M21-1, Part III, Subpart V, Chapter 4, Section C



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5. Restoring Benefits VA Previously Withheld to Offset a Veteran’s Receipt of Drill Pay




Introduction

This topic contains information on restoring benefits VA previously withheld to offset a Veteran’s receipt of drill pay, including


  • circumstances warranting a restoration of benefits, and

  • process for restoring benefits.



Change Date

March 25, 2013



a. Circumstances Warranting a Restoration of Benefits

If a Veteran notifies VA in advance that he/she will receive drill pay, but the Veteran ultimately attends fewer days of training than he/she initially reported, the Veteran may recover the extra benefits VA withheld by notifying VA of the discrepancy within one year of the end of the fiscal year during which the training took place.
The notice must include a signed statement from the Veteran’s unit commander (or designee) containing the following information:


  • armory drill/training session, and

  • period of active duty training, and

  • total number of days of drill pay the Veteran received during the fiscal year.


Reference: For more information on

  • the one-year limitation for notifying VA, see 38 CFR 3.654(c), and

  • handling advance notice of a Veteran’s receipt of drill pay, see M21-1, Part III, Subpart v, 4.C.4.c.



b. Process for Restoring Benefits

To restore benefits under the circumstances described in M21-1, Part III, Subpart v, 4.C.5.a, adjust the Veteran’s award to shorten the period during which VA previously withheld benefits. Do this by changing only the effective date on which VA previously stopped withholding benefits.
Example:

Scenario:

  • A Veteran provides VA advance notice he will receive drill pay for 55 days.

  • VA initially

  • withholds benefits effective March 1, and

  • resumes benefits effective April 26.

  • Within one year of the end of the fiscal year during which the Veteran attended training, he notifies VA he actually attended only

  • 20 armory drill/training sessions, performed over 10 calendar days, and

  • 15 days of active duty training.


Action: Because the Veteran received drill pay for only 35 days, adjust his award by changing the date benefits resume to April 6.
Reference: To ensure accurate calculation of the number of days the Veteran received drill pay, see M21-1, Part III, Subpart v, 4.C.2.b.



6. Award Adjustments Necessitated by a Veteran’s Return to and Discharge From Active Duty




Introduction

This topic contains information on award adjustments necessitated by a Veteran’s return to and discharge from active duty, including


  • relinquishment of benefits upon return to active duty

  • handling notice that a Veteran has returned to active duty

  • effective date for discontinuing compensation or pension

  • handling the pending claim of a Veteran who returns to active duty

  • action to take upon receipt of DD Form 214, Certificate of Release or Discharge from Active Duty

  • action to take upon receipt of a claim for reinstatement of compensation

  • proper application of 38 CFR 3.31

  • handling notice of a Veteran’s return to active duty that VA receives more than one year after discharge

  • active duty and drill(s)/training during the same fiscal years

  • separating training days from days of active duty on VA Form 21-8951

  • Veteran has more active duty days than the number of training days shown on VA Form 21-8951, and

  • listing of Active Duty for Special Work (ADSW) on VA Form 21-8951.



Change Date

April 20, 2015



a. Relinquishment of Benefits Upon Return to Active Duty

Under 38 U.S.C. 5304(c), Veterans receiving VA disability compensation or pension must relinquish these benefits when they return to active duty. This includes members of the National Guard who are activated under 10 U.S.C. or who serve full time in the Active Guard Reserve under 32 U.S.C.
Note: This restriction does not apply to recipients of Dependency and Indemnity Compensation (DIC). For example, a surviving spouse may concurrently receive active service pay and DIC.
References: For more information about

  • 38 CFR 3.654, and

  • 38 CFR 3.700(a)(1), or

  • full-time duty in the uniformed services, see M21-1, Part III, Subpart ii, 6.2.c and d.



b. Handling Notice That a Veteran Has Returned to Active Duty

Accept written notification or other credible evidence from a Veteran to establish the date he/she returned to active duty.
If VA receives notice a Veteran returned to active duty from a source other than the Veteran,


  • determine the date the Veteran returned to active duty by using the

  • Defense Personnel Records Image Retrieval System (DPRIS), or

  • Veterans Information Solution (VIS), and

  • notify the Veteran of VA’s proposal to discontinue the payment of compensation or pension.


