31 October 2008
|
|||||||
[Federal Register: October 31, 2008 (Volume 73, Number 212)]
[Proposed Rules]
[Page 65211-65234]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31oc08-29]
[[Page 65211]]
-----------------------------------------------------------------------
Part V
Department of Veterans Affairs
-----------------------------------------------------------------------
38 CFR Part 5
Payments and Adjustments to Payments; Proposed Rule
[[Page 65212]]
-----------------------------------------------------------------------
DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 5
RIN 2900-AM06
Payments and Adjustments to Payments
AGENCY: Department of Veterans Affairs.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Veterans Affairs (VA) proposes to reorganize
and rewrite in plain language provisions applicable to payment of VA
benefits and adjustments to payments. These revisions are proposed as
part of VA's rewrite and reorganization of all of its compensation and
pension rules in a logical, claimant-focused, and user-friendly format.
The intended effect of the proposed revisions is to assist claimants,
beneficiaries and VA personnel in locating and understanding these
rules.
DATES: Comments must be received by VA on or before December 30, 2008.
ADDRESSES: Written comments may be submitted through http://
www.regulations.gov; by mail or hand-delivery to: Director, Regulations
Management (02REG), Department of Veterans Affairs, 810 Vermont Ave.,
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026 (not
a toll-free number). Comments should indicate that they are submitted
in response to ``RIN 2900-AM06--Payments and Adjustments to Payments.''
Copies of 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) 461-4902 for an appointment (not a toll-free number).
In addition, during the comment period, comments may be viewed online
through the Federal Docket Management System (FDMS) at http://
www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: William F. Russo, Director of
Regulations Management (02REG), Department of Veterans Affairs, 810
Vermont Avenue, NW., Washington, DC 20420, (202) 461-4902 (not a toll-
free number).
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 general rate-setting and
adjustment and resumption of benefits. 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 This Notice of Proposed Rulemaking.
Table Comparing Current Part 3 Rules with Proposed Part 5 Rules.
Content of Proposed Regulations.
General Rate-Setting and Payments
5.690 Where to find benefit rates and income limits.
5.691 Adjustments for fractions of dollars.
5.692 Fractions of one cent not paid.
5.693 Beginning date for certain VA benefit payments.
5.694 Surviving spouse's benefit for the month of the veteran's
death.
5.695 Payments to or for a child pursuing a course of
instruction at an approved educational institution.
5.696 Awards of dependency and indemnity compensation when not
all dependents apply.
5.697 Exchange rates for income received or expenses paid in
foreign currencies.
General Reductions, Discontinuances, and Resumptions
5.705 General effective dates for reduction or discontinuance of
benefits.
5.706 Payments excluded in calculating income or net worth.
5.707 Deductible medical expenses.
5.708 Eligibility verification reports.
5.709 Claimant and beneficiary responsibility to report changes.
5.710 Adjustment in benefits due to reduction or discontinuance
of a benefit to another payee.
5.711 Payment to dependents due to the disappearance of a
veteran for 90 days or more.
5.712 Suspension of VA benefits due to the disappearance of a
payee.
5.713 Restriction on VA benefit payments to an alien located in
enemy territory.
5.714 Restriction on delivery of VA benefit payments to payees
located in countries on Treasury Department list.
5.715 Claims for undelivered or discontinued benefits.
Endnote Regarding Amendatory Language.
Paperwork Reduction Act of 1995.
Regulatory Flexibility Act.
Executive Order 12866.
Unfunded Mandates.
Catalog of Federal Domestic Assistance Numbers and Titles.
List of Subjects in 38 CFR Part 5.
Overview of New Part 5 Organization
We plan to organize the part 5 regulations so that most of the
provisions governing a specific benefit are located in the same
subpart, with general provisions pertaining to all compensation and
pension benefits also grouped together. This organization will enable
claimants, beneficiaries, and their representatives, as well as VA
adjudicators, 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, general definitions, and general policy
provisions for this part. This subpart was published as proposed on
March 31, 2006. See 71 FR 16464.
``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 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 Notices of Proposed
Rulemaking (NPRMs) due to its size. The first, concerning the duties of
VA and the rights and responsibilities of claimants and beneficiaries,
was published as proposed on May 10, 2005. See 70 FR 24680. The second,
covering general evidence requirements, effective dates for awards,
revision of decisions, and protection of VA ratings, was published as
proposed on May 22, 2007. See 72 FR 28770. The third, concerning
[[Page 65213]]
rules on filing VA benefits claims, was published as proposed on April
14, 2008. See 73 FR 20136.
``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. This
subpart was published as proposed on September 20, 2006. See 71 FR
55052.
``Subpart E--Claims for Service Connection and Disability
Compensation'' would define service-connected disability compensation
and service connection, including direct and secondary service
connection. This subpart would inform readers how VA determines service
connection and entitlement to disability compensation. 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 as proposed on July 27,
2004. See 69 FR 44614. The second, relating to special ratings and
ratings for health care eligibility only, was published as proposed on
October 17, 2008. See 73 FR 62004.
``Subpart F--Nonservice-Connected Disability Pensions and Death
Pensions'' would include information regarding the three types of
nonservice-connected pension: Old-Law Pension, Section 306 Pension, and
Improved Pension. This subpart would also include those provisions that
state how to establish entitlement to Improved Pension and the
effective dates governing each pension. This subpart will be published
in 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. The
portion concerning eligibility and entitlement requirements, as well as
effective dates for Improved Pension, was published as proposed on
September 26, 2007. See 72 FR 54776.
``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
dependency and indemnity compensation (DIC); death compensation;
accrued benefits; benefits awarded; 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 was published as two separate NPRMs due to its size. The
portion concerning accrued benefits, death compensation, 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 was published as
proposed on October 21, 2005. See 70 FR 61326.
``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. This subpart was published as proposed on March 9, 2007. See
72 FR 10860.
``Subpart I--Benefits for Certain Filipino Veterans and Survivors''
would pertain to the various benefits available to Filipino veterans
and their survivors. This subpart was published as proposed on June 30,
2006. See 71 FR 37790.
``Subpart J--Burial Benefits'' would pertain to burial allowances.
This subpart was published as proposed on April 8, 2008. See 73 FR
19021.
``Subpart K--Matters Affecting the Receipt of Benefits'' would
contain provisions regarding bars to benefits, forfeiture of benefits,
and renouncement of benefits. This subpart was published as proposed on
May 31, 2006. See 71 FR 31056.
``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,
subpart L will be published in two separate NPRMs, one of which is this
NPRM. The first, concerning payments to beneficiaries who are eligible
for more than one benefit, was published as proposed on October 2,
2007. See 72 FR 56136. The second, concerning provisions applicable to
payment of VA benefits and adjustments to payments, is the subject of
this document.
The final subpart, ``Subpart M--Apportionments to Dependents and
Payments to Fiduciaries and 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 for the Project, 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 cross-reference
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 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.
Because of its large size, proposed part 5 will be published in a
number of NPRMs, such as this one. VA will not adopt any portion of
part 5 as final until all of the NPRMs have been published for public
comment.
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 rulemakings.
Overview of This Notice of Proposed Rulemaking
This NPRM pertains to those regulations governing payment of
benefits, adjustments to payments, and regulations related to
resumption of benefits. These regulations would be contained in
proposed Subpart L of new 38 CFR part 5. 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 differences are proposed, as are
some regulations that do not have counterparts in 38 CFR part 3.
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 those proposed regulations contained in this
NPRM:
[[Page 65214]]
------------------------------------------------------------------------
Based in whole or in part on
Proposed part 5 section or paragraph 38 CFR part 3 section or
paragraph (or ``New'')
------------------------------------------------------------------------
5.690..................................... 3.21
5.691(a).................................. 3.260(g)
5.691(b).................................. 3.29(a) and (c)
5.691(c).................................. 3.29(b)
5.692..................................... 3.112
5.693(a).................................. 3.31(a)
5.693(b).................................. Introduction to 3.31.
5.693(c).................................. 3.31(b) and (c)
5.693(c)(1)............................... 3.31(b)
5.693(c)(2)............................... New.
5.693(c)(3)............................... 3.31(c)(1)
5.693(c)(4)............................... 3.31(c)(3)
5.693(c)(5)............................... 3.31(c)(4)
5.693(c)(6)............................... 3.31(c)(5)
5.693(c)(7)............................... 3.31(c)(3)
5.693(c)(8)............................... 3.31(c)(2)
5.693(c)(9)............................... 3.656(a) and (d)
5.693(d).................................. 3.401(e), 3.750
5.693(e)(1) and (e)(2).................... 3.31(c)(2)
5.693(e)(3)............................... Introduction to 3.31.
5.694..................................... 3.20
5.695(a).................................. 3.57(a)(1)(iii)
5.695(b).................................. 3.57(a)(1)(iii), 3.667(a)(1)
and (a)(2)
5.695(c) and (c)(1)....................... 3.667(a)(3)
5.695(c)(2)............................... 3.667(a)(4)
5.695(c)(3)............................... 3.667(a)(3)
5.695(d).................................. 3.667(a)(5)
5.695(e).................................. New
5.695(f).................................. 3.667(b)
5.695(g).................................. 3.667(c)
5.695(h).................................. 3.667(d)
5.695(i).................................. 3.667(f)
5.696..................................... 3.107
5.697(a).................................. Introduction to 3.32.
5.697(a)(1)............................... 3.32(a)(1)
5.697(a)(2)............................... 3.32(a)(2)
5.697(b) and (c).......................... 3.32(b)
5.705(a).................................. Introduction to 3.500,
3.500(a), Introduction to
3.501, Introduction to
3.502, 3.503(a).
5.705(b).................................. New.
5.706(a) and (b).......................... New.
5.706(b)(1)............................... 3.261(a)(32)
5.706(b)(2)............................... 3.262(z), 3.263(h),
3.272(v), 3.275(j),
3.261(a)(41)
5.706(b)(3)............................... 3.262(u), 3.263(f),
3.272(p), 3.275(g),
3.261(a)(36)
5.706(b)(4)............................... New.
5.706(b)(5)............................... 3.262(s), 3.263(e),
3.272(o), 3.275(f),
3.261(a)(35)
5.706(b)(6)............................... 3.262(y), 3.263(g),
3.272(u), 3.275(i),
3.261(a)(40)
5.706(b)(7)............................... New.
5.706(b)(8)............................... 3.262(v), 3.272(r),
3.261(a)(37)
5.706(b)(9) and (10)...................... New.
5.706(b)(11).............................. 3.262(x), 3.272(t),
3.261(a)(39)
5.706(b)(12) through (14)................. New.
5.706(b)(15).............................. 3.262(q), 3.272(k),
3.261(a)(33) and (a)(34)
5.706(b)(16) through (22)................. New.
5.706(b)(23).............................. 3.261(a)(14)
5.706(b)(24).............................. New.
5.707(a) and (b).......................... New.
5.707(c).................................. 3.261(b)(1), 3.262(l),
3.272(g)
5.708(a).................................. 3.256(b), 3.277(c)
Introduction to 5.708(b).................. 3.277(c)(3)
5.708(b)(1)............................... New.
5.708(b)(2)............................... 3.256(b)(3), 3.277(c)(2)
5.708(c).................................. New.
5.708(d).................................. 3.661(a)(1) and (2)
5.708(e).................................. 3.256(c), 3.277(d)
5.708(f)(1)............................... 3.256(c), 3.277(d)
5.708(f)(2)............................... New.
5.708(f)(3)............................... 3.661(b)(2)(i)
5.708(g).................................. 3.661(b)(2)(iii)
5.708(h).................................. 3.661(b)(2)(ii)
5.709(a).................................. 3.256(a), 3.277(a) and (b),
3.660(a)(1)
5.709(b).................................. 3.256(a), 3.277(b)
5.710(a).................................. 3.651(a)
5.710(b).................................. 3.651(b)
5.710(c).................................. 3.651(c)
5.711(a).................................. 3.656(a)
5.711(b).................................. 3.656(a)
5.711(c).................................. 3.656(d)
5.711(d)(1)............................... 3.656(b)
5.711(d)(2)............................... 3.656(c)
5.712..................................... 3.158(c)
5.713(a) through (b)(1)................... 3.653(a)
5.713(b)(2) and (b)(3).................... New.
5.713(c).................................. New.
5.714(a).................................. New.
5.714(b).................................. 3.653(c)(1)
5.714(c) and (d).......................... 3.653(c)
5.714(e).................................. 3.653(b)
5.714(f).................................. New.
5.715(a).................................. New.
5.715(b)(1)............................... 3.653(b)
5.715(b)(2)............................... 3.653(c)(3)
5.715(b)(3)............................... 3.653(b)
5.715(c).................................. 3.653(b)
5.715(d).................................. 3.653(b) and (c)(3)
5.715(e).................................. 3.653(d)
5.715(f).................................. 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 Rate-Setting and Payments
5.690 Where To Find Benefit Rates and Income Limits
Proposed Sec. 5.690 is based on current Sec. 3.21, with a few
changes.
First, we propose to not include in part 5 the reference to
appendix B of the Veterans Benefits Administration Manual M21-1 because
the reference is outdated and because the rates are available at our
Web site, which is easily available to the general public. The proposed
regulation would guide readers to that site. Second, we propose to
include a reference to the monthly allowances payable under 38 U.S.C.
chapter 18 for children disabled from spina bifida or with certain
birth defects. Adding this reference in connection with the general
reference to the publication of rates on our Web site will direct
readers to one location to find information about most of the rates for
benefits payable under part 5.
Current Sec. 3.21 involves monetary rates for VA benefits. The
last two sentences of current Sec. 3.21 read:
The maximum annual rates of improved pension payable under Pub.
L. 95-588 (92 Stat. 2497) are set forth in Sec. Sec. 3.23 and 3.24.
The monthly rates and annual income limitations applicable to
parents [DIC] are set forth in Sec. 3.25.
Although the rates and income limits for Improved Pension and
parents' DIC were at one time contained in Sec. Sec. 3.23 through
3.25, that is no longer the case. Moreover, the rates and income limits
applicable to Improved Pension and parents' DIC, like the other VA
benefits described above, are available on our Web site. Therefore, we
propose not to include a reference to the part 5 equivalents of current
Sec. Sec. 3.23 through 3.25 in Sec. 5.690.
5.691 Adjustments for Fractions of Dollars
Proposed Sec. 5.691 provides rules regarding how VA rounds to the
nearest dollar in various calculations. It restates in plain language
current Sec. Sec. 3.29 and 3.260(g).
[[Page 65215]]
Current Sec. 3.260(g) includes rules governing the computation of
income for both pension and parents' DIC. (DIC for surviving spouses
and children is not based on income.) To clarify that, in the context
of DIC, income calculations are relevant only as to parents' DIC,
proposed Sec. 5.691(a) would specifically refer to ``parents'
dependency and indemnity compensation'' instead of ``dependency and
indemnity compensation.''
Sections 5.531 through 5.534, cited in proposed Sec. 5.691(a),
were published as proposed on October 21, 2005. See 70 FR 61326, 61344-
47. Section 5.370, also cited in proposed Sec. 5.691(a), was published
as proposed on September 26, 2007. See 72 FR 54776, 54792.
We have intentionally omitted from proposed Sec. 5.691(c) the June
1, 1983, applicability date for rates of pension, found in current
Sec. 3.29(b). Because these regulations will apply only to claims
filed on or after the effective date of part 5, which will be no
earlier than 2011, it is exceedingly unlikely that these regulations
will apply to pension awards retroactive earlier than 1984. We have
also simplified the text for clarity.
5.692 Fractions of One Cent Not Paid
Proposed Sec. 5.692 restates in plain language current Sec.
3.112. VA intends no substantive change.
We note that, with respect to certain benefits, 38 U.S.C.
5312(c)(2) explicitly permits VA to round payments ``in such manner as
the Secretary considers equitable and appropriate for ease of
administration.'' This statute, combined with VA's general rulemaking
authority, gives VA authority to exclude fractions of a cent from
payment. VA considers this practice equitable and necessary to
efficiently administer the benefit programs covered by proposed 38 CFR
part 5.
5.693 Beginning Date for Certain VA Benefit Payments
The Omnibus Budget Reconciliation Act of 1982 (OBRA), Pub. L. 97-
253, 96 Stat. 763, introduced a number of Federal cost-saving measures.
Section 401 of the OBRA, 96 Stat. at 801, which is now codified at 38
U.S.C. 5111, ``Commencement of period of payment,'' prohibits VA from
paying certain benefits for any period before the first day of the
calendar month following the month in which the award or increased
award of the benefit becomes effective. The provisions of 38 U.S.C.
