[Federal Register Volume 72, Number 190 (Tuesday, October 2, 2007)]
[Proposed Rules]
[Pages 56136-56154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-19280]



[[Page 56135]]

-----------------------------------------------------------------------

Part II





Department of Veterans Affairs





-----------------------------------------------------------------------



38 CFR Part 5



 Payments to Beneficiaries Who Are Eligible for More Than One Benefit; 
Proposed Rule

  Federal Register / Vol. 72, No. 190 / Tuesday, October 2, 2007 / 
Proposed Rules  

[[Page 56136]]


-----------------------------------------------------------------------

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 5

RIN 2900-AL95


Payments to Beneficiaries Who Are Eligible for More Than One 
Benefit

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Veterans Affairs (VA) proposes to reorganize 
and rewrite in plain language provisions applicable to payments to 
beneficiaries who are eligible for more than one benefit. These 
revisions are proposed as part of VA's rewrite and reorganization of 
all of its compensation and pension rules in a logical, claimant-
focused, and user-friendly format. The intended effect of the proposed 
revisions is to assist claimants, beneficiaries, and VA personnel in 
locating and understanding these rules.

DATES: Comments must be received by VA on or before December 3, 2007.

ADDRESSES: Written comments may be submitted through 
www.Regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (00REG), Department of Veterans Affairs, 810 Vermont Avenue, 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026 (not 
a toll free number). Comments should indicate that they are submitted 
in response to ``RIN 2900-AL95-Payments to Beneficiaries Who Are 
Eligible for More than One Benefit.'' Copies of comments received will 
be available for public inspection in the Office of Regulation Policy 
and Management, Room 1063B, between the hours of 8 a.m. and 4:30 p.m., 
Monday through Friday (except holidays). Please call (202) 273-9515 
(not a toll free number) for an appointment. In addition, during the 
comment period, comments may be viewed online through the Federal 
Docket Management System (FDMS) at www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: William F. Russo, Director, 
Regulations Management (00REG), Department of Veterans Affairs, 810 
Vermont Avenue, NW., Washington, DC 20420, (202) 273-9515 (not a toll 
free number).

SUPPLEMENTARY INFORMATION: The Secretary of Veterans Affairs has 
established an Office of Regulation Policy and Management to provide 
centralized management and coordination of VA's rulemaking process. One 
of the major functions of this office is to oversee a Regulation 
Rewrite Project (the Project) to improve the clarity and consistency of 
existing VA regulations. The Project responds to a recommendation made 
in the October 2001 ``VA Claims Processing Task Force: Report to the 
Secretary of Veterans Affairs.'' The Task Force recommended that the 
compensation and pension regulations be rewritten and reorganized in 
order to improve the VA's claims adjudication process. Therefore, the 
Project began its efforts by reviewing, reorganizing, and redrafting 
the content of the regulations in 38 CFR part 3 governing the 
compensation and pension program of the Veterans Benefits 
Administration. These regulations are among the most difficult VA 
regulations for readers to understand and apply.
    Once rewritten, the proposed regulations will be published in 
several portions for public review and comment. This is one such 
portion. It includes proposed rules regarding payment to beneficiaries 
who are eligible for more than one benefit. After review and 
consideration of public comments, final versions of these proposed 
regulations will ultimately be published in a new part 5 in 38 CFR.

Outline

Overview of New Part 5 Organization
Overview of This Notice of Proposed Rulemaking
Table Comparing Current Part 3 Rules With Proposed Part 5 Rules
Content of Proposed Regulations
Payments to Beneficiaries Who Are Eligible for More Than One 
Benefit--General Provisions
    5.740 Definitions relating to elections.
    5.741 Persons who may make an election.
    5.742 Finality of elections; cancellation of certain elections.
    5.743 General effective dates for awarding, reducing, or 
discontinuing VA benefits because of an election.
Payments From Service Departments and the Effects of Those Payments 
on VA Benefits for Veterans
    5.745 Entitlement to concurrent receipt of military retired pay 
and VA disability compensation.
    5.746 Prohibition against receipt of active military service pay 
and VA benefits for the same period.
    5.747 Effect of military readjustment pay, disability severance 
pay, and separation pay on VA benefits.
    5.748 Concurrent receipt of VA disability compensation and 
retirement pay by certain officers of the Public Health Service.
Payments From Federal Agencies and the Effects of Those Payments on 
VA Benefits for Veterans and Survivors
    5.750 Election between VA benefits and compensation under the 
Federal Employees' Compensation Act for death or disability due to 
military service.
    5.751 Election between VA benefits and compensation under the 
Federal Employees' Compensation Act for death or disability due to 
Federal civilian employment.
    5.752 Procedures for elections between VA benefits and 
compensation under the Federal Employees' Compensation Act.
    5.753 Payment of VA benefits and civil service retirement 
benefits for the same period.
    5.754 Effect of payment of compensation under the Radiation 
Exposure Compensation Act of 1990 on payment of certain VA benefits.
Rules Concerning the Receipt of Multiple VA Benefits
    5.756 Prohibition against concurrent receipt of certain VA 
benefits based on the service of the same veteran.
    5.757 Elections between VA disability or death compensation and 
pension.
    5.758 Electing Improved Pension instead of Old-Law Pension or 
Section 306 Pension.
    5.759 Election between death compensation and dependency and 
indemnity compensation.
    5.760 Electing Improved Death Pension instead of dependency and 
indemnity compensation.
    5.761 Concurrent receipt of disability compensation, pension, or 
death benefits by a surviving spouse based on the service of more 
than one veteran.
    5.762 Payment of multiple VA benefits to a surviving child based 
on the service of more than one veteran.
    5.763 Payment of multiple VA benefits to more than one child 
based on the service of the same veteran.
    5.764 Payment of Survivors' and Dependents' Educational 
Assistance and VA death pension or dependency and indemnity 
compensation for the same period.
Non-inclusion of Other Part 3 Provisions
Endnote Regarding Amendatory Language
Paperwork Reduction Act
Regulatory Flexibility Act
Executive Order 12866
Unfunded Mandates
Catalog of Federal Domestic Assistance Numbers and Titles
List of Subjects in 38 CFR Part 5

