Part VI, Subpart iv, Chapter 2, Section BPaying Benefits to the Dependent(s) of an Incarcerated Veteran

Revised 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).

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.

2Apportioning 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.

Revised 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.

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.

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.

3Incarcerated 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.

Revised 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.

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.

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.