5111 are currently implemented in Sec. 3.31 and are the subject of
proposed Sec. 5.693. We propose several changes from the current
regulation.
Proposed Sec. 5.693(b) restates current Sec. 3.31(b) and
incorporates with one change the list in the introduction to Sec. 3.31
of the benefits affected by the beginning payment date rule. The
benefits affected are disability compensation, pension, dependency and
indemnity compensation and monetary allowances under 38 U.S.C. chapter
18 for children disabled from spina bifida or with certain birth
defects. The proposed change is that we not include the reference to
Vietnam, which is found in current Sec. 3.31. This change is required
because the law no longer limits chapter 18 benefits to children of
Vietnam-era service veterans. See Pub. L. 108-183, sec. 102, 117 Stat.
2651, 2653 (adding 38 U.S.C. 1821, ``Benefits for children of certain
Korea service veterans born with spina bifida''). Therefore, proposed
Sec. 5.693(b)(4) simply refers to payment of ``monetary allowances
under 38 U.S.C. chapter 18 for children disabled from spina bifida or
with certain birth defects.''
Proposed Sec. 5.693(c) lists payments that are not subject to the
general rule found in proposed paragraph (b). The list is derived from
current Sec. 3.31(b) and (c). We propose to add a payment not found in
the current regulation. The new payment, found in proposed Sec.
5.693(c)(2), pertains to ``[a]wards restoring a previously reduced
benefit because the circumstances requiring reduction no longer
exist.'' VA does not consider such a restoration of a previously
reduced award to be an ``increased award'' as defined by proposed Sec.
5.693(a), but rather a restoration of the pre-adjustment rate. This
award is more correctly viewed as a discontinuance of a temporary
reduction and not an increase subject to the delayed payments described
in proposed paragraph (b) of this section.
Next, we propose to restate with clarifying language an exception
found in current Sec. 3.31(c)(4). Current Sec. 3.31(c)(4) includes an
exception to the delayed payment provision of OBRA for increases
resulting solely from the enactment of certain types of legislation and
includes several examples. One example, found at Sec. 3.31(c)(4)(iii),
refers to ``[c]hanges in the criteria for statutory award
designations.'' The example is taken from examples in the joint House
and Senate Committee Conference report regarding OBRA. See H.R. Conf.
Rep. No. 97-759, at 82 (1982), as reprinted in 1982 U.S.C.C.A.N. 1846,
1877. Apart from this example, the term ``statutory award'' does not
appear elsewhere in the report. Rather than use the term ``statutory
award'' in part 5, we would refer in Sec. 5.693(c)(5)(v) to an ``award
of special monthly compensation.'' This is consistent with long-
standing VA usage of the term ``statutory award.'' For example, Talbert
v. Brown, 7 Vet. App. 352, 354 (1995), involved entitlement to special
monthly compensation under ``a statutory award pursuant to Public Law
No. 82-427.'' Public Law No. 82-427, 66 Stat. 295, introduced
provisions currently codified in 38 U.S.C. 1114(k), which provides for
special monthly compensation to veterans.
Finally, we propose not to include current Sec. 3.31(c)(3)(vi) in
part 5. The current regulation excludes an adjustment because of
limitations placed on the size of the estate of a hospitalized
incompetent veteran. However, the limitation in question was imposed by
former 38 U.S.C. 5503(b), which was repealed by section 204(a) of the
Veterans Education and Benefits Expansion Act of 2001, Pub. L. 107-103,
115 Stat. 976, 990.
Section 5.461, cited in proposed Sec. 5.693(a)(4), was published
as proposed on December 27, 2004. See 69 FR 77578, 77588-89. Section
5.745, cited in proposed Sec. 5.693(d)(1), was published as proposed
on October 2, 2007. See 72 FR 56136, 56149.
5.694 Surviving Spouse's Benefit for the Month of the Veteran's Death
Proposed Sec. 5.694 is a plain language restatement of current
Sec. 3.20. The proposed regulation provides rules regarding payment to
a surviving spouse for the month of the veteran's death. In proposed
paragraph (a) we have created a term, ``month-of-death benefit,'' to
serve as shorthand for a payment to a deceased veteran's surviving
spouse for the month in which the veteran died and in the amount of
disability compensation or pension that the veteran would have received
for that month, if not for his or her death. Using this term would make
this section easier to read and help ensure clarity.
We propose not to include current Sec. 3.20(a) in proposed Sec.
5.694. Section 3.20(a) currently reads:
Where the veteran died on or after December 1, 1962, and before
October 1, 1982, the rate of death pension or [DIC] otherwise
payable for the surviving spouse for the month in which the death
occurred shall be not less than the amount of pension or
compensation which would have been payable to or for the veteran for
that month but for his or her death. (Authority: 38 U.S.C. 5310)
Any award of benefits under current Sec. 3.20(a) would pertain to a
veteran who died between December 1, 1962, and September 30, 1982, more
than 25 years ago. The only situation in which
[[Page 65216]]
payment of benefits under this paragraph could arise presently is in a
retroactive benefit adjustment based on clear and unmistakable error.
However, in such a case, VA would be required to apply the provisions
of Sec. 3.20(a) in effect at the time the erroneous decision was made,
not the current provisions. Therefore, there is no reason to include
Sec. 3.20(a) in part 5.
Section 5.550, cited in proposed Sec. 5.694(d), was published as
proposed on October 1, 2004. See 69 FR 59072, 59085.
5.695 Payments to or for a Child Pursuing a Course of Instruction at an
Approved Educational Institution
Proposed Sec. 5.695 is based on current Sec. Sec. 3.57(a)(1)(iii)
and 3.667. The proposed section includes provisions related to payment
of additional Improved Pension or disability compensation to a veteran
or Improved Pension to a surviving spouse based on a child pursuing a
course of instruction at an approved educational institution, and
direct payment of Improved Pension or dependency and indemnity
compensation (DIC) to a child on or after the child's 18th birthday,
but before the child's 23rd birthday, if the child is pursuing a course
of instruction at an approved educational institution. Proposed Sec.
5.695(a) defines the term ``approved educational institution''
consistent with the definition of ``educational institution'' in Sec.
3.57(a)(1)(iii).
Whereas current Sec. 3.667(a)(1) and (2) merely indicate that
benefits ``may be paid,'' proposed Sec. 5.695(b) specifies which
benefits will be paid and to whom. This additional information, only
implied by the current regulation, will be helpful to the reader. No
substantive change is intended. Section 5.417, cited in proposed Sec.
5.695(b), was published as proposed on September 26, 2007. See 72 FR
54776, 54799-800.
We have intentionally not included in proposed Sec. 5.695(c) the
reference to September 30, 1981, which appears in current Sec.
3.667(a)(3). This date is not relevant to proposed part 5 because no
claim adjudicated under part 5 could pertain to a child then between
the ages of 18 and 23 who was age 18 before September 30, 1981. Section
5.573, cited in proposed Sec. 5.695(c), was published as proposed on
October 21, 2005. See 70 FR 61326, 61348.
Section 5.524, cited in proposed Sec. 5.695(d), was published as
proposed on October 21, 2005. See 70 FR 61326, 61344.
Proposed Sec. 5.695(e) explains that if a child is pursuing a
course of instruction at an approved educational institution on or
after the child's 18th birthday and a claim is not received within 1
year, benefits may still be paid to the child effective the date VA
receives the child's claim. We propose to include this provision in
order to fill a deficiency in the current regulation. The provision is
consistent with 38 U.S.C. 5110 (the general effective date statute) and
other effective-date provisions found in proposed part 5. It will
provide valuable information for regulation users and VA personnel.
Section 5.764, cited in proposed Sec. 5.695(i)(1), was published
as proposed on October 2, 2007. See 72 FR 56136, 56154.
5.696 Awards of Dependency and Indemnity Compensation When Not All
Dependents Apply
Proposed Sec. 5.696 is based on current Sec. 3.107. We have
updated the citation to Sec. 3.251(a)(4), contained in current Sec.
3.107, to the proposed part 5 counterpart Sec. 5.536(d), which was
published as proposed on October 21, 2005. See 70 FR 61326, 61347.
Although the language is much clearer in this part 5 regulation, we
have not made any substantive changes from current Sec. 3.107.
5.697 Exchange Rates for Income Received or Expenses Paid in Foreign
Currencies
Proposed Sec. 5.697 is derived from current Sec. 3.32. The
current regulation provides rules pertaining to income received or
expenses paid in foreign currencies. We propose the following changes
from the current regulation.
Proposed Sec. 5.697(a)(1) states that if VA is informed of a
change in a beneficiary's income or expenses paid in a foreign currency
that would affect his or her entitlement, VA will make retroactive
adjustments to the benefit rate using the quarterly exchange rate in
effect when VA receives the notice of the change in income received or
expenses paid in a foreign currency.
Current Sec. 3.32(b) references ``burial, plot or headstone
allowances.'' We propose to use the phrase ``burial benefits'' instead
of using the current phrase, ``burial, plot or headstone allowances,''
to be consistent with the term that we expect to use to describe
monetary burial benefits in subpart J of part 5, which is currently
being developed by VA.
Sections 5.550 and 5.555, cited in proposed Sec. 5.697(c)(1), were
published as proposed on October 1, 2004. See 69 FR 59072, 59085-86.
General Reductions, Discontinuances, and Resumptions
5.705 General Effective Dates for Reduction or Discontinuance of
Benefits
Currently, Sec. Sec. 3.500 through 3.503 set forth rules that
govern how VA assigns an effective date to a reduction or
discontinuance of disability compensation, pension, or dependency and
indemnity compensation (DIC). Each of the reduction and discontinuance
effective-date regulations contains general rules on the subject. Each
regulation also contains multiple paragraphs that apply to a specific,
narrow basis for reduction or discontinuance of benefits payable to a
specific type of beneficiary. In view of our proposal to organize by
benefit and topic the part 5 rewrites of the current part 3
regulations, the specific rules in Sec. Sec. 3.500 through 3.503 will
be organized in the part 5 subpart associated with the specific
benefits or subjects to which they apply. Proposed Sec. 5.705 includes
generally applicable rules, based on Sec. Sec. 3.500 through 3.503.
In 38 U.S.C. 5112(a), Congress requires VA to generally fix a
reduction or discontinuance of compensation, pension, or DIC ``in
accordance with the facts found,'' ``[e]xcept as otherwise specified in
[38 U.S.C. 5112].'' Proposed Sec. 5.705(a) states this general rule.
We propose to include the monetary allowances under chapter 18 of title
38, United States Code, in the list of benefits to which the general
rule applies. Although 38 U.S.C. 5112 does not refer to chapter 18
benefits, 38 U.S.C. 1832(b)(4) makes provisions of 38 U.S.C. 5112(a)
and (b) applicable to monetary allowances under chapter 18.
In 38 U.S.C. 5112(b), Congress provides ten specific exceptions to
the general rule. In such situations, the effective date of the
reduction or discontinuance ``shall be'' assigned as directed in the
particular paragraph of section 5112(b), and not as directed by the
general ``facts found'' provision in section 5112(a). Thus, section
5112 permits the assignment of an effective date for a reduction or
discontinuance in accordance with the facts found only when there is no
specific provision requiring VA to assign the effective date on some
other basis. This interpretation is consistent with general rules of
statutory interpretation (i.e., that a specific rule modifies a more
general one) and decisions from the Court of Appeals for Veterans
Claims on this subject.
Accordingly, we have retained the basic concepts from the
introductory language to current Sec. 3.500 and Sec. 3.500(a), and
modified them to
[[Page 65217]]
enhance the clarity of the current provisions. The first sentence of
proposed Sec. 5.705(a) restates the current language as follows:
``Except as otherwise provided, VA will assign an effective date for
the reduction or discontinuance of disability compensation, pension,
dependency and indemnity compensation (DIC), or the monetary allowances
under chapter 18 of title 38, United States Code, in accordance with
the facts found.''
The introductory text to current Sec. 3.500 also states that
``[t]he effective date * * * will be the earliest of the dates stated
in these paragraphs unless otherwise provided.'' Sections 3.501, 3.502,
and 3.503(a) all provide that ``[t]he effective date * * * will be the
earliest of the dates stated in this section.'' Current Sec. Sec.
3.501 through 3.503 do not reference Sec. 3.500. The wording in the
current sections implies that each section exclusively provides the
effective date of a reduction or discontinuance of benefits to the
class of beneficiaries covered in the particular section. The language
does not explicitly acknowledge that Sec. 3.500 provides the default
rule when none of the specific provisions in Sec. Sec. 3.501 through
3.503 apply. The part 5 rule would be explicit in this regard.
Additionally, if a specific paragraph in Sec. 3.500 applies and
there is no applicable provision in Sec. Sec. 3.501 through 3.503,
then the specific paragraph in Sec. 3.500 applies. For example, when a
surviving spouse's right to receive benefits is discontinued based on
his or her renouncement of the benefit, an event that is not covered
under Sec. 3.502, the effective date is assigned in accordance with
Sec. 3.500(q). For these reasons, VA applies Sec. 3.500 in cases
involving veterans, surviving spouses, parents and children,
notwithstanding that Sec. Sec. 3.501 through 3.504 appear to
exclusively provide the effective dates of reductions and
discontinuances applicable to those beneficiaries. Thus, the proposed
part 5 rule clearly states the general applicability of Sec. 5.705 but
does not represent a substantive change in VA practice or policy.
The second sentence of proposed Sec. 5.705(a) reads: ``If more
than one effective-date provision applies to a particular issue or
event, VA will reduce or discontinue the benefit(s) in accordance with
the earliest applicable date.'' This language restates similar
references to the ``earliest date,'' which appear in current Sec. Sec.
3.500 through 3.503. The proposed language is easier to understand and
apply, but it will not substantively alter VA's current interpretation
of the governing statute or VA's regulations.
The introductory paragraphs to Sec. Sec. 3.500 through 3.502 and
Sec. 3.503(a) identically state a general effective-date provision,
``Where an award is reduced, the reduced rate will be effective the day
following the date of discontinuance of the greater benefit.'' In the
last sentence of proposed Sec. 5.705(a) we propose to restate this
provision as follows: ``VA will pay a reduced rate or discontinue
benefits effective the date of reduction or discontinuance.'' Stating
the effective date in this manner--focusing only on the date that the
new rate begins rather than on the date that the old rate ends--
clarifies the effective-date provisions for reductions and
discontinuances. We propose similar wording throughout part 5. VA
intends no substantive change by this rewording.
Under proposed Sec. 5.705(a), as with the current rules, benefits
are subject to reduction on the earliest applicable date. In view of
that requirement, it would be useful to provide a reference tool in
order to help VA and claimants locate the effective-date provisions
throughout part 5. Proposed Sec. 5.705(b) is reserved for a table with
the locations of specific reduction and discontinuance rules once part
5 is published in the Federal Register. For the benefit of persons
reviewing this NPRM, we have included a table to notify readers of the
effective-date provisions that we intend to reference in the final
version of this paragraph. We do not intend that proposed Sec.
5.705(b) contain any substantive rules. In Sec. 5.705(b), we make a
statement to this effect, to prevent the reliance on this chart by
claimants or adjudicators. When considering the issue of effective
date, users of part 5 should apply the specific regulation referenced
in the chart, rather than rely on the chart itself.
As proposed, the table shows both already published and as yet
unpublished Part 5 sections. The unpublished sections are included as
placeholders; many may change before publication. Section 5.101 of
Subpart C was published as proposed on May 10, 2005. See 70 FR 24680.
Proposed Sec. Sec. 5.152, 5.165, and 5.177 of Subpart C were published
as proposed on May 22, 2007. See 72 FR 28770. The Subpart D provisions
were published as proposed on September 20, 2006. See 71 FR 55052.
Section 5.477 of Subpart F was published as proposed on December 27,
2004. See 69 FR 77578. Sections 5.568 to 5.572 of Subpart G were
published as proposed on October 1, 2004. See 69 FR 59072. A correction
to proposed Sec. 5.570 was published on October 21, 2004. See 69 FR
61914. Sections 5.524, 5.573, and 5.574 of Subpart G were published as
proposed on October 21, 2005. See 70 FR 61326. The Subpart H provisions
were published as proposed on March 9, 2007. See 72 FR 10860. The
Subpart I provisions were published as proposed on June 30, 2006. See
71 FR 37790. The Subpart K provisions were published as proposed on May
31, 2006. See 71 FR 31056.
5.706 Payments Excluded in Calculating Income or Net Worth
Proposed Sec. 5.706 contains a list of payments that are excluded
by VA in calculating income or net worth for those benefits that are
based on financial need, which are: Improved Pension, Section 306
Pension, Old-Law Pension, and parents' dependency and indemnity
compensation (DIC). Financial need is also the basis for establishing
dependency of parents in veterans' disability compensation cases. The
specific rules related to income and net worth limits for these five
benefits are located in the subpart dealing with each specific benefit.
