The Department of Veterans Affairs (VA) offers directly, or in conjunction with other federal agencies, several benefits for surviving spouses, children, and dependent parents of deceased veterans to provide them with financial, educational, and emotional support. Among these various programs, Dependency and Indemnity Compensation (DIC) is a monthly tax-free cash payment for eligible surviving spouses, children, and dependent parents. DIC has been paid in some form (monthly cash payments or insurance benefits) to survivors since the Revolutionary War. There were modifications after each war until the 1950s, when the federal government mandated a more streamlined process that created the system used currently for survivors of veterans and military servicemen. Several policy issues are associated with DIC, including the DIC offset of Survivor Benefit Plan (military retirement survivor) payments, often referred to as the "widow's tax"; adequacy of the payments for surviving spouses compared with the payments made by other retirement systems to surviving spouses; remarriage age of 57; length of time for a totally disabled rating for non-service-connected deaths to qualify for DIC; and maximum DIC payment for parents based on income levels that have not been adjusted for inflation. This report outlines the eligibility requirements and benefit levels for DIC and the policy issues associated with DIC. The eligibility for DIC by survivors is based on (1) the eligibility of the veteran, which is determined by the circumstances of the veteran's death and his or her disability compensation rating; and (2) the survivor meeting certain criteria related to either relationship to the veteran, age, or income. The recipients of DIC must be the survivors of qualifying veterans. By statute, a veteran is defined as a "person who served in the active military, naval, or air service, and who was discharged or released therefrom under conditions other than dishonorable." DIC is paid to eligible survivors for three categories of veterans whose deaths fit one of the following circumstances: 1. veterans who died on active duty, active duty for training, or inactive duty for training; 2. veterans who died due to service-connected disabilities; or 3. veterans who died from non-service-related causes not as a result of willful misconduct and were receiving, or eligible to receive, disability compensation from the VA for service-connected disabilities rated at 100% subject to the following stipulations: the disabilities were rated as 100% disabled for 10 years or more prior to death; the disabilities were rated as 100% since discharge or release from active duty for at least five years prior to death; or the veterans were prisoners of war who had service-connected disabilities rated at 100% for at least one year prior to death after September 30, 1999. The Veterans' Benefits Act of 2010 ( P.L. 111-275 ) expanded the criteria for survivors of veterans who were prisoners of war and died from non-service-related causes by eliminating the requirement that the veteran had to have died after September 30, 1999, for certain DIC applications that were pending a final decision on or after October 1, 2011. The VA determines the eligibility of veterans and their entitlement to disability compensation through evidence found in military service records and circumstances of death. Veterans' dependents are not generally entitled to all VA benefits, but some benefits are available based on the relationship the dependent may have had with the veteran. If the eligibility criteria for DIC related to the veteran's death are met, the survivors also have certain criteria to meet to be eligible for DIC. The three different groups of recipients are spouses, children, and dependent parents of deceased veterans. Each group has specific eligibility requirements. A surviving spouse is eligible if he or she was married to the veteran for at least one year before the veteran's death, or has a child with the veteran, or if the veteran left the military due to a service-connected disability, the marriage was within 15 years of the discharge; cohabited with the veteran for the duration of the marriage unless the couple underwent a period of separation that was not the fault of the surviving spouse; and has not remarried before reaching the age of 57. Surviving children are eligible for DIC if they are independent of the surviving spouse, unmarried, and below the age of 18. If they are aged 18 to 23, they must be pursuing an approved course of education to be eligible for DIC. Children who are permanently incapable of supporting themselves at the age of 18 or older remain entitled to DIC. Surviving parents are required to provide evidence of financial dependence on the deceased veteran before becoming eligible for DIC. This evidence is gained through a calculation of countable income by the VA that cannot exceed the amounts outlined in the Income for VA Purposes (IVAP) tables. Surviving spouses receive