--- title: "Part VI, Subpart iv, Chapter 2, Section B Paying Benefits to the Dependent(s) of an Incarcerated Veteran" document: "M-21-1" section: "Part VI, Subpart iv, Chapter 2, Section B" canonical: "https://veteranai.co/va-regulations/m21-1/vi.iv.2.b-paying-benefits-to-the-dependent-s-of-an-incarcerated" source: "https://www.knowva.ebenefits.va.gov/system/templates/selfservice/va_ssnew/help/customer/locale/en-US/portal/554400000001018/content/554400000207820/M21-1-Part-VI-Subpart-iv-Chapter-2-Section-B-Paying-Benefits-to-the-Dependents-of-an-Incarcerated-Veteran" updated: "2026-09-07T14:37:25.625297Z" --- March 9, 2026 ### VI.iv.2.B.1.a. Right of an Incarcerated Veteran’s Dependent(s) to Receive Pension [38 CFR 3.666]() requires the Department of Veterans Affairs (VA) to discontinue a Veteran’s disability pension effective the 61st day of incarceration following conviction of a felony or misdemeanor. However, this same regulation allows VA to pay pension to the Veteran’s spouse and/or child(ren) while the Veteran is incarcerated. **Exception:** VA may **_not_** pay pension to the dependent(s) of an incarcerated Veteran if * the Veteran is a fugitive felon, as defined in [38 CFR 3.666(e)(2)](), or * the dependent is * a fugitive felon, or * incarcerated for conviction of a felony or misdemeanor. **Notes:** * VA is responsible for notifying a Veteran of the right of any dependent(s) to receive pension at the same time it provides the Veteran with notice of the proposal to discontinue benefits due to incarceration. VA must concurrently notify the Veteran’s dependent(s) of the right to receive pension if * the evidence of record indicates the existence of an eligible dependent(s), and * VA is able to obtain contact information for the dependent(s). * Attach [_VA Form 21-0788, Information Regarding Apportionment of Beneficiary’s Award_](), to the Veteran’s notice and to the notice to the Veteran’s dependent(s). **Reference:** For more information about adjusting benefits based on a Veteran’s incarceration, see [M21-1, Part VI, Subpart iv, 1.A](). ### VI.iv.2.B.1.b. Form Claimants Must Submit to Request Payment of an Incarcerated Veteran’s Pension A claimant must submit [_VA Form 21-0788_]() to request payment of an incarcerated Veteran’s pension. **Notes:** * VA will accept a completed and signed [_VA Form 21-0788_]() from the individual requesting the apportionment of benefits or an individual acting on behalf of a minor child. The incarcerated Veteran may not submit the claim. * If a claimant requests payment of an incarcerated Veteran’s pension on anything other than [_VA Form 21-0788_](), treat the correspondence as a request for an application. **References:** For more information on * handling incomplete applications, see [M21-1, Part II, Subpart iii, 1.C.1](), and * the requirement for submission of [_VA Form 21-0788_]() by the individual requesting the apportionment, see * [38 CFR 3.450(c)](), and * [38 CFR 3.453(a)](). ### VI.iv.2.B.1.c. Determining the Entitlement of an Incarcerated Veteran’s Dependent(s) to Pension The entitlement of a Veteran’s dependent(s) to pension during the Veteran’s incarceration is based on the following factors: * except for the Veteran’s incarceration, the Veteran must otherwise remain eligible to receive pension, and * the Veteran’s dependent(s) must meet the income requirements for Survivors Pension (_without_ consideration of the Veteran’s income). ### VI.iv.2.B.1.d. Determining the Amount of Pension VA May Pay to the Dependent(s) of an Incarcerated Veteran [38 CFR 3.666(a)]() limits the amount of pension VA may pay to an incarcerated Veteran’s dependent(s) to the **_lesser_** of the following: * the amount of pension to which the Veteran was entitled before VA discontinued pension due to incarceration, or * the amount of Survivors Pension to which the dependent(s) would be entitled based on current income for VA purposes (IVAP). **Scenario:** * In February 2025, VA discontinued the payment of pension to a Veteran, effective January 10, 2025, due to his incarceration. Prior to this action, VA had been paying the Veteran $2,093.00 per month, based on annual IVAP of $0.00. This amount included additional benefits for a spouse and two children. * In March 2025, the Veteran’s spouse requested the payment of pension for herself and the two children during the Veteran’s incarceration. * The spouse’s and children’s annual IVAP is $0.00. **Result:** [38 CFR 3.666(a)]() limits the monthly amount of pension VA may pay to the spouse and children to $1,241.00. This represents the monthly amount of Survivors Pension to which the spouse would be entitled, which is also less than the monthly amount of pension to which the Veteran was entitled prior to incarceration.