However, there are certain payments that are excluded from income and
net worth by Federal statute for all Federal need-based programs.
Proposed Sec. 5.706 contains a list of these payments. It will be
helpful to consolidate all of these exclusions into one location and in
table form.
Current Sec. 3.261 contains a table listing the exclusions from
countable income for Old-Law Pension, Section 306 Pension, parents'
DIC, and dependency of parents. Current Sec. 3.263 contains exclusions
from net worth for Section 306 Pension and dependency of parents.
Current Sec. 3.272 contains exclusions from countable income for
Improved Pension, and current Sec. 3.275 contains exclusions from net
worth for Improved Pension. Exclusions common to each VA need-based
benefit are included in table form in proposed Sec. 5.706(b). The
exclusions that are not common to each VA need-based benefit are
contained in the regulations pertaining to the individual benefit. In
addition, we propose to include in this table certain statutory
exclusions from countable income or net worth that are not included in
part 3.
Proposed Sec. 5.706(b)(1) would exclude, from countable income,
relocation payments made under the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601 et
seq.), Pub. L. 91-646, 84 Stat. 1894. Current Sec. 3.261(a)(32)
excludes relocation payments under Public Law No. 90-448 and Public Law
No. 90-495. However, the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 repealed these relocation
payment
[[Page 65218]]
provisions and exclusions. Section 216 of the 1970 Act provides that
payments made under the Act are to be excluded from countable income.
See 42 U.S.C. 4636.
Proposed Sec. 5.706(b)(4) excludes from countable income and net
worth consideration, payments made to individuals because of their
status under Pub. L. 103-286, as victims of Nazi persecution. The
exclusion of this source of income will implement this statute, which
is not implemented by a part 3 regulation.
Proposed Sec. 5.706(b)(7) excludes certain appropriations to
comply with judgments of the Indian Claims Commission and the Court of
Federal Claims that are held under the Indian Judgment Funds Use and
Distributions Act (25 U.S.C. 1401 et seq.) or another act of Congress.
Proposed Sec. 5.706(b)(8) excludes from income and net worth
consideration the interests of individual Indians in trust or
restricted lands. The current regulations under Sec. Sec. 3.262(v) and
3.272(r) only exclude income of up to $2,000 per calendar year received
by American Indian beneficiaries from trust or restricted lands.
Pursuant to 25 U.S.C. 1408, interests of individual Indians in trust or
restricted lands shall not be considered a resource, and up to $2,000
per year of income received by individual Indians that is derived from
such interests shall not be considered income. Therefore, in order to
extend the exclusion to net worth consideration, proposed Sec.
5.706(b)(8) would exclude from net worth the interests received by
individual Indians from trust or restricted lands.
Proposed Sec. 5.706(b)(9) excludes from income and net worth
consideration income derived from certain submarginal land of the
United States that is held in trust for certain Indian tribes in
accordance with 25 U.S.C. 459. Proposed Sec. 5.706(b)(10) excludes
from income and net worth consideration up to $2,000 of per capita
distributions under the Old Age Assistance Claims Settlement Act (25
U.S.C. 2301 et seq.). The exclusions described in Sec. 5.706(b)(9) and
Sec. 5.706(b)(10) will implement statutory provisions which were not
implemented in part 3.
Proposed Sec. 5.706(b)(11) excludes from income and net worth
consideration, any income or asset received under the Alaska Native
Claims Settlement Act (43 U.S.C. 1626). Current Sec. Sec. 3.262(x) and
3.272(t) exclude the following payments from income consideration: cash
(including cash dividends on stock received from a Native Corporation)
to the extent that it does not, in the aggregate, exceed $2,000 per
individual per year; stock (including stock issued or distributed by a
Native Corporation as a dividend or distribution on stock); a
partnership interest; land or an interest in land (including land or an
interest in land received from a Native Corporation as a dividend or
distribution on stock); and an interest in a settlement trust. The
Alaska Native Claims Settlement Act (43 U.S.C. 1626) provides that the
income or asset received from a Native Corporation shall not be
considered or taken into account as an asset or resource. Therefore, in
order to extend the exclusion to net worth consideration, proposed
Sec. 5.706(b)(11) would exclude from net worth the cited income and
assets listed in this paragraph.
Proposed Sec. 5.706(b)(12) excludes from income and net worth
consideration payments received under the Maine Indian Claims
Settlement Act of 1980 (25 U.S.C. 1721 et seq.). The exclusion of this
source of income will implement this statute not implemented in part 3.
Proposed Sec. 5.706(b)(13) excludes from income consideration
allowances, earnings, and payments to individuals participating in
programs under the Workforce Investment Act of 1998 (29 U.S.C. 2931),
which provides that allowances, earnings, and payments to individuals
participating in programs under the Act shall not be considered as
income for the purposes of determining eligibility for, and the amount
of income transfer and in-kind aid furnished under, any Federal or
federally assisted program based on need. There is no resource
exemption. Therefore, proposed Sec. 5.706(b)(13) would only exclude
from income consideration income derived from the Workforce Investment
Act of 1998. The exclusion of this source of income will implement this
statute not implemented in part 3.
Proposed Sec. 5.706(b)(14) excludes from income consideration
allowances, earnings, and payments to AmeriCorps participants. Pursuant
to 42 U.S.C. 12637, allowances, earnings, and payments to individuals
participating in programs under subchapter I of title 42 shall not be
considered as income for the purposes of determining eligibility for,
and the amount of income transfer and in-kind aid furnished under, any
Federal or federally assisted program based on need. There is no
resource exemption. Therefore, proposed Sec. 5.706(b)(14) would only
exclude from income consideration income derived from the National and
Community Service Act of 1990. The exclusion of this source of income
will implement this statute, which is not implemented in part 3.
Current Sec. 3.262(q) and Sec. 3.272(k) list excludable income
from various Federal volunteer programs without reference to net worth
consideration. Through a series of legislative changes, these programs
are now administered by the Corporation for National and Community
Service rather than by the agencies listed in Sec. 3.262(q) and Sec.
3.272(k). See Pub. L. 103-82, 107 Stat. 785. Section 5044(f) of title
42, United States Code, provides that payments made under the act which
created the Corporation for National and Community Service, with
certain exceptions, do not reduce or eliminate assistance that
volunteers may be receiving under other programs. We propose to account
for this change in the law by providing, in Sec. 5.706(b)(15), that
payments received from any of the volunteer programs administered by
the Corporation for National and Community Service would be excluded
from income and net worth.
Proposed Sec. 5.706(b)(16) excludes from income and net worth
consideration the value of the allotment provided to an eligible
household under the Food Stamp Program. Proposed Sec. 5.706(b)(17)
excludes from income and net worth consideration the value of free or
reduced price for food under the Child Nutrition Act of 1966 (42 U.S.C.
chapter 13A). Proposed Sec. 5.706(b)(18) excludes from income and net
worth consideration the value of any child care provided or arranged
(or any amount received as payment for such care or reimbursement for
costs incurred for such care) under the Child Care and Development
Block Grant Act of 1990 (42 U.S.C. chapter 105). Proposed Sec.
5.706(b)(19) excludes from income and net worth consideration the value
of services, but not wages, provided to a resident of an eligible
housing project under a congregate services program under the Cranston-
Gonzalez National Affordable Housing Act (42 U.S.C. chapter 130).
Finally, proposed Sec. 5.706(b)(20) excludes from income and net worth
consideration the amount of any home energy assistance payments or
allowances provided directly to, or indirectly for the benefit of, an
eligible household under the Low-Income Home Energy Assistance Act of
1981 (42 U.S.C. chapter 94). The exclusion of the five sources of
income will implement these statutes not implemented in part 3.
Proposed Sec. 5.706(b)(21) excludes from income consideration
payments, other than wages or salaries, received from programs funded
under the Older Americans Act of 1965 (42 U.S.C. chapter 35). In
accordance with 42 U.S.C. 3020a(b), such payments may not
[[Page 65219]]
be treated as income or benefits for the purpose of any other program
or provision of Federal or State law. The exclusion of this source of
income will implement this statute not implemented in part 3.
Proposed Sec. 5.706(b)(22) excludes from income and net worth
consideration, amounts of student financial assistance received under
Title IV of the Higher Education Act of 1965, including Federal work-
study programs, under Bureau of Indian Affairs student assistance
programs, or vocational training under the Carl D. Perkins Vocational
and Technical Education Act of 1998 (20 U.S.C. chapter 44). The
exclusion of this source of income will implement this statute, which
is not implemented in part 3.
Proposed Sec. 5.706(b)(24) excludes from income and net worth
consideration, payments received under the Medicare transitional
assistance program and any savings associated with the Medicare
prescription drug discount card (42 U.S.C. 1395w-141(g)(6)).
5.707 Deductible Medical Expenses
Proposed Sec. 5.707, based on current Sec. Sec. 3.261(b)(1),
3.262(l), and 3.272(g), pertains to medical expenses that are deducted
from countable annual income. In Sec. 5.707, we propose to define the
categories of expenses that will be considered ``medical expenses.''
Paragraph (a) of proposed Sec. 5.707 cites several other proposed
rules that were published in prior Notices of Proposed Rulemaking:
Sec. 5.413 Income deductions for calculating adjusted annual income
(regarding Improved Pension), 72 FR 54776, 54797-98 (Sept. 26, 2007),
Sec. 5.474 Deductible Expenses for Section 306 Pension Only, 69 FR
77578, 77591-92 (Dec. 27, 2004), and Sec. 5.532 Deductions from income
(regarding parents' DIC), 70 FR 61326, 61345 (Oct. 21, 2005).
Proposed Sec. 5.707(b) defines the term ``licensed healthcare
provider.'' We propose to inform regulation users that individual
states are responsible for such licensing. We also propose to list
examples of licensed healthcare providers.
For Improved Pension, the authority for VA to deduct from countable
annual income a portion of amounts paid for unreimbursed medical
expenses derives from 38 U.S.C. 1503(a)(8). For parents' dependency and
indemnity compensation (DIC), the authority for VA to deduct unusual
medical expenses from countable annual income derives from 38 U.S.C.
1315(f)(3). For Section 306 Pension, such authority derives from
section 306 of Pub. L. 95-588, 92 Stat. 2508, which provides that
beneficiaries who do not wish to elect Improved Pension may continue to
receive the pension amount they were receiving on December 31, 1978,
subject to certain applicable laws that existed on that date. The
applicable law pertaining to medical expenses on that date was 38
U.S.C. 503(c) as in effect on December 31, 1978. (Section 503 was later
renumbered section 1503). VA has identified specific types of expenses
that will be considered deductible ``medical expenses,'' because that
term is not defined by statute. We propose to group these specific
types of expenses into broad categories, as listed in paragraph (c) of
the proposed rule.
Proposed Sec. 5.707(c) explains that the term ``medical expenses''
includes payments made for care by a licensed healthcare provider,
medical supplies and medications, adaptive equipment, transportation,
health insurance premiums, and institutional forms of care and in-home
attendants. We propose to include in paragraph (c) detailed provisions
relating to the broad categories of medical expenses. Proposed Sec.
5.707(c)(2) will state that vitamins will be deducted as a medical
expense only if the individual is directed by a ``healthcare provider
authorized to write prescriptions'' to take the vitamins. These
clarifications provide further guidance as to allowable medical
expenses.
Proposed Sec. 5.707(c)(6) includes details relating to medical
expenses paid for different forms of institutional care. Institutions
such as nursing homes, custodial institutions, soldiers' and sailors'
homes, or veterans' homes often provide a range of ``services,'' which
may include healthcare. In such settings, VA wishes to ensure that
deductions from countable annual income reflect Congress' intent that
amounts be deducted for ``medical expenses'' only, and not for other
primary or incidental services. For example, if fees are paid to an
institution that houses and maintains an individual because the
individual needs to live in a protected environment (see proposed
paragraph (c)(6)(iv), ``Custodial Care''), the portion of the fees paid
for medical treatment will be deducted from countable annual income.
However, the portion of the fees paid for strictly custodial care will
not be deducted. Similarly, VA may deduct fees paid to a nursing home
if the individual is there as a ``patient'' and not merely as a
``resident.'' Individuals in veterans' homes or soldiers' and sailors'
homes may have expenses deducted if they are actually receiving medical
care, but expenses will not be deducted merely for domiciliary
functions performed by the homes.
5.708 Eligibility Verification Reports
Proposed Sec. 5.708 combines provisions from current Sec. Sec.
3.256, 3.277, and 3.661 with a few substantive changes. The proposed
regulation includes rules regarding when VA will require claimants and
beneficiaries to complete an eligibility verification report (EVR).
Proposed Sec. 5.708(a)(1) would define an EVR. The current
regulations, Sec. Sec. 3.256(b) and 3.277(c) require the use of an EVR
in certain circumstances, such as to obtain a social security number or
to obtain certain information from a beneficiary receiving parents'
dependency and indemnity compensation (DIC) or pension. Requiring an
EVR under these circumstances is unnecessarily restrictive and
burdensome to both VA personnel and the beneficiary who must file the
EVR. In some cases, verifying a social security number can be achieved
by sending a simple form letter or by making a direct telephone call to
the individual. Hence, an EVR is defined as a ``form that VA may use to
obtain'' certain information, rather than as a ``form that VA shall use
to obtain'' that information.
Current Sec. 3.661(b)(2) uses the term, ``12-month annualization
period'' to describe the reporting period for which a beneficiary
reports income, adjustments to income, and net worth to VA. We propose
to use the term ``reporting period'' instead of ``12-month
annualization period,'' for ease of use by claimants, beneficiaries, VA
claims examiners, and other interested parties. We therefore propose in
paragraph (a) to include a definition of ``reporting period'' and to
use that term in Sec. 5.708 and Sec. 5.697.
In order to provide flexibility to VA personnel, we propose to use
in Sec. 5.708(b) the word ``may'' in place of the word ``shall,''
which will give VA the option of not using an EVR to obtain some types
of information. In addition, we would make this new, permissive rule
applicable to both claimants and beneficiaries, in order to improve
VA's ability to process both claims and ongoing awards, by
incorporating into Sec. 5.708(b)(1), long-standing VA practice
regarding when to send an EVR. Therefore, proposed paragraph (b)
provides the circumstances under which EVRs ``may'' be sent to
beneficiaries and claimants.
Proposed Sec. 5.708(c) includes an important exception regarding
sending an annual EVR to certain parents' DIC beneficiaries.
Specifically, 38 U.S.C. 1315(e) states that when a parent has
[[Page 65220]]
reached the age of 72 and has been receiving parents' DIC during 2
consecutive calendar years, the parent will not be required to annually
report their income by filing an EVR. However, Sec. 1315(e) does
require that a parent receiving parents' DIC notify VA whenever there
is a material change in his or her annual income and we have
incorporated this requirement in paragraph (c). The text in paragraph
(c) of proposed Sec. 5.708(c) is an exception to the general rule
stated in paragraph (b) and we have pointed that out in the
introductory paragraph of (b).
Proposed Sec. 5.708(d) specifies actions VA may take upon receipt
of information or an EVR. Current part 3 provisions contain an
explanation of the actions VA takes upon receipt of an EVR from a
beneficiary. Missing, however, is an explanation of the action VA takes
when an EVR is received from a claimant. This explanation is necessary
to completely address actions VA will take regarding EVRs received from
claimants and beneficiaries. In addition, because paragraph (b) of this
rule would make the use of an EVR optional, paragraph (d) states the
action VA may take upon receipt of either an EVR or information from a
claimant or a beneficiary.
Proposed Sec. 5.708(d) also describes generally the action VA
takes when the expected annual income is uncertain. This provision is
based on current Sec. 3.661(a)(2). We have updated the citations to
Sec. Sec. 3.260(b) and 3.271(f), contained in current Sec.
3.661(a)(2), to the proposed part 5 counterparts. See 69 FR 77578,
77593 (Dec. 27, 2004) (proposed Sec. 5.478(a)); 70 FR 61326, 61345
(Oct. 21, 2005) (proposed Sec. 5.531(e); 72 FR 54776, 54801 (Sept. 26,
2007) (proposed Sec. 5.423).
Proposed Sec. 5.708(f) provides for the action VA will take when a
beneficiary does not return a completed EVR in a timely manner. We are
proposing to incorporate a long-standing VA practice which is helpful
to beneficiaries in proposed Sec. 5.708(f)(2). VA's practice is that
when a beneficiary submits an incomplete EVR within 60 days after the
date VA requested the EVR, VA will notify the beneficiary that the EVR
is incomplete and inform him or her of the additional information
needed to complete it. If VA does not receive a completed EVR within
120 days after the date VA first requested the EVR from the
beneficiary, VA will immediately suspend further benefit payments.
