposed § 5.502 provides rules 

regarding how a claimant may establish 

the fact of a person’s death if that person 

has been missing for 7 years or more 

and his or her absence is unexplained. 

It is derived from current § 3.212. 

Current § 3.212 includes a 

requirement that ‘‘satisfactory evidence’’

be produced to show a person’s 

continued and unexplained absence. In 

order to clarify what evidence is 

necessary to establish the death of a 

missing person, we propose to replace 

the phrase ‘‘satisfactory evidence’’ with 

‘‘competent, credible evidence’’ because 

this term more appropriately describes 

the qualities that make such evidence 

‘‘satisfactory.’’ VA will propose a 

definition of ‘‘competent evidence’’ in a 

separate NPRM. ‘‘Credible’’ evidence is 

just evidence that is believable. 

(‘‘Credible testimony is that which is 

plausible or capable of being believed.’’

Caluza v. Brown, 7 Vet. App. 498, 511 

(1995).) 

All other proposed revisions to the 

language of § 3.212 are structural in 

nature and do not change the substance 

of the regulation. 

5.503 Establishing the date of death. 

The fact of death, that is that a person 

died, may be established through the 

evidence described in §§ 5.500 and 

5.501, but that evidence may not show 

exactly when death occurred. The exact 

date of death may never be known when 

the fact of death is established using the 

presumption in § 5.502 when there has 

been a 7-year unexplained absence. 

Proposed § 5.503 sets out rules for 

establishing the date of death for VA 

purposes in such circumstances. 

The current regulation concerning the 

7-year-absence death presumption, 

§ 3.212(a), refers to an individual who 

has been absent ‘‘from his or her home 

and family for a period of 7 years or 

more.’’ It provides that in such cases 

death occurred ‘‘as of the expiration of 

such period.’’ It is not entirely clear 

from the language used whether the ‘‘or 

more’’ is part of ‘‘such period.’’ VA’s 

practice has been to presume that death 

occurred seven years after the person 

was last known to be alive in cases 

where the fact of death is established 

under current § 3.212 (proposed 

§ 5.502). This date of death presumption 

is set out more clearly in proposed 

§ 5.503(b). 

In cases where the fact of death is 

proven by the evidence described in 

proposed § 5.500 or § 5.501, and not the 

7-year-absence rule, but the exact date 

of death is unknown, long-standing VA 

practice is that the date of death can be 

established as the date the deceased 

person was last seen alive, the date the 

body was found, or any time between 

those dates, depending on the 

circumstances. Proposed § 5.503(c) 

incorporates and clarifies this practice. 

It includes standards for setting the date 

of death when the body of the deceased 

is found and a presumption that, if no 

identifiable body is found, the date of 

death is the date the deceased was last 

known to be alive in the absence of 

evidence to the contrary. 

5.504 Service-connected cause of 

death. 

The next regulation in this NPRM 

concerns how VA determines whether a 

veteran’s death was service connected. 

This determination is important to a 

veteran’s survivors because a veteran’s 

service-connected death is a foundation 

for awarding several types of VA 

benefits. For example, see proposed 

§ 5.510, ‘‘Dependency and indemnity 

compensation—basic entitlement,’’ and 

§ 3.1600(a) (concerning the serviceconnected burial allowance). Proposed 

paragraph (a) of § 5.504 sets this context 

and explains that the purpose of the 

section is to provide rules on how VA 

determines whether a veteran’s death 

was service connected. 

Proposed paragraph (b) defines 

‘‘service-connected disability’’ for 

purposes of proposed § 5.504. An 

examination of 38 U.S.C. 1310(a), the 

basic authorizing statute for the award 

of DIC for service-connected deaths, is 

instructive. The statute provides: 

(a) When any veteran dies after December 

31, 1956, from a service-connected or 

compensable disability, the Secretary shall 

pay dependency and indemnity 

compensation to such veteran’s surviving 

spouse, children, and parents. The standards 

and criteria for determining whether or not 

a disability is service-connected shall be 

those applicable under chapter 11 of this 

title. 

Chapter 11 of Title 38, United States 

Code, referenced in 38 U.S.C. 1310(a), 

contains the provisions for determining 

whether living veterans are entitled to 

service connection for disabilities. In 

other words, VA determines whether a 

disability is service connected in death 

cases using the same principles it 

applies in determining service 

connection for the disabilities of living 

veterans. Therefore, § 5.504(b)(1) defines 

service-connected disability, in the 

context of service-connected cause of 

death, as ‘‘(i) * * * a disability that was 

service connected at the time of the 

veteran’s death, or (ii) [a] disability that 

is service connectable under the 

provisions of subpart E of this part, 

‘Claims for service connection and 

disability compensation.’ ’’ (Subpart E 

will be the subject of a separate NPRM.) 

To preclude an interpretation that a 

traumatic death in service was so 

sudden that it did not produce a 

‘‘disability’’ before death and that the 

death was therefore not serviceconnectable, we also propose to state in 

§ 5.504(b)(1)(ii) that ‘‘[f]or purposes of 

this section, VA will deem a sudden 

death in service from trauma to have 

been preceded by disability from the 

trauma.’’

There is an important exception to the 

principle stated in proposed 

§ 5.504(b)(1)(i) that (for purposes of 

determining service-connected causes of 

death) service-connected disabilities 

include disabilities that were service 

connected at the time of the veteran’s 

death. Congress has precluded VA from 

granting service connection for the 

cause of a veteran’s death in some cases, 

even though the disability in question 

may have been service connected at the 

time of the veteran’s death. 

One such case results from 38 U.S.C. 

1103(a), which provides that 

‘‘[n]otwithstanding any other provision 

of law, a veteran’s disability or death 

shall not be considered to have resulted 

61330 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

from personal injury suffered or disease 

contracted in the line of duty in the 

active military, naval, or air service for 

purposes of this title on the basis that 

it resulted from injury or disease 

attributable to the use of tobacco 

products by the veteran during the 

veteran’s service.’’ See also Kane v. 

Principi, 17 Vet. App. 97, 101 (2003) 

(‘‘Thus, the plain language of 38 U.S.C. 

§ 1103 expresses the Congressional 

intent to no longer award service 

connection for a veteran’s death that 

results from a service connected disease 

that was ‘capable of being attributed’ to 

the use of tobacco products during the 

veteran’s service.’’). 

Another case in which service 

connection may not be granted for the 

cause of death based on a disability 

service connected at the time of death 

is the result of 38 U.S.C. 105(a) which 

provides, in part, that ‘‘[a]n injury or 

disease incurred during active military, 

naval, or air service will be deemed to 

have been incurred in line of duty and 

not the result of the veteran’s own 

misconduct when the person on whose 

account benefits are claimed was, at the 

time the injury was suffered or disease 

contracted, in active military, naval, or 

air service, whether on active duty or on 

authorized leave, unless such injury or 

disease was a result of the person’s own 

willful misconduct or abuse of alcohol 

or drugs.’’ See also VAOPGCPREC 11–

96, 61 FR 66748, 66750 (1996), which 

held that ‘‘[s]ection 8052 of the 

Omnibus Budget Reconciliation Act of 

1990, Pub. L. No. 101–508, § 8052, 104 

Stat. 1388, 1388–351, applicable to 

claims filed after October 31, 1990, 

precludes an injury or disease that is a 

result of a person’s own abuse of alcohol 

or drugs from being considered incurred 

in line of duty and, consequently, 

precludes resulting disability or death 

from being considered service 

connected.’’

We propose to provide for these 

Congressionally mandated exceptions, 

and any such exceptions that may arise 

in the future, by stating the following in 

proposed § 5.504(b)(2): 

(2) Exception. For purposes of this section, 

‘‘service-connected disability’’ does not 

include a disability that was service 

connected at the time of the veteran’s death 

if the law in effect at the time of a survivor’s 

claim precludes VA from establishing service 

connection for the cause of the veteran’s 

death. See § 3.300 of this chapter, ‘‘Claims 

based on the effects of tobacco products,’’

and § 3.301(d) of this chapter ‘‘Line of duty; 

abuse of alcohol or drugs.’’

We note that current § 3.301(d), crossreferenced in proposed § 5.504(b)(2), 

does not yet include provisions based 

on Allen v. Principi, 237 F.3d 1368 (Fed. 

Cir. 2001) (concluding that 38 U.S.C. 

1110 does not preclude compensation 

for an alcohol or drug abuse disability 

secondary to a service-connected 

disability). However, we anticipated 

that we will address that issue in the 

part 5 equivalent of § 3.301(d) and that 

part 5 regulation would be the one 

cross-referenced in the final version of 

proposed 5.504. 

Proposed § 5.504(c) addresses the 

kind of link that must exist between a 

service-connected disability and the 

veteran’s death in order for VA to 

determine that the death was service 

connected. It is based on the provisions 

of current § 3.312(c). Current § 3.312(c) 

distinguishes between ‘‘principal’’ and 

‘‘contributory’’ causes of death and 

includes elaborate provisions 

concerning ‘‘contributory’’ causes of 

death. We believe that these provisions 

can be simplified considerably. 

The causation question can be 

adjudicated using two relatively simple 

standards that better reflect VA’s longstanding practice and interpretation of 

the authorizing statutes. The first 

standard would be to determine if the 

veteran’s death would have occurred in 

the absence of the service-connected 

disability, or the combined effects of 

multiple service-connected disabilities. 

If the answer is that the death would not 

have occurred in the absence of the 

service-connected disability, or 

disabilities, service connection should 

be awarded for the cause of the veteran’s 

death. 

Answering this ‘‘in the absence of’’

question should resolve a broad 

spectrum of cases. Sometimes the 

answer to the question will depend 

upon medical evidence. For example, if 

the medical evidence (such as autopsy 

reports, reports of the veteran’s final 

hospitalization, etc.) shows that the 

veteran died of a particular kind of 

cancer, then clearly the veteran would 

not have died in the absence of that 

cancer. If that cancer was service 

connected or service connectable, the 

death should be service connected. 

The ‘‘in the absence of’’ standard 

should also work well in other types of 

cases that may involve fact finding 

beyond the purely medical realm, such 

as cases involving service-connected or 

service-connectable disabilities that 

produce impairment of balance or 

physical mobility that plays a role in the 

death of a veteran. For example, a 

veteran with a service-connected leg 

amputation might have died as the 

result of a slip and fall accident. A 

veteran who was bedridden due to the 

service-connected residuals of a stroke 

might have died in a home fire. The 

literal cause of death might be the 

injuries sustained in the accident or fire, 

but the evidence might show that the 

impaired mobility due to the serviceconnected disabilities caused the 

accident in one case and prevented the 

veteran from escaping from the fire in 

the other. In both cases, the veteran 

would not have died in the absence of 

the service-connected disability and 

determining that the death is service 

connected would be appropriate under 

the proposed test. 

However, there are circumstances 

where death would be service 

connected under the provisions in 

current § 3.312(c) even though such 

death would not satisfy the ‘‘in the 

absence of’’ test described above. 

Specifically, current § 3.312(c)(3) and 

(4) provide: 

(3) Service-connected diseases or injuries 

involving active processes affecting vital 

organs should receive careful consideration 

as a contributory cause of death, the primary 

cause being unrelated, from the viewpoint of 

whether there were resulting debilitating 

effects and general impairment of health to 

an extent that would render the person 

materially less capable of resisting the effects 

of other disease or injury primarily causing 

death. Where the service-connected 

condition affects vital organs as 

distinguished from muscular or skeletal 

functions and is evaluated as 100 percent 

disabling, debilitation may be assumed. 

(4) There are primary causes of death 

which by their very nature are so 

overwhelming that eventual death can be 

anticipated irrespective of coexisting 

conditions, but, even in such cases, there is 

for consideration whether there may be a 

reasonable basis for holding that a serviceconnected condition was of such severity as 

to have a material influence in accelerating 

death. In this situation, however, it would 

not generally be reasonable to hold that a 

service-connected condition accelerated 

death unless such condition affected a vital 

organ and was of itself of a progressive or 

debilitating nature. 

While stated in different ways, the 

basic concept in these provisions is the 

same. Even though a veteran may have 

died of a nonservice-connected 

disability, VA may grant service 

connection for the cause of death if the 

service-connected disability was so 

debilitating that death was materially 

hastened. VA proposes to preserve this 

concept in § 5.504(c)(2), together with 

the presumption that such a degree of 

debilitation is presumed where a 

service-connected disability rated as 

100% disabling affects vital organs. 

‘‘Vital organs’’ are also defined in this 

proposed paragraph as ‘‘those organs 

necessary to sustain life, including the 

heart, lungs, central nervous system, 

liver, and kidneys.’’ (‘‘The word ‘vital’

means necessary to life or essential.’’

Federal Tel. & Radio Corp. v. Associated 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61331 

Tel. & Tel. Co., 169 F.2nd 1012, 1015 

(3rd Cir. 1948). ‘‘[V]ital * * * 1. Of or 

characteristic of life: vital processes. 2. 

Necessary to the continuation of life; life 

sustaining: vital functions.’’ The 

American Heritage Dictionary of the 

English Language 1433 (New College 

Ed. 1976). ‘‘[V]ital * * * necessary to or 

pertaining to life.’’ Dorland’s Illustrated 

Medical Dictionary 1834 (28th ed. 

1994).) 

Dependency and Indemnity 

Compensation—General 

5.510 Dependency and indemnity 

compensation—basic entitlement. 

Proposed § 5.510 is the first of several 

sequential proposed regulations 

explaining DIC benefits for a veteran’s 

surviving spouse, children, and parents. 

It serves as an introduction to the DIC 

program and outlines basic 

requirements for DIC entitlement. It 

includes provisions from current 38 

CFR 3.5(a), (b), and (d). 

Proposed paragraph (a) defines DIC 

and is derived from current § 3.5(a). 

Proposed § 5.510(b) sets out the three 

statutory bases for the award of DIC: (1) 

Service-connected death during or after 

service (38 U.S.C. 1310, ‘‘Deaths 

entitling survivors to dependency and 

indemnity compensation’’); (2) serviceconnected disability that had been rated 

as totally disabling for certain specified 

periods of time prior to the veteran’s 

death (38 U.S.C. 1318, ‘‘Benefits for 

survivors of certain veterans rated 

totally disabled at time of death’’); and 

(3) death due to incidents occurring 

during certain VA-furnished medical, 

training, rehabilitation, or compensated 

work therapy services (38 U.S.C. 1151, 

‘‘Benefits for persons disabled by 

treatment or vocational rehabilitation’’). 

Proposed paragraph (b) also includes 

provisions from current § 3.5(b). Current 

§ 3.5(b) includes three different date of 

death requirements for basic entitlement 

to DIC based upon the interplay 

between DIC and a benefit program 

called death compensation that DIC 

replaced in the 1950s. VA data shows 

that fewer than 1,000 persons, primarily 

the parents of veterans, are still 

receiving death compensation benefits. 

On the other hand, more than 300,000 

persons are receiving DIC benefits. 

Detailed information about the 

relationship between DIC and death 

compensation was desirable years ago 

when current § 3.5 was drafted and VA 

was transitioning between the two 

death-benefit programs. However, a 

simpler explanation of DIC benefits will 

now be more useful to most claimants 

and VA personnel adjudicating claims. 

Therefore, we propose to place death 

compensation rules in a portion of 

subpart G dealing with death 

compensation (published as part of a 

separate NPRM, see 69 FR 59072, Oct. 

1, 2004) and include only essential 

information about the relationship 

between DIC and death compensation in 

VA’s DIC regulations, such as proposed 

§ 5.510. 

Specifically, we state in proposed 

§ 5.510(b)(1)(ii) that ‘‘DIC is not payable 

unless the service-connected death 

occurred after December 31, 1956, 

except in the case of certain individuals 

receiving or eligible to receive death 

compensation who elect to receive DIC 

in lieu of death compensation.’’. The 

few users seeking more information 

about death compensation and the 

election of DIC in lieu of death 

compensation would be referred to 

other sections that address those topics. 

In keeping with the simplification of 

§ 5.510 in comparison with current 

§ 3.5, we have intentionally not repeated 

in § 5.510 some of the details in current 

§ 3.5(b)(2) concerning entitlement to 

elect DIC in lieu of death compensation. 

Current § 3.5(b)(2) provides that one of 

the bases for DIC entitlement is that 

‘‘[d]eath occurred prior to January 1, 

1957, and the claimant was receiving or 

eligible to receive death compensation 

on December 31, 1956 (or, as to a parent, 

would have been eligible except for 

income), under laws in effect on that 

date or who subsequently becomes 

eligible by reason of a death which 

occurred prior to January 1, 1957.’’