**Reference:** For more information on current Survivors Pension rates, see the current [Survivors Pension Rate Tables](). ### VI.iv.2.B.1.e. Determining the Effective Date of Entitlement and the Effective Date of Payment If VA receives a completed and signed [_VA Form 21-0788_]() within one year of the date VA notified the Veteran of the rights of any dependent(s) to receive pension during the Veteran’s incarceration, the effective date of entitlement, if entitlement exists, is the 61st day of incarceration. Otherwise, the effective date can be no earlier than the date VA receives the form. **Important:** * It is possible for some amount of time to pass between the 61st day of incarceration and the date VA discontinues an incarcerated Veteran’s pension. This delay may result in an overpayment of benefits to the Veteran. Although VA may find the dependent(s) of an incarcerated Veteran **_entitled_** to pension from the 61st day of incarceration, to avoid paying the dependent(s) benefits VA has already overpaid to the Veteran, VA must * ensure the effective date of **_payment_** of pension to the Veteran’s dependent(s) is no earlier than the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in the Veterans Benefits Management System (VBMS), and * follow the instructions in M21-1, Part VI, Subpart iv, 2.B.1.g to apply to the Veteran’s overpayment any pension due the Veteran’s dependent(s) for the period between the 61st day of incarceration and the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS. * Before applying benefits due the Veteran’s dependent(s) to the Veteran’s overpayment, ensure VA has not already recouped or waived the overpayment. * Process the payment of pension to an incarcerated Veteran’s dependent(s) under end product (EP) 130. **References:** For more information on * application of the policies described in this block, see M21-1, Part VI, Subpart iv, 2.B.1.h, and * the effective date of payment of pension to an incarcerated Veteran’s dependents, see [38 CFR 3.666(a)(4)](). ### VI.iv.2.B.1.f. Notice of Incarceration Received After Incarceration Has Ended If VA does not receive notice of a Veteran’s incarceration until _after_ incarceration has ended, and discontinuation of the Veteran’s benefits due to incarceration is otherwise in order, no pension is payable to the Veteran’s dependent(s). **Important:** VA may still award pension to the Veteran’s dependent(s) under these circumstances, but only for the purpose of reducing the overpayment resulting from retroactive discontinuance of the Veteran’s benefits due to incarceration. The Veteran’s dependent(s) will not receive any actual payments. ### VI.iv.2.B.1.g. Procedure for Reducing/ Eliminating an Overpayment Resulting From a Veteran’s Incarceration Follow the instructions in the table below to reduce or eliminate an _**existing**_ overpayment in a Veteran’s account when * the overpayment is the result of retroactive discontinuance of the Veteran’s benefits due to incarceration, and * the Veteran has a dependent or dependents that are entitled to the Veteran’s benefits during the period of incarceration. **Important:** The instructions presented in the table below are for application when a decision has been made to apportion an incarcerated Veteran’s _compensation or pension_ to any dependent(s).| **Step**| **Action** 1| Enter the decision to apportion benefits to the Veteran’s dependent(s) in the awards system. **Important:** To determine the effective date of payment of the apportionment, follow the instructions for * pension in M21-1, Part VI, Subpart iv, 2.B.1.e, or * compensation in M21-1, Part VI, Subpart iv, 2.B.2.d. 2| Generate the award to the apportionee(s) by clicking on the GENERATE AWARD button on the RECORD DECISIONS screen. 3| When the ADDRESS DISPLAY screen appears, * confirm or, if necessary, change the address of the apportionee(s), and * click on the CONTINUE GENERATION button. 4| When the CURRENT AND PROPOSED AWARD/AUTHORIZATION screen appears, * manually calculate the amount due the apportionee(s) from the effective date of payment to the first day of the current month, and * confirm that the net effect of the proposed award (as displayed in the title of the PROPOSED AWARD tab) matches the result of the manual calculation. **Important:** If award action is taken at the _end_ of the current month, the net effect of the proposed award will likely include benefits payable for the current month. 