monthly benefits at a current base rate of $1,254.19 in 2015, if the veteran died on or after January 1, 1993. Otherwise, payment is based on the veteran's pay grade at the time of death with the current base rate being $1,254.19. A higher amount may be provided to the surviving spouse for several reasons: if the veteran, eight years before death, was receiving or entitled to receive disability compensation for a service-connected disability rated at totally disabled (100%)—an additional $266.32 per month; if the surviving spouse has dependent children—an additional $310.71 per month for each child; if the surviving spouse has a disability that requires aid and assistance—an additional $310.71 per month; or if the surviving spouse is permanently housebound—an additional $145.55 per month. Surviving children under the age of 18 (or under the age of 23 if they are students, who are independent of the surviving spouse) are entitled to DIC in the following current monthly amounts: one child receives $310.71, and each additional child receives an additional $310.71. Moreover, if the surviving spouse has one or more children under the age of 18 on the award, an additional flat $270 shall be received per month for two years as part of a two-year transitional benefit. For example, in 2015 a surviving spouse with two children under the age of 18 would receive monthly benefits for surviving children in the amount of $891.42; $310.71 per child in addition to the flat $270 per month for the first two years. If a child is permanently incapable of self-support before the age of 18, the child remains eligible for DIC past the age of 18 in the amount of $529.55 per month. Children in school over the age of 18 (and under the age of 23) are also eligible for benefits at the rate of $263.23 per month. Under current law, the maximum allowable DIC for surviving dependent parents is reduced for countable income above $800, or $1,000 if both parents are a married couple. Monthly benefits received by parents fluctuate by income. In the case of a sole surviving parent, the monthly DIC benefit ranges between $5 and $621. For parents who are still married to each other or have remarried other individuals, the range is between $5 and $422. For parents who are not living with each other nor living with different spouses, the range is between $5 and $449. To claim DIC benefits, a survivor must complete and submit to the local VA office VA Form 21-534a and Department of Defense (DD) Form 1300. The effective date of DIC entitlement is the first day of the month that the death occurred for claims filed within one year of the death. After one year, the DIC entitlement starts on the date the claim is received by the VA. In FY2013, 376,979 spouses, children, and parents of veterans received more than $5.8 billion in DIC. On average, each spousal survivor received $15,744 in annual compensation. Child recipients received an average of $7,094 in annual compensation. Several policy issues are associated with DIC, including the DIC offset of Survivor Benefit Plan (military retirement survivor) payments, often referred to as the "widow's tax;" adequacy of the payments for survivors compared with other retirement systems' payments to surviving spouses; remarriage age of 57; length of time for a totally disabled rating for non-service-connected deaths to qualify for DIC; and maximum DIC payment for parents based on income levels that have not been adjusted for inflation. The Survivor Benefit Plan (SBP) is a form of insurance provided by the Department of Defense to military retirees that does not require service-connected death or disability for survivors to receive payments. A military retiree elects to have lower monthly retirement pay—the insurance premium for SBP is taken from retirement pay—to ensure that his or her survivors can receive a monthly payment after his or her death. However, this income is taxable, whereas DIC is tax-free. If the survivor of a military retiree is also eligible for and receives DIC, the SBP payment is reduced dollar for dollar by the DIC amount (but not below zero). There is a disparity between the percentage of income a DIC recipient is paid and the percentages given to recipients of other retirement and pension plans. Currently, an eligible surviving spouse would receive a basic DIC benefit of $1,254.19 monthly. This is just under 41% of the basic compensation rate for a veteran with a spouse receiving disability compensation at the 100% disabled rating. This has called into question the adequacy of DIC payments. Private pension plans are required to pay 50% of their benefit to surviving spouses, but retirees in some plans may elect to give their surviving spouses a larger percentage. As a result of the variance in pension plans, benefits, and survivor options, it is difficult to discern what the average pension benefit for a surviving spouse in the private sector might be. SBP recipients receive 55% of the military retiree's retirement pay.