Instead, as previously indicated, we 

propose to merely state in 

§ 5.510(b)(1)(ii) that ‘‘DIC is not payable 

unless the service-connected death 

occurred after December 31, 1956, 

except in the case of certain individuals 

receiving or eligible to receive death 

compensation who elect to receive DIC 

in lieu of death compensation.’’ We 

intend no substantive change. A person 

could not be ‘‘receiving, or eligible to 

receive, death compensation’’ unless 

they were ‘‘receiving or eligible to 

receive death compensation on 

December 31, 1956 ‘‘ under laws in 

effect on that date or * * * 

subsequently bec[a]me[] eligible by 

reason of a death which occurred prior 

to January 1, 1957.’’ And, as also 

mentioned previously, rules concerning 

death compensation entitlement are 

addressed elsewhere in proposed part 5. 

The same is true of rules concerning the 

election of DIC in lieu of death 

compensation. 

Finally, in paragraph (d) of proposed 

§ 5.510, we state that DIC for parents is 

subject to income limitations. This 

provision is derived from current 38 

CFR 3.251(a). 

5.511 Special monthly dependency 

and indemnity compensation. 

Proposed § 5.511, based on current 38 

CFR 3.351(a)(3), (a)(4), (b), (c), and (e), 

provides for payment of increased DIC 

benefits to a surviving spouse or parent 

based on the need for regular aid and 

attendance or being permanently 

housebound. 

5.512 Eligibility for death 

compensation or death pension instead 

of dependency and indemnity 

compensation. 

Proposed § 5.512 explains that VA 

may not pay death compensation or 

death pension to a person eligible for 

DIC based upon a death occurring after 

December 31, 1956, subject to the right 

of a surviving spouse to elect death 

pension in lieu of DIC. This proposed 

section is based on current § 3.5(c), 

which is, in turn, based on 38 U.S.C. 

1317, ‘‘Restriction on payments under 

this chapter.’’

Current § 3.5(c) states: 

No person eligible for dependency and 

indemnity compensation by reason of a death 

occurring on or after January 1, 1957, shall 

be eligible by reason of such death for death 

pension or compensation under any other 

law administered by the Department of 

Veterans Affairs, except that, effective 

November 2, 1994, a surviving spouse who 

is receiving dependency and indemnity 

compensation may elect to receive death 

pension instead of such compensation. 

The November 2, 1994, date 

referenced in current § 3.5(c) is the 

effective date of Pub. L. 103–446, which 

added subsection (b) to 38 U.S.C. 1317, 

thereby permitting DIC recipients to 

elect to receive death pension instead of 

DIC. See Veterans’ Benefits 

Improvements Act of 1994, Pub. L. 103–

446, section 111(a), 108 Stat. 4645, 

4654. Including the date was helpful 

during the time when the right to elect 

death pension in lieu of DIC was new. 

However, we propose to omit it from 

this revision inasmuch as elections are 

prospective and its inclusion is no 

longer necessary. 

Current § 3.5(c) speaks of the right of 

a surviving spouse ‘‘receiving’’ DIC to 

elect death pension. However, under 38 

U.S.C. 1317(b), the surviving spouse 

need only be eligible for DIC in order to 

make this election. Proposed § 5.512(b) 

uses the statutory term. No other 

substantive changes are proposed. 

61332 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

Dependency and Indemnity 

Compensation—Eligibility 

Requirements and Payment Rules for 

Surviving Spouses and Children 

5.520 Dependency and indemnity 

compensation—time of marriage 

requirements for surviving spouses. 

A surviving spouse must meet various 

requirements in order to qualify for DIC 

benefits. These include requirements 

that the date of his or her marriage to 

the veteran, or the length of that 

marriage, must fall within certain 

parameters. Proposed § 5.520, based on 

portions of current § 3.54 and applicable 

statutory provisions, sets out the time of 

marriage requirements and the ways in 

which the requirements can be met. 

The first way in which the 

requirements can be met is set out in the 

introduction to current § 3.54, which 

explains that a surviving spouse who 

married the veteran before, or during, 

the veteran’s service may qualify for 

DIC. Three alternative time-of-marriage 

requirements, which apply when the 

veteran and the surviving spouse were 

married after the veteran’s separation 

from service, are listed in current 

§ 3.54(c). These alternative requirements 

are that the surviving spouse was 

married to the veteran: 

(1) Before the expiration of 15 years after 

the termination of the period of service in 

which the injury or disease causing the death 

of the veteran was incurred or aggravated, or 

(2) For 1 year or more, or 

(3) For any period of time if a child was 

born of the marriage, or was born to them 

before the marriage. 

This list in current § 3.54(c) is based 

on 38 U.S.C. 1304, ‘‘Special provisions 

relating to surviving spouses,’’ which 

applies to a surviving spouse who is 

seeking DIC under 38 U.S.C. 1310. 

However, current § 3.54 does not 

explain time of marriage requirements 

for surviving spouses who married the 

veteran after service and who are 

seeking DIC under 38 U.S.C. 1151 or 38 

U.S.C. 1318. Proposed § 5.520 explains 

how the time of marriage requirement 

applies to claims for DIC under any of 

the three statutory bases for DIC. 

The time of marriage requirements are 

not specifically addressed in 38 U.S.C. 

1151. However, subsection 1151(a) 

provides that ‘‘[DIC] under chapter 13 of 

this title shall be awarded for a 

qualifying * * * death of a veteran in 

the same manner as if such * * * death 

were service-connected.’’ (Emphasis 

added.) Therefore, we conclude that the 

three methods in current § 3.54(c) for 

meeting the time of marriage 

requirements under 38 U.S.C. 1310 also 

apply to cases in which DIC is awarded 

based upon the provisions of 38 U.S.C. 

1151. Proposed § 5.520(b) includes this 

information. 

Proposed § 5.520(b)(1)(ii) resolves an 

ambiguity in the current regulation. As 

noted above, the time of marriage 

requirements for eligibility for DIC 

under 38 U.S.C. 1151 or 1310 may be 

met if the surviving spouse was married 

to the veteran for one year or more. We 

propose to state that multiple periods of 

marriage can be added together to meet 

this 1-year marriage requirement. The 

one-year marriage requirement is 

designed to prevent abuse by sham 

‘‘death bed’’ marriages to obtain 

benefits. We believe that there is much 

less risk of such abuse where the 

veteran and the surviving spouse have 

had an ongoing close relationship 

demonstrated by previous marriage. 

This information has been included to 

fill a gap in the current regulation. 

We believe that this interpretation, 

favorable to surviving spouses, is 

reasonable. The statute authorizing the 

time of marriage requirement, 38 U.S.C. 

1304, does not prohibit adding multiple 

periods of marriage together. On the 

other hand, 38 U.S.C. 1318 does provide 

such a prohibition. Specifically, 38 

U.S.C. 1318(c)(1) provides that benefits 

may not be paid under that section to 

a surviving spouse of a veteran unless 

‘‘the surviving spouse was married to 

the veteran for one year or more 

immediately preceding the veteran’s 

death.’’ Inasmuch as Congress 

prohibited combining multiple 

marriages together to meet the 1-year 

marriage requirement in 38 U.S.C. 1318 

and did not do so in 38 U.S.C. 1304, we 

believe it was Congress’ intent not to 

apply the prohibition to other claims for 

DIC. Norman J. Singer, Sutherland On 

Statutory Construction § 46:06 (6th ed. 

2000) (‘‘when the legislature uses 

certain language in one part of the 

statute and different language in 

another, the court assumes different 

meanings were intended. In like 

manner, where the legislature has 

carefully employed a term in one place 

and excluded it in another, it should not 

be implied where excluded.’’). 

Therefore, we have included in 

proposed § 5.520(b)(1)(ii) that multiple 

periods of marriage may be combined to 

meet the 1-year marriage requirement 

for claims of DIC based on 38 U.S.C. 

1151 or 1310. 

Proposed § 5.520(b)(2) describes the 

methods of meeting the time of marriage 

requirements under 38 U.S.C. 1318, 

which only provides for two methods of 

meeting the requirements. Following the 

statute, proposed paragraph (b)(2) omits 

the provision for marriage ‘‘[b]efore the 

expiration of 15 years after the 

termination of the period of service in 

which the injury or disease causing the 

death of the veteran was incurred or 

aggravated.’’

Concerning the one-year marriage 

requirement in claims based on 38 

U.S.C. 1318, we have previously noted 

that the statute provides that benefits 

may not be paid to a surviving spouse 

unless ‘‘the surviving spouse was 

married to the veteran for one year or 

more immediately preceding the 

veteran’s death.’’ 38 U.S.C. 1318(c)(1) 

(emphasis added). VA interprets this 

provision to mean that multiple periods 

of marriage cannot be added together to 

meet the 1-year marriage requirement 

for purposes of eligibility for DIC under 

38 U.S.C. 1318. In order to satisfy the 

one-year marriage requirement, the 

veteran and spouse must have been 

married continuously for a year or more 

immediately prior to the veteran’s 

death. Therefore, we propose to add the 

requirement for continuity of the 

marriage during the year prior to the 

veteran’s death to paragraph 

§ 5.520(b)(2). 

5.521 [Reserved] 

VA proposes to set out in §§ 5.521 and 

5.522 the rules concerning the payment 

of DIC benefits to the survivors of 

certain deceased veterans who received, 

or were entitled to receive, 

compensation for service-connected 

disability rated as totally disabling. 

These rules would be based on the 

statute that authorizes DIC on this basis, 

38 U.S.C. 1318, and VA’s implementing 

regulation, current § 3.22. 

However, we propose to simply 

reserve § 5.521 for purposes of this 

NPRM. VA is undertaking a separate 

rulemaking to respond to a decision by 

the United States Court of Appeals for 

the Federal Circuit in National 

Organization of Veterans’ Advocates, 

Inc. v. Secretary of Veterans Affairs, 314 

F.3d 1373 (Fed. Cir. 2003). See 69 FR 

62229 (2004). This proposed rulemaking 

involves revision of provisions of 

current § 3.22(b), which defines 

‘‘entitled to receive’’ for purposes of 

determining whether a veteran’s 

survivors are entitled to benefits under 

38 U.S.C. 1318. See 38 U.S.C. 1318(b). 

We propose to reserve § 5.521 as the 

eventual location for a part 5 regulation 

that will repeat the material in § 3.22(b) 

after the final amendment of § 3.22(b) is 

adopted. 

5.522 Dependency and indemnity 

compensation benefits for survivors of 

certain veterans rated totally disabled at 

time of death—offset of wrongful death 

damages. 

VA is required by 38 U.S.C. 1318(d) 

to offset the value of money or property 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61333 

a surviving spouse or child may receive 

‘‘pursuant to an award in a judicial 

proceeding based upon, or a settlement 

or compromise of, any cause of action 

for damages’’ for the death of a veteran 

against any death benefits to which the 

spouse or child may be entitled under 

38 U.S.C. 1318. Current § 3.22(e) 

implements this requirement. In 

proposed § 5.522, the part 5 replacement 

for § 3.22(e), we have restructured this 

material in more readily understandable 

language and to provide additional 

information about how the offset should 

be calculated. 

An opinion by the United States Court 

of Appeals for Veterans Claims in Bryan 

v. West, 13 Vet. App. 482 (2000), shows 

the need for regulatory guidance 

concerning how offsets are calculated. 

In Bryan the Court remanded a case to 

the Board of Veterans’ Appeals in order 

for the Board to decide the following 

matters with respect to a 38 U.S.C. 

1318(d) offset: ‘‘(1) How much money 

was received by a plaintiff other than 

[the VA claimant]; (2) Whether the 

money received by such a plaintiff was 

received ultimately by [the VA 

claimant] through estate distribution; (3) 

If so, whether such distribution was 

considered received by [the VA 

claimant]; and (4) Whether the money 

received by her attorney was, in 

contemplation of law, ‘received’ by [the 

VA claimant].’’ Proposed § 5.522 

addresses these and other practical 

issues. 

Proposed § 5.522(c)(1) incorporates a 

concept favorable to VA claimants 

(because it would reduce the amount of 

offset) from a 1997 Precedent Opinion 

by VA’s General Counsel, 

VAOPGCPREC 3–97, which states: 

Section 1318(d) of title 38, United States 

Code, requires offset against survivors’

benefits payable under section 1318 of 

amounts received by the beneficiary pursuant 

to an award, settlement, or compromise 

based on a claim for damages resulting from 

the death of a veteran, i.e., the types of 

damages typically recoverable under state 

wrongful death statutes, but does not require 

offset of amounts received pursuant to a 

survival action as compensation for injuries 

suffered by the veteran prior to his or her 

death. 

Legislative history is of some 

assistance in determining other aspects 

of how the offset should be calculated. 

VAOPGCPREC 3–97 includes the 

following information, at paragraph 10: 

The legislative history indicates that the 

purpose of providing DIC in the case of such 

non-service-connected deaths was to provide 

a measure of income to the surviving spouse 

or child to replace the support lost when the 

veteran died. In a report prepared during 

consideration of that legislation, the Senate 

Committee on Veterans’ Affairs stated that 

‘‘[t]he appropriate Federal obligation to these 

survivors should, in the Committee’s view, 

be the replacement of the support lost when 

the veteran dies.’’ S. Rep. No. 1054, 95th 

Cong., 2d Sess. 28 (1978), reprinted in 1978 

U.S.C.C.A.N. 3465, 3486. Similarly, the basis 

for authorizing such benefits was described 

during floor debates as follows: 

The purpose of those benefits is to provide 

income security to the survivors. This reflects 

the Committee’s view that the veteran’s total 

disability endured over a lengthy period of 

time, necessarily results in a substantial 

impairment of the veteran’s ability to provide 

for his or her survivors; and that the primary 

purpose of the new benefit is to compensate 

for that impairment. 

124 Cong. Rec. S12687 (daily ed. Aug. 7, 

1978) (statement of Sen. Cranston). * * * 

Particularly in view of Congressional 

intent that 38 U.S.C. 1318 benefits are 

to provide for the survivors’ support, we 

propose to look to whether the money 

or property received is actually 

available to meet the claimants’ needs 

and obligations, rather than the 

technical form in which the money or 

property is passed to the claimant, in 

calculating the offset under 38 U.S.C. 

1318(d). In this regard, we propose to 

adopt the rationale in paragraph 13 of 

VAOPGCPREC 3–97: 

13. Finally, we note that the reference in 

section 1318(d) to amounts received 

‘‘pursuant to’’ an award, settlement, or 

compromise may be intended to indicate that 

the surviving spouse or child need not have 

been an actual party to the action, but need 

only have received money or property of 

value ‘‘pursuant to’’ the action. Many state 

statutes require wrongful death actions to be 

brought by a representative of the estate or 

other designated representative, although 

such actions are for the exclusive benefit of 

the actual beneficiaries. 22A Am. Jur. 2d 

Death § 399. The phrase ‘‘pursuant to’’ may 

be read as clarifying that offset will be 

required against amounts received by the 

actual beneficiaries pursuant to a wrongful 

death action regardless of whether the 

beneficiaries were individually named as 

parties in the award, settlement, or 

compromise. 

Under proposed § 5.522(c)(2), any 

amounts used to pay a third party to 

satisfy a legal obligation of the claimant 

would be considered as ‘‘received’’ by 

the claimant regardless of whether the 

claimant receives the damages and pays 

the third party directly or whether the 

third party is paid on the claimant’s 

behalf by the party liable for the 

damages. This view is consistent with 

long-standing VA policy that attorney’s 

fees, court costs and other expenses 

incident to a civil claim are not 

deductible from the total amount 

awarded or accepted. For example, 

current § 3.22(g) provides that when a 

VA beneficiary reports money or 

property received, ‘‘[e]xpenses incident 

to recovery, such as attorney’s fees, may 

not be deducted from the amount to be 

reported.’’ However, in providing that 

damages going to pay attorney’s fees and 

costs be included in the offset, proposed 

§ 5.522(c)(2) limits the amount included 

to the particular claimant’s proportional 

share of fees and costs in cases where 

the recovered damages are payable to 

multiple parties. 

The 38 U.S.C. 1318(d) offset would 

not normally include damages payable 

to another person or entity. However, 

because the focus of 38 U.S.C. 1318(d) 

is on who receives the money or 

property, that exclusion does not apply 

where the other person or entity is 

merely acting as a conduit to pass the 

money or property recovered to the 

claimant. For example, a wrongful death 

award paid to a veteran’s estate that is 

then distributed to the claimant, or paid 

into a trust for the benefit of the 

claimant, would be included in the 

offset. We propose to address this 

situation in § 5.522(c)(3). 

Another addition to proposed § 5.522 

provides for determining the date of the 

valuation of property for purposes of 

this section. Current § 3.22(g) requires, 

in part, that a beneficiary receiving DIC 

under 38 U.S.C. 1318 report the value of 

property received as damages for the 

death of a veteran at fair market value, 

but is silent as to the time of valuation 

of such property. The statute, 38 U.S.C. 