5| Click on the GENERATE AWARD OVERRIDE (GAO) button. 6| When the GENERATE AWARD OVERRIDE screen appears, select the first award line that falls within the period during which the overpayment resulting from the Veteran’s incarceration was created. 7| Click on the EDIT button. 8| When the OVERRIDE WORKSHEET screen appears, subtract from the amount shown in the INST ADJ field the monthly amount of the apportionment in effect as of the date of the award line that appears at the top of the screen. 9| Update the amount in the AMOUNT field (in the lower, right-hand corner of the OVERRIDE WORKSHEET screen) so that it matches the amount in the AWARD NET column in the award line that appears at the top of the same screen. 10| Search for the Veteran in the Enterprise Management of Payments Workload and Reporting for VA (eMPWR-VA). Select _Receivables_ from the drop-down menu on the TRANSACTION HISTORY screen. 11| Select the Veteran’s name in the BENEFICIARIES field to open the RECIEVABLE DETAILS screen. On the RECEIVABLE DETAILS screen, identify the row with a BEGIN DATE field that matches the effective date of the award line at the top of the OVERRIDE WORKSHEET screen in VBMS. 12| Confirm that the RECEIVABLE REASON field (on the RECEIVABLE DETAILS screen in eMPWR-VA for the row identified in Step 11) matches the reason displayed in the SELECTED REASONS field in the bottom, left-hand side of the OVERRIDE WORKSHEET screen in VBMS. If the reasons do **_not_** match, * remove the current reason in the SELECTED REASON field, and * select from the reasons displayed in the AVAILABLE REASONS field the reason that matches the RECEIVABLE REASON field shown in eMPWR-VA. **Important:** If the RECEIVABLE REASON field and the reason in the SELECTED REASON field do **_not_** match, the actions described in this table will **_not_** have the desired effect of reducing or eliminating the overpayment in the Veteran’s account. 13| Capture and associate with the claims folder a screenshot of the GENERATE AWARD OVERRIDE WORKSHEET screen associated with each overridden award line. **Example:** ![Image of a screenshot of the GENERATE AWARD OVERRIDE WORKSHEET screen](/img/cpkm/III.v.8.B.1.g_Step13.png) **Note:** When uploading the worksheet(s) to VBMS, use the following document properties: * SUBJECT: _GAO Worksheet_ , and * CATEGORY – TYPE: _Worksheet: User Calculations (Retroactive Payment, etc.)_. 14| Click on the ACCEPT button. 15| Are there additional award lines on the GENERATE AWARD OVERRIDE screen that fall within the period during which the overpayment resulting from the Veteran’s incarceration was created? * If _yes_ , * select the next award line on the GENERATE AWARD OVERRIDE screen, and * return to Step 7. * If _no_ , go to the next step. 16| In the REMARKS field on the GENERATE AWARD OVERRIDE screen, add the following text: _Performed award override to offset the overpayment in the Veteran’s account that was created as a result of the Veteran’s incarceration_. 17| Click on the GENERATE button. **Note:** The offset of the Veteran’s debt will be reflected in eMPWR-VA after authorization of the award action described in the table above. ### VI.iv.2.B.1.h. Example: Payment of Pension to the Dependents of an Incarcerated Veteran **Scenario:** * On September 1, 2024, VA receives notification of a Veteran’s incarceration for conviction of a felony. The 61st day of the Veteran’s incarceration was June 10, 2024. * VA has been paying the Veteran pension, to include additional benefits for his spouse and child. * On September 8, 2024, VA * sends notice of proposed adverse action to the Veteran, and * informs the Veteran of his dependents’ rights to receive pension while he is incarcerated. * On November 3, 2024, VA receives a [_VA Form 21-0788_]() from the Veteran’s spouse for the payment of pension for herself and her child. * On November 17, 2024, VA discontinues the Veteran’s pension effective June 10, 2024. VA concurrently * finds the Veteran’s spouse entitled to the payment of pension while the Veteran is incarcerated * applies the benefits to which the Veteran’s spouse is entitled for the period June 10, 2024, to November 1, 2024, to the overpayment resulting from the retroactive adjustment to the Veteran’s award, and * begins paying pension to the spouse effective November 1, 2024. **Note:** VA does not always discontinue a Veteran’s