Current Sec. 3.661(b)(2)(i) was once applicable when VA used the
``annualization period'' as the period for which income is reported by
the beneficiary. VA is now using the 12-month calendar year as its
annual reporting period. Section 5.708(f)(3) is a plain language
rewrite of the applicable provision of current Sec. 3.661(b)(2)(i) to
reflect the change in the annual reporting period. VA intends no
substantive change by this rewording.
Current Sec. 3.661(b)(2)(iii) allows VA to resume the payment of
benefits from the date they were stopped (because a beneficiary failed
to return an EVR) if VA receives information requested in the EVR
within 1 year after the end of the 12-month period for which the
beneficiary had been asked to provide the EVR. Current Sec.
3.661(b)(2)(ii), titled ``Adjustment of overpayment,'' however, reads:
If evidence of entitlement to improved pension or DIC for any
period for which payment of improved pension or DIC was discontinued
for failure to file an [EVR] is received at any time, payment of
improved pension or DIC shall be awarded for the period of
entitlement for which benefits were discontinued for failure to file
an [EVR].
This paragraph means that if information requested in an EVR is
provided by a beneficiary more than 1 year after the end of the 12-
month period for which VA requested the EVR, retroactive payments may
be paid only for the purpose of reducing or eliminating any overpayment
created as a result of loss of entitlement during that same EVR
reporting period. In other words, current Sec. 3.661(b)(2)(ii) limits
the payment of retroactive benefits to the amount of the overpayment
created as a result of the failure to return an EVR if VA does not
receive the EVR timely. We propose to clarify the current language in
proposed Sec. 5.708(h).
Finally, we propose not to include current Sec. Sec. 3.256(b)(2)
and 3.661(b)(1) in part 5. The current sections permit VA to require
that beneficiaries receiving Old-Law Pension and Section 306 Pension
complete an EVR and provide the effective date for discontinuance of
those benefits for failure to return a completed EVR. However,
eligibility for these two programs is limited to individuals who have
been continuously entitled to receive benefits under one of these
programs from the dates they were superseded until the present. The
last date eligibility could be established for Old-Law Pension was June
30, 1960, and the last date eligibility could be established for
Section 306 Pension was December 31, 1978. The majority of individuals
entitled to receive benefits under these two programs are advanced in
age, and their population is rapidly declining; currently, fewer than
100,000 such beneficiaries exist. For these reasons, VA no longer
requests EVRs from individuals receiving benefits under these two
pension programs.
5.709 Claimant and Beneficiary Responsibility To Report Changes
Proposed Sec. 5.709 is a combination of some of the provisions in
Sec. Sec. 3.256, 3.277, and 3.660. Proposed paragraph (a) restates
concepts from current Sec. Sec. 3.256(a), 3.277(a) and (b), and
3.660(a)(1), which require that pension or parents' DIC claimants or
beneficiaries promptly notify VA of changes in the factors that affect
entitlement to those benefits. Both Sec. 3.256(a) and Sec. 3.277(a)
and (b) require a claimant or beneficiary to ``promptly notify'' VA of
changes, while Sec. 3.660(a)(1) requires a beneficiary to provide
notification ``when the recipient acquires knowledge that he or she
will begin to receive additional income or when his or her marital or
dependency status changes.'' Although worded differently, all three
provisions contain comparable notification requirements, which are
intended to mean that a claimant or beneficiary must promptly notify VA
when that person becomes aware of changes in the factors that affect
entitlement. Therefore, proposed Sec. 5.709(a) requires that claimants
and beneficiaries ``promptly notify VA of any material change'' that
would affect entitlement to pension or parents' DIC.
Current Sec. 3.277(a) gives VA authority to require ``information,
proofs, and evidence'' from an individual as needed to ``determine the
annual income and the value of the corpus of the estate of'' a pension
claimant or beneficiary. We include this authority in proposed Sec.
5.709(a) too. However, proposed Sec. 5.709(a) does not include the
word ``proofs.'' We note that the word ``proofs'' is antiquated and may
confuse some regulation users. We therefore propose to omit the word
``proofs'' from the phrase and use ``information and evidence'' in
proposed Sec. 5.709(a).
Proposed Sec. 5.709(b) sets forth the factors affecting
entitlement to pension and parents' DIC which change most frequently.
In keeping with our goal of rewriting and reorganizing part 3
regulations in a user-friendly format, it would be helpful to
consolidate all of these factors into a reference table. Proposed Sec.
5.709(b) includes this table along with a few clarifications of some of
the provisions in current Sec. Sec. 3.256 and 3.277. We do not intend
that proposed Sec. 5.709(b) confer any substantive rights.
The first clarification concerns current Sec. Sec. 3.256(a)(4) and
3.277(b)(4). The current paragraphs provide that claimants and
beneficiaries must notify VA of changes in ``[n]ursing home
[[Page 65221]]
patient status.'' However, the notification requirement only applies to
veterans and surviving spouses claiming or receiving pension and
parents claiming or receiving parents' DIC. The table in proposed Sec.
5.709(b) would indicate that nursing home status is a factor affecting
entitlement to pension for veterans and surviving spouses and DIC for
parents.
Second, current Sec. 3.660(a)(1) requires that a veteran,
surviving spouse, or child receiving pension, or a parent receiving
death compensation or parents' DIC, must notify VA ``of any * * *
dependency status changes.'' This may lead some readers to erroneously
conclude that a veteran's parent or a surviving child must report
changes in the number of children he or she has. However, the number of
children a claimant or beneficiary has is a factor that affects
entitlement only when the claimant or beneficiary is a veteran or
surviving spouse. Proposed Sec. 5.709(b) makes this clear.
Section 5.220, cited in proposed Sec. 5.709(b), was published as
proposed on September 20, 2006. See 71 FR 55052, 55069. Section
5.411(b), also cited in proposed Sec. 5.709(b), was published as
proposed on September 26, 2007. See 72 FR 54776, 54796. Section 5.473,
also cited in proposed Sec. 5.709(b), was published as proposed on
December 27, 2004. See 69 FR 77578, 77591.
5.710 Adjustment in Benefits Due to Reduction or Discontinuance of a
Benefit to Another Payee
Proposed Sec. 5.710 is a plain language rewrite of current Sec.
3.651 and provides rules for adjustments to a beneficiary's payments
when a benefit to another payee is reduced or discontinued. VA intends
no substantive change by this rewording.
5.711 Payment to Dependents Due to the Disappearance of a Veteran for
90 Days or More
Proposed Sec. 5.711 is based on current Sec. 3.656 and provides
that when a veteran disappears for 90 days or more, benefits may be
paid to the veteran's dependents.
Current Sec. 3.656 refers to payment ``to or for'' a veteran's
dependents. We propose to omit the ``or for'' qualifier in Sec. 5.711.
A number of regulations in current part 3 refer to payment of various
VA benefits ``to or for'' a veteran, a child, or a surviving spouse.
This language as used in current Sec. 3.656 is used to indicate that a
payment may be made directly to a beneficiary or to a fiduciary for
that beneficiary. A typical example of the latter would be payment to a
child's parent or guardian as the fiduciary of a VA beneficiary who is
a minor. Another example would be payment to a VA-appointed fiduciary
on behalf of an incompetent beneficiary. However, we note that although
VA disability compensation and pension benefits are always potentially
payable to a fiduciary for a VA beneficiary when the conditions
warrant, the ``to or for'' phrase may be confusing to some regulation
users. Further, inasmuch as benefits are always potentially payable to
a fiduciary for a beneficiary, it is not necessary to state that
explicitly in every regulation. Therefore, we have omitted the ``or
for'' qualifier in proposed Sec. 5.711. Interested persons may find
rules relating to payment through fiduciaries in 38 CFR part 13, and
that topic will also be addressed in subpart M of proposed part 5. We
intend no substantive change by omission of the ``or for'' language.
In addition, current Sec. 3.656(a) uses the word ``parents.'' This
word has the potential to confuse readers because a parent must first
be established as a dependent of a veteran who was in receipt of
disability compensation at the time of the veteran's disappearance in
order to be considered for benefits as a dependent parent. Under 38
U.S.C. 1158, where a veteran receiving disability compensation
disappears, VA may pay the compensation otherwise payable to the
veteran, to the veteran's ``parents.'' The amount of such payments may
not exceed the amount payable to the parents if the veteran had died
from a service-connected disability. Because only dependent parents are
eligible for parents' DIC benefits, no benefits would be payable to a
non-dependent parent under Sec. 1158. Therefore, we are proposing to
use the term ``dependent parents'' instead of ``parents'' in proposed
Sec. 5.711(b).
We also propose to replace the language ``date of last payment''
(used in current Sec. 3.656(a) and other part 3 sections) throughout
this rulemaking with ``the first day of the month after the month for
which VA last paid benefits,'' which is clearer and more specific. No
substantive change is intended by this change.
Current Sec. 3.656(a) states that if a veteran is missing for 90
days or more, VA will pay the veteran's dependents the lesser of the
DIC which would be payable if the veteran had died from a service-
connected cause or the amount of disability compensation when the
veteran disappeared. In proposed Sec. 5.711(b)(1) we clarify how VA
distributes such payments: if VA pays DIC pursuant to this paragraph,
then it will pay benefits to the dependents as if the veteran were
deceased, and if VA pays disability compensation pursuant to this
paragraph, then it will pay benefits in equal amounts to the
dependents. These payment methods are fair to dependents and are simple
for VA to administer.
Current Sec. 3.656(b) states that if a missing veteran's
whereabouts become known VA will discontinue the award to the
dependents and ``appropriate action will be taken to adjust the
veteran's award in accordance with the facts found.'' We have not
included this quoted material in proposed Sec. 5.711 because this
section pertains to payments made to dependents of missing veterans.
Proposed Sec. 5.712, which pertains to payments made to veterans who
are missing and later found, includes this material.
Current Sec. 3.656(d) references Improved Pension, Section 306
Pension, and Service Pension. Service Pension is the name for Spanish
American War Pension. See 38 CFR 3.1(x). There are no Spanish American
War veterans still living, so it would be inappropriate to include the
term ``Service Pension'' in proposed Sec. 5.711(c)(1).
Section 5.502, cited in proposed Sec. 5.711(d), was published as
proposed on October 21, 2005. See 70 FR 61326, 61341.
5.712 Suspension of VA Benefits Due to the Disappearance of a Payee
Proposed Sec. 5.712 concerns the suspension and resumption of
benefits for a payee whose whereabouts are or were unknown. Proposed
Sec. 5.712(a) states VA's long-standing practice to suspend benefit
payments when a payee's whereabouts are unknown. If the payee is
ultimately located, VA pays the suspended benefits to him or her, so
the payee is not deprived of any payments. Title 38, United States
Code, requires VA to pay benefits to those who are entitled. Ensuring
that benefit payments are received by the payee is an inherent part of
that duty.
Current Sec. 3.158(c) provides for resumption of payments if the
payee's whereabouts become known. This concept has been restated in
plain language in proposed Sec. 5.712(b). VA intends no substantive
change by this rewording.
The last sentence of proposed Sec. 5.712(b) states, ``Retroactive
payments under this paragraph (b) will be reduced by the amount of any
payments made to a veteran's dependents under Sec. 5.711.'' During the
period of suspension, 38 U.S.C. 1158 and 1507 (the statutory
authorities for Sec. 5.711) authorize VA to reallocate disability
compensation or pension to the veteran's dependents.
[[Page 65222]]
The benefits paid under Sec. 5.711 are those benefits that would be
otherwise payable to the veteran if not for his or her disappearance.
Therefore, when a veteran's whereabouts become known and his or her
benefits are restored, VA will not pay the veteran benefits that have
already been paid to dependents. This rule is not explicitly stated in
part 3 but we have included it in Sec. 5.712(b).
5.713 Restriction on VA Benefit Payments to an Alien Located in Enemy
Territory
Current Sec. 3.653 describes two different types of restrictions
on the payment of VA benefits to persons located in foreign countries.
Provisions relating to these restrictions are included in proposed
Sec. Sec. 5.713 (the withholding of benefits to an alien located in
enemy territory) and 5.714 (the withholding of checks sent to foreign
countries specifically listed by the Department of the Treasury).
Provisions regarding claims for undelivered or discontinued benefits
affected by these restrictions are stated in proposed Sec. 5.715.
Proposed Sec. 5.713 addresses the first restriction and would
implement 38 U.S.C. 5308, ``Withholding benefits of persons in
territory of the enemy.'' Proposed Sec. 5.713(b), which is based on
current Sec. 3.653(a), permits payment to an alien's dependents of the
benefits discontinued under this section. A change from the current
section would include language that more closely follows 38 U.S.C.
5308(c). Specifically, proposed paragraph (b)(1) provides that VA may
apportion and pay all or any part of the alien's benefits to his or her
dependents, up to the amount the dependents would receive if the alien
were dead.
Proposed Sec. 5.713(b) also regulates the reduction or
discontinuation of payments to the alien's dependents. Because VA will
often have no way of knowing when an alien leaves enemy territory, and
to avoid creation of unnecessary overpayments, payments to dependents
will be discontinued effective as of the date VA receives notice that
the alien is no longer located in enemy territory or under enemy
control. In addition, proposed Sec. 5.713(b) provides that benefit
payments to the alien's dependents will be reduced or discontinued, as
required by law, upon the death of the alien or dependent, upon
reduction or discontinuance of the alien's benefits, or cessation of
dependent status.
Current Sec. 3.653(a) is limited to compensation, pension and DIC.
However, we note that under 38 U.S.C. 5308(a), the rule applies to any
award of ``gratuitous benefits under the laws administered by the
Secretary.''
Paragraph 7 of VAOPGCPREC 06-91, 56 FR 25156 (June 3, 1991), states
that:
7. Interim Issue (CONTR-169), dated January 13, 1960, providing
necessary instructions for the fiscal implementation of Pub. L. 86-
146, provides in paragraph D.3 in pertinent part:
``a. Immediately upon death of a veteran who has been adjudged
or rated incompetent, the balance in the Personal Funds of Patients
account will be analyzed to determine the source thereof, i.e.,
funds derived from gratuitous benefits deposited by the VA under
laws administered by the VA or from other sources. For this purpose
gratuitous benefits are defined as all benefit payments under laws
administered by the VA except insurance payments (Servicemen's
Indemnity benefits are not insurance payments).''
Therefore, we propose in Sec. 5.713(a) to make this section
applicable to ``all VA benefits except insurance payments.''
Finally, we propose to not include current Sec. Sec. 3.400(l) and
3.500(j) in part 5. These paragraphs are merely cross-references to
award, reduction, or discontinuance effective-date provisions that are
included in proposed Sec. 5.713. Cross-references are not necessary.
5.714 Restriction on Delivery of VA Benefit Payments to Payees Located
in Countries on Treasury Department List
Proposed Sec. 5.714 addresses restrictions on payments to
individuals located in countries listed by the Department of the
Treasury. This regulation implements 31 U.S.C. 3329, ``Withholding
checks to be sent to foreign countries,'' and 31 U.S.C. 3330, ``Payment
of Department of Veterans Affairs checks for the benefit of individuals
in foreign countries.'' The first statute, 31 U.S.C. 3329, requires
that the Secretary of the Treasury prohibit sending a Federal payment
to a foreign country when the Secretary decides that there is no
reasonable assurance the intended recipient of the payment will receive
it and be able to negotiate it for its full value. The second statute,
31 U.S.C. 3330, provides special rules for applying 31 U.S.C. 3329 to
VA benefits. The specific countries subject to the prohibition are
listed in 31 CFR 211.1, ``Withholding delivery of checks.'' We propose
to refer readers to 31 CFR 211.1, rather than list the affected
countries, because the list is subject to change by the Department of
the Treasury.
Proposed Sec. 5.714(a) defines the following terms used in this
section and elsewhere in part 5: ``Payee,'' ``special deposit account''
(the special account referenced in 31 U.S.C. 3329), and ``Treasury
Department list'' (the list of countries in 31 CFR 211.1). Although
these definitions are new, they reflect current VA practices
contemplated by part 3 of title 38, CFR.
Current Sec. 3.653(c) is limited to ``aliens residing in'' a
country on the Treasury Department list; however, we note that 38
U.S.C. 3329 and 3330 are not limited to aliens and are based on
delivery to a country, not residency in a country. Therefore, in
proposed Sec. 5.714(c), we apply the restriction on check delivery to
a ``payee located in a country on the Treasury Department list.''