Reference: For more information on

  • sending notice of a proposed adverse action, see M21-1, Part I, 2.B

  • VIS, see the VIS User Guide, or

  • DPRIS, select the HELP tab within the DPRIS application, which is accessible at https://www.dpris.dod.mil. (Registration is required.)



c. Effective Date for Discontinuing Compensation or Pension

According to 38 CFR 3.501(a) and 3.654(b), an award of compensation or pension to a Veteran will be discontinued effective the day preceding his/her return to active duty. For the purpose of discontinuing an award in VETSNET or VBMS because a Veteran returned to active duty, this means


  • the last day the Veteran is entitled to benefits is the day preceding the date he/she returns to active duty, and

  • the date the Veteran returned to active duty represents the first day of non-payment of VA benefits.

Because the programming of VETSNET and VBMS requires users to enter the first day of non-payment as the effective date of discontinuance of an award due to a Veteran’s return to active duty, the “effective date of discontinuance” referred to in this section is the date on which the Veteran returned to active duty, not the day preceding it.





d. Handling the Pending Claim of a Veteran Who Returns to Active Duty

VA is prohibited from paying compensation or pension to a Veteran while he/she is receiving active service pay. If, however, a Veteran files a claim before returning to active duty, VA may not deny the claim solely because the Veteran returned to active duty.
Rationale: If VA ultimately grants the Veteran’s claim, it may pay the Veteran any benefits due him/her for the period preceding his/her return to active duty.
Important: According to VAOPGCPREC 10-2004, the return of a Veteran to active duty under the circumstances described above does not change VA’s duty to assist him/her in substantiating a pending claim, to include providing the Veteran an examination, when necessary to decide his/her claim.



e. Action to Take Upon Receipt of DD Form 214

Upon receipt of DD Form 214, Certificate of Release or Discharge from Active Duty, or other credible evidence showing a Veteran has been released from active duty,


  • ensure VA properly discontinued benefits effective the day the Veteran returned to active duty, and

  • notify the Veteran that VA will reinstate his/her benefits effective the day following release from active duty if the Veteran submits a claim for reinstatement within one year of that date.



f. Action to Take Upon Receipt of a Claim for Reinstatement of Compensation

Follow the steps in the table below upon receipt of a claim for reinstatement of compensation from a Veteran who is no longer on active duty.




Step

Action

1

Use DPRIS or VIS to confirm the date the Veteran was discharged from active duty.

2

Undertake development to obtain service treatment records (STRs) for the period(s) of service the Veteran most recently completed by following the instructions in M21-1, Part III, Subpart iii, Chapter 2.

3

If the Veteran is claiming reinstatement only, and all of his/her service-connected disabilities are static (no future review examination is indicated on the most recent rating decision),


  • establish EP 290, and

  • proceed to Step 6.


Exception: If VA accepted the claim for reinstatement as a Benefits Delivery at Discharge (BDD) or Quick Start claim, use EP 297.

4

Establish EP 020 if the Veteran


  • has a service-connected disability that is not static, or

  • is claiming

  • submits the claim for reinstatement on a prescribed form.


Exception: If VA accepted the claim for reinstatement as a BDD or Quick Start claim, use EP

  • 021 (BDD), or

  • 027 (Quick Start).

5

Does the Veteran have any static disabilities?


  • If yes, proceed to the next step.

  • If no, proceed to Step 8.

6

If VA received the Veteran’s claim for reinstatement


  • within one year of discharge from active duty, reinstate compensation for static disabilities only effective the day following the date of discharge, or

  • one year or more after the date of discharge, reinstate compensation for static disabilities only effective one year prior to the date VA received the claim.

7

Which EP was established to control the Veteran’s claim for reinstatement?


  • If EP 290 or 297 was established, take no further action except to follow the instructions in M21-1, Part IV, Subpart ii, 2.A.1 upon receipt of the STRs requested in Step 2.

  • If EP 020, 021, or 027 was established, proceed to the next step.