pension due to incarceration and process the payment of pension to the dependent(s) at the same time (as described in the example above). Often, VA does not receive a request for the payment of pension to the dependent(s) of an incarcerated Veteran until _after_ it has discontinued the Veteran’s benefits. If this were the case in the example above, the effective date of payment of pension to the Veteran’s spouse (November 1, 2024) would remain the same, as long as VA received the request before September 8, 2025. ### VI.iv.2.B.1.i. Notifying Dependents of the Temporary Nature of Entitlement When notifying a Veteran’s dependent of VA’s decision to pay pension during the Veteran’s period of incarceration, advise the dependent that * entitlement to the benefit is temporary, and * payments are subject to discontinuation without due process after incarceration ends. ### VI.iv.2.B.1.j. Discontinuing the Payment of Pension to a Veteran’s Dependent(s) After Incarceration Ends If VA receives notice that a Veteran’s incarceration has ended, and VA has been paying pension to the Veteran’s dependent(s) during incarceration, * discontinue the payment of pension to the Veteran’s dependent(s) effective the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS * for the period between the date incarceration ended and the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS, pay the Veteran the difference between * the full amount of pension to which the Veteran is entitled, and * the amount of pension VA paid to the dependents during the same period of time * resume payment of the full amount of pension to which the Veteran is entitled effective the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS, and * notify both the Veteran and the dependent(s) of the adjustments made to their individual awards, according to the instructions in [M21-1, Part VI, Subpart i, 1.B](). **Notes:** * VA does not require the submission of a specific form to * report that incarceration has ended, or * request a resumption of benefits after incarceration has ended. * If VA was paying a Veteran either Section 306 or Old Law Pension prior to incarceration, resume payment of the same benefit after incarceration ends if entitlement still exists. Do not switch the Veteran to current-law pension unless the Veteran specifically elects this benefit. * Because a Veteran’s dependent(s) has already been notified of the temporary nature of entitlement (in accordance with the instructions in M21-1, Part VI, Subpart iv, 2.B.1.i), there is no need to provide notice of proposed adverse action to the dependent(s) before making the adjustments described in this block. **Reference:** For more information about elections between VA benefits, see [M21-1, Part VI, Subpart ii, 1.A.2](). ### VI.iv.2.B.1.k. Example: Adjustments to Pension Awards After Incarceration Ends **Scenario:** * In May 2021, VA discontinued the payment of pension to a Veteran due to his incarceration for conviction of a felony. * The Veteran has a spouse and one child. VA has been paying pension to the Veteran’s spouse for herself and the child since shortly after the Veteran’s incarceration. * On February 3, 2025, VA received notice the Veteran had been released from prison on January 21, 2025. The full amount of pension payable to the Veteran at this time, based on the annual IVAP of his household and the number of dependents he has, is $775.00. * VA last paid pension to the Veteran’s spouse in the amount of $450.00 for the month of January 2025. **Actions:** * Discontinue the payment of pension to the Veteran’s spouse effective February 1, 2025. * Resume the payment of pension to the Veteran in the amounts and from the dates shown below. * $325.00 from January 21, 2025 (this represents the difference between the full rate of pension payable to the Veteran on this date and the amount of pension VA had been paying to the Veteran’s spouse each month), and * $775.00 from February 1, 2025. * Notify the Veteran and his spouse (in separate letters) of the adjustments made to their individual awards. ## 2. Apportioning an Incarcerated Veteran’s Compensation to Dependent(s) This topic contains information on apportioning an incarcerated Veteran’s compensation to dependent(s), including * right of an incarcerated Veteran’s dependent(s) to an apportionment * form claimants must submit to request apportionment of an incarcerated Veteran’s disability compensation * avoiding unnecessary apportionment development * determining the effective date of