Further, section 3330(a) of title 31, United States Code, prohibits
VA from sending checks ``if the check is * * * to be sent to a person
in the United States or a territory or possession of the United States,
and the person is legally responsible for the care of an individual in
a foreign country.'' Although broadly written, this provision is not
intended to bar VA benefit payments to anyone in the U.S. who is
legally responsible for any person located in a foreign country.
Rather, its intended effect is only to bar payment to a person in the
U.S. or its territories or possessions on behalf of a VA beneficiary
located in a country on the Treasury Department list. We propose to
make that clear in proposed Sec. 5.714(c).
Section 3329 of title 31, United States Code, prohibits sending VA
checks to countries on the Treasury Department list. Neither the
statute, nor its implementing regulation, 31 CFR 211.1, precludes a
payee located in such countries from taking delivery outside of that
country. It is VA's practice to permit delivery of checks to a U.S.
Foreign Service post in a country that is not on the Treasury
Department list, if requested by a payee. We propose to include this
provision in Sec. 5.714(d). VA intends no substantive change, inasmuch
as this method of delivery is mentioned in current Sec. 3.653(c)(1)
and (2).
5.715 Claims for Undelivered or Discontinued Benefits
Proposed Sec. 5.715 explains how to claim benefits discontinued
under proposed Sec. 5.713. It also explains how to claim benefits that
could not be delivered because of the restrictions in proposed Sec.
5.714. Proposed Sec. 5.715(a) cross-references the definitions of
``payee,'' ``special deposit account,'' and ``Treasury Department
list'' in Sec. 5.714(a).
Proposed Sec. 5.715(b)(2) states that there is no time limit for
filing claims under this section. This provision is based on current
Sec. 3.653(c)(3) with one change involving time limits for filing
claims for discontinued or withheld benefits. The current regulation
states
[[Page 65223]]
that there is no time limit with respect to claims for benefits
withheld from a person located in a country on the Treasury Department
list. There is also no time limit with respect to claims for benefit
payments to an alien whose benefits were discontinued. We have included
general language in proposed Sec. 5.715(b)(2) in order to make clear
that there is no time limit for claims filed for benefits discontinued
under Sec. 5.713 or withheld under Sec. 5.714.
Proposed Sec. 5.715 is based on 38 U.S.C. 5308(b). Section 5308(b)
requires that a new claim by an alien whose benefits were discontinued
under section 5308 be ``accompanied by evidence satisfactory to the
Secretary showing that such alien was not guilty of mutiny, treason,
sabotage, or rendering assistance to the enemy.'' Section 3329(c)(1) of
title 31 in essence provides that before the Secretary of the Treasury
can pay out VA benefit funds in the special deposit account, the person
claiming payment must satisfy VA of his or her right to the withheld
funds. We propose to address these concerns by providing in Sec.
5.715(d) that VA may request any evidence necessary to support a claim
under this section. This includes evidence that the payee has not been
guilty of mutiny, treason, sabotage, or rendering assistance to an
enemy and evidence of continued entitlement to benefits during the time
that awarded benefits were discontinued or benefit payments were
undelivered.
Section 5.677, cited in proposed Sec. 5.715(c), was published as
proposed on May 31, 2006. See 71 FR 31056, 31065-66. Section 5.90,
cited in proposed Sec. 5.715(d), will restate the content of current
Sec. 3.159. Space was reserved in part 5 in a prior Notice of Proposed
Rulemaking. See 70 FR 24680, 24683 (May 10, 2005); see also 73 FR 23353
(April 30, 2008) (amending 38 CFR 3.159). Section 5.565, cited in
proposed Sec. 5.715(f), was published as proposed on October 1, 2004.
See 69 FR 59072, 59088-89.
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
Although this document contains provisions constituting a
collection of information, at 38 CFR 5.708 and 5.709, under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501-3521), no new
or proposed revised collections of information are associated with this
proposed rule. The information collection requirements for Sec. Sec.
5.708 and 5.709 are currently approved by the Office of Management and
Budget (OMB) and have been assigned OMB control number 2900-0101.
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
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, when regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity). The Executive
Order classifies a ``significant regulatory action,'' requiring review
by the Office of Management and Budget (OMB) unless OMB waives such
review, as any regulatory action that is likely to result in a rule
that may: (1) Have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities; (2) Create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) Materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
Raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in the Executive
Order.
The economic, interagency, budgetary, legal, and policy
implications of this proposed rule have been examined and it has been
determined to be a significant regulatory action under the Executive
Order because it is likely to result in a rule that may raise novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order.
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 issuing 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 rule would have no such
effect on State, local, or tribal governments, or the private sector.
Catalog of Federal Domestic Assistance Numbers and Titles
The Catalog of Federal Domestic Assistance program numbers and
titles for this proposal are 64.100, Automobiles and Adaptive Equipment
for Certain Disabled Veterans and Members of the Armed Forces; 64.101,
Burial Expenses Allowance for Veterans; 64.102, Compensation for
Service-Connected Deaths for Veterans' Dependents; 64.104, Pension for
Non-Service-Connected Disability for Veterans; 64.105, Pension to
Veterans Surviving Spouses, and Children; 64.106, Specially Adaptive
Housing for Disabled Veterans; 64.109, Veterans Compensation for
Disability; 64.110, Veterans Dependency and Indemnity Compensation for
Service-Connected Death; 64.115, Veterans Information and Assistance;
and 64.127, Monthly Allowance for Children of Vietnam Veterans Born
with Spina Bifida.
List of Subjects in 38 CFR Part 5
Administrative practice and procedure, Claims, Disability benefits,
Pensions, Veterans.
Approved: August 19, 2008.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.
For the reasons set forth in the preamble, VA proposes to amend 38
CFR Part 5, as proposed to be added at 69 FR 4832, January 30, 2004,
and as amended, by adding subpart L as follows:
PART 5--COMPENSATION, PENSION, BURIAL, AND RELATED BENEFITS
Subpart L--Payments and Adjustments to Payments
General Rate-Setting and Payments
Sec.
5.690 Where to find benefit rates and income limits.
5.691 Adjustments for fractions of dollars.
5.692 Fractions of one cent not paid.
5.693 Beginning date for certain VA benefit payments.
5.694 Surviving spouse's benefit for the month of the veteran's
death.
[[Page 65224]]
5.695 Payments to or for a child pursuing a course of instruction at
an approved educational institution.
5.696 Awards of dependency and indemnity compensation when not all
dependents apply.
5.697 Exchange rates for income received or expenses paid in foreign
currencies.
5.698--5.704 [Reserved]
General Reductions, Discontinuances, and Resumptions
5.705 General effective dates for reduction or discontinuance of
benefits.
5.706 Payments excluded in calculating income or net worth.
5.707 Deductible medical expenses.
5.708 Eligibility verification reports.
5.709 Claimant and beneficiary responsibility to report changes.
5.710 Adjustment in benefits due to reduction or discontinuance of a
benefit to another payee.
5.711 Payment to dependents due to the disappearance of a veteran
for 90 days or more.
5.712 Suspension of VA benefits due to the disappearance of a payee.
5.713 Restriction on VA benefit payments to an alien located in
enemy territory.
5.714 Restriction on delivery of VA benefit payments to payees
located in countries on Treasury Department list.
5.715 Claims for undelivered or discontinued benefits.
5.716-5.739 [Reserved]
Authority: 38 U.S.C. 501(a) and as noted in specific sections.
Subpart L--Payments and Adjustments to Payments
General Rate-Setting and Payments
Sec. 5.690 Where to find benefit rates and income limits.
The rates of disability compensation, dependency and indemnity
compensation, Old-Law Pension, Section 306 Pension, Improved Pension,
and monthly allowances under 38 U.S.C. chapter 18 for children disabled
from spina bifida or with certain birth defects, as well as the income
limits applicable to Old-Law Pension, Section 306 Pension, Improved
Pension, and parents' dependency and indemnity compensation, are
available on VA's public Web site at http://www.va.gov.
(Authority: 38 U.S.C. 501(a))
Sec. 5.691 Adjustments for fractions of dollars.
(a) Calculation of adjusted annual income. For purposes of
entitlement to pension, VA will round down to the nearest dollar when
calculating the adjusted annual income. See Sec. 5.370 for the
definition of adjusted annual income. For purposes of entitlement to
parents' dependency and indemnity compensation (DIC), VA will round
down to the nearest dollar when calculating the annual income. See
Sec. Sec. 5.531 through 5.534 for how to calculate parents' DIC annual
income.
(Authority: 38 U.S.C. 1503(b))
(b) Calculation of increased rates and income limits. VA will round
up to the nearest dollar when calculating the increase due to a cost-
of-living adjustment of any of the following amounts:
(1) Improved Pension maximum annual pension rates;
(2) Old-Law Pension and Section 306 Pension annual income limits;
(3) Income of a spouse when excluded from a veteran's countable
annual income for Old-Law Pension and Section 306 Pension purposes;
(4) Parents' DIC annual rates and income limits; or
(5) The monthly allowance rates under 38 U.S.C. chapter 18 for
children disabled from spina bifida or with certain birth defects.
(Authority: 38 U.S.C. 5312(c))
(c) Calculation of monthly or other pension rates. VA will round
down to the nearest dollar the amount of Improved Pension or Section
306 Pension payable.
(Authority: 38 U.S.C. 5123)
Sec. 5.692 Fractions of one cent not paid.
VA will not pay fractions of a cent when paying any benefit.
(Authority: 38 U.S.C. 501(a), 5312(c)(2))
Sec. 5.693 Beginning date for certain VA benefit payments.
(a) Definition. For purposes of this section, ``increased award''
means a benefit payment increased as a result of:
(1) An added dependent;
(2) An increase in disability or disability rating, including but
not limited to a temporary increased rating;
(3) A reduction in income;
(4) An election of Improved Pension under Sec. 5.461;
(5) Except as provided in paragraph (c)(6) of this section, a
temporary total rating under Sec. 4.29 of this chapter, ``Ratings for
service-connected disabilities requiring hospital treatment or
observation''; or
(6) A temporary total rating under Sec. 4.30 of this chapter,
``Convalescent ratings.''
(b) Beginning payment date rule. Except as provided in paragraph
(c) of this section, benefits identified in this paragraph will not be
paid for any period before the first day of the month after the month
in which the payment becomes effective. However, VA will consider
beneficiaries to be in receipt of monetary benefits as of the effective
date of the award. This paragraph applies to awards or increased awards
of the following benefits made based on an original claim, reopened
claim, or claim for increase:
(1) Disability compensation;
(2) Pension;
(3) Dependency and indemnity compensation (DIC); or
(4) The monetary allowances under 38 U.S.C. chapter 18 for children
disabled from spina bifida or with certain birth defects.
(c) Exceptions to beginning payment date rule. The beginning
payment date in paragraph (b) of this section does not apply to the
following awards, which are payable as of the effective date:
(1) Awards that provide only for continuity of entitlement with no
increase in the rate of payment.
(2) Awards restoring a previously reduced benefit because the
circumstances requiring reduction no longer exist.
(3) Awards to a surviving spouse at the veteran's rate for the
month of the veteran's death.
(4) Awards that change any withholding, reduction, or suspension by
reason of:
(i) Recoupment;
(ii) An offset to collect indebtedness;
(iii) Hospitalization (Institutionalization);
(iv) Incompetency;
(v) Incarceration; or
(vi) Discontinuance of apportionment.
(5) Benefit increases resulting solely from the enactment of
certain types of legislation, including:
(i) Cost-of-living increases for disability compensation and DIC
for surviving spouses and children;
(ii) Increases in the maximum annual pension rate for Improved
Pension;
(iii) Increases in the income limits and maximum monthly rate for
parents' DIC;
(iv) Increases in the monetary allowances under 38 U.S.C. chapter
18 for children disabled from spina bifida or with certain birth
defects; and
(v) Statutory changes in the criteria for the award of special
monthly compensation.
(6) Awards based on temporary total ratings under Sec. 4.29 of
this chapter when the entire period of hospitalization or treatment,
including any period of post-hospitalization convalescence, begins and
ends within the same calendar month. In such cases the period of
payment will begin on the first day of the month in which the
hospitalization or treatment began.
(7) Apportionments of benefits.
(8) Certain awards of disability compensation to a veteran who is
also
[[Page 65225]]
eligible for retired pay, as described in paragraph (d)(1) of this
section.
(9) Awards to a veteran's dependent of benefits that the veteran
was receiving or entitled to receive when the veteran disappeared for
90 days or more.
(d) Cases involving waiver of retired pay. (1) If the veteran's
retired pay, as defined in Sec. 5.745(a), is greater than the amount
of VA disability compensation payable, VA will pay disability
compensation from the effective date the veteran waives such retired
pay.
(2) If the amount of VA disability compensation payable is greater
than the veteran's retired pay, VA's payment of the difference for any
period before the effective date of the veteran's waiver of such
retired pay is subject to the beginning payment date rule described in
paragraph (b) of this section.
(3) Nothing in this section prevents the veteran from receiving
retired pay before the effective date of waiver of such pay.
(Authority: 38 U.S.C. 501(a), 1832, 5305, 5111)
Sec. 5.694 Surviving spouse's benefit for the month of the veteran's
death.
(a) Month-of-death benefit. For purposes of this section, ``month-
of-death benefit'' means a payment to a deceased veteran's surviving
spouse for the month in which the veteran died and in the amount of
disability compensation or pension that the veteran would have received
for that month, if not for his or her death.
(b) Surviving spouse entitled to death pension or dependency and
indemnity compensation (DIC) for the month of death. (1) If the
surviving spouse is entitled to death pension or DIC for the month of
the veteran's death in an amount greater than the amount of disability
compensation or pension that the veteran would have received for that
month but for his or her death, then the surviving spouse is not
entitled to a month-of-death benefit.
(2) If the surviving spouse is entitled to death pension or DIC for
the month of the veteran's death in an amount equal to or less than the
amount of disability compensation or pension that the veteran would
have received for that month but for his or her death, then the
surviving spouse is entitled to death pension or DIC for the month of
the veteran's death in an amount equal to the amount of disability
compensation or pension that veteran would have received for that month
but for his or her death.
(c) Surviving spouse not entitled to death pension or DIC for the
month of death. If the veteran died after December 31, 1996, and the
surviving spouse is not entitled to death pension or DIC for the month
of the veteran's death, then the surviving spouse is entitled to the
month-of-death benefit. If the veteran died before December 31, 1996,
then such a surviving spouse is not entitled to the month-of-death
benefit.
(d) Payment issued to deceased veteran. If VA issues payment to a
deceased veteran for the month-of-death benefit, the payment will be
treated as payable to a surviving spouse who is otherwise eligible for
payment under paragraph (c) of this section. If the payment issued to a
deceased veteran is negotiated or deposited by the surviving spouse,
the payment will be considered the benefit to which the surviving
spouse is entitled under paragraph (c) of this section. However, if
such payment is less than the amount the surviving spouse would receive
under paragraph (c) of this section, the unpaid difference may be paid
as accrued benefits. See Sec. 5.550 (defining accrued benefits).
(Authority: 38 U.S.C. 5111(c), 5310)
Sec. 5.695 Payments to or for a child pursuing a course of
instruction at an approved educational institution.
(a) Definition. An ``approved educational institution'' means a
permanent organization, approved by VA, that offers courses of
instruction to a group of students who meet its enrollment criteria,
including schools, colleges, academies, seminaries, technical
institutes, and universities. The term also includes home schools that
operate in compliance with the compulsory attendance laws of the States
in which they are located, whether treated as private schools or home
schools under State law. The term ``home schools'' is limited to
courses of instruction for grades kindergarten through 12.
(Authority: 38 U.S.C. 104(a))
(b) Payment of Improved Pension or disability compensation.
Additional disability compensation will be paid to a veteran, or a
higher rate of Improved Pension may be paid to a veteran or a surviving
spouse, for a child of the veteran at least 18 years but less than 23
years old who is pursuing a course of instruction at an approved
educational institution. If no surviving spouse is eligible to Improved
Death Pension or such child of the veteran is not in the surviving
spouse's custody, Improved Death Pension may be paid directly to such
child. For the definition of custody see paragraph (a) of Sec. 5.417
``Child custody for purposes of determining dependency for Improved
Pension.'' An award under this section will be effective on or after
the child's 18th birthday.
(1) Child began pursuing a course of instruction at an approved
educational institution before reaching age 18. If a child began
pursuing a course of instruction at an approved educational institution
on or before the child's 18th birthday and VA receives a claim on or
before the child's 18th birthday or no later than 1 year after the
child's 18th birthday, the effective date will be the child's 18th
birthday.
