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



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7. Examples of Award Adjustments




Introduction

This topic contains examples of award adjustments necessitated by a Veteran’s receipt of drill pay, including award adjustments when


  • training is completed during a prior year

  • Veteran provides advance notice of training

  • VA increases the disability rating after the end of the fiscal year in question

  • VA increases the disability rating prior to the end of the fiscal year in question

  • 38 CFR 3.31 causes the effective date of the increase in compensation to fall after the end of the fiscal year

  • VA reduces the Veteran’s disability rating

  • Veteran returns to active duty during a period VA withheld or is withholding benefits

  • Veteran returns VA Form 21-8951 for multiple fiscal years

  • VA is withholding compensation in its entirety to recoup separation benefits, and

  • VA is withholding part of the Veteran’s compensation.



Change Date

April 20, 2015



a. Training Is Completed During a Prior Year

Scenario:

  • In January 2006, a Veteran with a 10-percent disability rating returns VA Form 21-8951 showing he attended 63 days of training during fiscal year 2001.

  • The earliest future date from which VA can make an award adjustment is February 1, 2006.

  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year 2001 (September 30, 2001) was $101.00.

  • The monthly rate of compensation payable to the Veteran on February 1, 2006, is $112.00.


Results:

  • VA reduces the Veteran’s compensation to $11.00 effective February 1, 2006. (This amount represents the difference between the monthly rate payable at the end of fiscal year 2001 and the monthly rate payable on February 1, 2006.)

  • VA resumes monthly payments of $112.00 effective April 4, 2006.



b. Veteran Provides Advance Notice of Training

Scenario:

  • In December 2005, a Veteran with a 10-percent disability rating submits VA Form 21-8951-2 showing she will attend 55 days of training during fiscal year 2006.

  • The earliest future date from which VA can make an award adjustment is January 1, 2006.

  • The monthly rate of compensation payable to the Veteran on January 1, 2006, is $112.00.


Results:

  • VA begins withholding all of the Veteran’s compensation effective January 1, 2006.

  • VA resumes monthly payments of $112.00, effective February 26, 2006.



c. VA Increases the Disability Rating After the End of the Fiscal Year in Question

Scenario:

  • In December 2005, VA increased a Veteran’s disability rating from 10 percent to 30 percent, effective December 1, 2001.

  • In January 2006, the Veteran returns VA Form 21-8951 showing he attended 63 days of training during fiscal year 2001.

  • The earliest future date from which VA can make an award adjustment is February 1, 2006.

  • As of the last day of fiscal year 2001 (September 30, 2001), VA was paying the Veteran $101.00 per month.

  • The Veteran has no dependents.

  • The monthly rate of compensation payable to the Veteran on February 1, 2006 is $337.00.


Results:

  • VA reduces the Veteran’s compensation to $236.00 per month effective February 1, 2006. (This amount represents the difference between the rate payable at the end of fiscal year 2001 and the rate payable on February 1, 2006.)

  • VA resumes monthly payments of $337.00 effective April 4, 2006.



d. VA Increases the Disability Rating Prior to the End of the Fiscal Year in Question

Scenario:

  • In December 2005, VA increased a Veteran’s disability rating from 10 percent to 30 percent, retroactive to April 1, 1999.

  • In January 2006, the Veteran returns VA Form 21-8951 showing she attended 63 days of training during fiscal year 2001.

  • The earliest future date from which VA can make an award adjustment is February 1, 2006.

  • The Veteran has no dependents.

  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year 2001 (September 30, 2001) was $298.00.

  • The monthly rate of compensation payable to the Veteran on February 1, 2006, is $337.00.


Results:

  • VA reduces the Veteran’s compensation to $39.00 per month effective February 1, 2006. (This amount represents the difference between the monthly rate payable on the last day of fiscal year 2001 and the monthly rate payable on February 1, 2006.)