entitlement and the effective date of payment * notice of incarceration received after incarceration has ended * example of the apportionment of an incarcerated Veteran’s compensation * notifying dependents of the temporary nature of the apportionment * determining the amount of compensation to apportion to an incarcerated Veteran’s dependent, and * handling apportioned awards when incarceration ends. March 9, 2026 ### VI.iv.2.B.2.a. Right of an Incarcerated Veteran’s Dependent(s) to an Apportionment [38 CFR 3.665]() requires VA to reduce a Veteran’s disability compensation to the amount payable under [38 CFR 3.665(d)]() effective the 61st day of incarceration following conviction of a felony. However, this same regulation also allows VA to apportion all or part of the compensation no longer payable to the Veteran to a * spouse * child(ren), and/or * dependent parent(s). **Exception:** VA may **_not_** apportion compensation * to a Veteran’s dependent(s) if the Veteran is a fugitive felon, as defined in [38 CFR 3.665(n)(2)]() * if a claim is not filed _by a spouse or by/for a child_ * to any dependent who is * a fugitive felon * incarcerated for conviction of a felony, or * determined by VA to have been guilty of mutiny, treason, sabotage, or rendering assistance to an enemy of the U.S. or its allies, or * after September 1, 1959, if a Veteran, spouse, child, dependent parent, or other primary beneficiary * forfeited benefits due to fraud or a treasonable act, or * was convicted of subversive activity. **Notes:** * If an incarcerated Veteran received separation benefits that VA has not yet recouped in their entirety, see the notes in [M21-1, Part VI, Subpart iv, 1.A.4.c](). * VA is responsible for notifying a Veteran of the rights of any dependent(s) to an apportionment of the Veteran’s compensation at the same time it provides the Veteran with notice of the proposal to reduce benefits due to incarceration. VA must concurrently notify the Veteran’s dependent(s) of the right to an apportionment if * the evidence of record indicates the existence of an eligible dependent(s), and * VA is able to obtain contact information for the dependent(s). * Attach [_VA Form 21-0788_]() to the Veteran’s notice and to the notice to the Veteran’s dependent(s). **Reference:** For more information about adjusting benefits based on a Veteran’s incarceration, see [M21-1, Part VI, Subpart iv, 1.A](). ### VI.iv.2.B.2.b. Form Claimants Must Submit to Request Apportionment of an Incarcerated Veteran’s Disability Compensation Claimants must submit [_VA Form 21-0788_]() to request apportionment of a Veteran’s disability compensation. **Notes:** * VA will accept a completed and signed [_VA Form 21-0788_]() from the individual requesting the apportionment of benefits or an individual acting on behalf of a minor child. The incarcerated Veteran may not submit the claim * If a claimant requests apportionment of an incarcerated Veteran’s disability compensation on anything other than a [_VA Form 21-0788_](), treat the correspondence as a request for an application. **References:** For more information on * handling incomplete applications, see [M21-1, Part II, Subpart iii, 1.C.1](). * the requirement for submission of [_VA Form 21-0788_]() by the individual requesting the apportionment, see * [38 CFR 3.450(c)](), and * [38 CFR 3.453(a)](). ### VI.iv.2.B.2.c. Avoiding Unnecessary Apportionment Development It is not routinely necessary to provide notice of proposed adverse action or undertake development following receipt of a claim for apportionment associated with incarceration. Such actions are usually unnecessary and not required because the * notice of proposed adverse action issued for the incarceration adjustment will have informed the Veteran of eligible family members’ rights to an apportionment of benefits withheld due to incarceration * Veteran’s monthly rate of payment will not be adversely impacted by any apportionment authorized to the dependent(s), and * [ _VA Form 21-0788_]() required to request an apportionment will adequately portray factors material to apportionment consideration. **References:** For more information on * the regulatory authority for apportioning incarceration withholdings for Veterans in receipt of compensation, see [38 CFR 3.665(e)(l)](), and * handling notices a claims from beneficiaries and claimants regarding dependents, see [M21-1, Part VII, Subpart i, 1.A.4](). ### VI.iv.2.B.2.d. Determining the Effective Date of Entitlement and the Effective Date of Payment