(2) Child began pursuing a course of instruction at an approved
educational institution after reaching age 18. If a child began
pursuing a course of instruction at an approved educational institution
after reaching age 18 and a claim is received no later than 1 year
after the date the child began pursuing a course of instruction at an
approved educational institution, the effective date will be the date
the child began pursuing a course of instruction at an approved
educational institution.
(c) Payment of dependency and indemnity compensation (DIC) to a
child not receiving DIC before reaching age 18. If a child was not
receiving DIC before reaching age 18, DIC will be paid directly to the
child for periods beginning on or after the child's 18th birthday if
the child is entitled to DIC and is pursuing a course of instruction at
an approved educational institution. The effective date of the award of
benefits will be as follows:
(1) Child was pursuing a course of instruction at an approved
educational institution upon reaching age 18. If the child began
pursuing a course of instruction at an approved educational institution
on or before the child's 18th birthday and a claim for DIC is received
on or before the child's 18th birthday or no later than 1 year after
the child's 18th birthday, the effective date will be the first day of
the month in which the child turned 18.
(2) Child began pursuing a course of instruction after reaching age
18. If the child began pursuing a course of instruction at an approved
educational institution after reaching age 18 and a claim for DIC is
received no later than 1 year after the date the child began pursuing a
course of instruction at an approved educational institution, the
effective date will be the first day of the month the child began
pursuing a course of instruction at an approved educational
institution.
(3) Child established as a surviving spouse's dependent. If
immediately before a child's 18th birthday, the child was established
as a dependent of a surviving spouse entitled to DIC, and
[[Page 65226]]
the child's claim for DIC is received on or before the child's 18th
birthday or no later than 1 year after the child's 18th birthday, the
effective date of the DIC to the child will be the child's 18th
birthday.
(Authority: 38 U.S.C. 5110(e))
Cross Reference: For information on the impact on awards to other
children, see Sec. 5.573, ``Effective date for dependency and
indemnity compensation rate adjustments when an additional survivor
files an application.''
(d) Payment of DIC to a child receiving DIC before reaching age 18.
If a child was receiving DIC in his or her own right before reaching
age 18, payments may be made for periods beginning on or after the
child's 18th birthday if the child is pursuing a course of instruction
at an approved educational institution. Benefits will be payable
directly to the child as follows:
(1) Child began pursuing a course of instruction before reaching
age 18. If the child began pursuing a course of instruction at an
approved educational institution on or before the child's 18th birthday
and evidence of school attendance is received on or before the child's
18th birthday or no later than 1 year after the child's 18th birthday,
payments will be made from the child's 18th birthday.
(2) Child began pursuing a course of instruction after reaching age
18. If the child began pursuing a course of instruction at an approved
educational institution after reaching age 18 and evidence of school
attendance at an approved educational institution is received no later
than 1 year after the date the child began pursuing a course of
instruction, payments will be made from the date the child began
pursuing a course of instruction.
(Authority: 38 U.S.C. 5110(e))
Cross Reference: For the rate of payment, see Sec. 5.524, ``Awards
of dependency and indemnity compensation benefits to children when
there is a retroactive award to a school child.''
(e) Claims filed outside the one-year period. If VA receives a
claim referred to in paragraphs (b) or (c), or evidence referred to in
paragraph (d), of this section after the expiration of the 1-year
period, the effective date will be the date VA receives the claim or
evidence.
(f) Payments for vacation or holiday periods. (1) Child returns to
an approved educational institution. A child is considered to be
pursuing a course of instruction at an approved educational institution
during a vacation or holiday period if the child:
(i) Was pursuing a course of instruction at an approved educational
institution immediately before the vacation or holiday period; and
(ii) Resumes the course of instruction at the beginning of the next
term either at the same or a different approved educational
institution.
(2) Child fails to return to an approved educational institution.
When payment has been made for a vacation or holiday period, and the
child does not resume the course of instruction, benefits will be
discontinued effective the first day of the month after the month for
which VA last paid benefits, or the first day of the month that the
child was scheduled to resume the course of instruction, whichever date
is earlier.
(Authority: 38 U.S.C. 5112(b)(7))
(g) Ending dates. (1) Course of instruction completed. Except as
provided in paragraph (f)(2) of this section, benefits will be paid
under this section through the last day of the month in which a course
of instruction was or will be completed.
(2) Termination of course of instruction before completion.
Benefits will be paid under this section through the last day of the
month in which the course of instruction was terminated.
(h) Transfer to another course of instruction or another
educational institution. Payments previously made under this section
will not be adjusted because the child changed a course of instruction
or transferred to a different approved educational institution.
(i) Bars to benefit payments under this section. Benefits under
this section will not be paid if:
(1) The child has elected to receive educational assistance under
38 U.S.C. chapter 35 (see Sec. Sec. 5.764 and 21.3023 of this
chapter); or
(2) The child is pursuing a course of instruction at an approved
educational institution where the child is completely supported at the
expense of the Federal Government, such as a military service academy.
(Authority: 38 U.S.C. 501(a))
Sec. 5.696 Awards of dependency and indemnity compensation when not
all dependents apply.
Except as provided in Sec. 5.536(d), ``One parent--marriage ends
or parent is separated from spouse,'' in any case where a dependency
and indemnity compensation (DIC) claim has been filed by or on behalf
of at least one dependent but VA believes that other dependents may be
entitled to DIC based on the death of the same veteran, the award
(original or amended) to all dependents who have filed claims will be
made for all periods at the rates and in the same manner as though
there were no dependents other than the dependents who filed claims.
However, if the file reflects that there are additional potential DIC
claimants and less than 1 year has passed since the veteran's death,
the award to a dependent who has filed a claim will be made at the rate
which would be payable as if all dependents were receiving benefits.
If, at the expiration of the 1-year period, claims have not been filed
for such dependents, VA will pay the full rate to the dependents
already receiving DIC. This payment will include any retroactive
amounts to which they are entitled.
(Authority: 38 U.S.C. 501(a))
Sec. 5.697 Exchange rates for income received or expenses paid in
foreign currencies.
(a) Pension and parents' dependency and indemnity compensation
(DIC) rates. In determining the rate of pension or parents' DIC payable
to an individual, VA will convert the amount of income received or
expenses paid in foreign currencies into U.S. dollars using the
quarterly exchange rates established by the U.S. Department of the
Treasury as provided in this section. Benefits will be paid in U.S.
dollars.
(1) Calculation of pension or parents' DIC rates. Because exchange
rates for foreign currencies cannot be determined in advance, VA will
estimate pension or parents' DIC rates using the most recent quarterly
exchange rate. When the beneficiary or claimant informs VA of a change
in income or expenses that would affect entitlement, VA will make
retroactive benefit adjustments based on the exchange rate in effect at
the time VA received notice of the change in income or expenses.
(2) Retroactive adjustments due to changes in exchange rates. (i)
For retroactive adjustments to pension or parents' DIC rates due to
changes in the currency exchange rate, VA will use the average of the
four most recent quarterly exchange rates.
(ii) If income or expenses are reported for a prior reporting
period, VA will calculate any retroactive benefit rate adjustment using
the average of the four most recent quarterly exchange rates which were
available on the last day of the reporting period for which the income
is being reported. See Sec. 5.708(a)(2) (definition of ``reporting
period'').
(b) Burial benefits--(1) General rule. VA will calculate monetary
burial
[[Page 65227]]
benefits (as defined in [regulation that will be published in a future
Notice of Proposed Rulemaking]) payable as reimbursement for burial
expenses paid in foreign currency using the quarterly exchange rate for
the quarter in which expenses were paid. If the U.S. Department of the
Treasury has not yet published a rate for that quarter, the payment
amount will be calculated using the most recent quarterly exchange
rate. Payments will be made in U.S. dollars.
(2) Exception. If burial benefits are payable to an unpaid
creditor, VA will calculate the payment amount using the quarterly
exchange rate for the quarter in which the veteran died. When
entitlement originates during a quarter for which the U.S. Department
of the Treasury has not yet published a quarterly rate, amounts due
will be calculated using the most recent quarterly exchange rate.
Payments will be made in U.S. dollars.
(c) Accrued benefits-- (1) General rule. Accrued benefits, as
defined in Sec. 5.550, may be paid in accordance with Sec. 5.555 as
reimbursement to the person who bore the expense of the deceased
beneficiary's last illness and/or burial. VA will calculate such
accrued benefits based on expenses paid in foreign currency using the
quarterly exchange rate for the quarter in which the expenses were
paid. If the U.S. Department of the Treasury has not yet published a
rate for that quarter, the payment amount will be calculated using the
most recent quarterly exchange rate. Payments will be made in U.S.
dollars.
(2) Exception. If accrued benefits are payable to an unpaid
creditor, VA will calculate the payment amount using the quarterly
exchange rate for the quarter in which the beneficiary died. When
entitlement originates during a quarter for which the U.S. Department
of the Treasury has not yet published a quarterly rate, amounts due
will be calculated using the most recent quarterly rate. Payments will
be made in U.S. dollars.
(Authority: 38 U.S.C. 501(a))
Sec. Sec. 5.698-5.704 Reserved
General Reductions, Discontinuances, and Resumptions
Sec. 5.705 General effective dates for reduction or discontinuance of
benefits.
(a) General rule. Except as otherwise provided, VA will assign an
effective date for the reduction or discontinuance of disability
compensation, pension, dependency and indemnity compensation (DIC), or
the monetary allowances under chapter 18 of title 38, United States
Code, in accordance with the facts found. If more than one effective-
date provision applies to a particular issue or event, VA will reduce
or discontinue the benefit(s) in accordance with the earliest
applicable date. VA will pay a reduced rate or discontinue benefits
effective the date of reduction or discontinuance.
(b) The following table lists the locations of specific reduction
and discontinuance effective-date provisions in part 5. The table is
provided solely for informational purposes, and does not contain any
substantive rules.
------------------------------------------------------------------------
Effective-date provision Part 5 location
------------------------------------------------------------------------
Subpart C--Adjudicative Process, General
------------------------------------------------------------------------
Filing a claim for death benefits.............. Sec. 5.53(c)
Requirement to provide Social Security numbers. Sec. 5.101(c)
Failure to report for VA examination or Sec. 5.103(d)
reexamination.................................
Certifying continuing eligibility to receive Sec. 5.104(c)
benefits......................................
Effective dates based on change of law or VA Sec. 5.152(b)
issue.........................................
Effective dates for reduction or discontinuance Sec. 5.165
of awards based on erroneous payments.........
Effective dates for severing service connection Sec. 5.177
or discontinuing or reducing benefit payments.
------------------------------------------------------------------------
Subpart D--Dependents and Survivors
------------------------------------------------------------------------
Evidence of dependency--reduction or Sec. 5.181(c)
discontinuance of VA benefits.................
Effective date of reduction or discontinuance Sec. 5.184
of VA benefits due to the death of a
beneficiary's dependent.......................
Effective date of reduction or discontinuance Sec. 5.197
of improved pension, compensation, or
dependency and indemnity compensation due to
marriage or remarriage........................
Effective date of reduction or discontinuance Sec. 5.198
of improved pension, compensation, or
dependency and indemnity compensation due to
divorce or annulment..........................
Effective date of discontinuance of VA benefits Sec. 5.204
to a surviving spouse who holds himself, or
herself, out as the spouse of another person..
Effective date of reduction or discontinuance-- Sec. 5.231
child reaches age 18 or 23....................
Effective date of reduction or discontinuance-- Sec. 5.232
terminated adoptions..........................
Effective date of reduction or discontinuance-- Sec. 5.233
stepchild no longer a member of the veteran's
household.....................................
Effective date of an award, reduction, or Sec. 5.234
discontinuance of benefits based on child
status due to permanent incapacity for self-
support.......................................
------------------------------------------------------------------------
Subpart E--Claims for Service Connection and Disability Compensation
------------------------------------------------------------------------
Effective dates--reduction or severance of Sec. 5.313
service-connected disability compensation.....
Effective dates--discontinuance of total Sec. 5.314
disability rating based on individual
unemployability...............................
Effective dates--reduction or discontinuance of Sec. 5.315
additional disability compensation based on
parental dependency...........................
Effective dates--Additional compensation for Sec. 5.334(b)
regular aid and attendance payable for a
veteran's spouse..............................
------------------------------------------------------------------------
Subpart F--Nonservice-Connected Disability Pensions and Death Pensions
------------------------------------------------------------------------
Effective dates for awards, reductions, and Sec. 5.393
discontinuances of special monthly pension....
Improved Pension income adjustments--effective Sec. 5.421(a), (c)
dates, categories, and counting...............
Improved Pension time limits to establish Sec. 5.423
entitlement or to increase rate based on
income........................................
Effective date of discontinuance of Improved Sec. 5.433
Death Pension payments to a beneficiary no
longer recognized as the veteran's surviving
spouse........................................
Award, or discontinuance of award, of Improved Sec. 5.434(b), (c)
Death Pension to a surviving spouse where
Improved Death Pension payments to a child are
involved......................................
[[Page 65228]]
Effective dates for Old-Law Pension and Section Sec. 5.477
306 Pension reductions or discontinuances.....
------------------------------------------------------------------------
Subpart G--Dependency and Indemnity Compensation, Death Compensation,
Accrued Benefits, and Special Rules Applicable Upon Death of a
Beneficiary
------------------------------------------------------------------------
Awards of dependency and indemnity compensation Sec. 5.524(c)
benefits to children when there is a
retroactive award to a school child...........
Effective dates for discontinuance of DIC or Sec. 5.568
death compensation payments to a person no
longer recognized as the veteran's surviving
spouse........................................
Effective date for award, or termination of Sec. 5.569
award, of DIC or death compensation to a
surviving spouse where DIC or death
compensation payments to children are involved
Effective date for reduction in DIC--surviving Sec. 5.570
spouses.......................................
Effective date for reduction or discontinuance Sec. 5.572
based on increased income--parents' DIC.......
Effective date for dependency and indemnity Sec. 5.573
compensation rate adjustments when an
additional dependent files an application.....
Effective dates of awards and discontinuances Sec. 5.574(b)
of special monthly dependency and indemnity
compensation..................................
------------------------------------------------------------------------
Subpart H--Special and Ancillary Benefits for Veterans, Dependents, and
Survivors
------------------------------------------------------------------------
Awards of VA benefits based on special acts or Sec. 5.581(d), (e)
private laws..................................
Effective dates of awards for certain disabled Sec. 5.591
children of Vietnam veterans..................
------------------------------------------------------------------------
Subpart I--Benefits for Certain Filipino Veterans and Survivors
------------------------------------------------------------------------
Filipino veterans and their survivors: Sec. 5.618
Effective dates of reductions and
discontinuances for benefits at the full-
dollar rate...................................
------------------------------------------------------------------------
Subpart K--Matters Affecting the Receipt of Benefits
------------------------------------------------------------------------
Effective dates--forfeiture.................... Sec. 5.681
Presidential pardon for offenses causing Sec. 5.682(d)
forfeiture....................................
Renouncement of benefits....................... Sec. 5.683(c)
------------------------------------------------------------------------
Subpart L--Payments and Adjustments to Payments
------------------------------------------------------------------------
Beginning date for certain VA benefit payments. Sec. 5.693(b)
Benefits paid to or for a child pursuing a Sec. 5.695(b)-(g)
course of instruction at an approved
educational institution.......................
Eligibility verification reports............... Sec. 5.708(f), (g)
Adjustment in benefits due to reduction or Sec. 5.710(b)
discontinuance of a benefit to another payee..
Payment to dependents due to the disappearance Sec. 5.711(b), (c),
of a veteran for 90 days or more.............. (d)
Suspension of VA benefits due to the Sec. 5.712
disappearance of a payee......................
Restriction on VA benefit payments to an alien Sec. 5.713(b)
located in enemy territory....................
Reduction of special monthly compensation based Sec. 5.720(b), (e),
on the need for regular aid and attendance (f)
while a veteran is receiving hospital care....
Resumption of special monthly compensation Sec. 5.721(c), (b)
based on the need for regular aid and
attendance when a veteran is discharged or
released from hospital care...................
Reduction of Improved Pension while a veteran Sec. 5.722(a), (d),
is receiving domiciliary or nursing home care. (e), (f)
Reduction of Improved Pension while a veteran Sec. 5.723(b), (c)
or surviving spouse is receiving Medicaid-
covered care in a nursing facility............
Reduction of special monthly pension based on Sec. 5.724(b), (d),
the need for regular aid and attendance for (e)
Improved Pension while a veteran is receiving
hospital care.................................
Resumption of Improved Pension and special Sec. 5.725(c), (d)
monthly pension based on the need for regular
aid and attendance after discharge or release
from hospital care............................