  • VA resumes monthly payments of $337.00, effective April 4, 2006.



e. 38 CFR 3.31 Causes the Effective Date of the Increase in Compensation to Fall After the End of the Fiscal Year

Scenario:

  • In December 2005, VA increased a Veteran’s disability rating from 10 percent to 30 percent, effective September 15, 2001. The effective date of the increase in the Veteran’s compensation after application of 38 CFR 3.31 was October 1, 2001.

  • In January 2006, the Veteran returns VA Form 21-8951 showing he attended 63 days of training during fiscal year 2001.

  • The earliest future date from which VA can make an award adjustment is February 1, 2006.

  • The Veteran is married and has no other dependents.

  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year 2001 (September 30, 2001) for a 30-percent disability rating was $334.00.

  • The monthly rate of compensation payable to the Veteran on February 1, 2006, is $377.00.


Results:

  • VA reduces the Veteran’s compensation to $43.00 per month, effective February 1, 2006. (This amount represents the difference between the monthly rate payable on the last day of fiscal year 2001 and the monthly rate payable on February 1, 2006.)

  • VA resumes monthly payments of $377.00, effective April 4, 2006.


Rationale: Under 38 CFR 3.31, Veterans are in receipt of increased benefits on the effective date of the increased rating, even though the effective date of payment is not until the first of the following month. Accordingly, the monthly rate payable to the Veteran in this scenario, as of the end of fiscal year 2001, was $334.00, not $101.00.



f. VA Reduces the Veteran’s Disability Rating

Scenario:

  • Effective April 1, 2005, VA reduced a Veteran’s disability rating from 10 percent to 0 percent.

  • In January 2006, the Veteran returns VA Form 21-8951 showing she attended 55 days of training during fiscal year 2001.

  • The monthly rate of compensation payable to the Veteran on the last day of fiscal year 2001 (September 30, 2001) was $101.00.

  • The last award line before VA discontinued the Veteran’s compensation on April 1, 2005, shows a cost-of-living adjustment (COLA) to $108.00 on December 1, 2004.


Result:

  • VA creates an overpayment in the Veteran’s account by retroactively reducing her compensation to $7.00 effective December 1, 2004. (This amount represents the difference between the monthly rate payable on the last day of fiscal year 2001 and the monthly rate payable on December 1, 2004.)

  • VA resumes the $108.00 rate from January 26, 2005, to April 1, 2005.



g. Veteran Returns to Active Duty During a Period VA Withheld or Is Withholding Benefits

Scenario:

Part I:

  • In May 2012, a Veteran with a 10-percent disability rating returns VA Form 21-8951 showing he attended 64 days of training during fiscal year 2009.

  • The earliest future date from which VA can make an award adjustment is June 1, 2012.

  • The monthly rate of compensation payable to the Veteran

  • on the last day of fiscal year 2009 (September 30, 2009) was $123.00, and

  • between December 1, 2011, and December 1, 2012, is $127.00.


Results: VA reduces the Veteran’s award to $4.00 per month for the period June 1, 2012, through August 4, 2012. (This amount represents the difference between the monthly rate payable at the end of fiscal year 2009 and the monthly rate payable on June 1, 2012.)
Part II:

  • In September 2012, the Veteran informs VA he returned to active duty on July 1, 2012.

  • December 1, 2011, is the date of the most recent award line that both

  • precedes the date the Veteran returned to active duty, and

  • equals or exceeds $123.00.


Results: VA

  • discontinues the Veteran’s benefits effective July 1, 2012, and

  • issues notice of proposed adverse action to inform the Veteran VA intends to reduce his monthly benefit to $4.00 for the period December 1, 2011, through January 4, 2012.

  • This date range represents the 34-day period during which VA was unable to withhold benefits (from July 1, 2012, through August 4, 2012) because the Veteran is not entitled to VA benefits while on active duty.

  • Notice of proposed adverse action is necessary because the version date of the VA Form 21-8951 the Veteran submitted is earlier than February 2015.