1318, is also silent as to the time of 

valuation. We propose to fill this gap by 

providing, in § 5.522(c)(5), that the 

property be valued at its fair market 

value at the time the claimant receives 

it. We believe that this is most 

consistent with the expressed 

Congressional intent that these DIC 

benefits serve to provide for the support 

of the veteran’s survivors. 

Proposed paragraph (d), based on 

current § 3.22(g), states the DIC 

beneficiary’s obligation to report 

wrongful death recoveries to VA. We 

propose to add that overpayments 

created by failure to report will be 

subject to recovery if not waived. The 

instructions for VA Form 21–534, 

‘‘Application for Dependency and 

Indemnity Compensation, Death 

Pension and Accrued Benefits by a 

Surviving Spouse or Child (Including 

Death Compensation if Applicable),’’

notify claimants of the reporting 

requirement described in proposed 

§ 5.522(d). 

5.523 [Reserved] 

As indicated in the discussion 

concerning reservation of § 5.521, VA is 

undertaking a separate rule-making to 

respond to a decision by the United 

61334 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

States Court of Appeals for the Federal 

Circuit in National Organization of 

Veterans’ Advocates, Inc. v. Secretary of 

Veterans Affairs, 314 F.3d 1373 (Fed. 

Cir. 2003). See 69 FR 62229 (2004). That 

proposed rulemaking involves revision 

of provisions of current § 3.5(e) relating 

to the rates of DIC payable to surviving 

spouses and moving those provisions 

into new § 3.10. We propose to reserve 

§ 5.523 as the eventual location for the 

part 5 regulation that will repeat the 

material in proposed § 3.10 when § 3.10 

is adopted as a final rule. 

5.524 Awards of dependency and 

indemnity compensation benefits to 

children when there is a retroactive 

award to a school child. 

Under 38 U.S.C. 1313, ‘‘Dependency 

and indemnity compensation to 

children,’’ DIC is payable to eligible 

children when there is no surviving 

spouse entitled to DIC. The total amount 

payable to the children, which varies 

according to the number of eligible 

children, is divided and paid to the 

children in equal shares. However, there 

is an exception to the equal-share rule 

that applies to a retroactive payment to 

a child whose entitlement terminated 

when he or she reached eighteen years 

of age, but who later reestablished 

entitlement because he or she is 

pursuing a course of instruction at an 

approved educational institution. 

We have addressed rules concerning 

this exception, currently found in 

§ 3.650(c), in proposed § 5.524. In an 

effort to make them more 

understandable, we have substantially 

restructured the text. In proposed 

§ 5.524(a), ‘‘Applicability,’’ we have also 

provided more context by including a 

description of the equal-share rule and 

a better description of the exception to 

that rule that § 5.524 addresses. 

Because of requirements of 38 U.S.C. 

5111, ‘‘Commencement of period of 

payment,’’ payment of newly awarded 

or increased DIC does not begin to 

accrue until the first day of the calendar 

month following the month in which 

the award or increased award became 

effective. For that reason, proposed 

§ 5.524 refers to the ‘‘payment 

commencement date,’’ rather than the 

‘‘effective date,’’ in some instances. 

We have not included the provisions 

in § 3.650(c)(3) that state the method for 

determining retroactive awards to a 

school child for periods prior to October 

1, 1981 (a date established by Congress 

in the Veterans’ Disability 

Compensation, Housing, and Memorial 

Benefits Amendments of 1981, Pub. L. 

97–66, 95 Stat. 1026). We propose to 

omit this provision because we believe 

that all eligible dependents who could 

be affected by the provision have 

already received their benefits. In the 

unlikely event that the need should 

arise, VA could process the retroactive 

award relying on applicable statutory 

authority. 

Dependency and Indemnity 

Compensation—Eligibility 

Requirements and Payment Rules for 

Parents 

5.530 Eligibility for, and payment of, 

parents’ dependency and indemnity 

compensation. 

Proposed § 5.530 serves as an 

introduction to a group of regulations 

concerning parents’ DIC and provides a 

brief overview of that VA benefit 

program. 

As noted previously, proposed 

§ 5.510(b) sets out the three statutory 

bases for the award of DIC. Proposed 

paragraph § 5.530(a) explains that only 

two of those bases are applicable to 

parents’ DIC. This is because 38 U.S.C. 

1318, which provides for payment of 

DIC to the survivors of certain veterans 

with a service-connected disability rated 

as totally disabling at the time of their 

death, only provides benefits to the 

veteran’s surviving spouse and children. 

Unlike DIC benefits payable to 

surviving spouses and children, parents’

DIC is an income-based benefit program. 

Under 38 U.S.C. 1315(b) the amount of 

parents’ DIC payable bears an inverse 

relationship to the amount of the 

parents’ income and no DIC is payable 

if the parents’ income exceeds statutory 

limits. Proposed paragraph 5.530(b) 

states these principles and, through a 

cross-reference, points readers to 

subsequent part 5 sections that provide 

income and payment rate rules. 

Some income-based VA benefit 

programs also consider the claimant’s 

net worth in determining payments. For 

example, eligibility for certain benefits 

requires a specific finding that a parent 

was actually ‘‘dependent’’ upon the 

veteran, and VA considers the parent’s 

net worth in making such findings. See 

38 U.S.C. 102, 1115, 1121, 5121; 38 CFR 

3.263(a). However, that is not the case 

with parents’ DIC, as 38 U.S.C 1315 

does not require a specific finding of 

dependency, but merely provides that 

DIC may be paid to a veteran’s parent, 

subject to reduction based on the 

parent’s income. We therefore propose 

to state in paragraph 5.530(c) that net 

worth is not a factor in determining 

entitlement to parents’ DIC or the 

amount of parents’ DIC payable. 

5.531 General income rules. 

Proposed § 5.531 is based on 38 

U.S.C. 1315(f), which contains the basic 

statutory rules for determining what 

counts as income for parents’ DIC 

purposes, and portions of current 

§§ 3.251, 3.260, 3.261 and 3.262 that 

implement that statute. 

Proposed paragraph 5.531(a) states the 

basic statutory rule that VA must count 

all payments of any kind from any 

source in determining income. 

Beginning with this basic rule permits 

simplification of the proposed 

regulation because the all-inclusive 

nature of the basic rule eliminates any 

need to catalog types of countable 

income. All income that a parent 

receives is income for parents’ DIC 

purposes unless there is a specific 

exclusion. For example, with this 

beginning point, provisions such as the 

first sentence of current § 3.262(j)(2) 

(providing that, with respect to life 

insurance, ‘‘the full amount of payments 

is considered income as received’’) 

become redundant and need not be 

carried forward. We have also included 

a cross-reference to proposed § 5.533, 

‘‘Exclusions from income,’’ where the 

exceptions to the general rule in 

paragraph (a) may be found. 

Because VA must count all payments, 

it is necessary to know what VA 

includes in and excludes from the term 

‘‘payments.’’ Proposed § 5.531(b) serves 

that function. It is based on various 

rules from portions of current §§ 3.261 

and 3.262. See the ‘‘Table comparing 

current part 3 rules with proposed part 

5 rules’’ earlier in the supplementary 

information. 

Proposed § 5.531(c) provides that if a 

parent is married, ‘‘income’’ is the 

combined income of the parent and the 

parent’s spouse, except if the marriage 

has been terminated or the parent is 

separated from his or her spouse. We 

also propose to state in paragraph (c) 

that ‘‘[i]ncome is combined whether the 

parent’s spouse is the veteran’s other 

surviving parent or the veteran’s 

stepparent.’’ We believe that this is a 

clearer statement of the principle in the 

introduction to current § 3.262(b), 

which provides that ‘‘[i]ncome of the 

spouse will be determined under the 

rules applicable to income of the 

claimant.’’ The income rules in 

proposed § 5.531 are applicable to a 

parent. The spouse of a claimant-parent 

will always be either the veteran’s other 

parent (in which case the rules would 

expressly apply) or the veteran’s 

stepparent. 

Proposed paragraph (d) provides the 

rules VA uses to determine whether 

income from property is the income of 

a parent. Property ownership is an 

important indicator of the right to 

income from that property, but it is not 

always controlling. In keeping with 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61335 

long-standing VA practice, we propose 

to state in paragraph (d)(3) that if a 

parent transfers ownership of incomeproducing property to another person or 

legal entity, but retains the right to that 

income, the income will be counted. 

Current § 3.262(k)(1) provides, in part, 

that ‘‘if property is owned jointly each 

person will be considered as owning a 

proportionate share. The claimant’s 

share of property held in partnership 

will be determined on the facts found.’’

Current § 3.262(k)(2) provides, in part, 

that the ‘‘claimant’s share [of income] 

will be determined in proportion to his 

right according to the rules of 

ownership.’’ We propose to combine 

these provisions in § 5.531(d)(4) by 

stating that ‘‘[i]n the absence of 

evidence showing otherwise, VA will 

consider a parent who owns property 

jointly with others, including 

partnership property, to be entitled to a 

share of the income from that property 

proportionate to the parent’s share of 

ownership. VA will accept the 

claimant’s statement concerning the 

terms of ownership in the absence of 

evidence to the contrary.’’ The last 

sentence of paragraph (d)(4) follows the 

last sentence of current § 3.261(k)(1). 

Current § 3.260(b) provides rules for 

how VA calculates income when there 

is uncertainty about the amount of 

income a parent will receive during a 

calendar year. We propose, in § 5.531(e), 

to more clearly explain the process 

involved. We also propose to include a 

cross-reference to proposed § 5.535, 

‘‘Adjustments to parents’ DIC when 

income is less than anticipated,’’ to 

assist users of the proposed regulation 

in finding information about submitting 

amended income information. 

5.532 Deductions from income. 

While all income is counted except 

where there is statutory authority to 

exclude it, VA permits deductions from 

countable income in some instances. 

That is, the amount of income 

ultimately counted is the difference 

between income and certain deductible 

expenses directly associated with that 

income. Proposed § 5.532 lists permitted 

deductions. These deductions are the 

same as those included in current 

§ 3.262. However, we propose to add 

some clarifications, as described in the 

following paragraphs. 

Proposed § 5.532(a) continues a rule 

in current § 3.262(a)(2) that permits the 

deduction of expenses incident to the 

operation of businesses and professions 

from income from those sources. We 

propose to clarify that ‘‘business’’

includes the operation of a farm and 

transactions involving investment 

property. Because of this definitional 

change, it is only necessary to state in 

§ 5.532(a) that losses sustained in 

operating a business or profession may 

not be deducted from income from any 

other source. This is consistent with the 

rule in current § 3.262(a)(3) that states 

that ‘‘[a] loss sustained in operating a 

business, profession, or farm or from 

investments may not be deducted from 

income derived from any other source.’’

Note also that current § 3.262(a)(3) 

implies that investment income is 

counted and that current § 3.262(k)(5) 

provides, with respect to DIC, that profit 

from the sale of nonbusiness property is 

not counted. With respect to 

investments, VA only counts income 

when the investment property is sold 

and does not constantly adjust income 

based on increases or decreases in the 

market value of investment property 

due to market fluctuations. Therefore, 

VA essentially already treats investment 

transactions as business transactions. 

Proposed § 5.532(b) continues a 

provision in current § 3.262(j)(4) that 

permits deduction of related medical, 

legal, or other expenses from sums 

recovered under disability, accident, or 

health insurance. Of course the same 

expenses cannot be deducted twice. 

Therefore, we propose to state in 

§ 5.532(b) that if medical expenses are 

deducted under that paragraph, they 

cannot be deducted as unusual medical 

expenses under § 5.532(d). 

Proposed § 5.532(d) states the rules 

for deducting unusual medical 

expenses, as authorized by 38 U.S.C. 

1315(f)(3) and described in current 

§ 3.262(l). Among other things, the latter 

permits deduction of the unusual 

medical expenses of relatives of a parent 

or, under some circumstances, of a 

parent’s spouse who are ‘‘constructive 

members’’ of the household. See 

§ 3.262(l)(4). However, there is no 

definition of what a ‘‘constructive’’

household member is. In VAOPGCPREC 

61–90, VA’s Office of General Counsel 

discussed exceptions that had been 

carved out of the general rule that a 

‘‘household’’ is comprised of those who 

dwell under the same roof and compose 

a family. The General Counsel then 

observed that: 

We regard the foregoing exceptions with 

respect to the language ‘‘who is a member of 

a veteran’s household’’ generally as 

recognizing any situation where it may be 

reasonably assumed that the parties would be 

dwelling under one roof but for unusual or 

unavoidable circumstances, such as one 

temporary in nature or one beyond the 

control of the parties and wherein the family 

ties and relationship continue and the parties 

considered themselves morally bound to care 

for each other. 

We believe that this statement 

captures the meaning of ‘‘constructive’’

household membership. However rather 

than referring to constructive household 

members and then defining that term, 

we propose to use a simpler approach 

by stating in § 5.532(d)(1)(i) that ‘‘[a 

family member] includes a relative who 

would normally be a resident of the 

household, but who is physically absent 

due to unusual or unavoidable 

circumstances, such as a child away at 

school or a family member confined to 

a nursing home.’’

We have not repeated in proposed 

§ 5.532(d) a restriction in current 

§ 3.262(l)(4) that limits the exclusion of 

unreimbursed amounts a parent pays for 

the unusual medical expenses of the 

parent’s relatives who are members, or 

‘‘constructive members,’’ of the parent’s 

household to relatives ‘‘in the ascending 

as well as descending class.’’ We 

construe this to mean relatives in the 

parents’ direct line. (Ascendant means 

‘‘[o]ne who precedes in lineage, such as 

a parent or grandparent.’’ Black’s Law 

Dictionary 121 (8th ed. 2004). 

Descendant means ‘‘[o]ne who follows 

in lineage, in direct (not collateral) 

descent from a person. Example are 

children and grandchildren.’’ Id. at 476.) 

This would appear to exclude, for 

example, the medical expenses of an 

orphaned niece or nephew who had 

been taken into the parent’s household. 

This restriction to the ascending and 

descending class is not required by 

statute. The authorizing statute, 38 

U.S.C. 1315(f)(3), merely states that 

‘‘[t]he Secretary [of Veterans Affairs] 

may provide by regulation for the 

exclusion from income under this 

section of amounts paid by a parent for 

unusual medical expenses.’’ We do not 

believe that the restriction is necessary, 

particularly because the deduction is 

already limited in several ways that 

should serve to deter any abuse. The 

deduction is limited to expenses of 

persons who are relatives, who are 

members of the parent’s household (or 

who would be a member of the 

household absent unusual or 

unavoidable circumstance), and to 

whom the parent has a moral or legal 

obligation of support. We also note that 

there is no such restriction with respect 

to medical expenses deductions used in 

calculating VA’s largest income-based 

program, Improved Pension. See current 

§ 3.272(g)(1)(i). We believe that VA’s 

rules for determining income for 

purposes of administering its incomebased programs should be consistent 

unless the law requires otherwise. 

The term ‘‘medical expenses’’ is used 

in a number of regulations in current 

part 3 and would similarly appear in a 

61336 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

number of regulations in proposed part 

5. Therefore, we will propose a 

centralized definition of that term in a 

separate NPRM as part of the Project. 

This is the definition referenced in 

proposed § 5.532(d)(1)(ii). 

5.533 Exclusions from income. 

Income that VA does not count when 

calculating parents’ income is listed in 

proposed § 5.533. Paragraph (a) is based 

on 38 U.S.C. 1315(f)(1)(A), which 

excludes ‘‘payments of the six-months’

death gratuity.’’ However, we propose to 

change the description to ‘‘death 

gratuity payments by the Secretary 

concerned under 10 U.S.C. 1475 

through 1480.’’ The phrase ‘‘six-months’

death gratuity’’ is obsolete. While the 

death gratuity consisted of six-months’

pay when originally enacted (see Pub. L. 

66–99, 41 Stat. 367 (1919)), that is no 

longer the case. Over the years these 

death gratuity payments have evolved 

into a fixed sum, rather than a variable 

amount equal to six-months’ pay. See 10 

U.S.C. 1478. As would be provided in 

proposed paragraph (a), this exclusion 

extends to death gratuity payments in 

lieu of payments under 10 U.S.C. 1478 

made to certain survivors of ‘‘Persian 

Gulf conflict’’ veterans as authorized by 

the Persian Gulf Conflict Supplemental 

Authorization and Personnel Benefits 

Act of 1991. See Pub. L. 102–25, Title 

III, Part A, § 307, 105 Stat. 82 (1991). 

(Note that the phrase ‘‘Secretary 

concerned’’ is defined currently in 

§ 3.1(g). It will also be defined in § 3.1’s 

part 5 equivalent, to be published in 

another NPRM.) 