If VA receives a [_VA Form 21-0788_]() within one year of the date VA notified the Veteran of the rights of any dependent(s) to an apportionment during incarceration, the effective date of **_entitlement_** to the apportionment, if granted, is the 61st day of incarceration. Otherwise, the effective date can be no earlier than the date VA receives the claim. It is possible for some amount of time to pass between the 61st day of incarceration and the date VA actually adjusts the Veteran’s award based on incarceration. In most cases, this retroactive adjustment will result in the creation of an overpayment in the Veteran’s account. The existence of such an overpayment must be considered when determining the proper effective date of **_payment_** of the apportionment, as explained in the table below. **Note:** The instructions in the table below are based on an assumption that VA received the [_VA Form 21-0788_]() within one year of the date VA notified the Veteran of the rights of any dependent(s) to an apportionment. | **If ...**| **Then ...** an overpayment resulting from the Veteran’s incarceration remains in the account| to avoid paying the apportionee(s) benefits VA has already overpaid to the Veteran, * ensure the effective date of **_payment_** of the apportionment is no earlier than the first of the month following the month for which VA last paid the Veteran the _full_ rate of compensation, and * follow the instructions in M21-1, Part VI, Subpart iv, 2.B.1.g to apply to the Veteran’s overpayment, any benefit due the apportionee(s) for the period between the 61st day of incarceration and the first of the month following the month for which VA last paid the Veteran the _full_ rate of compensation. **Note:** The actual payment of VA benefits is always one month in arrears. For example, benefits due a beneficiary for the month of October are deposited at the end of October or the beginning of November. Using this example, “the first of the month following the month for which VA last paid the Veteran” would be November 1. no overpayment exists| the effective date of **_payment_** of the apportionment is the 61st day of incarceration. _**Reference**_ : For more information on the effective date of an apportionment of compensation associated with incarceration, see [38 CFR 3.665(f)](). ### VI.iv.2.B.2.e. Notice of Incarceration Received After Incarceration Has Ended If VA does not receive notice of a Veteran’s incarceration until _after_ incarceration has ended, and reduction of the Veteran’s benefits due to incarceration is otherwise in order, no apportionment of the Veteran’s benefits is **_payable_** to the Veteran’s dependent(s). **Important:** VA may still grant an apportionment of the Veteran’s benefits under these circumstances, but only for the purpose of reducing the overpayment resulting from retroactive reduction of the Veteran’s benefits due to incarceration (by means of procedures outlined in M21-1, Part VI, Subpart iv, 2.B.1.g). The Veteran’s dependent(s) will not receive any actual payments. **Exception:** Do **_not_** grant an apportionment under the circumstances described in this block if the justification for doing so is based solely on the policy expressed in the notes in [M21-1, Part VI, Subpart iv, 1.A.4.c](). ### VI.iv.2.B.2.f. Example: Apportionment of an Incarcerated Veteran’s Compensation **Scenario:** * On September 1, 2024, VA receives notification of a Veteran’s incarceration in a federal prison for conviction of a felony. The 61st day of incarceration was June 10, 2024. * The Veteran has multiple service-connected (SC) disabilities with a combined disability rating of 50 percent. He also has a wife and one child for whom he has been receiving additional compensation. * On September 8, 2024, VA sends notice of proposed adverse action to the Veteran and informs him of his dependents’ rights to an apportionment of his compensation. * On November 3, 2024, VA receives a [_VA Form 21-0788_]() from the Veteran’s spouse for an apportionment of the Veteran’s compensation. * On November 17, 2024, VA reduces the Veteran’s compensation to the rate payable for a disability rated 10-percent disabling, effective June 10, 2024. VA concurrently * finds the Veteran’s spouse entitled to an apportionment of the remaining amount of compensation to which the Veteran is not entitled due to his incarceration * applies the apportionment to which the Veteran’s spouse is entitled for the period June 10, 2024, to November 1, 2024, to the overpayment resulting