Part III: The Veteran does not respond to the advance notice of adverse action.
Result: VA

  • reduces the Veteran’s monthly benefit to $4.00, effective December 1, 2011

  • resumes full payment of the Veteran’s benefits effective January 5, 2012, and

  • reexecutes the prior award adjustments that

  • reduced monthly benefits to $4.00 effective June 1, 2012, and

  • discontinued benefits effective July 1, 2012.



h. Veteran Returns VA Form 21-8951 for Multiple Fiscal Years

Scenario:

  • In March 2006, a Veteran with a 10-percent disability rating returns VA Form 21-8951 showing he attended 55 days of training during each of fiscal years 2002 and 2003.

  • The earliest future date from which VA can make an award adjustment is April 1, 2006.

  • The rate of compensation payable to the Veteran on

  • 2002 (September 30, 2002) was $103.00, and

  • 2003 (September 30, 2003) was $104.00, and

  • April 1, 2006, is $112.00


Results:

  • VA reduces the Veteran’s compensation to $9.00 effective April 1, 2006. The amount represents the difference between the rate payable at the end of fiscal year 2002 and the rate payable on April 1, 2006.

  • VA reduces the Veteran’s compensation to $8.00 effective May 26, 2006. This amount represents the difference between the rate payable at the end of fiscal year 2003 and the rate payable on April 1, 2006.

  • VA resumes monthly payments of $112.00 effective July 21, 2006.


i. VA Is Withholding Compensation in Its Entirety to Recoup Separation Benefits

Scenario:

  • In December 2006, VA

  • determines a Veteran is entitled to service connection for residuals of a broken wrist effective June 25, 2005, and

  • assigns the wrist a disability rating of 10 percent.

  • VA withheld all of the Veteran’s compensation because she received $38,000.00 in separation benefits that are subject to recoupment.

  • In June 2012, the Veteran returns VA Form 21-8951 showing she attended 63 days of training during fiscal year 2010.

  • The earliest future date from which VA can make an award adjustment is July 1, 2012.

  • The monthly rate of compensation payable for a disability rated 10-percent disabling is

  • $123.00 on the last day of fiscal year 2010 (September 30, 2010), and

  • $127.00 on July 1, 2012.


Results:

  • VA continues to withhold all of the Veteran’s compensation. However, effective July 1, 2012, VA withholds

  • $4.00 for recoupment of the Veteran’s separation benefits (This represents the difference between the rate payable at the end of fiscal year 2010 and the rate payable on July 1, 2012.), and

  • $123.00 to offset the Veteran’s receipt of drill pay, and

  • VA resumes the withholding of $127.00 for recoupment of the Veteran’s separation benefits effective September 4, 2012.


Reference: For instructions about withholding benefits for more than one purpose in

  • VETSNET, see the VETSNET Awards Handbook, or

  • VBMS, see the VBMS-Awards User Guide.



j. VA is Withholding Part of the Veteran’s Compensation to Recoup Separation Benefits

Scenario:

  • In January 2010, VA

  • grants a Veteran’s original claim for service connection, and

  • assigns the Veteran a disability rating of

  • The effective date of the rating is June 2, 2009.

  • The Veteran has no dependents.

  • VA pays the Veteran at the rate payable for a disability rated as 10 percent disabling and withholds the difference because the Veteran received disability severance pay (in the amount of $49,000.00) for depression.

  • In April 2013, the Veteran returns VA Form 21-8951 showing he attended 60 days of training during fiscal year 2011.

  • The earliest future date from which VA can make an award adjustment without creating an overpayment is May 1, 2013.

  • The monthly rate of compensation payable for a combined disability evaluation of 40 percent is $541.00 on the last day of fiscal year 2011 (September 30, 2011).

    Results:

  • Effective May 1, 2013, VA withholds

  • $541.00 from the Veteran’s award for the drill pay he received during fiscal year 2011, and

  • the balance of the Veteran’s award ($28.00) for recoupment of his disability severance pay.

  • VA resumes payment of $129.00 and the withholding of $440.00 (for recoupment of disability severance pay), effective July 1, 2013.



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