Subsection (f)(1)(B) of 38 U.S.C. 1315 

excludes ‘‘donations from public or 

private relief or welfare organizations’’

from income for parents’ DIC purposes. 

Proposed § 5.533(b) would combine 

material from several portions of current 

§ 3.262 that explain how VA interprets 

this exclusion. One of these is current 

§ 3.262(f), which states that ‘‘[b]enefits 

received under noncontributory 

programs, such as old age assistance, aid 

to dependent children, and 

supplemental security income are 

subject to the rules contained in 

paragraph (d) of this section applicable 

to charitable donations.’’ We propose to 

remove the references to the Old Age 

Assistance program and the Aid to 

Dependent Children program because 

these programs no longer exist. The Old 

Age Assistance program was phased out 

and totally replaced by the 

Supplemental Security Income program 

in 1972 and the Aid to Dependent 

Children program became a federal 

block grant known as Temporary 

Assistance to Needy Families in 1996. 

Section (f)(1)(C) of 38 U.S.C. 1315 

provides that several types of VA benefit 

payments are not counted in 

determining income for parents’ DIC 

purposes. These include payments 

made under 38 U.S.C. chapter 15, the 

chapter that authorizes VA’s current 

Improved Pension program, and ‘‘under 

the first sentence of section 9(b) of the 

Veterans’ Pension Act of 1959.’’ The 

referenced sentence preserved the rights 

of persons receiving earlier types of 

pension to continue to receive that 

pension at the time that Section 306 

pension was introduced. The Veterans’

and Survivors’ Pension Improvement 

Act of 1978, Pub. L. 95–588, 92 Stat. 

2497 (1978), introduced the current 

Improved Pension program. Section 

306(b)(1) of that public law explicitly 

repealed section 9(b) of the Veterans’

Pension Act of 1959. See 92 Stat. 2509. 

However, section 306(b)(3) of Pub. L. 

95–588 provides that those who do not 

elect to receive Improved Pension ‘‘shall 

continue to receive pension at the 

monthly rate being paid to such person 

on December 31, 1978, subject to all 

provisions of law applicable to basic 

eligibility for and payment of pension 

under section 9(b) of the Veterans’

Pension Act of 1959, as in effect on 

December 31, 1978.’’ 92 Stat. 2509. We 

interpret these various provisions 

together as excluding all VA nonserviceconnected disability and death pension 

payments from income for parents’ DIC 

purposes, as currently provided in 

§ 3.261(a)(20). That rule is stated in 

§ 5.533(c)(3). 

Another exclusion from parents’

countable income, found at 38 U.S.C. 

1315(f)(1)(G), is ‘‘10 percent of the 

amount of payments to an individual 

under public or private retirement, 

annuity, endowment, or similar plans or 

programs.’’ VA has traditionally 

construed this ten-percent exclusion to 

apply to a broad range of payments for 

disability or death, including payments 

pursuant to insurance policies, statutory 

retirement or disability-compensation 

programs, and tort damages collected 

pursuant to employer’s liability statutes. 

In a 1966 opinion, designated as VA 

Administrator’s Decision 989, the 

Administrator of Veterans’ Affairs 

applied the principle that statutes 

should be construed in favor of veterans 

and reasoned that such payments are 

sufficiently similar to payments under a 

retirement program to come within the 

meaning of statutory language 

essentially identical to that in 38 U.S.C. 

1315(f)(1)(G). That interpretation is 

reflected in current VA regulations at 38 

CFR 3.262(f), (g), (i)(2), (j)(1), (j)(2), and 

(j)(4). We propose to aggregate in 

proposed § 5.533(g) all of the various 

§ 3.262 ten-percent exclusions based on 

the 38 U.S.C. 1315(f)(1)(G) exclusion. 

One of these 10-percent exclusions, 

found at current § 3.262(i)(2), is for 

‘‘payments based on permanent and 

total disability or death * * * received 

from the Bureau of Employees’

Compensation.’’ The Bureau of 

Employees’ Compensation was 

abolished in 1974. See 20 CFR 1.5. Its 

functions are now carried out by the 

Office of Workers’ Compensation 

Programs of the U.S. Department of 

Labor. See 20 CFR 1.6(b). This change 

is reflected in proposed paragraph (g)(4). 

Section 1315(f)(1)(K) of 38 U.S.C. 

1315 excludes ‘‘profit realized from the 

disposition of real or personal property 

other than in the course of a business’’

from being counted as income for 

parents’ DIC purposes. Current 

§ 3.262(k)(5) states, in part, that ‘‘[a]ny 

amounts received in excess of the sales 

price will be counted as income. Where 

payments are received in installments, 

principal and interest will not be 

counted separately.’’ We interpret this 

last statement to mean that where 

payments are received in installments, 

the installments received will not begin 

to count as income until the total of 

installments received is equal to the 

sales price without interest. That rule is 

more clearly stated at proposed 

§ 5.533(i). 

Section 38 U.S.C. 1315(f)(1)(F) 

excludes, among other things, 

‘‘payments of servicemen’s indemnity.’’

We propose to omit this exclusion 

because it is now obsolete. The 

Servicemen’s Indemnity Act of 1951, 

Pub. L. 82–23, 65 Stat. 33, 34 (1951), 

authorized VA to pay indemnity in the 

form of $10,000 automatic life insurance 

coverage to the survivors of members of 

the Armed Forces who died in service. 

However, the Act authorizing this 

benefit was repealed in 1956. See sec. 

502(9) of the Servicemen’s and 

Veterans’ Survivor Benefits Act, Pub. L. 

84–881, 70 Stat. 857, 886 (1956). 

Current § 3.262(e)(4) provides, in part, 

that: 

Where a parent was receiving or entitled to 

receive dependency and indemnity 

compensation and retirement benefits based 

on his or her own employment on December 

31, 1966, the retirement payments will not be 

considered income until the amount of the 

claimant’s personal contribution (as 

distinguished from amounts contributed by 

the employer) has been received. Thereafter 

the 10 percent exclusion will apply. 

Similarly, current § 3.262(j)(1) 

provides in part that: 

In dependency and indemnity 

compensation claims, where the parent is 

receiving or entitled to receive dependency 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61337 

and indemnity compensation on December 

31, 1966, and is also receiving or entitled to 

receive annuity payments on that date, or 

endowment insurance matures on or before 

that date, no part of the payments received 

will be considered income until the full 

amount of the consideration has been 

received, after which 10 percent of the 

amount received will be excluded. 

We propose to omit these two 

provisions from § 5.533. It is extremely 

unlikely that a parent’s contributions to 

retirement benefits, an annuity, or an 

endowment he or she was receiving on 

December 31, 1966, were not recovered 

long ago. Should the occasion arise, VA 

will adjudicate any affected claims 

under existing statutory authority. 

Proposed § 5.533(k) continues an 

exclusion for payments under section 6 

of the Radiation Exposure 

Compensation Act of 1990, Pub. L. 101–

426, 104 Stat. 920, 923. Payments under 

that act are not countable as income for 

parents’ DIC purposes because section 

6(h)(2) of the act provides that amounts 

paid to individuals under section 6 

‘‘shall not be included as income or 

resources for purposes of determining 

eligibility to receive benefits described 

in section 3803(c)(2)(C) of title 31, 

United States Code, or the amount of 

such benefits.’’ The list of benefits in 31 

U.S.C. 3803(c)(2)(C) includes benefits 

under 38 U.S.C. chapter 13. See 31 

U.S.C. 3803(c)(2)(C)(viii). Parents’ DIC is 

such a benefit. 

However, payments under section 6 of 

the Radiation Exposure Compensation 

Act of 1990 are not the only payments 

that Congress has excluded from 

consideration as income for benefit 

programs on the 31 U.S.C. 3803(c)(2)(C) 

list. Our research has shown three 

others that we propose to add to § 5.533 

as paragraph (l) through (n). These are 

payments under section 103(c)(1) of the 

Ricky Ray Hemophilia Relief Fund Act 

of 1998, payments under the Energy 

Employees Occupational Illness 

Compensation Program, and payments 

to certain eligible Aleuts under 50 U.S.C 

Appx. 1989c–5. 

There are also a number of other 

Federal statutes that exempt specific 

kinds of income from consideration in 

determining either eligibility for all 

Federal income-based programs, or 

eligibility for all of VA’s income-based 

benefit programs. Because those 

exclusions affect more than the parents’

DIC benefit program, they will be 

addressed in a separate regulation in 

another NPRM to be published later as 

part of this Project. This separate 

regulation is the future regulation 

mentioned in paragraphs (c)(4) and (q) 

of proposed § 5.533. 

These broad exclusions that will be 

addressed in a future NPRM include 

some of the income exclusions that 

currently appear in §§ 3.261 and 3.262. 

These are Agent Orange settlement 

payments, certain relocation payments, 

annuity payments elected under the 

Retired Serviceman’s Family Protection 

Plan, restitution to individuals of 

Japanese ancestry, income received by 

American Indian beneficiaries from 

trust or restricted lands, payments 

under the Alaska Native Claims 

Settlement Act, payments from certain 

volunteer programs, Victims of Crime 

Act of 1984 payments, and monetary 

allowances under 38 U.S.C. chapter 18 

for certain children of veterans who 

served in Vietnam and Korea. Because 

these exclusions will be addressed in 

another regulation included in a future 

NPRM, they have not been listed in 

proposed § 5.533. 

In redrafting various provisions of 

current § 3.262 for proposed § 5.533, we 

have intentionally omitted references to 

a January 1, 1967, effective date 

applicable to various income exclusions 

in paragraphs (e)(4), (i)(2), (j)(1), (j)(4), 

and (k)(5) of § 3.262. We believe that it 

is highly unlikely that VA would need 

to process a retroactive adjustment to a 

prior parents’ DIC award effective more 

than 35 years in the past. Therefore, we 

believe it is no longer necessary to refer 

to these effective dates in the regulation. 

Should the occasion arise, VA will 

adjudicate any affected claims under 

existing statutory authority. 

5.534 When VA counts parents’

income. 

Proposed § 5.534 is based on portions 

of current §§ 3.251 and 3.260 that 

pertain to when VA counts income for 

parents’ DIC purposes. Rules concerning 

pension in current § 3.260 will be 

addressed in a different NPRM. 

Current § 3.251(b) provides that 

‘‘[i]ncome will be counted for the 

calendar year in which it is received 

and total income for the full calendar 

year will be considered except as 

provided in § 3.260.’’ The introduction 

to current § 3.260 provides that ‘‘[f]or 

entitlement to pension or dependency 

and indemnity compensation, income 

will be counted for the calendar year in 

which it is received.’’ Proposed 

§ 5.534(a) provides a consolidated 

restatement of these rules. It also 

clarifies that VA uses anticipated 

income in calculating parents’ DIC in 

some circumstances (for example, see 

proposed § 5.531(e)). 

The remainder of proposed § 5.534 

sets out the exceptions referenced in 

paragraph 5.534(a)(3), ‘‘VA will count 

parents’ total income for the full 

calendar year except as provided in this 

section.’’

The first exception, addressed in 

proposed paragraph (b), is based on 

concepts in current § 3.260(c) and (d) 

concerning ‘‘proportionate’’ income 

calculations. As proposed paragraph 

5.534(b) indicates, ‘‘proportionate’’

income calculations are used when 

parents’ DIC is first awarded, or when 

an award follows a period of no 

entitlement. Under the proportionate 

annual income calculation method, VA 

disregards income received, and 

expenses paid, during the portion of the 

year prior to the award of parents’ DIC. 

It then determines what the parent(s)’

income would have been if income had 

been received at the same rate for the 

entire calendar year as it was from the 

effective date of the award of parents’

DIC to the end of the calendar year. The 

result is the proportionate annual 

income. 

Paragraph (b)(3) describes the specific 

steps VA would use to calculate this 

proportionate annual income. While 

there are several ways in which the 

mathematical process involved could be 

described, we are proposing a daily 

average method, because we believe this 

will be the most understandable to 

regulation users. Basically, VA would 

calculate the daily average income for 

the applicable portion of the year and 

multiply that figure by 365 to determine 

what annual income would have been if 

the same level of income had been in 

effect for the entire year. 

As current 3.260(c) does, proposed 

paragraph 5.534(b) permits using actual 

annual income, rather than 

proportionate income, if that would be 

to the parents’ advantage. 

The second exception to the general 

rule in proposed § 5.534(a)(3) is set out 

in paragraph (c). It states that ‘‘[i]f a 

parent marries during the applicable 

calendar year, income received by the 

parent’s spouse prior to the date of the 

marriage is not counted.’’ This simple 

rule is in accord with long-standing VA 

practice. It would replace complex rules 

in current § 3.260(f), as they relate to 

parents’ DIC, and would achieve 

essentially the same result. 

Finally, we note that we have 

intentionally omitted the rule stated in 

current § 3.260(a) that installment 

income ‘‘will be determined by the total 

amount received or anticipated during 

the calendar year.’’ In terms of whether 

installment income will be counted as 

parents’ income, this rule is subsumed 

in the general rule stated in proposed 

§ 5.531(a) that all payments of any kind 

from any source are counted in 

determining the income of a veteran’s 

parents. With respect to proposed 

61338 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

§ 5.534, the rule in § 3.260(a) is not an 

exception to the general rules in 

§ 5.534(a). 

5.535 Adjustments to parents’ DIC 

when income is less than anticipated. 

Proposed § 5.535 is a simplification 

and clarification of the rules in current 

§ 3.660(b) that state when VA may make 

a retroactive award of parents’

dependency and indemnity 

compensation based on amended 

income information. Current 

§ 3.660(b)(1) and (2) state the following 

alternative rules for determining when a 

parent must submit amended income 

information in order to obtain a 

retroactive increase in DIC benefits 

when income decreases: 

(1) Anticipated income. Where payments 

were not made or were made at a lower rate 

because of anticipated income, pension or 

dependency and indemnity compensation 

may be awarded or increased in accordance 

with the facts found but not earlier than the 

beginning of the appropriate 12-month 

annualization period if satisfactory evidence 

is received within the same or the next 

calendar year. 

(Authority: 38 U.S.C. 5110(h)) 

(2) Actual income. Where the claimant’s 

actual income did not permit payment, or 

payment was made at a lower rate, for a given 

12-month annualization period, pension or 

dependency and indemnity compensation 

may be awarded or increased, effective the 

beginning of the next 12-month 

annualization period, if satisfactory evidence 

is received within that period. 

Proposed § 5.535(b) follows the rule 

in § 3.660(b)(1). We propose to omit the 

rule in § 3.660(b)(2), which provides a 

shorter period of time for submitting 

amended income information in some 

instances, because we believe that it has 

no practical application to parents’ DIC 

cases. 

With respect to parents’ DIC, current 

§ 3.660(b)(2) contemplates a situation 

such as the following: A parents’ DIC 

beneficiary provides VA with the 

amount of income expected for year A. 

VA pays DIC for year A based on that 

anticipated income. The beneficiary 

receives actual income for year A in the 

amount anticipated. Therefore, no 

adjustments are necessary for year A. 

However, income decreases during year 

B. If the beneficiary provides VA with 

evidence of the decreased income for 

year B not later than December 31 of 

year B, VA will increase benefits for 

year B because of the decreased income. 

However, as a practical matter, what 

will have taken place in this situation is 

that VA will have commenced paying 

benefits for year B either in anticipation 

that income for year B is going to be the 

same as it was for year A or on the basis 

of anticipated income information for 

year B from the beneficiary. In either 

case, the situation will be one in which 

anticipated income for year B turned out 

to be less than anticipated. Therefore, 

the rule in 3.660(b)(1) would apply and 

the parent would have through 

December 31 of year C to provide 

evidence of the decreased income for 

year B. 

5.536 Parents’ dependency and 

indemnity compensation rates. 

Current part 3 regulations for 

determining the rates payable for 

parents’ dependency and indemnity 

compensation are quite complex. 

Current § 3.25 sets out a series of rules 

for calculating payments of DIC to 

parents. The rules vary depending upon 

whether there is one unmarried parent, 

one parent who has remarried, two 

parents living together, two parents not 

living together, two parents not living 

together one or both of whom have 

remarried, or a parent who is a patient 

in a nursing home or who is so helpless 

or blind, or so nearly helpless or blind, 

as to require the regular aid and 

attendance of another person. The rules 

refer regulation users to various 

provisions of 38 U.S.C. 1315 for specific 

rates. Together with current § 3.27(b), 

they note that those rates, and the 

annual income limitation for parents’

DIC, are increased in step with cost-ofliving increases in benefits under title II 

of the Social Security Act. (These 

increases are required by 38 U.S.C. 

5312(b).) Because parents’ DIC is 

income based and because 38 U.S.C. 