from the retroactive adjustment to the Veteran’s award, and * processes an award to the Veteran’s spouse with an effective date of payment of November 1, 2024 (the first day of the month following the month for which VA last paid the Veteran his full rate of compensation). **Note:** VA does not always reduce a Veteran’s compensation due to incarceration and process a corresponding apportionment at the same time (as described in the example above). Oftentimes, VA does not receive a claim for an apportionment until _after_ it has reduced or discontinued the Veteran’s benefits. If this were the case in the example above, * the effective date of payment of the apportionment (November 1, 2024) would remain the same, as long as VA received the claim before September 8, 2025, and * procedures outlined in M21-1, Part VI, Subpart iv, 2.B.1.g would be used to reduce or eliminate any remaining overpayment resulting from the Veteran’s incarceration. ### VI.iv.2.B.2.g. Notifying Dependents of the Temporary Nature of the Apportionment When notifying a dependent of VA’s decision to grant an apportionment of an incarcerated Veteran’s benefits, advise the dependent that the apportionment is temporary and subject to discontinuation without due process after incarceration ends. ### VI.iv.2.B.2.h. Determining the Amount of Compensation to Apportion to an Incarcerated Veteran’s Dependent As provided in [38 CFR 3.665(e)(1)](), all of the compensation not paid to an incarcerated Veteran may be apportioned. * To determine the amount of compensation VA may apportion to the dependent(s) of an incarcerated Veteran, subtract the rate payable for a disability rating of 10 percent from the rate payable if the Veteran were _not_ incarcerated. * If the Veteran’s compensation is subject to withholding for the recoupment of separation benefits, see the notes in [M21-1, Part VI, Subpart iv, 1.A.4.c]() to determine the amount of compensation VA may apportion to the dependent(s) of an incarcerated Veteran. * When an incarcerated Veteran’s apportioned compensation benefits are subject to a cost-of-living adjustment (COLA), apply the COLA to the apportionee’s award. **Reference:** For more information on adjusting an award to reflect a COLA, see [M21-1, Part X, Subpart v, 2.C](). ### VI.iv.2.B.2.i. Handling Apportioned Awards When the Incarceration Ends When incarceration ends, take the actions described in the table below to discontinue the apportionment. | **Step**| **Action** 1| Discontinue the apportionment effective the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS. 2| Resume payment of the full amount of compensation to which the Veteran is entitled, minus any required withholdings, effective the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS. 3| Notify both the Veteran and the dependent(s) of the adjustments made to their individual awards, according to the instructions in [M21-1, Part VI, Subpart i, 1.B](). **Note:** Because a Veteran’s dependent(s) has already been notified of the temporary nature of the apportionment (in accordance with the instructions in M21-1, Part VI, Subpart iv, 2.B.2.g), there is no need to provide notice of proposed adverse action to the dependent(s) before discontinuing the apportionment when incarceration ends. ## 3. Incarcerated Veterans Entitled to Both Compensation and Pension This topic contains information about incarcerated Veterans who are entitled to both compensation and pension, including * paying compensation in lieu of pension during incarceration, and * resuming the benefits of a Veteran entitled to both compensation and pension when incarceration ends. March 9, 2026 ### VI.iv.2.B.3.a. Paying Compensation in Lieu of Pension During Incarceration [38 CFR 3.666]() requires VA to **_discontinue_** the payment of **_pension_** to a Veteran incarcerated for more than 60 days following conviction of a felony **_or misdemeanor_** , whereas [38 CFR 3.665]() requires VA to **_reduce_** the payment of **_compensation_** to a Veteran incarcerated for more than 60 days following conviction of a felony. Because the law allows Veterans entitled to compensation to continue receiving at least a portion of benefits during incarceration, compensation is often the greater benefit for Veterans entitled to both compensation and pension whose awards are subject to adjustment due to incarceration. Follow the instructions in the table below when * discontinuation of a Veteran’s pension due to incarceration is in order, and * the Veteran is entitled to both compensation and pension. | **If the Veteran has ...