Revised March 9, 2026
X.v.2.C.1.aAdjusting an Award to Reflect a COLA
When the automated process of adjusting a beneficiary’s award to reflect a cost-of-living adjustment (COLA) fails, it will generate one of the following end products (EPs):
- 692 for compensation, Medal of Honor Pension, and Dependency and Indemnity Compensation (DIC) awards
- 600 for Pension and Parents’ DIC awards if a notice of adverse action prior to manual adjustment of COLA is required, or
- 696 for Pension and Parents’ DIC if no adverse action is needed.
Exception : If the EPs listed above were not established there may have been a Pension or Parent’s DIC related EP 150, 600, 696, or 130 pending at the time of the batch COLA process. Notes :
- EP 420 – CH 18 Increase Claim – Spina Bifida is established for COLA adjustments for Chapter 18 beneficiaries.
- The automated process will not establish both an EP 600 and an EP 696 for Pension and Parents’ DIC awards for the same COLA year.
Use the table below to determine the actions to take to manually process a COLA adjustment that was generated for the reason described in the preceding paragraphs.
| If a ... | Then ... |
|---|---|
Veterans Service Center is processing the EP 692 |
|
pension management center (PMC) is processing the EP 692 (for DIC beneficiaries only) |
|
PMC is processing the EP 696 that was automatically established (for pension and Parents’ DIC beneficiaries only) |
|
PMC is processing the EP 600 that was automatically established with automatic due process notification (for pension and Parents’ DIC beneficiaries only) |
|
Important:
-
Notifying the beneficiary of the action taken only requires a brief statement of the reason for the action (the legislative COLA), statement of the change in rate, and the date from which the new rate applies. Decision notice requirements from 38 CFR 3.103(f) are not required. Notification of an award to manually implement a COLA is not an adjudicative decision on a claim.
-
EP 130 is the appropriate EP for cases involving apportionments and other payee codes.
-
If, during PMC processing of a current-year automatic COLA, additional action is identified (such as prior year COLAs), the claims processor must address the issue(s).
X.v.2.C.1.bProcessing a COLA When an Automated EP Was Not Established
When the automated COLA for Pension or Parents’ DIC awards fails, and an automated EP listed in M21-1, Part X, Subpart v, 2.C.1.a, is not established, the claims processor must manually process a COLA adjustment under the pending EP or by establishing a new EP as described in the table below.A batch established Veteran level note will be added in the Veterans Benefits Management System (VBMS) that says, COLA claim was not established due to a pending Pension or Parents’ DIC related claim. Please review for potential COLA adjustments.Follow the table below for the proper EP to use and actions to take to manually process the failed COLA.
| If ... | Then ... |
|---|---|
EP 600 is pending for a separate reduction, and the failed COLA does not require additional due process |
|
EP 600 is pending for a separate reduction, and the failed COLA requires additional due process | Follow the table below. If due process ... Then ... |
has expired |
|
has not expired | follow the procedures in M21-1, Part X, Subpart ii, 3.A.3.e, to send a corrected notice of proposed adverse action that includes both issues. |
EP 600 is pending for a separate reduction, but the proposed actions are not warranted based on the response from the claimant and the failed COLA does not require due process | process both actions under the pending EP 600. |
EP 130 or EP 150 is pending and processing the failed COLA simultaneously will not cause a reduction |
|
EP 150 is pending, and processing the failed COLA simultaneously will cause a reduction |
|
EP 130 or 150 is pending but it is not a valid claim, and the failed COLA has not been processed |
|
Notes :
-
There should never be an EP 696 and/or pension EP 600 pending at the same time for the same beneficiary.
-
An EP 696 should never be cleared when processing a COLA when there is a valid EP 150, 130, or 600 pending for Pension or Parents’ DIC.
X.v.2.C.1.cCOLA Adjustments for Apportionments
All COLA adjustments for apportionments, minus the adjusted rate prescribed by regulation paid to the primary beneficiary, associated with incarceration or hospitalization of a primary beneficiary under 38 CFR 3.451 and M21-1, Part VI, Subpart iv, 2.A, will be applied to the apportionee(s). When there are multiple apportionments, divide the COLA equally to adjust the award for each apportionee. These increases must be processed manually, as discussed in M21-1, Part X, Subpart v, 2.C.1.a.Note : For legacy apportionments, only those apportionment decisions providing for increases in the amount of the apportionment each time the primary beneficiary receives a COLA will be adjusted. Such increases must also be processed manually.References : For more information on
- the definition of legacy apportionment, see M21-1, Part VI, Subpart iv, 2.C.1.a
- adjustments for legacy apportionments, see M21-1, Part VI, Subpart iv, 2.D, and
- rounding for fractions of cents associated with apportionments, see M21-1, Part VI, Subpart iv, 2.A.4.c.
End of Part X, Subpart v, Chapter 2, Section C