1315 requires it, these rules also provide 

for rate reductions based on parents’

income. They provide a formula for that 

reduction, but note that the formula will 

be recomputed when there is a rate 

increase in order to achieve ‘‘an 

equitable distribution of the rate 

increase.’’

Current §§ 3.25 and 3.27(d) together 

require that VA publish in the Federal 

Register the increased DIC payment 

rates, the annual income limitation 

increases, and the updated formulas VA 

uses for reducing DIC payments because 

of income. Section 3.25 also includes 

various other rules based on 

requirements of 38 U.S.C. 1315, such as 

a $5.00 minimum for parents’ DIC 

payments applicable under some 

circumstances. 

These various provisions of §§ 3.25 

and 3.27 are all accurate, but they do 

not provide the information in a way 

that is very practical for regulations 

users who want specific information 

about the dollar amounts of rates and 

income limitations and the specific 

current formulas for calculating 

payment reductions because of income. 

Essentially, they send users to different 

sections of statutes and to 

announcements by the Social Security 

Administration to obtain data for 

performing complex calculations under 

different scenarios. However, as they 

also note, VA performs those 

calculations when there are changes and 

publishes the result in the Federal 

Register. For an example, see the rates 

of parents’ DIC published in the Federal 

Register on April 7, 2004 (69 FR 18425). 

In § 5.536, we propose to take a much 

simpler and more practical approach. 

Proposed paragraph (a) states that VA 

pays DIC to eligible parents based upon 

statutory requirements and briefly 

describes the nature of the relevant 

statutory provisions. It also crossreferences the regulation concerning the 

calculation of parents’ DIC based on 

service of certain Filipino veterans. 

Then, in paragraph (b), proposed § 5.536 

provides that VA will use the data it 

publishes in the Federal Register in 

calculating parents’ DIC payments. VA 

normally publishes such data within 

three months of the effective date of the 

legislative cost-of-living increases. 

The remainder of § 5.536 provides 

specific rate payment rules based on 

various provisions of current §§ 3.25, 

3.251, 3.260, and 3.704. See the ‘‘Table 

comparing current part 3 rules with 

proposed part 5 rules’’ earlier in the 

supplementary information. 

5.537 Payment intervals. 

Proposed § 5.537(a) states the general 

rule that VA pays parents’ DIC monthly. 

An exception in proposed paragraph (b) 

is based on the rule in current § 3.30(e) 

that provides that parents’ DIC will be 

paid semiannually if the amount of the 

annual benefit is less than 4 percent of 

the maximum allowable rate as 

published in the Notices section of the 

Federal Register. We propose to retain 

the exception, found in the introduction 

to current § 3.30, that permits parents 

receiving payment semiannually to elect 

to receive payment monthly in cases in 

which other Federal benefits would 

otherwise be denied. 

Effective Dates 

5.573 Effective date for dependency 

and indemnity compensation rate 

adjustments when an additional 

survivor files an application. 

Proposed § 5.573 is a revision of 

current § 3.650(a) and (b) and provides 

general DIC rate and effective date 

determination rules. We intend no 

substantive changes in these provisions. 

We propose to use ‘‘survivor’’ rather 

than the word ‘‘dependent,’’ which is 

used in current § 3.650. DIC is payable 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61339 

to certain survivors of a veteran who 

may or may not have been financially 

dependent upon the veteran. See 38 

U.S.C. 1310(a) (providing for payment of 

DIC to a veteran’s surviving spouse, 

children, or parents). This proposed rule 

would fall at the end of the effective 

date rules for subpart G previously 

published for notice and comment. See 

69 FR 59072 (Oct. 1, 2004). 

5.574 Effective dates of awards and 

discontinuances of special monthly 

dependency and indemnity 

compensation. 

Proposed § 5.574 provides effective 

date rules for the award and 

discontinuance of special monthly DIC 

benefits. Proposed § 5.574(b)(1), based 

on current §§ 3.502(e)(1) and 3.504, 

provides an effective date rule for the 

discontinuance of special monthly DIC 

when a surviving spouse or parent is no 

longer in need of aid and attendance. 

The current rules refer to discontinuing 

special monthly DIC on the ‘‘date of last 

payment.’’ We propose to instead state 

that ‘‘VA will discontinue special 

monthly DIC based upon the need of aid 

and attendance effective the first day of 

the month that follows the month for 

which VA last paid that benefit.’’ The 

result is exactly the same, but we 

believe that this description will be 

clearer to VA claimants and to VA 

personnel who adjudicate claims. As the 

name suggests, VA pays special monthly 

DIC on a monthly basis. See 38 U.S.C. 

1311(c) and (d) and 1315(g). The ‘‘last 

payment’’ in question is the check for 

the last month in which VA paid the 

benefit. Benefit payments would 

therefore stop on the first day of the 

following month. 

We have not included in this special 

monthly DIC effective date section 

language in current § 3.502(e)(2) which 

states the following: ‘‘If hospitalized at 

Department of Veterans Affairs expense 

as a veteran, the date [of discontinuance 

of the aid and attendance allowance to 

a surviving spouse will be the date] 

specified in § 3.552(b)(1) or (3).’’ We 

have also omitted similar language from 

current § 3.504 pertaining to the 

discontinuance of the aid and 

attendance allowance for surviving 

parents. Current § 3.552(b) is based on 

38 U.S.C. 5503(c) (identified in the 

authority citation at the end of 

§ 3.552(b) under its old designation of 

38 U.S.C. 5503(e)). The provisions of 38 

U.S.C. 5503(c) only concern adjustments 

of special monthly disability 

compensation under various portions of 

38 U.S.C. 1114 for veterans who are in 

need of aid and attendance and special 

monthly pension for veterans who are in 

need of aid and attendance. 

We propose, in § 5.574(b)(2), to 

provide an effective date rule for 

discontinuance of a surviving spouse’s 

special monthly DIC award based on 

housebound status that parallels the 

structure of the rule for the 

discontinuance of a surviving spouse’s 

special monthly DIC award based on the 

need for aid and attendance. ‘‘When a 

surviving spouse is no longer 

housebound, VA will discontinue 

special monthly DIC based upon 

housebound status effective the first day 

of the month that follows the month for 

which VA last paid that benefit.’’

Omission of Rule in 38 CFR 3.22(h) 

Current § 3.22(h), based on 38 U.S.C. 

1318(e), sets out a rule concerning the 

offset of certain DIC payments to a 

surviving spouse against annuity 

payments to that spouse under a 

survivor benefit plan applicable to 

survivors of members of the Armed 

Forces. We propose not to repeat that 

rule in part 5. The rule is accurate, but 

it provides no substantive information 

that is not included in the underlying 

statute. Further, the survivor benefit 

plan in question is not administered by 

VA. It is administered by the 

Department of Defense. 

Endnote Regarding Amendatory 

Language 

We intend to ultimately remove part 

3 entirely, but we are not including 

amendatory language to accomplish that 

at this time. VA will provide public 

notice before removing part 3. 

Paperwork Reduction Act 

Proposed 38 CFR 5.500 through 5.502, 

which are set forth in full in the 

proposed regulatory text portion of this 

document, contain collections of 

information under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501–

3521). These provisions prescribe the 

information VA claimants submit to 

prove the death of a person upon whose 

death their entitlement to various VA 

benefits for survivors depends. As 

required under section 3507(d) of the 

Act, VA has submitted a copy of this 

proposed rulemaking action to the 

Office of Management and Budget 

(OMB) for its review of the collection of 

information. 

OMB assigns control numbers to 

collections of information it approves. 

VA may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information unless it 

displays a currently valid OMB control 

number. Subject to OMB approval, VA 

proposes to amend the collection 

currently approved by OMB under 

control number 2900–0004 to include 

the information described in proposed 

38 CFR 5.500 through 5.502. 

Comments on the collections of 

information should be submitted to the 

Office of Management and Budget, 

Attention: Desk Officer for the 

Department of Veterans Affairs, Office 

of Information and Regulatory Affairs, 

Washington, DC 20503, with copies to 

the Director, Regulations Management 

(00REG1), Department of Veterans 

Affairs, 810 Vermont Avenue, NW., 

Washington, DC 20420. Comments 

should indicate that they are submitted 

in response to ‘‘RIN 2900–AL89.’’

Title: Proof of death. 

Summary of collection of information: 

Survivors of VA beneficiaries may be 

entitled to certain VA survivors’ benefits 

when that beneficiary dies. Examples of 

such survivors’ benefits that would be 

governed by provisions of proposed 38 

CFR part 5 include benefits awarded, 

but unpaid at death, and accrued 

benefits under 38 U.S.C. 5121; death 

compensation under 38 U.S.C. 1121 and 

1141; dependency and indemnity 

compensation under 38 U.S.C. chapter 

13; and death pension under 38 U.S.C. 

chapter 15. Proposed 38 CFR 5.500 

through 5.502 set forth the various kinds 

of evidence that a survivor may submit 

to prove the death. VA will provide 

assistance in obtaining this evidence as 

provided in 38 CFR 3.159(c). 

Description of the need for 

information and proposed use of 

information: A basic element of 

entitlement to VA benefits for survivors 

is establishing the death of the person 

whom the claimant survives. VA will 

examine the evidence of death 

submitted in determining eligibility for 

claimed survivors’ benefits. 

Description of likely respondents: VA 

survivors’ benefits claimants. 

Estimated number of respondents: 

Approximately 56,865 per year. 

Estimated frequency of responses: 

This information is collected on a ‘‘onetime’’ basis. 

Estimated average burden per 

collection: In most cases survivors will 

have evidence of death at hand because 

they have gathered that evidence for 

probating estates, filing commercial life 

insurance claims, and similar purposes. 

Most survivors know that proof of death 

should accompany applications for VA 

survivors’ benefits and mail copies of 

the proof of death to VA with their 

applications. (The information 

collections in survivor benefit 

applications have been separately 

approved by OMB.) VA estimates that 

the burden for those individuals will be 

approximately one-quarter hour for 

locating and mailing the documentation 

proving death they already have at 

61340 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

hand. In other cases, VA will obtain the 

proof of death for the claimant. VA is 

obligated under 38 CFR 3.159(c) to 

obtain for claimants records in the 

custody of a Federal department or 

agency and will make reasonable efforts 

to obtain records in the custody of other 

sources. In a relatively small number of 

cases claimants will need to obtain 

proof of death and provide it to VA. VA 

estimates that this will take an average 

of 1 hour per respondent. 

Estimated total annual reporting and 

recordkeeping burden: This information 

collection imposes no recordkeeping 

requirement. VA estimates that it will 

receive approximately 66,900 

applications for VA survivors’ benefits 

annually. VA estimates that it will 

obtain proof of death for approximately 

15 percent of those claimants. Of the 

remaining 56,865 claimants, VA 

estimates that approximately 90 percent, 

or 51,179 claimants, will already have 

the information at hand and that the 

remaining 10 percent, or 5,686 

claimants, will need to obtain and 

provide proof of death. The information 

collection burden per case is 

approximately one-quarter hour for 

those who have the information at hand, 

or a total of 12,795 hours. VA estimates 

the time necessary to obtain and provide 

proof of death in other cases will 

average approximately 1 hour, or 5,686 

hours. Therefore VA estimates the total 

annual reporting burden to be 18,481 

hours. 

The Department considers comments 

by the public on proposed collections of 

information in: 

• Evaluating whether the proposed 

collections of information are necessary 

for the proper performance of the 

functions of the Department, including 

whether the information will have 

practical utility; 

• Evaluating the accuracy of the 

Department’s estimate of the burden of 

the proposed collections of information, 

including the validity of the 

methodology and assumptions used; 

• Enhancing the quality, usefulness, 

and clarity of the information to be 

collected; and 

• Minimizing the burden of the 

collections of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology, 

e.g., permitting electronic submission of 

responses. 

OMB is required to make a decision 

concerning the proposed collection of 

information contained in this proposed 

rule between 30 and 60 days after 

publication of this document in the 

Federal Register. Therefore, a comment 

to OMB is best assured of having its full 

effect if OMB receives it within 30 days 

of publication. This does not affect the 

deadline for the public to comment on 

the proposed regulations. 

Regulatory Flexibility Act 

The Secretary hereby certifies that 

this proposed regulatory amendment 

will not have a significant economic 

impact on a substantial number of small 

entities as they are defined in the 

Regulatory Flexibility Act, 5 U.S.C. 601–

612. This proposed amendment would 

not affect any small entities. Therefore, 

pursuant to 5 U.S.C. 605(b), this 

proposed amendment is exempt from 

the initial and final regulatory flexibility 

analysis requirements of sections 603 

and 604. 

Executive Order 12866 

This document has been reviewed by 

the Office of Management and Budget 

under Executive Order 12866. 

Unfunded Mandates 

The Unfunded Mandates Reform Act 

of 1995 requires, at 2 U.S.C. 1532, that 

agencies prepare an assessment of 

anticipated costs and benefits before 

developing any rule that may result in 

an expenditure by State, local, or tribal 

governments, in the aggregate, or by the 

private sector of $100 million or more 

(adjusted annually for inflation) in any 

given year. This proposed amendment 

would have no such effect on State, 

local, or tribal governments, or the 

private sector. 

Catalog of Federal Domestic Assistance 

Numbers 

The Catalog of Federal Domestic 

Assistance program number and title for 

this proposal is 64.110, Veterans 

Dependency and Indemnity 

Compensation for Service-Connected 

Death. 

List of Subjects in 38 CFR Part 5 

Administrative practice and 

procedure, Claims, Disability benefits, 

Health care, Pensions, Radioactive 

materials, Veterans, Vietnam. 

Approved: July 13, 2005. 

Gordon H. Mansfield, 

Deputy Secretary of Veterans Affairs. 

For the reasons set out in the 

preamble, VA proposes to amend 38 

CFR chapter I by further amending 

subpart G of part 5, as proposed to be 

added at 69 FR 59084, October 1, 2004, 

as follows: 

PART 5—COMPENSATION, PENSION, 

BURIAL, AND RELATED BENEFITS 

Subpart G—Dependency and 

Indemnity Compensation, Accrued 

Benefits, Death Compensation 

Benefits, and Special Rules Applicable 

Upon Death of a Beneficiary 

1. The authority citation for subpart G 

of part 5 continues to read as follows: 

Authority: 38 U.S.C. 501(a) and as noted in 

specific sections. 

2. Sections 5.500 through 5.549 are 

added to subpart G to read as follows: 

General Provisions 

Sec.

5.500 Proof of death. 

5.501 Proving death by other means. 

5.502 Proving death after 7 years of 

continuous, unexplained absence. 

5.503 Establishing the date of death. 

5.504 Service-connected cause of death. 

5.505–5.509 [Reserved] 

Dependency and Indemnity Compensation—

General 

5.510 Dependency and indemnity 

compensation—basic entitlement. 

5.511 Special monthly dependency and 

indemnity compensation. 

5.512 Eligibility for death compensation or 

death pension instead of dependency 

and indemnity compensation. 

5.513–5.519 [Reserved] 

Dependency and Indemnity Compensation—

Eligibility Requirements and Payment Rules 

for Surviving Spouses And Children 

5.520 Dependency and indemnity 

compensation—time of marriage 

requirements for surviving spouses. 

5.521 [Reserved] 

5.522 Dependency and indemnity 

compensation benefits for survivors of 

certain veterans rated totally disabled at 

time of death—offset of wrongful death 

damages. 

5.523 [Reserved] 

5.524 Awards of dependency and 

indemnity compensation benefits to 

children when there is a retroactive 

award to a school child. 

5.525–5.529 [Reserved] 

Dependency and Indemnity Compensation—

Eligibility Requirements and Payment Rules 

for Parents 

5.530 Eligibility for, and payment of, 

parents’ dependency and indemnity 

compensation. 

5.531 General income rules. 

5.532 Deductions from income. 

5.533 Exclusions from income. 

5.534 When VA counts parents’ income. 

5.535 Adjustments to parents’ DIC when 

income is less than anticipated. 

5.536 Parents’ dependency and indemnity 

compensation rates. 

5.537 Payment intervals. 

5.538–5.549 [Reserved] 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61341 

General Provisions 

§ 5.500 Proof of death. 

(a) Purpose and application.—(1) This 

section describes evidence VA will 

accept to prove that a person has died 

in cases where the death of the person 

is relevant to eligibility for a VA benefit. 

It covers the most common situations. 

Sections 5.501, ‘‘Proving death by other 

means,’’ and 5.502, ‘‘Proving death after 

7 years of continuous, unexplained 

absence,’’ apply where the evidence 

described in this section is not 

available. 

(2) Where more than one paragraph of 

this section applies, VA will accept the 

evidence described in any relevant 

paragraph as proof of death. For 

example, if the person died in a U.S. 

Government hospital located within a 

State, VA would accept the evidence 

establishing death specified in either 

paragraph (b) or (d) of this section. 