Reduction of Section 306 Pension while a Sec. 5.726(a), (d)
veteran is receiving hospital care............
Reduction of Old-Law Pension while a veteran is Sec. 5.727(a), (c)
receiving hospital care.......................
Reduction of special monthly pension based on Sec. 5.728(b), (e)
the need for regular aid and attendance for
Old-Law Pension or Section 306 Pension while a
veteran is receiving hospital care............
Resumption of Section 306 Pension and special Sec. 5.729(c), (e)
monthly pension based on the need for regular
aid and attendance when a veteran is
discharged or released from hospital care.....
Resumption of Old-Law Pension and special Sec. 5.730(c), (d),
monthly pension based on the need for regular (e)
aid and attendance when a veteran is
discharged or released from hospital care.....
General effective dates for awarding, reducing, Sec. 5.743(b)
or discontinuing VA benefits because of an
election......................................
Prohibition against receipt of active military Sec. 5.746(c)
service pay and VA benefits for the same
period........................................
Effect of election of compensation under the Sec. 5.754(d)
Radiation Exposure Compensation Act of 1990 on
payment of certain VA benefits................
Payment of multiple VA benefits to a surviving Sec. 5.762(c)(6)(ii)
child based on the service of more than one
veteran.......................................
Payment of dependents' educational assistance Sec. 5.764(a)
(DEA) and VA pension or dependency and
indemnity compensation (DIC) for the same
period........................................
------------------------------------------------------------------------
Subpart M--Apportionments to Dependents and Payments to Fiduciaries and
Incarcerated Beneficiaries
------------------------------------------------------------------------
Effective date of apportionment discontinuance Sec. 5.784
or reduction..................................
Determinations of incompetency................. Sec. 5.791(d)
Incarcerated beneficiaries--general provisions Sec. 5.810(c)
and definitions...............................
[[Page 65229]]
Discontinuance of pension during incarceration. Sec. 5.813(b)
------------------------------------------------------------------------
(Authority: 38 U.S.C. 501(a), 1832, 5112)
Cross Reference: Additional time period before certain reductions
or discontinuances take effect. See Sec. 5.177.
Sec. 5.706 Payments excluded in calculating income or net worth.
(a) Scope. This section describes payments excluded by Federal
statutes from income and net worth determinations for VA benefits that
are provided based on financial need. These benefits are Improved
Pension, Section 306 Pension, Old-Law Pension, parents' dependency and
indemnity compensation (DIC), and additional amounts of veterans'
compensation payable for dependent parents. Income and net worth rules
applying solely to a specific benefit are included in the regulations
that deal with that specific benefit.
(b) Specific payments excluded. The following table states whether
certain payments are included or excluded as income or net worth for
any VA-administered benefit program that is based on financial need.
This table does not confer any substantive rights.
----------------------------------------------------------------------------------------------------------------
Program or payment Income Net worth Authority
----------------------------------------------------------------------------------------------------------------
Compensation or Restitution Payments
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
(1) Relocation payments. Payments to Excluded.............. Included.............. 42 U.S.C. 4636.
persons displaced as a direct result
of programs or projects undertaken by
a Federal agency or with Federal
financial assistance under the
Uniform Relocation Assistance and
Real Property Acquisition Policies
Act of 1970.
(2) Crime victim compensation. Amounts Excluded.............. Excluded.............. 42 U.S.C. 10602(c).
received as compensation under the
Victims of Crime Act of 1984 unless
the total amount of assistance
received from all federally funded
programs is sufficient to fully
compensate the claimant for losses
suffered as a result of the crime.
(3) Restitution to individuals of Excluded.............. Excluded.............. 50 U.S.C. App. 1989b-
Japanese ancestry. Payments made as 4(f).
restitution under Pub. L. 100-383 to
an individual of Japanese ancestry
who was interned, evacuated, or
relocated during the period of
December 7, 1941 through June 30,
1946, pursuant to any law, Executive
Order, Presidential proclamation,
directive, or other official action
respecting these individuals.
(4) Victims of Nazi persecution. Excluded.............. Excluded.............. Sec. 1(a), Pub. L. 103-
Payments made to individuals because 286, 108 Stat. 1450, 42
of their status as victims of Nazi U.S.C. 1437a note.
persecution.
(5) Agent Orange settlement payments. Excluded.............. Excluded.............. Sec. 1, Pub. L. 101-201,
Payments made from the Agent Orange 103 Stat. 1795.
Settlement Fund or any other fund
established pursuant to the
settlement in the In Re Agent Orange
product liability litigation, M.D.L.
No. 381 (E.D.N.Y.).
(6) Chapter 18 benefits. Allowances Excluded.............. Excluded.............. 38 U.S.C. 1833(c).
paid under 38 U.S.C. chapter 18 to a
veteran's child with a birth defect.
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
Payments to Native Americans
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
(7) Indian judgment fund Excluded.............. Excluded.............. 25 U.S.C. 1407.
distributions. Funds listed in 25
U.S.C. 1407.
(8) Interests of individual Indians in Excluded.............. Excluded.............. 25 U.S.C. 1408.
trust or restricted lands. Interests
of individual Indians in trust or
restricted lands and up to $2,000 per
year of income received by individual
Indians that is derived from such
interests.
(9) Submarginal land. Income derived Excluded.............. Excluded.............. 25 U.S.C. 459e.
from certain submarginal land of the
United States that is held in trust
for certain Indian tribes.
(10) Old Age Assistance Claims Excluded.............. Excluded.............. 25 U.S.C. 2307.
Settlement Act. Up to $2,000 of per
capita distributions under the Old
Age Assistance Claims Settlement Act.
(11) Alaska Native Claims Settlement Excluded.............. Excluded.............. 43 U.S.C. 1626(c).
Act. Any of the following, if
received from a Native Corporation,
under the Alaska Native Claims
Settlement Act:
(i) Cash, including cash dividends
on stocks and bonds, up to a
maximum of $2,000 per year;
(ii) Stock, including stock issued
as a dividend or distribution;
(iii) Bonds that are subject to
the protection under 43 U.S.C.
1606(h) until voluntarily and
expressly sold or pledged by the
shareholder after the date of
distribution;
(iv) A partnership interest;
(v) Land or an interest in land,
including land received as a
dividend or distribution on
stock;
(vi) An interest in a settlement
trust.
(12) Maine Indian Claims Settlement Excluded.............. Excluded.............. 25 U.S.C. 1728.
Act. Payments received under the
Maine Indian Claims Settlement Act of
1980.
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
Work-Related Payments
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
(13) Workforce investment. Allowances, Excluded.............. Included.............. 29 U.S.C. 2931(a)(2).
earnings, and payments to individuals
participating in programs under the
Workforce Investment Act of 1998 (29
U.S.C. chapter 30).
(14) AmeriCorps participants. Excluded.............. Included.............. 42 U.S.C. 12637(d).
Allowances, earnings, and payments to
AmeriCorps participants under the
National and Community Service Act of
1990.
[[Page 65230]]
(15) Volunteer work. Compensation or Excluded.............. Excluded.............. 42 U.S.C. 5044(f).
reimbursement to volunteers involved
in programs administered by the
Corporation for National and
Community Service, unless the
payments are equal to or greater than
the minimum wage. The minimum wage is
either under the Fair Labor Standards
Act of 1938 (29 U.S.C. 201 et seq.)
or under the law of the State where
the volunteers are serving, whichever
is greater.
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
Miscellaneous Payments
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
(16) Food stamps. Value of the Excluded.............. Excluded.............. 7 U.S.C. 2017(b).
allotment provided to an eligible
household under the Food Stamp
Program.
(17) Food for children. Value of free Excluded.............. Excluded.............. 42 U.S.C. 1780(b).
or reduced price for food under the
Child Nutrition Act of 1966.
(18) Child care. Value of any child Excluded.............. Excluded.............. 42 U.S.C. 9858q.
care provided or arranged (or any
amount received as payment for such
care or reimbursement for costs
incurred for such care) under the
Child Care and Development Block
Grant Act of 1990.
(19) Services for housing recipients. Excluded.............. Excluded.............. 42 U.S.C. 8011(j)(2).
Value of services, but not wages,
provided to a resident of an eligible
housing project under a congregate
services program under the Cranston-
Gonzalez National Affordable Housing
Act.
(20) Home energy assistance. The Excluded.............. Excluded.............. 42 U.S.C. 8624(f).
amount of any home energy assistance
payments or allowances provided
directly to, or indirectly for the
benefit of, an eligible household
under the Low-Income Home Energy
Assistance Act.
(21) Programs for older Americans. Excluded.............. Included.............. 42 U.S.C. 3020a(b).
Payments, other than wages or
salaries, received from programs
funded under the Older Americans Act
of 1965 (42 U.S.C. chapter 35).
(22) Student financial aid. Amounts of Excluded.............. Excluded.............. 20 U.S.C. 1087uu,
student financial assistance received 2415(a).
under Title IV of the Higher
Education Act of 1965, including
Federal work-study programs or under
Bureau of Indian Affairs student
assistance programs, or vocational
training under the Carl D. Perkins
Vocational and Technical Education
Act of 1998.
(23) Retired Serviceman's Family Excluded.............. Included.............. 10 U.S.C. 1441.
Protection Plan annuities. Annuities
received under subchapter 1 of the
Retired Serviceman's Family
Protection Plan.
(24) Medicare Prescription Drug Excluded.............. Excluded.............. 42 U.S.C. 1395w-
Discount Card and Transitional 141(g)(6).
Assistance Program.
----------------------------------------------------------------------------------------------------------------
(Authority: 38 U.S.C. 501(a))
Sec. 5.707 Deductible medical expenses.
(a) Scope. This section describes the medical expenses that VA will
deduct for purposes of three of VA's benefit programs based on
financial need: Improved Pension, Section 306 Pension, and parents'
dependency and indemnity compensation (DIC). For the rules governing
how such medical expenses are deducted, see 5.413 Income deductions for
calculating adjusted annual income (regarding Improved Pension), 5.474
Deductible Expenses for Section 306 Pension Only, and 5.532 Deductions
from income (regarding parents' DIC).
(b) Definition of licensed healthcare provider. For purposes of
this section, the term ``licensed healthcare provider'' means an
individual licensed to provide health services in the state in which
the individual provides health services. The term includes, but is not
limited to, physician, registered nurse, licensed vocational nurse, or
licensed practical nurse.
(c) Medical Expenses--general. The following payments are ``medical
expenses'' that will be deducted from income if they are not
reimbursed:
(1) Care by a licensed healthcare provider. Payments made for
diagnosis, treatment, rehabilitation, or preventive maintenance (such
as an annual physical examination).
(2) Medical supplies and medications. Payments made for prescribed
medication and legal non-prescription medication. This category also
includes medically necessary food, beverages, and vitamins that a
licensed healthcare provider authorized to write prescriptions directs
an individual to take.
(3) Adaptive equipment. Payments made for adaptive devices or
companion animals used to assist an individual with an ongoing
disability, to the extent that a non-disabled person would not normally
make such payments.
(4) Transportation expenses. Payments made for transportation for
medical purposes (including transportation to and from a licensed
healthcare provider's office). When an individual uses a private
vehicle, the deductible expense for traveling will be limited to 20
cents per mile traveled, but the full cost of parking, taxi, bus, or
other transportation costs will be deducted.
(5) Health insurance premiums. Payments made for health, medical,
and hospitalization insurance premiums. This category includes Medicare
premiums.
(6) Institutional forms of care and in-home attendants. The
following payments are ``medical expenses'' that will be deducted from
income:
(i) Nursing home care. Payments made to a facility that provides
extended term inpatient medical care and made for such care, if a
responsible official of the facility certifies that the individual is a
patient (as opposed to a resident) in the facility.
(ii) In-home attendant. Payments made for an in-home attendant for
personal care and maintenance of the immediate environment of an
individual who is in need of regular aid and attendance or is
housebound, if the attendant is providing some medical or nursing
services. The attendant need not be a licensed healthcare provider. The
attendant may be a family member.
(iii) Veterans in State homes. Payments made to a ``State home,''
such as a veterans' or soldiers' and sailors' home (or the equivalent)
operated by a State, for the domiciliary care or nursing and hospital
care of a veteran who is a patient (as opposed to a resident) in the
State home.
(iv) Custodial Care. Payments made to an institution that houses
and maintains an individual because the individual needs to live in a
protected environment, to the extent the payments are made for medical
treatment but not to the extent they are made for strictly custodial
care.
(v) Government Institution. Payments to a government institution
for a physician-supervised program of
[[Page 65231]]
therapy or rehabilitation for an individual at that institution.
(vi) Adult Day Care, Rest Homes, Group Homes. Payments to an adult
day care facility, rest home, or group home in which an individual is
maintained rather than in a nursing home, subject to paragraphs
(c)(6)(vi)(A) through (C) of this section:
(A) If the individual is in need of regular aid and attendance or
is housebound, all reasonable fees paid to the facility are deducted
from countable annual income if the facility provides some medical or
nursing services to the individual. The services need not be provided
by a licensed healthcare provider.
(B) If the individual is not in need of regular aid and attendance
and is not housebound, VA will deduct all reasonable fees paid to the
facility, but only to the extent that they are for medical treatment
provided by a licensed healthcare provider.
(C) If the institution is a government facility, paragraph
(c)(6)(v) of this section applies.
(Authority: 38 U.S.C. 501(a), 1503(a)(8), 1315(f)(3))
Sec. 5.708 Eligibility verification reports.
(a) Definitions. (1) An ``eligibility verification report'' (EVR)
is a form that VA may use to obtain from claimants and beneficiaries
information about factors that affect entitlement to Improved Pension
and parents' dependency and indemnity compensation (DIC). See Sec.
5.709(b) for a list of some of the factors that affect entitlement to
these benefits.
(2) A ``reporting period'' is a time period established by VA for
which a claimant or beneficiary reports income, adjustments to income,
and net worth to VA.
(b) Circumstances when VA may require completion of an eligibility
verification report (EVR). Except as provided in paragraph (c) of this
section, claimants or beneficiaries of pension or parents' DIC must, as
a condition of receipt or continued receipt of benefits, file a
completed EVR upon request in the following circumstances:
(1) EVRs for claimants. VA may require a claimant to file a
completed EVR annually, or when necessary to update, complete, or
clarify information regarding the claimant's income or marital status
or any other factor that affects entitlement.
(2) EVRs for beneficiaries. VA may require a beneficiary to file a
completed EVR annually or if:
(i) The Social Security Administration has not verified the social
security number of the beneficiary or, if applicable, the beneficiary's
spouse;
(ii) Evidence suggests that the beneficiary or, if applicable, the
beneficiary's spouse or child, may have received income from sources
other than the Social Security Administration during the current or
previous calendar year; or
(iii) The Secretary decides completion of an EVR is necessary to
ensure accurate and timely reporting of changes in the factors that
affect entitlement or to protect the Improved Pension and parents' DIC
programs from fraud.
(c) Eligibility verification reports for certain parents receiving
parents' DIC. A parent receiving parents' DIC is not required to file
an EVR if:
(1) The parent has reached age 72; and
(2) The parent has been receiving parents' DIC during 2 consecutive
calendar years.
However, a parent receiving parents' DIC must notify VA whenever
there is a material change in his or her annual income.
(Authority 38 U.S.C. 1315(e))
(d) Action VA takes upon receipt of information or an eligibility
verification report (EVR). When determining whether an individual is
entitled to benefits, VA will consider any new information provided in
an EVR or through other means. VA may award, deny, increase, reduce, or
discontinue benefits based on the information provided. When the
expected annual income is uncertain, payment of pension or parents' DIC
will be authorized at the lowest rate or discontinued, as provided in
Sec. 5.423, Sec. 5.478(a), or Sec. 5.531(e).
(e) Action VA takes when a claimant does not return an eligibility
verification report (EVR). If VA does not receive a completed EVR
within 60 days after the date VA requested the EVR from a claimant, VA
will deny the claim.
(f) Action VA takes when a beneficiary does not return a completed
eligibility verification report (EVR)--(1) Failure to return an EVR. If
VA does not receive an EVR within 60 days after the date VA requested
the EVR from a beneficiary, VA will immediately suspend further benefit
payments.
(2) Return of an incomplete EVR. If VA receives an incomplete EVR
no later than 60 days after the date VA requested the EVR from a
beneficiary, VA will notify the beneficiary that the EVR is incomplete
and inform the beneficiary of the additional information needed to
complete the EVR. If VA does not receive a completed EVR within 120
days after the date VA first requested the EVR from the beneficiary, VA
will immediately suspend further benefit payments.