**| **Then ...** neither spouse nor child| begin paying the Veteran compensation at the rate specified in [38 CFR 3.665(d)]() effective the 61st day of incarceration. (No election is required under these circumstances, according to [38 CFR 3.666(d)]()). a spouse and/or child| * notify the Veteran of * the right of any dependent(s) to the payment of pension during the Veteran’s incarceration * the Veteran’s right to elect compensation, and * the effect the election would have on the amount of benefits payable to the Veteran and any dependent(s) during the Veteran’s incarceration, and * notify the Veteran’s dependent(s) of the right to receive pension if * the evidence of record indicates the existence of an eligible dependent(s), and * contact information for the dependent(s) is obtainable. **Notes:** * The notification referenced above should take place at the same time VA notifies the Veteran of the proposal to discontinue pension due to incarceration. * Do not begin paying the Veteran compensation unless the Veteran elects the benefit. * If the Veteran fails to make an election within the time period allotted for a response, discontinue benefits according to the notice of proposed adverse action. * If the Veteran elects compensation, award it effective the **_later_** of the following dates: * the date VA received the election, or * the 61st day of incarceration. **References:** For more information about * paying pension to a Veteran’s dependent(s) during the Veteran’s incarceration, see M21-1, Part VI, Subpart iv, 2.B.1, and * apportioning an incarcerated Veteran’s compensation to dependent(s), see M21-1, Part VI, Subpart iv, 2.B.2. **Important:** Do **_not_** reduce a Veteran’s **_compensation_** based on incarceration if the incarceration is for conviction of a **_misdemeanor_**. ### VI.iv.2.B.3.b. Resuming the Benefits of a Veteran Entitled to Both Compensation and Pension When Incarceration Ends If a Veteran entitled to both compensation and pension was receiving compensation in lieu of pension during incarceration, follow the instructions in the table below when incarceration ends. | **If ...**| **Then ...** compensation continues to be the greater benefit after incarceration ends| adjust the Veteran’s award according to the instructions in * [M21-1, Part VI, Subpart iv, 1.A.5](), and * M21-1, Part VI, Subpart iv, 2.B.2.i. * pension is the greater benefit after incarceration ends, and * VA was **_not_** apportioning the Veteran’s compensation to dependent(s) while the Veteran was incarcerated | follow the instructions in [M21-1, Part VI, Subpart iv, 1.A.5.d and e]() for selecting an effective date for resuming the payment of pension. * pension is the greater benefit after incarceration ends, and * VA was apportioning the Veteran’s compensation to dependent(s) while the Veteran was incarcerated * discontinue the apportionment to the Veteran’s dependent(s) effective the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS * for the period between the date incarceration ended and the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS, pay the Veteran the difference between * the full amount of pension to which entitled, and * the amount of the apportionment * resume payment of the full amount of pension to which the Veteran is entitled effective the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS, and * notify both the Veteran and the dependent(s) of the adjustments made to their individual awards, according to the instructions in [M21-1, Part VI, Subpart i, 1.B](). **Note:** Because a Veteran’s dependent(s) has already been notified of the temporary nature of the apportionment (in accordance with the instructions in M21-1, Part VI, Subpart iv, 2.B.2.g), there is no need to provide notice of proposed adverse action to the dependent(s) before reducing the apportionment when incarceration ends. **Reference:** For more information about elections between VA benefits, see [M21-1, Part VI, Subpart ii, 1.A.2](). **Notes:** * If VA was paying the Veteran either Section 306 or Old Law Pension prior to incarceration, resume payment of the same benefit when incarceration ends if entitlement still exists. Do not switch the Veteran to current-law pension unless the Veteran specifically elects this benefit. * VA does not require the submission of a specific form to * report that incarceration has ended, or * request a restoration of benefits to which the Veteran is otherwise entitled after incarceration has ended.