Overview of New Part 5 Organization

    We plan to organize the part 5 regulations so that most of the 
provisions governing a specific benefit are located in the same 
subpart, with general provisions pertaining to all compensation and 
pension benefits also grouped together. We believe this organization 
will enable claimants, beneficiaries, and their representatives, as 
well as VA personnel, to find information relating to a specific 
benefit more quickly than the organization provided in current part 3.
    The first major subdivision would be ``Subpart A--General 
Provisions.'' It would include information regarding the scope of the 
regulations in new part 5, general definitions, and general policy 
provisions for this part. This

[[Page 56137]]

subpart was published as proposed on March 31, 2006. See 71 FR 16464.
    ``Subpart B--Service Requirements for Veterans'' would include 
information regarding a veteran's military service, including the 
minimum service requirement, types of service, periods of war, and 
service evidence requirements. This subpart was published as proposed 
on January 30, 2004. See 69 FR 4820.
    ``Subpart C--Adjudicative Process, General'' would inform readers 
about types of claims and filing procedures, VA's duties, rights and 
responsibilities of claimants and beneficiaries, general evidence 
requirements, and effective dates for new awards, as well as revision 
of decisions and protection of VA ratings. This subpart will be 
published as three separate Notices of Proposed Rulemaking (NPRMs) due 
to its size. The first, concerning the duties of VA and the rights and 
responsibilities of claimants and beneficiaries, was published as 
proposed on May 10, 2005. See 70 FR 24680. The second, covering general 
evidence requirements, effective dates for awards, revision of 
decisions, and protection of VA ratings, was published as proposed on 
May 22, 2007 (AM01). See 72 FR 28770.
    ``Subpart D--Dependents and Survivors'' would inform readers how VA 
determines whether an individual is a dependent or a survivor of a 
veteran. It would also provide the evidence requirements for these 
determinations. This subpart was published as proposed on September 20, 
2006. See 71 FR 55052.
    ``Subpart E--Claims for Service Connection and Disability 
Compensation'' would define service-connected compensation, including 
direct and secondary service connection. This subpart would inform 
readers how VA determines entitlement to service connection. The 
subpart would also contain those provisions governing presumptions 
related to service connection, rating principles, and effective dates, 
as well as several special ratings. This subpart will be published as 
three separate NPRMs due to its size. The first, concerning 
presumptions related to service connection, was published as proposed 
on July 27, 2004. See 69 FR 44614.
    ``Subpart F--Nonservice-Connected Disability Pensions and Death 
Pensions'' would include information regarding the three types of 
nonservice-connected pension: Improved Pension, Old-Law Pension, and 
Section 306 Pension. This subpart would also include those provisions 
that state how to establish entitlement to Improved Pension, and the 
effective dates governing each pension. This subpart would be published 
in two separate NPRMs due to its size. The portion concerning Old-Law 
Pension, Section 306 Pension, and elections of Improved Pension was 
published as proposed on December 27, 2004. See 69 FR 77578.
    ``Subpart G--Dependency and Indemnity Compensation, Death 
Compensation, Accrued Benefits, and Special Rules Applicable Upon Death 
of a Beneficiary,'' would contain regulations governing claims for 
dependency and indemnity compensation (DIC); death compensation; 
accrued benefits; benefits awarded, but unpaid at death; and various 
special rules that apply to the disposition of VA benefits, or proceeds 
of VA benefits, when a beneficiary dies. This subpart would also 
include related definitions, effective-date rules, and rate-of-payment 
rules. This subpart was published as two separate NPRMs due to its 
size. The portion concerning accrued benefits, death compensation, 
special rules applicable upon the death of a beneficiary, and several 
effective-date rules, was published as proposed on October 1, 2004. See 
69 FR 59072. The portion concerning DIC benefits and general provisions 
relating to proof of death and service-connected cause of death was 
published as proposed on October 21, 2005. See 70 FR 61326.
    ``Subpart H--Special and Ancillary Benefits for Veterans, 
Dependents, and Survivors'' would pertain to special and ancillary 
benefits available, including benefits for children with various birth 