8

If the Veteran is claiming service connection for a new disability or entitlement to an increased disability rating, undertake any necessary development, to include issuing Section 5103 notice according to the instructions in M21-1, Part I, 1.B.
Note: The claim must be submitted on a prescribed form.

9

If the Veteran has non-static, service-connected disabilities, schedule him/her for an examination unless the evidence of record is sufficient to assign a disability rating without an examination report.

10

Refer the claim to the rating activity for a decision


  • as soon as development is complete (if initiated), and/or

  • upon receipt of examination reports and STRs (if requested).


Note: Do not postpone rating action based solely on the absence of the Veteran’s STRs if the evidence of record supports a grant of the benefit the Veteran is seeking. In such cases,

  • process the rating decision, to include clearing the controlling EP, and

  • follow the instructions in M21-1, Part IV, Subpart ii, 2.A.1 when the STRs eventually arrive.




References: For more information on

  • reinstating benefits following release from active duty, see 38 CFR 3.654(b)(2)

  • handling receipt of notice of a Veteran’s return to active duty and subsequent discharge more than one year after discharge occurred, see M21-1, Part III, Subpart v, 4.C.6.h, or

  • pre-discharge claims for reinstatement, see M21-1, Part III, Subpart i, 2.C.3.



g. Proper Application of 38 CFR 3.31

The reinstatement of compensation VA previously discontinued because a Veteran returned to active duty does not constitute a new grant of or increase in benefits. Therefore, the requirement in 38 CFR 3.31 to award benefits effective the first of the month following the month of entitlement is not for application.
If, however, in connection with the Veteran’s claim for reinstatement, VA grants service connection for a new disability and/or increases the disability rating assigned to a service-connected disability, the provisions of 38 CFR 3.31 do apply.
Example:

Scenario:

  • A Veteran with a static, service-connected knee disorder, which VA rated 10 percent disabling, returns to active duty on August 1, 2010.

  • VA discontinues the Veteran’s benefits effective the date she returned to active duty.

  • The Veteran’s active duty ends August 15, 2011.

  • On October 1, 2011, the Veteran files a claim for reinstatement of her compensation and an increased rating for the knee disorder.

  • VA subsequently assigns the knee disorder a disability rating of 30 percent.


Result: The effective date of the award that reinstates compensation at the rate payable for a disability rated 10 percent disabling is August 16, 2011. Although the Veteran is entitled to the 30 percent disability rating for the knee disorder from August 16, 2011, the proper effective date of the increased award, per 38 CFR 3.31, is September 1, 2011.



h. Handling Notice of a Veteran’s Return to Active Duty That VA Receives More Than One Year After Discharge

Sometimes, VA may not discover that a Veteran in receipt of VA benefits returned to active duty and was subsequently discharged until years after the fact. When retroactively discontinuing benefits during the period of active duty, do not discontinue benefits beyond the date of discharge, even though the Veteran did not notify VA of his/her discharge within one year.
Example:

Scenario: On August 10, 2010, a Veteran in receipt of compensation reports a period of active duty that began December 15, 2007, and ended January 5, 2009.
Action: Discontinue the Veteran’s compensation effective December 15, 2007, and reinstate it effective January 6, 2009.



i. Active Duty and Drill(s)/ Training During the Same Fiscal Year

If a Veteran received active service pay for both active duty and drill(s)/training during the same fiscal year, VA Form 21-8951 will show the combined number of days for which the Veteran received active service pay.
Follow the instructions in the table below if


  • VA Form 21-8951 shows training in excess of 179 days, or

  • the evidence of record suggests the Veteran had active duty during the fiscal year the VA Form 21-8951 covers.


Note: Consider a report of training in excess of 179 days on VA Form 21-8951 an indication the Veteran might have returned to active duty for a period of time.




Step

Action

1

Use VIS and/or DPRIS to determine whether the Veteran had a period of active duty during the fiscal year in question.
Reference: For more information on

  • VIS, see the VIS User Guide, or

  • DPRIS, select the HELP tab within the DPRIS application, which is accessible at https://www.dpris.dod.mil. (Registration is required.)

2

Does VIS and/or DPRIS confirm the Veteran had an unreported period of active duty?


  • If yes, proceed to the next step.

  • If no, proceed to Step 5.