(b) Deaths occurring within a State. 

Death occurring within a State may be 

established by: (1) A copy of the public 

record of the State or community where 

death occurred, or 

(2) A copy of a coroner’s report of 

death, or of a verdict of a coroner’s jury, 

from the State or community where 

death occurred, provided the report or 

verdict properly identifies the deceased. 

(c) Deaths occurring abroad. Death 

occurring abroad may be established by: 

(1) A U.S. consular report of death 

bearing the signature and seal of the 

U.S. consul, 

(2) A copy of the public record of 

death authenticated by the U.S. consul 

or other agency of the State Department 

or which is exempt from such 

authentication as provided in 

§ 3.202(b)(4) of this chapter (concerning 

certain copies of public or church 

records), or 

(3) An official report of death of a 

civilian employee of the U.S. 

Government from the employing U.S. 

Government entity. 

(d) Deaths at institutions under the 

control of the U.S. Government. Death 

occurring in a hospital or other 

institution under the control of the U.S. 

Government may be established by: 

(1) A death certificate signed by a 

medical officer, or 

(2) A clinical summary, or other 

report, signed by a medical officer 

showing the fact and date of death. 

(e) Deaths of members of the 

uniformed services. The death of a 

member of the uniformed services may 

be established by an official report of 

the death from the uniformed service 

concerned. 

(Authority: 38 U.S.C. 501(a)(1)) 

§ 5.501 Proving death by other means. 

(a) Applicability. This section and 

§ 5.502, ‘‘Proving death after 7 years of 

continuous, unexplained absence,’’

describe methods of proving that a 

person has died if the death of that 

person is relevant to eligibility for a VA 

benefit and the evidence described in 

§ 5.500, ‘‘Proof of death,’’ is not 

available. 

(b) Required statement. A claimant 

seeking to establish the fact of death 

under this section must submit a 

statement explaining why none of the 

evidence described in § 5.500 is 

available. 

(c) Affidavits or certified statements of 

witnesses who viewed the body. The fact 

of death may be established by the 

affidavit or certified statement of one or 

more persons who have personal 

knowledge of the fact of death, have 

viewed the body of the deceased, and 

know it to be the body of the person 

whose death is being alleged. These 

affidavits or statements should describe 

all the facts and circumstances known 

concerning the death, including the 

place, date, time, and cause of death. 

(d) Other methods of establishing 

death. If the claimant cannot furnish the 

affidavits or certified statements 

described in paragraph (c) of this 

section, the fact of death may be 

established by one of the following: 

(1) U.S. Government agency finding. 

In the absence of evidence to the 

contrary, VA will accept a finding of the 

fact of death by another U.S. 

Government agency. 

(2) Body not recovered or not 

identifiable. If circumstances preclude 

recovery or identification of the body of 

the deceased, the fact of death may be 

established by the claimant’s affidavit or 

certified statement setting forth the 

circumstances under which the missing 

person was last seen and the known 

facts which led the claimant to believe 

that death has occurred and one of the 

following, as applicable: 

(i) The affidavits or certified 

statements of persons who witnessed 

the event in which the missing person 

is alleged to have perished, describing 

the event and, if applicable, why they 

believe the missing person perished in 

the event, or 

(ii) If the testimony of eyewitnesses is 

not obtainable, the affidavits or certified 

statements of persons who have the 

most reliable information available 

concerning why the missing person is 

believed to have been at the event in 

which the missing person is alleged to 

have perished, why the missing person 

was in imminent peril at the time the 

event occurred, and the basis on which 

they concluded that death was caused 

by the event. 

(3) Finding of fact of death by 

authorized VA official. An authorized 

VA official may make a finding of the 

fact of death where death is shown by 

competent evidence. See § 3.100(a) of 

this chapter (concerning delegation of 

authority to make findings and 

decisions concerning entitlement to VA 

benefits). 

(Authority: 38 U.S.C. 501(a)(1)) 

§ 5.502 Proving death after 7 years of 

continuous, unexplained absence. 

(a) Evidence required. A claimant 

seeking to establish the death of a 

person who has been absent for 7 years, 

where death is not established with 

documentary evidence described in 

§ 5.500, ‘‘Proof of death,’’ or § 5.501, 

‘‘Proving death by other means,’’ must 

produce competent, credible evidence 

to show that: 

(1) The person has been continuously 

absent from home and family for at least 

7 years without explanation; and 

(2) A diligent search disclosed no 

evidence of the person’s continued 

existence after the disappearance. 

(b) Finding of death conclusive. A 

finding of death under this section will 

be conclusive and final for the purposes 

of laws administered by VA except 

where suit is filed for insurance under 

38 U.S.C. 1984, ‘‘Suits on insurance.’’

(c) Impact of findings of death made 

by other entities.—(1) State laws that 

provide for presumption of death are 

not applicable to claims for VA benefits 

and may not be used to establish death 

under this section. 

(2) A finding of death by another 

Federal agency meeting the criteria 

described in paragraphs (a)(1) and (2) of 

this section is acceptable for VA 

purposes if there is no credible evidence 

to the contrary. 

(Authority: 38 U.S.C. 108, 501(a)(1)) 

§ 5.503 Establishing the date of death. 

(a) Applicability. This section applies 

when the fact of death is established 

under §§ 5.500 through 5.502, but the 

exact date of death is uncertain. 

(b) Date of death in cases involving a 

continuous, unexplained absence of 

seven years or more. When the fact of 

death is established under § 5.502, 

‘‘Proving death after 7 years of 

continuous, unexplained absence,’’ the 

date of death for purposes of the laws 

administered by VA is seven years after 

the date the person was last known to 

be alive. 

(c) Date of death in other cases. If the 

fact of death is established by the 

evidence described in § 5.500, ‘‘Proof of 

death,’’ or § 5.501, ‘‘Proving death by 

61342 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

other means,’’ VA will determine the 

date of death for purposes of the laws 

administered by VA by considering all 

of the known facts and circumstances 

surrounding the death, including the 

condition of the body when found and 

any estimate of the date of death 

provided by a coroner or other official 

within the scope of that official’s duties. 

If no identifiable body is found, the date 

of death will be presumed to be the date 

the deceased was last known to be alive 

in the absence of evidence to the 

contrary. 

(Authority: 38 U.S.C. 108, 501(a)) 

§ 5.504 Service-connected cause of death. 

(a) Purpose. Eligibility for several VA 

benefits for a veteran’s survivors 

requires that the veteran’s death be 

service connected. This section provides 

the rules VA uses to determine whether 

a veteran’s death is service connected. 

(b) Definition of service-connected 

disability—(1) General. For purposes of 

this section, ‘‘service-connected 

disability’’ means: 

(i) Except as provided in paragraph 

(b)(2) of this section, a disability that 

was service connected at the time of the 

veteran’s death, or 

(ii) A disability that is service 

connectable under the provisions of 

subpart E of this part, ‘‘Claims for 

service connection and disability 

compensation.’’ For purposes of this 

section, VA will deem a sudden death 

in service from trauma to have been 

preceded by disability from the trauma. 

(2) Exception. For purposes of this 

section, ‘‘service-connected disability’’

does not include a disability that was 

service connected at the time of the 

veteran’s death if the law in effect at the 

time of a survivor’s claim precludes VA 

from establishing service connection for 

the cause of the veteran’s death. See 

§ 3.300 of this chapter, ‘‘Claims based 

on the effects of tobacco products,’’ and 

§ 3.301(d) of this chapter ‘‘Line of duty; 

abuse of alcohol or drugs.’’

(c) Determining whether a veteran’s 

death is service connected. A veteran’s 

death is service connected if death 

resulted from a service-connected 

disability. Death resulted from a serviceconnected disability if the serviceconnected disability produced death or 

hastened death, as provided in the 

following paragraphs: 

(1) Service-connected disability 

produces death. A service-connected 

disability is the cause of death if a single 

service-connected disability, or the 

combined effect of multiple serviceconnected disabilities, is such that 

death would not have occurred in the 

absence of the disability, or disabilities. 

If two or more disabilities were present 

at the time of death, only one of which 

was service connected or service 

connectable, and each disability by 

itself was sufficient to bring about 

death, VA will grant service connection 

for the cause of the veteran’s death. 

(2) Service-connected disability 

hastens death. VA will grant service 

connection for the cause of death if 

competent medical evidence shows that 

a service-connected disability, or the 

combined effect of multiple serviceconnected disabilities, was so 

debilitating as to materially hasten 

death from nonservice-connected 

causes. VA will presume such 

debilitation where a service-connected 

disability affected a vital organ and was 

evaluated as 100 percent disabling 

under the Schedule for Rating 

Disabilities in part 4 of this chapter at 

the time of the veteran’s death. For 

purposes of this paragraph, vital organs 

are those organs necessary to sustain 

life, including the heart, lungs, central 

nervous system, liver, and kidneys. 

(Authority: 38 U.S.C. 101(16), 501(a), 1121, 

1141, 1310) 

§§ 5.505–5.509 [Reserved] 

Dependency and Indemnity 

Compensation—General 

§ 5.510 Dependency and indemnity 

compensation—basic entitlement. 

(a) Definition. Dependency and 

indemnity compensation (DIC) is a 

monthly VA payment to a veteran’s 

surviving spouse, child, and/or parent 

based on the veteran’s death. The 

surviving relative must be otherwise 

qualified and meet the entitlement 

criteria provided in this section. 

(b) Bases for entitlement. There are 

three ways in which an otherwise 

qualified survivor may become entitled 

to DIC: 

(1) Service-connected death—38 

U.S.C. 1310. (i) VA will grant DIC to the 

qualified survivors of a veteran when it 

determines that the cause of the 

veteran’s death, whether occurring 

during or after service, is service 

connected. See 38 U.S.C. 1310, ‘‘Deaths 

entitling survivors to dependency and 

indemnity compensation,’’ and § 5.504, 

‘‘Service-connected cause of death.’’

(ii) DIC is not payable unless the 

service-connected death occurred after 

December 31, 1956, except in the case 

of certain individuals receiving or 

eligible to receive death compensation 

who elect to receive DIC in lieu of death 

compensation. See § 3.702 of this 

chapter, ‘‘Dependency and indemnity 

compensation.’’

(2) Veterans with a service-connected 

disability rated as totally disabling at 

the time of death—38 U.S.C. 1318. VA 

will grant DIC to the qualified survivors 

of a veteran rated totally disabled due to 

service-connected disability for a 

specified period of time at the time of 

death, in the same manner as if the 

veteran’s death were service connected. 

See § 3.22 of this chapter, ‘‘DIC benefits 

for survivors of certain veterans rated 

totally disabled at time of death,’’ and 

38 U.S.C. 1318, ‘‘Benefits for survivors 

of certain veterans rated totally disabled 

at time of death.’’

(3) Veterans whose death was due to 

certain VA-furnished medical, training, 

compensated work therapy, or 

rehabilitation services—38 U.S.C. 1151. 

VA will grant DIC to the qualified 

survivors of a veteran whose death was 

caused by VA-furnished hospital care, 

medical or surgical treatment, medical 

examination, training and rehabilitation 

services, or participation in a 

compensated work therapy program, in 

the same manner as if the veteran’s 

death were service connected. See 

§§ 3.358, 3.361 and 3.800 of this chapter 

and 38 U.S.C. 1151, ‘‘Benefits for 

persons disabled by treatment or 

vocational rehabilitation.’’

(c) Certain Federal Employees’ Group 

Life Insurance beneficiaries ineligible. 

VA cannot pay DIC to any surviving 

spouse, child or parent based on the 

death of a commissioned officer of the 

Public Health Service, the Coast and 

Geodetic Survey, the Environmental 

Science Services Administration, or the 

National Oceanic and Atmospheric 

Administration occurring after April 30, 

1957, if any amounts are payable based 

on the same death under the Federal 

Employees’ Group Life Insurance Act of 

1954 (Pub. L. 598, 83d Cong., as 

amended). 

(d) Special rules for parents’ DIC. The 

basis of entitlement described in 

paragraph (b)(2) of this section does not 

apply to parents’ DIC and payment of 

parents’ DIC is subject to income 

limitations. See §§ 5.530 through 5.537 

for special eligibility and payment rules 

for parents’ DIC. 

(Authority: 38 U.S.C. 101(14), 1151, 1304, 

1310, 1315, 1318; Sec. 501(c)(2), Pub. L. 84–

881, 70 Stat. 857, as amended by Sec. 13(u), 

Pub. L. 85–857, 72 Stat. 1266; Sec. 5, Pub. L. 

91–621, 84 Stat. 1863) 

§ 5.511 Special monthly dependency and 

indemnity compensation. 

(a) Entitlement based on need for 

regular aid and attendance. A surviving 

spouse or parent in receipt of 

dependency and indemnity 

compensation (DIC) is entitled to special 

monthly DIC benefits if he or she is 

helpless, or so nearly helpless as to need 

the regular aid and attendance of 

another person. Among other factors, 

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VA considers the presence of conditions 

listed in § 3.352(a) of this chapter when 

determining whether a person 

demonstrates this degree of 

helplessness. 

(b) Automatic entitlement. VA will 

automatically consider a person to be in 

need of regular aid and attendance, 

without having to demonstrate the 

degree of helplessness described in 

paragraph (a) of this section, if the 

person: 

(1) Is blind or so nearly blind as to 

have corrected visual acuity of 5/200 or 

less in both eyes; 

(2) Has concentric contraction of the 

visual field in both eyes to 5 degrees or 

less; or 

(3) Is a patient in a nursing home 

because of mental or physical 

incapacity. 

(c) Entitlement based on permanent 

housebound status—surviving spouse. A 

surviving spouse who does not qualify 

for special monthly DIC based on need 

for regular aid and attendance, as 

provided in paragraphs (a) and (b) of 

this section, is entitled to special 

monthly DIC if he or she is permanently 

housebound. A surviving spouse will be 

considered permanently housebound if 

substantially confined to his or her 

home (ward or clinical areas, if 

institutionalized) or immediate 

premises because of a disability or 

disabilities and it is reasonably certain 

that such disability or disabilities will 

remain throughout the surviving 

spouse’s lifetime. 

(Authority: 38 U.S.C. 1311(c), (d), 1315(g)) 

§ 5.512 Eligibility for death compensation 

or death pension instead of dependency 

and indemnity compensation. 

(a) General rule. Subject to paragraph 

(b) of this section, VA will not pay death 

compensation or death pension to any 

person eligible for dependency and 

indemnity compensation (DIC) based 

upon a death occurring after December 

31, 1956. 

(b) Right of spouse to elect death 

pension. A surviving spouse eligible for 

DIC may elect to receive death pension 

instead of DIC. For effective date 

information, see § 3.400(j)(1) of this 

chapter. 

(Authority: 38 U.S.C. 1317) 

§§ 5.513–5.519 [Reserved] 

Dependency and Indemnity 

Compensation—Eligibility 

Requirements and Payment Rules for 

Surviving Spouses and Children 

§ 5.520 Dependency and indemnity 

compensation—time of marriage 

requirements for surviving spouses. 

(a) Purpose. In addition to meeting the 

marriage requirements necessary to 

qualify as a surviving spouse, as defined 

at § 3.50 of this chapter, a surviving 

spouse must meet certain requirements 

concerning the time of his or her 

marriage to the veteran in order to 

qualify for dependency and indemnity 

compensation (DIC). This section sets 

out those requirements. 

(b) Time of marriage requirements—

(1) Surviving spouse eligible under 

§ 5.510(b)(1) or (b)(3). A surviving 

spouse meets the time of marriage 

requirements for DIC under the bases for 

eligibility set out in § 5.510(b)(1), 

‘‘Service-connected death—38 U.S.C. 

1310’’ or (b)(3), ‘‘Veterans whose death 

was due to certain VA-furnished 

medical, training, compensated work 

therapy, or rehabilitation services—38 

U.S.C. 1151,’’ if his or her marriage to 

the veteran meets any of the following 

criteria: 

(i) The surviving spouse married the 

veteran before or during the veteran’s 

military service. 

(ii) The surviving spouse was married 

to the veteran for one year or more. 

Multiple periods of marriage may be 

added together to meet the 1-year 

marriage requirement. 

(iii) The surviving spouse was 

married to the veteran for any length of 

time and a child was born of the 

marriage or before the marriage. See 

§ 3.54(d) of this chapter, ‘‘Child born.’’

(iv) The surviving spouse married the 

veteran within 15 years of the date of 

termination of the period of service in 

which the injury or disease causing the 

veteran’s death was incurred or 

aggravated. For purposes of this 

paragraph, ‘‘period of service’’ means a 

period of active military service from 

which the veteran was discharged under 

conditions other than dishonorable. If 

the surviving spouse has been married 

to the veteran more than once, see 

§ 3.54(e) of this chapter, ‘‘More than one 

marriage to veteran.’’