(3) Discontinuance for failure to return a completed EVR. A
beneficiary whose benefits were suspended under paragraphs (f)(1) or
(2) of this section must return the completed EVR no later than 1 year
after the date VA first requested the EVR from the beneficiary.
Otherwise, VA will discontinue benefits as follows:
(i) If the reporting period is the initial reporting period, the
effective date of discontinuance is the first day of that period; or
(ii) If the reporting period is a subsequent reporting period, the
effective date of discontinuance is the first day of the calendar year
for which the beneficiary was asked to provide information in the EVR.
(g) Action VA takes when a beneficiary returns an eligibility
verification report (EVR) after benefits were suspended or
discontinued. If benefits were suspended or discontinued under
paragraph (f) of this section, VA will resume payments (if otherwise in
order) as follows:
(1) If VA receives the completed EVR no later than 1 year after the
end of the reporting period for which the beneficiary was asked to
provide the EVR, VA will resume payment of benefits as follows:
(i) Payments suspended but not discontinued. If payments are
suspended but not discontinued, such payments will be resumed effective
the date of suspension.
(ii) Payments discontinued effective before the date of suspension.
If payments are discontinued effective before the date of suspension,
such payments will be resumed effective the date of discontinuance.
(2) If VA receives the completed EVR more than 1 year after the end
of the reporting period, VA will treat the EVR as a new claim.
(h) VA will accept the eligibility verification report (EVR) at any
time to reduce a debt. A former beneficiary who owes or owed money to
VA because VA discontinued payments for failure to file an EVR within
the time limit in paragraph (f) of this section may submit the EVR at
any time. If, based on information in the EVR, VA decides that the
former beneficiary was entitled to benefits for any part of the period
of time in which payment had been discontinued for failure to file an
EVR, VA will offset the debt for that part of the period. Once the debt
has been completely offset, VA will not pay additional benefits for
that period.
(Authority: 38 U.S.C. 501(a), 1506)
[[Page 65232]]
Sec. 5.709 Claimant and beneficiary responsibility to report changes.
(a) Claimants and beneficiaries of pension or parents' dependency
and indemnity compensation (DIC) must promptly notify VA of any
material change in a factor that affects entitlement to the benefit
that they are claiming or receiving. VA may request any information or
evidence that is necessary to determine whether the individual is
entitled (or continues to be entitled) to a benefit. See Sec. 5.708
(explaining the circumstances when VA will require an EVR).
(b) The following table lists factors that often change and that
affect entitlement to pension or parents' DIC. The table is intended
solely for informational purposes. It is not intended to confer any
substantive rights and does not list every factor that could affect
entitlement to pension or parents' DIC.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Factors affecting Claimant/Beneficiary's entitlement to pension or parents' DIC benefits.
(``YES'' indicates that the factor may affect entitlement. ``NO'' indicates that the factor
does not affect entitlement)
Claimant/beneficiary ------------------------------------------------------------------------------------------------
Benefit type (beneficiary) and applicable School
dependent(s) Number of Nursing home attendance
Income Marital status Net worth children (See status (if 18 or
Sec. 5.220) older)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Improved
--------------------------------------------------------------------------------------------------------------------------------------------------------
Disability Pension (Veteran)..... Veteran............. YES............ YES........... YES........... YES........... YES........... NO.
Dependent spouse.... YES............ YES........... YES........... YES........... NO............ NO.
Dependent child..... YES \1\........ YES........... YES........... NO............ NO............ YES.
Death Pension (Surviving spouse). Surviving spouse.... YES............ YES........... YES........... YES........... YES........... NO.
Dependent child..... YES \1\........ YES........... YES........... NO............ NO............ YES.
Death Pension (Surviving child).. Surviving child..... YES \1\........ YES........... YES........... NO............ NO............ YES.
Child's legal YES \4\........ NO............ YES........... NO............ NO............ NO.
custodian.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 306
--------------------------------------------------------------------------------------------------------------------------------------------------------
Disability Pension (Veteran)..... Veteran............. YES............ YES........... YES........... YES........... YES........... NO.
Dependent spouse.... YES \2\........ YES........... NO............ YES........... NO............ NO.
Dependent child..... NO............. YES........... NO............ NO............ NO............ YES.
Death Pension (Surviving spouse). Surviving spouse.... YES............ YES........... YES........... YES........... YES........... NO.
Dependent child..... YES \3\........ YES........... NO............ NO............ NO............ YES.
Death Pension (Surviving child).. Surviving child..... YES \5\........ YES........... YES........... NO............ NO............ YES.
Child's legal NO............. NO............ NO............ NO............ NO............ NO.
custodian.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Old-Law
--------------------------------------------------------------------------------------------------------------------------------------------------------
Disability Pension (Veteran)..... Veteran............. YES............ YES........... NO............ YES........... YES........... NO.
Dependent spouse.... NO............. YES........... NO............ YES........... NO............ NO.
Dependent child..... NO............. YES........... NO............ NO............ NO............ YES.
Death Pension (Surviving spouse). Surviving spouse.... YES............ YES........... NO............ YES........... YES........... NO.
Dependent child..... YES \3\........ YES........... NO............ NO............ NO............ YES.
Death Pension (Surviving child).. Surviving child..... YES............ YES........... NO............ NO............ NO............ YES.
Child's legal NO............. NO............ NO............ NO............ NO............ NO.
custodian.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parents' DIC (Surviving parent).. Surviving parent.... YES............ YES........... NO............ NO............ YES........... NO.
Surviving parent's YES \6\........ YES........... NO............ NO............ YES........... NO.
spouse.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ A child's earned income (wages and/or salary) is not a factor under certain circumstances described in Sec. 5.411(b).
\2\ For exceptions to this rule, see Sec. 5.473.
\3\ A child's income is not a factor unless it is turned over to the surviving spouse. (See Sec. 5.473)
\4\ The income of a custodian is a factor unless the custodian is an institution rather than an individual.
\5\ Only unearned income (income other than wages and/or salary) is a factor. (See Sec. 5.473)
\6\ The income of a surviving parents' spouse is a factor unless the parent and spouse are not living together.
(Authority: 38 U.S.C. 501(a), 1315, 1521(b), (c), and (h); 1522,
1541(b), (c), and (g); 1542; 1543; sec. 306, Pub. L. 95-588 92 Stat.
2497)
Sec. 5.710 Adjustment in benefits due to reduction or discontinuance
of a benefit to another payee.
(a) Effect of reduction or discontinuance of another payee's
benefit. If a payee becomes entitled to pension, disability
compensation, or dependency and indemnity compensation (DIC), or an
increase in such a benefit because payment of the same benefit to
another payee has been reduced or discontinued, the award or increase
will be paid without the filing of a new claim, except as provided in
paragraph (b) of this section.
(b) Effective date. VA will award or increase the payee's benefit
and pay the appropriate rate effective the day following the reduction
or discontinuance of the benefit to the other payee. If VA requests
information or evidence, it must be received no later than 1 year after
the date of VA's request. If the information or evidence is not
received within 1 year, the effective date will be the date VA receives
a new claim.
(c) Rate payable. The rate for the persons entitled will be the
rate that would have been payable if they had been the only original
persons entitled.
(Authority: 38 U.S.C. 501(a))
[[Page 65233]]
Sec. 5.711 Payment to dependents due to the disappearance of a
veteran for 90 days or more.
(a) General. When a veteran receiving or entitled to receive
disability compensation, Section 306 Pension, or Improved Pension
disappears for 90 days or more, benefits will be paid to the veteran's
dependent(s) as provided in this section. Dependents will be paid under
this section only if the veteran's whereabouts are unknown to the
dependent(s) and to VA and a claim is received from the dependent(s).
(b) Veteran receiving or entitled to receive disability
compensation. If the veteran was receiving or was entitled to receive
disability compensation, benefits may be paid to the veteran's spouse,
child, and/or dependent parent.
(1) Rate payable. The total amount the veteran's dependent(s) will
be paid is the lesser of either the total amount of dependency and
indemnity compensation (DIC) that would be payable if the veteran had
died from a service-connected disability or the amount of disability
compensation (minus any authorized insurance deductions) the veteran
would have received or been entitled to receive at the time of the
veteran's disappearance.
(i) If VA pays DIC pursuant to this paragraph, then it will pay
benefits to the dependents as if the veteran were deceased.
(ii) If VA pays disability compensation pursuant to this paragraph,
then it will pay benefits in equal amounts to the dependents.
(2) Effective date of payments. (i) If a claim for benefits under
this section is received no later than 1 year after the first day of
the month after the month for which VA last paid benefits to the
veteran, then payments to the veteran's dependent(s) will be payable
effective the first day of the month after the month for which VA last
paid benefits to the veteran.
(ii) If a claim for benefits under this section is received more
than 1 year after the first day of the month after the month for which
VA last paid benefits to the veteran, payments to the veteran's
dependent(s) will be payable effective the date VA receives the claim.
(c) Veteran receiving or entitled to receive pension. If the
veteran was receiving or entitled to receive Section 306 Pension or
Improved Pension, benefits may be paid to the veteran's spouse and/or
child(ren). The veteran's permanent and total disability status,
income, and net worth will be presumed to continue unchanged.
(1) Rate payable. The total amount payable to the veteran's
dependent(s) will be either the rate of Improved Death Pension payable
if the veteran had died of a non-service-connected disability or the
amount of pension the veteran would have received at the time of
disappearance, whichever amount is less.
(2) Effective date of payments. (i) If a claim is received no later
than 1 year after the first day of the month after the month for which
VA last paid benefits to the veteran, payments to the veteran's
dependent(s) will be payable effective the first day of the month after
the month for which VA last paid benefits to the veteran.
(ii) If a claim for benefits is received more than 1 year after the
first day of the month after the month for which VA last paid benefits
to the veteran, payments to the veteran's dependent(s) will be payable
effective the date VA receives the claim.
(d) Discontinuance of payments to veteran's dependent(s)--(1)
Veteran's whereabouts become known. If VA becomes aware of the
veteran's whereabouts, payments to the veteran's dependent(s) will be
discontinued effective the first day of the month after the month for
which VA last paid benefits to the veteran's dependent(s).
(2) Veteran presumed dead. Payments to the veteran's dependent(s)
will be discontinued if the veteran is presumed dead under Sec. 5.502,
``Proving death after 7 years of continuous, unexplained absence.''
(Authority: 38 U.S.C. 1158, 1507)
Sec. 5.712 Suspension of VA benefits due to the disappearance of a
payee.
(a) If a payee's whereabouts are unknown, then VA will suspend
payment of pension, disability compensation, dependency and indemnity
compensation, the monetary allowance under 38 U.S.C. chapter 18 for
children disabled from spina bifida or with certain birth defects, or
other monetary allowances.
(b) If benefits were suspended under paragraph (a) of this section,
then VA will resume payments if the payee's whereabouts become known.
The effective date of payments will be the first day of the first month
for which benefits were suspended if entitlement is otherwise
established. Retroactive payments under this paragraph (b) will be
reduced by the amount of any payments made to a veteran's dependents
under Sec. 5.711.
(Authority: 38 U.S.C. 501(a))
Sec. 5.713 Restriction on VA benefit payments to an alien located in
enemy territory.
(a) Restriction on payment. VA will discontinue all VA benefits
except insurance payments to an alien who is:
(1) Located in the territory of an enemy of the United States or an
enemy of any ally of the United States; or
(2) Located in territory which is under the military control of an
enemy of the United States or an enemy of any ally of the United
States.
(b) Apportionment of benefits. VA may apportion to the dependent(s)
of an affected alien all or any part of the benefits discontinued under
paragraph (a) of this section.
(1) The amount payable to each dependent may not exceed the amount
that would be payable if the alien had died.
(2) VA will discontinue payments to the dependents effective the
date it receives notice that the alien is no longer located in the
territory described in paragraph (a) of this section.
(3) VA will reduce or discontinue payments to a dependent upon the
death of the alien or dependent, upon reduction or discontinuance of
the alien's benefits, or when dependent status ends.
(c) Claims for discontinued benefits. See Sec. 5.715, ``Claims for
undelivered or discontinued benefits.''
(Authority: 38 U.S.C. 5112(a), 5308)
Sec. 5.714 Restriction on delivery of VA benefit payments to payees
located in countries on Treasury Department list.
(a) Definitions. For purposes of this part 5:
(1) Payee means a person to whom a VA benefit check is payable.
(2) Special deposit account means the ``Secretary of the Treasury,
Proceeds of Withheld Foreign Checks'' account established under 31
U.S.C. 3329(b)(4).
(3) Treasury Department list is the list of countries identified by
the Secretary of the Treasury in 31 CFR 211.1, ``Withholding delivery
of checks,'' to which checks cannot be delivered with reasonable
assurance that the payee will actually receive the check and be able to
negotiate it for full value.
(b) Evidence requests. Unless a claimant or payee who is living in
a country on the Treasury Department list requests the alternative
means of delivery described in paragraph (c) of this section, VA will
not request evidence in support of a claim for VA benefits if such
evidence would be obtained from a country on the Treasury Department
list.
(c) Restriction on check delivery. VA will not send benefit checks
to a payee
[[Page 65234]]
located in a country on the Treasury Department list or to a guardian
or other person in the United States or a territory or possession of
the United States who is legally responsible for the care of a payee
located in a country on the Treasury Department list.
(d) Alternative delivery permitted. If requested by a payee located
in a country on the Treasury Department list, VA will send VA benefit
checks to him or her in care of a U.S. Foreign Service post, specified
by the payee, in a country that is not on the Treasury Department list.
(e) Disposition of benefit checks. If the payee does not request
the alternative means of delivery described in paragraph (d) of this
section, VA benefit checks that are not delivered because of the
restriction described in paragraph (c) of this section will be
deposited into the special deposit account or into the U.S. Treasury as
miscellaneous receipts, as required by 31 U.S.C. 3329(b) and 3330(b).
(f) Claims for undelivered benefits. See Sec. 5.715, ``Claims for
undelivered or discontinued benefits.''
(Authority: 31 U.S.C. 3329, 3330)
Sec. 5.715 Claims for undelivered or discontinued benefits.
(a) Definitions. For the definitions of ``payee,'' ``special
deposit account,'' and ``Treasury Department list,'' see Sec.
5.714(a).
(b) Claims for undelivered or discontinued benefits. (1) A payee
may file with VA a claim for:
(i) Any amounts not paid because awarded benefits were discontinued
under Sec. 5.713, ``Restriction on VA benefit payments to an alien
located in enemy territory''; or
(ii) Any undelivered benefit payments deposited to the payee's
credit in the special deposit account or into the U.S. Treasury as
miscellaneous receipts as described in Sec. 5.714(e).
(2) There is no time limit for filing such a claim.
(3) Undelivered amounts will be released or a discontinued benefit
resumed only if:
(i) For a payee whose VA benefits were discontinued under Sec.
5.713, ``Restriction on VA benefit payments to an alien located in
enemy territory,'' the payee is no longer subject to the restriction in
Sec. 5.713(a);
(ii) For a payee whose benefit checks were withheld under Sec.
5.714, ``Restriction on delivery of VA benefit payments to payees
located in countries on Treasury Department list,'' the payee is no
longer subject to the restriction in Sec. 5.714(c);
(iii) For a payee whose benefit checks were withheld under Sec.
5.714, the country in which the payee is located is removed from the
Treasury Department list; or
(iv) For a payee whose benefit checks were withheld under Sec.
5.714, the payee requests the alternative means of delivery described
in Sec. 5.714(d).
(Authority: 31 U.S.C. 3329)
(c) Forfeiture for treasonable acts. Payment is subject to
forfeiture of benefits for treasonable acts as provided in Sec. 5.677.
(d) Evidence requests. Subject to Sec. 5.90, VA may request
evidence necessary to support a claim under this section. Evidence VA
may request includes:
(1) Satisfactory evidence that the payee has not been guilty of
mutiny, treason, sabotage, or rendering assistance to an enemy; and
(2) Evidence of continued entitlement to benefits during the time
that awarded benefits were discontinued or benefit payments were
undelivered.
(Authority: 38 U.S.C. 5308)
(e) Germany and Japan. No payments will be made for any period
before the date of filing a new claim if payments were discontinued
before July 1, 1954, because the payee was a citizen or subject of
Germany or Japan.
(Authority: 38 U.S.C. 5309)
(f) Payment of funds in special deposit account upon death of a
payee. See Sec. 5.565, ``Special rules for payment of VA benefits on
deposit in a special deposit account when a payee living in a foreign
country dies.''
(Authority: 31 U.S.C. 3330)
Sec. Sec. 5.716-5.739 Reserved.
[FR Doc. E8-25547 Filed 10-30-08; 8:45 am]
BILLING CODE 8320-01-P