3

Notify the Veteran VA proposes to discontinue his/her benefits effective the date he/she returned to active duty. In the notice, ask the Veteran to submit the following with regard to the time period in question:


  • a copy of his/her orders or separation document, or

  • other evidence of the duty he/she performed.


Reference: For more information about preparing a notice of proposed adverse action, see M21-1, Part I, 2.B.

4

Sixty-five days after sending the notice,


  • take the proposed action unless the Veteran

  • requested a hearing within thirty days of the notice, or

  • submits evidence showing VA should not take the proposed action, and

  • proceed no further, except to follow the instructions in M21-1, Part III, Subpart v, 4.C.6.j.

5

Send a letter to the Veteran asking for the dates he/she was on active duty, if any, during the fiscal year in question and


  • a copy of his/her orders or separation document, or

  • other evidence of the duty he/she performed during the fiscal year.

6

Follow the instructions in the table below after giving the Veteran 30 days to respond.


If ...

Then ...

the Veteran responds by confirming his/her return to active duty

discontinue benefits effective the date active duty began.

the Veteran fails to respond

  • assume the days reported on VA Form 21-8951 do not include a period of active duty, and

  • take the actions described in M21-1, Part III, Subpart v, 4.C.3.b.

evidence is obtained from a source other than the Veteran that he/she returned to active duty

follow the instructions in steps 3 and 4 of this table.





j. Separating Training Days from Days of Active Duty on VA Form 21-8951

After confirming the number of days a Veteran was on active duty during a specific fiscal year, calculate the number of days he/she received drill pay by subtracting the number of days the Veteran was on active duty from the total number of training days shown on VA Form 21-8951.
Important: The instructions in M21-1, Part III, Subpart v, 4.C.4.b for determining the date range during which VA will prospectively withhold compensation based on a Veteran’s receipt of drill pay do not apply when calculating the number of days a Veteran was on active duty.
Example:

Scenario: The number of training days shown on VA Form 21-8951 is 185. Both the Veteran and personnel records retrieved through DPRIS confirm the Veteran was on active duty from June 25, 2011, through August 31, 2011.
Result: The Veteran was on active duty for 68 days (6 days in June, 31 days in July, and 31 days in August) and received drill pay for a total of 117 days.



k. Veteran Has More Active Duty Days Than the Number of Training Days Shown on VA Form 21-8951

When a Veteran has more active duty days during a given fiscal year than the number of training days shown on VA Form 21-8951 for the same fiscal year,


  • assume the Veteran was on active duty for all of the days printed on VA Form 21-8951

  • follow the instructions in M21-1, Part III, Subpart v, 4.C.6, h, i, and j to adjust the Veteran’s award to reflect his/her return to active duty, and

  • take no action on the VA Form 21-8951 except to electronically annotate it with an explanation as to why no action was taken.


Example:

  • VA terminated a Veteran’s benefits for the period November 1, 2011, through May 15, 2012, because the Veteran returned to active duty.

  • In 2013, VA receives a VA Form 21-8951 showing the Veteran was paid for 65 days of drill/training during fiscal year 2012.


References: For information about electronically annotating documents in an eFolder, see the VBMS User Guide.



l. Listing of ADSW on VA Form 21-8951

In addition to active and/or inactive duty training, VA Form 21-8951 may also include Active Duty for Special Work (ADSW).
Duties performed under ADSW may be for operational, support, or training purposes. The Department of Defense (DoD) defines ADSW as a tour of active duty to fulfill support requirements. VA characterizes ADSW as active duty for the purpose of this topic unless the purpose for going on ADSW was to receive training.
Important:

  • Undertake development to determine the type of duty a Veteran performed while on ADSW, even though

  • the duration of service is less than 180 days, and/or

  • DoD issues the Veteran a DD Form 214 for the ADSW.

  • If the Veteran went on ADSW to receive training, treat the active service pay he/she received during this period of time as drill pay.

  • If the duties a Veteran performed during ADSW cannot be ascertained, treat the period of service as active duty.


Reference: For assistance in characterizing a Veteran’s duty when he/she provided training as opposed to receiving it, see VAOPGCPREC 25-90.



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