(2) Surviving spouse eligible under 

§ 5.510(b)(2). A surviving spouse meets 

the time of marriage requirements for 

DIC under the basis for eligibility set out 

in § 5.510(b)(2), ‘‘Veterans with a 

service-connected disability rated as 

totally disabling at the time of death—

38 U.S.C. 1318,’’ if his or her marriage 

to the veteran meets any of the 

following criteria: 

(i) The surviving spouse was married 

to the veteran continuously for one year 

or more immediately preceding the 

veteran’s death. 

(ii) The surviving spouse was married 

to the veteran for any length of time and 

a child was born of the marriage or 

before the marriage. See § 3.54(d) of this 

chapter, ‘‘Child born.’’

(Authority: 38 U.S.C. 1151, 1304, 1310, 1318) 

§ 5.521 [Reserved] 

§ 5.522 Dependency and indemnity 

compensation benefits for survivors of 

certain veterans rated totally disabled at 

time of death—offset of wrongful death 

damages. 

(a) Applicability. This section applies 

when a surviving spouse or child: 

(1) Is eligible for dependency and 

indemnity compensation (DIC) on the 

basis described in § 5.510(b)(2), 

‘‘Veterans with a service-connected 

disability rated as totally disabling at 

the time of death—38 U.S.C. 1318,’’ and 

(2) Receives any money or property of 

value pursuant to an award in a judicial 

proceeding based upon, or a settlement 

or compromise of, any cause of action 

for damages for the wrongful death of 

the veteran whose death is the basis for 

such VA benefits. 

(b) Offset. VA will not pay DIC on the 

basis described in § 5.510(b)(2) for any 

month following a month in which the 

beneficiary receives money or property 

described in paragraph (a)(2) of this 

section until the total amount of such 

DIC benefits that would otherwise have 

been payable equals the total of the 

amount of such money and/or value of 

such property. This paragraph does not 

apply to DIC benefits payable under this 

section for any period preceding the end 

of the month in which such money or 

property was received. 

(c) Amount of offset. The following 

rules apply when calculating the 

amount to be offset in DIC cases: 

(1) The amount to be offset includes 

damages typically recoverable under 

wrongful death statutes, such as 

reimbursement for the loss of support, 

services, and other contributions, which 

the surviving spouse or child would 

have received if the veteran had lived 

and, where allowed, reimbursement for 

pain, suffering or mental anguish of the 

survivors due to death. Damages 

recoverable as compensation for injuries 

suffered by, or economic loss sustained 

by, the veteran prior to death such as 

wages lost prior to death, medical 

expenses, and compensation for the 

veteran’s pain and suffering prior to 

death are excluded. 

61344 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

(2) The amount to be offset includes 

amounts paid to a third party to satisfy 

a legal obligation of the surviving 

spouse or child. This includes the 

payment of the claimant’s proportional 

share of attorney’s fees, court costs, and 

other expenses incident to the civil 

claim. 

(3) The amount to be offset excludes 

money or property payable to a person 

or entity other than the spouse or child 

under the terms of the judgment, 

settlement, or compromise agreement 

unless the spouse or child receives the 

benefit of such a payment. For example, 

wrongful death damages paid to a 

veteran’s estate or into a trust or similar 

arrangement will be included in the 

amount to be offset to the extent that 

they are distributed to, or available for 

the use and benefit of, the surviving 

spouse or child. 

(4) The amount to be offset excludes 

benefits received under Social Security 

or worker’s compensation even though 

such benefits may have been awarded in 

a judicial proceeding. 

(5) The value of property received is 

that property’s fair market value at the 

time it is received by the claimant. 

(d) Beneficiary’s duty to report receipt 

of money or property. Any person 

entitled to DIC on the basis described in 

§ 5.510(b)(2), ‘‘Veterans with a serviceconnected disability rated as totally 

disabling at the time of death—38 U.S.C. 

1318,’’ must promptly report to VA the 

receipt of any money or property 

described in paragraph (a)(2) of this 

section. This obligation may be satisfied 

by providing VA a copy of the 

judgment, settlement agreement, or 

compromise agreement awarding the 

money or property. Overpayments 

created by failure to report will be 

subject to recovery if not waived. 

(Authority: 38 U.S.C. 1318(d)) 

§ 5.523 [Reserved] 

§ 5.524 Awards of dependency and 

indemnity compensation benefits to 

children when there is a retroactive award 

to a school child. 

(a) Applicability. Dependency and 

indemnity compensation (DIC) is 

payable to eligible children when there 

is no surviving spouse entitled to DIC. 

The total amount payable to the 

children, which varies according to the 

number of children, is divided and paid 

to the children in equal shares. This 

section states an exception that applies 

when all of the following conditions are 

met: 

(1) DIC is being paid to one or more 

children; 

(2) DIC was previously paid to an 

additional child, but that child’s DIC 

was discontinued because he or she 

reached 18 years of age; 

(3) That additional child has 

reestablished entitlement to DIC because 

he or she is attending an approved 

educational institution; and 

(4) The effective date of the additional 

child’s reestablished entitlement is prior 

to the date VA received the application 

to reestablish entitlement. 

(b) Award to the additional child—(1) 

Retroactive payment. The payment to 

the additional child for the period 

extending from the payment 

commencement date of the award to the 

additional child through the month that 

award was approved is equal to the 

difference between the total amount 

payable for all children, including the 

additional child, during that period and 

the total amount paid to the other 

children during that period. If more 

than one child reestablishes entitlement 

as described in paragraph (a) of this 

section, the retroactive award will be 

paid to each such child in equal shares. 

(2) Payment commencement date for 

full equal share. The payment 

commencement date for the full equal 

share of DIC to the additional child, or 

additional children, is the first of the 

month following the month VA 

approved his or her reestablished DIC 

award. 

(c) Effective date of payment of 

reduced shares to the other children. 

The running awards to the other 

children will be reduced to the amount 

of their new equal shares effective the 

first of the month following the month 

VA approved the award of reestablished 

DIC to the additional child. 

(Authority: 38 U.S.C. 1313(b), 5110(e), 5111) 

Cross-references: See also § 3.31 of 

this chapter, ‘‘Commencement of the 

period of payment,’’ and § 3.667 of this 

chapter, ‘‘School attendance.’’

§§ 5.525–5.529 [Reserved] 

Dependency and Indemnity 

Compensation—Eligibility 

Requirements and Payment Rules for 

Parents 

§ 5.530 Eligibility for, and payment of, 

parents’ dependency and indemnity 

compensation. 

(a) Basic eligibility. A veteran’s 

surviving parents may receive 

dependency and indemnity 

compensation (DIC) on the basis 

described in § 5.510(b)(1), ‘‘Serviceconnected death—38 U.S.C. 1310,’’ and 

§ 5.510(b)(3), ‘‘Veterans whose death 

was due to certain VA-furnished 

medical, training, compensated work 

therapy, or rehabilitation services—38 

U.S.C. 1151.’’ DIC is not payable to 

parents on the basis described in 

§ 5.510(b)(2), ‘‘Veterans with a serviceconnected disability rated as totally 

disabling at the time of death— 38 

U.S.C. 1318.’’

(b) Parents’ DIC is income based. 

Unlike DIC benefits for a surviving 

spouse and children, the amount of 

parents’ DIC payable is adjusted based 

on parents’ income and DIC is not 

payable to parents whose income 

exceeds statutory limits. Sections 5.531 

through 5.537 provide income and 

payment rules. 

(c) Net worth not considered. Net 

worth is not a factor in determining 

entitlement to parents’ DIC or the 

amount of parents’ DIC payable. 

(Authority: 38 U.S.C. 501(a), 1151, 1310, 

1318, 1315) 

§ 5.531 General income rules. 

(a) All payments included in income. 

All payments of any kind from any 

source are counted in determining the 

income of a veteran’s parents, except as 

provided in § 5.533, ‘‘Exclusions from 

income.’’

(b) Payments—(1) What is included. 

For purposes of this section, 

‘‘payments’’ are cash and cash 

equivalents (such as checks and other 

negotiable instruments) and the fair 

market value of personal services, 

goods, or room and board a parent 

receives from someone else in lieu of 

other forms of payment. 

(2) What is not included. ‘‘Payments’’

do not include any of the following: 

(i) The value of a parent’s use of his 

or her own property, such as the rental 

value of a home a parent owns and lives 

in. 

(ii) Dividends on commercial 

insurance policies. 

(iii) Retirement benefits from the 

following sources (or to the following 

persons), if the benefits have been 

waived pursuant to Federal statute: 

(A) Civil Service Retirement and 

Disability Fund; 

(B) Railroad Retirement Board; 

(C) District of Columbia, firemen, 

policemen, or public school teachers; 

(D) Former United States Lighthouse 

Service. 

(c) Spousal income combined. Income 

for parents’ dependency and indemnity 

compensation purposes is the combined 

income of a parent and the parent’s 

spouse, unless the marriage has been 

terminated or the parent is separated 

from his or her spouse. Income is 

combined whether the parent’s spouse 

is the veteran’s other surviving parent or 

the veteran’s stepparent. See also 

§ 5.534(c) (concerning how much of the 

spouse’s income to count for the year of 

remarriage). 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61345 

(d) Income-producing property—(1) 

Scope. This paragraph (d) provides rules 

for determining whether income from 

property should be counted as a parent’s 

income. The provisions of this 

paragraph (d) apply to all property, real 

or personal, in which a parent has an 

interest, whether acquired through 

purchase, bequest or inheritance. 

(2) Proof of ownership. In determining 

whether to count income from real or 

personal property, VA will consider the 

terms of the recorded deed or other 

evidence of title. However, VA will 

accept the claimant’s statement 

concerning the terms of ownership in 

the absence of evidence to the contrary. 

(3) Transfer of ownership with 

retention of income. If a parent transfers 

ownership of property to another person 

or legal entity, but retains the right to 

income, the income will be counted. 

(4) Income from jointly owned 

property. In the absence of evidence 

showing otherwise, VA will consider a 

parent who owns property jointly with 

others, including partnership property, 

to be entitled to a share of the income 

from that property proportionate to the 

parent’s share of ownership. VA will 

accept the claimant’s statement 

concerning the terms of ownership in 

the absence of evidence to the contrary. 

(e) Procedure when income amounts 

are uncertain—deferred determinations. 

When a parent is uncertain about the 

amount of income the parent will 

receive during a calendar year, VA will 

calculate dependency and indemnity 

payments for that calendar year using 

the highest amount of income the parent 

estimates, or VA’s best estimate of 

income if the parent’s estimate appears 

to be unrealistically low in light of the 

parent’s past income and current 

circumstances. VA will adjust benefits, 

or pay benefits, when actual total 

income for the year is determined. See 

also § 5.535, ‘‘Adjustments to parents’

DIC when income is less than 

anticipated.’’

(Authority: 38 U.S.C. 1315(f)) 

§ 5.532 Deductions from income. 

(a) Expenses of a business or 

profession. Necessary business 

operating expenses are deductible from 

gross income from a business or 

profession. Examples include the cost of 

goods sold and payments for rent, taxes, 

upkeep, repairs, and replacements. 

Depreciation is not a deductible 

expense. Losses sustained in operating a 

business or profession may not be 

deducted from income from any other 

source. For purposes of this section, 

‘‘business’’ includes the operation of a 

farm and transactions involving 

investment property. 

(b) Expenses associated with 

disability, accident, or health insurance 

recoveries. Medical, legal, or other 

expenses incident to the insured 

disability are deductible from sums 

recovered under disability, accident, or 

health insurance. However, if medical 

expenses are deducted under this 

paragraph, they cannot be deducted as 

unusual medical expenses under 

paragraph (d) of this section. 

(c) Expenses of a deceased spouse or 

of the deceased veteran—(1) Deceased 

spouse. Amounts a parent pays for the 

following expenses of a deceased spouse 

are deductible: 

(i) A deceased spouse’s just debts, 

excluding debts secured by real or 

personal property. 

(ii) The expenses of the spouse’s last 

illness and burial to the extent such 

expenses are not reimbursed by VA 

under 38 U.S.C. chapter 23 (see subpart 

J of this part concerning VA burial 

benefits) or 38 U.S.C. chapter 51 (see 

§ 5.551(e) concerning the use of accrued 

benefits to reimburse the person who 

bore the expense of a deceased 

beneficiary’s last sickness or burial). 

(2) Deceased veteran. Amounts a 

parent pays for the expenses of the 

veteran’s last illness and burial are 

deductible to the extent that such 

expenses are not reimbursed by VA 

under 38 U.S.C. chapter 23 (see subpart 

J of this part concerning VA burial 

benefits). 

(3) When expenses are deducted. 

Expenses deductible under this 

paragraph (c) are deductible for the year 

in which they were paid. However, if 

such expenses were paid during the 

year following the year the veteran or 

spouse died, the expenses may be 

deducted for the year the expenses were 

paid or the year of death, whichever is 

to the parent’s advantage. 

(4) Proof of expenses. VA will accept 

as proof of expenses deductible under 

this paragraph (c) a claimant’s statement 

as to the amount and nature of each 

expense, the date of payment, and the 

identity of the creditor unless the 

circumstances create doubt as to the 

credibility of the statement. 

(d) Unusual medical expenses—(1) 

Applicability—(i) Family members. For 

purposes of determining whose medical 

expenses are deductible, a family 

member is a relative of the parent or 

parent’s spouse who is a member of the 

household of the parent or parent’s 

spouse whom the parent or parent’s 

spouse has a moral or legal obligation to 

support. This includes a relative who 

would normally be a resident of the 

household, but who is physically absent 

due to unusual or unavoidable 

circumstances, such as a child away at 

school or a family member confined to 

a nursing home. 

(ii) Medical expenses. See [regulation 

that will be published in a future Notice 

of Proposed Rulemaking] (defining 

medical expenses). 

(iii) Unusual medical expenses. For 

purposes of this section, ‘‘unusual 

medical expenses’’ means unreimbursed 

medical expenses above five percent of 

annual income. If annual income 

includes retirement plan income, the 

five percent will be calculated prior to 

deduction of the ten percent exclusion 

under § 5.533(g), ‘‘Ten percent of 

income from retirement plans and 

similar plans and programs.’’

(2) Expenses of parent and parent’s 

family members. Amounts paid by a 

parent for his or her own unusual 

medical expenses and those of family 

members are deductible. 

(3) Expenses of spouse and spouse’s 

family members. The deduction 

includes the unusual medical expenses 

of the spouse and the spouse’s family 

members if the combined annual 

income of the parent and the parent’s 

spouse is the basis for calculating 

income. 

(4) When expenses are deducted. VA 

will deduct unusual medical expenses 

from income for the calendar year in 

which they were paid regardless of 

when the expenses were incurred. 

(5) Proof of expenses. VA will accept 

the claimant’s statement as to the 

amount and nature of each medical 

expense, the date of payment, and the 

identity of the creditor unless the 

circumstances create doubt as to the 

credibility of the statement. 

(6) Estimates of expenses for future 

benefit periods. For the purpose of 

authorizing prospective payment of 

benefits, VA may accept a claimant’s 

estimate of future medical expenses 

based on a clear and reasonable 

expectation that unusual medical 

expenditure will be incurred. VA will 

adjust an award based on such an 

estimate upon receipt of an amended 

estimate or upon receipt of an eligibility 

verification report. See also § 3.256 of 

this chapter (concerning requirements 

for eligibility verification reports). 

(e) Certain salary deductions not 

deductible for determining income. For 

purposes of determining a parent’s 

income, a salary may not be reduced by 

the amount of deductions made under a 

retirement act or plan or for income tax 

withholding. 

(Authority: 38 U.S.C. 1315(f)) 

§ 5.533 Exclusions from income. 

VA will not count payments from the 

following sources when calculating 

61346 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

parents’ income for dependency and 

indemnity compensation purposes: 

(a) Death gratuity. Death gratuity 

payments by the Secretary concerned 

under 10 U.S.C. 1475 through 1480. 

This includes death gratuity payments 

in lieu of payments under 10 U.S.C. 

1478 made to certain survivors of 

Persian Gulf conflict veterans 

authorized by sec. 307, Pub. L. 102–25, 

105 Stat. 82. 

(b) Donations received. Donations 

from public or private relief or welfare 

organizations, including the following: 

(1) The value of maintenance 

furnished by a relative, friend, or a civic 

or governmental charitable organization, 

including money paid to an institution 

for the care of the parent due to 

impaired health or advanced age. 

(2) Benefits received under 

noncontributory programs, such as 

Supplemental Security Income 

payments. 

(c) Certain VA benefit payments. The 

following VA benefit payments: 

(1) Payments under 38 U.S.C. chapter 

11, ‘‘Compensation for ServiceConnected Disability or Death.’’

(2) Payments under 38 U.S.C. chapter 

13, ‘‘Dependency and Indemnity 

Compensation for Service-Connected 

Death.’’ However, payments under 38 

U.S.C. 1312(a), described in § 3.804 of 

this chapter, are counted as income. 

(3) Nonservice-connected VA 

disability and death pension payments. 

(4) VA benefit payments listed in 

[regulation that will be published in a 

future Notice of Proposed Rulemaking]. 

(d) Certain life insurance payments. 

Payments under policies of 

Servicemembers’ Group Life Insurance, 

United States Government Life 

Insurance, or National Service Life 

Insurance. 

(e) Social Security death payments. 

Lump-sum death payments under title II 

of the Social Security Act. 

(f) State service bonuses. Payments of 

a bonus or similar cash gratuity by any 

State based upon service in the Armed 

Forces. 

(g) Ten percent of income from 

retirement plans and similar plans and 

programs. Ten percent of the amount of 

payments to an individual under public 

or private retirement, annuity, 

endowment, or similar plans or 

programs is not counted. This includes 

payments for: 

(1) Annuities or endowments paid 

under a Federal, State, municipal, or 

private business or industrial plan. 

(2) Old age and survivor’s insurance 

and disability insurance under title II of 

the Social Security Act. 

(3) Retirement benefits received from 

the Railroad Retirement Board. 

(4) Payments for permanent and total 

disability or death received from the 

Office of Workers’ Compensation 

Programs of the U.S. Department of 

Labor, the Social Security 

Administration, or the Railroad 

Retirement Board, or pursuant to any 

worker’s compensation or employer’s 

liability statute, including damages 

collected incident to a tort suit under 

employer’s liability law of the United 

States or a political subdivision of the 

United States. This ten-percent 

exclusion applies after the income from 

the specified payments is reduced by 

the deductions described in § 5.532(b), 

‘‘Expenses associated with disability, 

accident, or health insurance 

recoveries.’’

(5) The proceeds of a commercial 

annuity, endowment, or life insurance. 

(6) The proceeds of disability, 

accident or health insurance. This tenpercent exclusion applies after the 

income from the specified payments is 

reduced by the deductions described in 

§ 5.532(b), ‘‘Expenses associated with 

disability, accident, or health insurance 

recoveries.’’

(h) Casualty loss reimbursement. 

Reimbursements of any kind for any 

casualty loss are not counted, but only 

up to the greater of the fair market value 

or the reasonable replacement value of 

the property involved immediately 

preceding the loss. For purposes of this 

section, a ‘‘casualty loss’’ is the 

complete or partial destruction of 

property resulting from an identifiable 

event of a sudden, unexpected or 

unusual nature. 

(i) Profit from sale of non-business 

property.—(1) Profit realized from the 

sale of real or personal property other 

than in the course of a business. 

However, any amounts received in 

excess of the sale price, such as interest 

payments, will be counted as income. 

(2) If payments are received in 

installments, the sums received 

(including principal and interest) will 

be excluded until the parent has 

received an amount equal to the sale 

price. Any amounts received after the 

sale price has been recovered will be 

counted as income. 

(j) Payment for civic obligations. 

Payments received for discharge of jury 

duty or other obligatory civic duties. 

(k) Radiation Exposure Compensation 

Act payments. Payments under Section 

6 of the Radiation Exposure 

Compensation Act of 1990. 

(Authority: 42 U.S.C. 2210 (note)) 

(l) Ricky Ray Hemophilia Relief Fund 

payments. Payments under section 

103(c)(1) of the Ricky Ray Hemophilia 

Relief Fund Act of 1998. 

(Authority: 42 U.S.C. 300c–22 (note)) 

(m) Energy Employees Occupational 

Illness Compensation Program 

payments. Payments under the Energy 

Employees Occupational Illness 

Compensation Program. 

(Authority: 42 U.S.C. 7385e(2)) 

(n) Payments to Aleuts. Payments to 

certain eligible Aleuts under 50 U.S.C. 

Appx. 1989c–5. 

(Authority: 50 U.S.C. Appx. 1989c–5(d)(2)) 

(o) Increased inventory value of a 

business. The value of an increase of 

stock inventory of a business. 

(p) Employer contributions. An 

employer’s contributions to health and 

hospitalization plans for either an active 

or retired employee. 

(q) Other payments. Other payments 

listed in [regulation that will be 

published in a future Notice of Proposed 

Rulemaking]. 

(Authority: 38 U.S.C. 1315(f)) 

§ 5.534 When VA counts parents’ income. 

(a) General rules—(1) VA counts 

income for parents’ dependency and 

indemnity compensation (DIC) purposes 

on a calendar year basis. 

(2) The calendar year for which VA 

will count income is the calendar year 

in which the parent received the 

income, or anticipates receiving it. 

(3) VA will count parents’ total 

income for the full calendar year except 

as provided in this section. 

(b) Exception for first awards and 

awards following a period of no 

entitlement—proportionate annual 

income—(1) When used. VA will use 

proportionate annual income for the 

first award of parents’ DIC, or for 

resuming payments on an award of 

parents’ DIC which was discontinued 

for a reason other than excess income or 

a change in marital or dependency 

status, if it is to the parents’ advantage. 

Otherwise, VA will base the award on 

the parent’s actual total annual income 

for the entire calendar year. 

(2) Proportionate annual income 

calculation. A proportionate annual 

income calculation disregards income 

received, and expenses paid, prior to the 

effective date of an initial award of 

parents’ DIC, or prior to the effective 

date of an award that follows a period 

of no entitlement for a reason other than 

excess income or a change in marital or 

dependency status. In performing a 

proportionate annual income 

calculation, VA first determines what 

the parents’ income was for the portion 

of the calendar year from the effective 

date of the award of parents’ DIC to the 

end of the calendar year. VA then 

calculates what annual income would 

Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 61347 

have been if income had been received 

at the same rate for the entire calendar 

year. 

(3) How VA computes proportionate 

annual income. VA will use the 

following steps in making the 

proportionate annual income 

calculation, rounding the result only at 

the final step. 

(i) Determine income from the 

effective date of the award of parents’

DIC to the end of the calendar year, 

disregarding income received and 

expenses paid before the effective date 

of the award. 

(ii) Divide the result by the number of 

days from the effective date of the award 

of parents’ DIC to the end of the 

calendar year. 

(iii) Multiply that result by 365. This 

result, rounded down to the nearest 

dollar, is the proportionate annual 

income. 

(c) Exception for an increase in 

income because of a parent’s marriage. 

If a parent marries during the applicable 

calendar year, income received by the 

parent’s spouse prior to the date of the 

marriage is not counted. 

(Authority: 38 U.S.C. 501(a), 1315(b)) 

§ 5.535 Adjustments to parents’ DIC when 

income is less than anticipated. 

(a) Applicability. This section applies 

when, based on anticipated income, VA 

did not pay parents’ DIC for a particular 

calendar year, or paid less than the full 

applicable statutory rate for that 

particular calendar year, but income for 

that calendar year was actually less than 

anticipated. 

(b) Retroactive adjustment; income 

reporting time limitation. VA may 

retroactively pay parents’ DIC or pay a 

higher rate of parents’ DIC from the first 

of the applicable calendar year under 

the following circumstances: 

(1) Satisfactory evidence shows that 

income was actually less than 

anticipated for that calendar year and 

(2) VA receives such evidence not 

later than the end of the year following 

the year to which the evidence pertains. 

Otherwise, payment or increased 

payments may not be made for the 

applicable calendar year on the basis of 

such evidence. 

(Authority: 38 U.S.C. 501(a), 1315(e), 5110(a)) 

Cross-reference: See also § 3.256 of this 

chapter, ‘‘Eligibility reporting requirements.’’

§ 5.536 Parents’ dependency and 

indemnity compensation rates. 

(a) Statutory rates. VA pays 

dependency and indemnity 

compensation (DIC) to eligible parents 

based upon statutory rates that vary 

depending upon whether both parents 

are living, upon the parents’ marital 

status, upon whether a parent is 

separated from his or her spouse, and 

upon whether a parent is a patient in a 

nursing home or helpless or blind or so 

nearly helpless or blind as to require the 

aid and attendance of another person. 

These rates are reduced by varying 

amounts that depend upon the parents’

income. See 38 U.S.C. 1315. Rate and 

income limitations are periodically 

adjusted whenever there is an increase 

in benefit amounts payable under title II 

of the Social Security Act. See 38 U.S.C. 

5312(b). In cases based on service in the 

Commonwealth Army of the 

Philippines, or as a guerrilla or as a 

Philippine Scout, also see § 3.251(a)(3) 

of this chapter (concerning calculation 

of the parents’ DIC income limitation for 

claims based on such service). 

(b) Use of published rates and income 

limitations. Whenever there is a cost-ofliving increase in benefit amounts 

payable under section 215(i) of title II of 

the Social Security Act, VA increases 

the annual income limitations and the 

maximum monthly rates of parents’ DIC 

by the same percentage as the Social 

Security increase. These increases are 

effective on the same date as the Social 

Security increase. VA will publish 

parents’ DIC rates, the annual income 

limitations, and the formulas for 

adjusting parents’ DIC rates for annual 

income in the Notices section of the 

Federal Register when there is a change 

in the amounts. VA will use this 

published data in calculating parents’

DIC payments. The rates referenced in 

paragraphs (c) through (e) of this section 

are the rates specified in the applicable 

Federal Register notice of an increase in 

the rates of parents’ DIC. 

(c) One parent—remarried. Where 

there is only one parent and that parent 

has remarried and is living with his or 

her spouse, VA will pay DIC at the rate 

for one parent who has not remarried, 

or the rate applicable to a remarried 

parent living with his or her spouse, 

whichever will provide the greater 

monthly rate of DIC. However, § 5.531(c) 

(requiring spousal income to be 

combined) applies in either instance. 

(d) One parent—marriage ends or 

parent is separated from spouse. Where 

there is only one parent and that parent 

has remarried and that marriage has 

ended or the parent is separated from 

his or her spouse, the rate of DIC for that 

parent will be that which would be 

payable if there were one parent alone, 

in the case of termination of the 

marriage, or two parents not living 

together, in the case of separation. 

(e) Two parents living—one parent 

files DIC application. Where there are 

two parents of the veteran living and 

only one parent has filed an application 

for DIC, the rate of DIC payable to that 

parent will be that which would be 

payable to such parent if both parents 

had filed an application. 

(f) Minimum payment—(1) Five dollar 

minimum. If any payment of parents’

DIC is due after the applicable rate 

payable is adjusted for income, the 

amount of that payment will not be less 

than $5.00 monthly. 

(2) Minimum DIC payment required 

for special monthly DIC. The special 

monthly DIC payable to a parent who is 

a patient in a nursing home, is helpless 

or blind or requires the aid and 

attendance of another person will be 

paid to a parent only if he or she 

qualifies for at least the minimum DIC 

payment described in paragraph (f)(1) of 

this section. 

(g) Rate changes due to changes in 

marital status or living arrangements. If 

a parent’s conditions of entitlement 

change because of a change in marital 

status or living arrangements, VA will 

determine the new rate payable based 

on the new status. For example, if the 

parent was unmarried for part of the 

year, and married for part of the year, 

VA will pay the applicable rate for an 

unmarried parent for the part of the year 

that the parent was unmarried, and then 

pay the applicable rate for a married 

parent for the part of the year that the 

parent was married. 

(h) Rates payable when one of two 

parents receiving death compensation 

elects DIC—(1) Parent who elects DIC. 

The rate of DIC for the parent who elects 

DIC will not exceed the amount that 

would be paid to the parent if both 

parents had elected DIC. 

(2) Parent still receiving death 

compensation. The rate of death 

compensation for the parent who did 

not elect DIC will not exceed the 

amount that would be paid if both 

parents were receiving death 

compensation. 

(Authority: 38 U.S.C. 501(a), 1315, 5312) 

§ 5.537 Payment intervals. 

(a) Monthly payments. VA pays 

parents’ dependency and indemnity 

compensation (DIC) monthly, except as 

provided in paragraph (b) of this 

section. 

(b) Exception. VA will pay the 

parents’ DIC benefit semiannually, on or 

about June 1 and December 1, if the 

amount of the annual benefit is less than 

four percent of the maximum annual 

rate payable for that parent. However, 

parents receiving payment semiannually 

may elect to receive payment monthly 

in cases in which receiving payments 

semiannually would cause other Federal 

benefits to be denied. 

61348 Federal Register / Vol. 70, No. 203 / Friday, October 21, 2005 / Proposed Rules 

(Authority: 38 U.S.C. 501(a), 1315) 

§§ 5.538–5.549 [Reserved] 

3. Sections 5.573 through 5.579 are 

added to subpart G to read as follows: 

§ 5.573 Effective date for dependency and 

indemnity compensation rate adjustments 

when an additional survivor files an 

application. 

(a) General. If an additional survivor 

files an application for dependency and 

indemnity compensation (DIC) benefits 

while other survivors are receiving 

benefits under a running award (for 

example, one or more children are 

receiving benefits and another child 

files for benefits), VA will reduce the 

running award while VA determines the 

additional survivor’s entitlement when: 

(1) The additional survivor has 

apparent entitlement to benefits; and 

(2) Payment to the additional survivor 

would reduce the DIC benefits being 

paid to other survivors under the 

running award. 

(b) Effective date of reduction to 

running awards.—(1) Benefits payable 

prior to filing of application. If benefits 

would be payable to the additional 

survivor from a date prior to the date 

VA received the additional survivor’s 

application, the effective date of any 

reduction in the running award will be 

the date of the additional survivor’s 

potential entitlement. 

(2) Benefits payable from the date of 

application. If benefits would be 

payable to the additional survivor from 

the date VA received the additional 

survivor’s application, VA will reduce 

the running award on the later of the 

following dates: 

(i) The date VA received the 

additional survivor’s application, or 

(ii) The first day of the month that 

follows the month for which VA last 

paid benefits to the original survivor(s). 

(c) Effective date for award to 

additional survivor. If an award for the 

additional survivor is warranted, the 

full rate to which the additional 

survivor is entitled is payable to the 

additional survivor from the effective 

date of that award. 

(d) Resumption of previous level of 

payments to other survivors. If 

entitlement is not established for the 

additional survivor, benefits previously 

being paid to other survivors will be 

resumed, if otherwise in order, from the 

date of the reduction in the running 

award. 

(e) Exception. This section does not 

apply to cases governed by § 5.524, 

‘‘Awards of dependency and indemnity 

compensation benefits to children when 

there is a retroactive award to a school 

child.’’

(Authority: 38 U.S.C. 1313, 5110(a), (e), 5112) 

§ 5.574 Effective dates of awards and 

discontinuances of special monthly 

dependency and indemnity compensation. 

(a) Effective date of award—(1) 

General rule. The effective date for an 

award of special monthly dependency 

and indemnity compensation (DIC) will 

be the date VA receives the application 

for special monthly DIC or the date 

entitlement arose, as defined in 

[regulation that will be published in a 

future Notice of Proposed Rulemaking], 

whichever date is later. 

(2) Exception—cases involving a 

retroactive award of basic DIC. When an 

award of basic DIC is effective for a 

period prior to the date of receipt of the 

application and a spouse or parent is 

also entitled to special monthly DIC at 

the time of that basic DIC award, the 

effective date for special monthly DIC 

will be the later of the following dates: 

(i) The effective date of the basic DIC 

award, or 

(ii) The date entitlement to special 

monthly DIC arose. See [regulation that 

will be published in a future Notice of 

Proposed Rulemaking] (defining ‘‘date 

entitlement arose’’). 

(3) Surviving spouse or parent in 

receipt of hospital, institutional, or 

domiciliary care at VA expense. If the 

surviving spouse or parent is provided 

hospital, institutional, or domiciliary 

care at VA expense, the effective date of 

any special monthly DIC award based 

on the need for aid and attendance 

under § 5.511(a) or (b) will be the date 

of departure from the medical facility. 

(b) Effective date of discontinuance—

(1) Aid and attendance. When a parent 

or surviving spouse is no longer in need 

of aid and attendance, VA will 

discontinue special monthly DIC based 

upon the need of aid and attendance 

effective the first day of the month that 

follows the month for which VA last 

paid that benefit. 

(2) Housebound. When a surviving 

spouse is no longer housebound, VA 

will discontinue special monthly DIC 

based upon housebound status effective 

the first day of the month that follows 

the month for which VA last paid that 

benefit. 

(Authority: 38 U.S.C. 501(a), 1311(c) and (d), 

1315(g), 5110, 5112) 

§§ 5.575–5.579 [Reserved] 

[FR Doc. 05–21026 Filed 10–20–05; 8:45 am] 

BILLING CODE 8320–01–P