defects. This subpart was published as proposed on March 9, 2007. See 
72 FR 10860.
    ``Subpart I--Benefits for Certain Filipino Veterans and Survivors'' 
would pertain to the various benefits available to Filipino veterans 
and their survivors. This subpart was published as proposed on June 30, 
2006. See 71 FR 37790.
    ``Subpart J--Burial Benefits'' would pertain to burial allowances.
    ``Subpart K--Matters Affecting the Receipt of Benefits'' would 
contain provisions regarding bars to benefits, forfeiture of benefits, 
and renouncement of benefits. This subpart was published as proposed on 
May 31, 2006. See 71 FR 31056.
    ``Subpart L--Payments and Adjustments to Payments'' would include 
general rate-setting rules, several adjustment and resumption 
regulations, and election-of-benefit rules. Because of its size, 
subpart L will be published in two separate NPRMs. The portion of 
subpart L that concerns payments to beneficiaries who are eligible for 
more than one benefit is the subject of this NPRM.
    The final subpart, ``Subpart M--Apportionments to Dependents and 
Payments to Fiduciaries and Incarcerated Beneficiaries,'' would include 
regulations governing apportionments, benefits for incarcerated 
beneficiaries, and guardianship.
    Some of the regulations in this NPRM cross-reference other 
compensation and pension regulations. If those regulations have been 
published in this or earlier NPRMs for the Project, we cite the 
proposed part 5 section. We also include, in the relevant portion of 
the Supplementary Information, the Federal Register page where a 
proposed part 5 section published in an earlier NPRM may be found. 
However, where a regulation proposed in this NPRM would cross-reference 
a proposed part 5 regulation that has not yet been published, we cite 
to the current part 3 regulation that deals with the same subject 
matter. The current part 3 section we cite may differ from its eventual 
part 5 counterpart in some respects, but we believe this method will 
assist readers in understanding these proposed regulations where no 
part 5 counterpart has yet been published. If there is no part 3 
counterpart to a proposed part 5 regulation that has not yet been 
published, we have inserted ``[regulation that will be published in a 
future Notice of Proposed Rulemaking]'' where the part 5 regulation 
citation would be placed.
    Because of its large size, proposed part 5 will be published in a 
number of NPRMs, such as this one. VA will not adopt any portion of 
part 5 as final until all of the NPRMs have been published for public 
comment.
    In connection with this rulemaking, VA will accept comments 
relating to a prior rulemaking issued as a part of the Project, if the 
matter being commented on relates to both rulemakings.

Overview of This Notice of Proposed Rulemaking

    This NPRM pertains to payments to claimants and beneficiaries who 
are eligible for more than one VA benefit or one VA benefit in addition 
to certain benefits from other Federal agencies. These regulations 
would be contained in proposed Subpart L of new 38 CFR part 5. Although 
these regulations have been substantially restructured and rewritten 
for greater clarity and ease of use, most of the basic concepts 
contained in these proposed regulations are the same as in their 
existing counterparts in 38 CFR part 3. However, a few substantive 
differences are proposed, as are some regulations that

[[Page 56138]]

do not have counterparts in 38 CFR part 3.

Table Comparing Current Part 3 Rules With Proposed Part 5 Rules

    The following table shows the relationship between the current 
regulations in part 3 and the proposed regulations contained in this 
NPRM:

------------------------------------------------------------------------
                                            Based in whole or in part on
   Proposed part 5 section or paragraph       38 CFR part 3 section or
                                               paragraph (or ``New'')
------------------------------------------------------------------------
5.740--Election...........................  3.701(b).
5.740--Initial election...................  New.
5.740--Reelection.........................  New.
5.740--Timely filed.......................  3.750(b) [third sentence].
5.741(a)..................................  3.155(a), 3.701(b), 13.55,
                                             13.57, 13.58, 13.59, and
                                             New.
5.741(b)..................................  3.155(b), 3.701(b).
5.742(a)..................................  3.702(d)(1) [second
                                             sentence] and 3.711 [second
                                             sentence].
5.742(b)..................................  New.
5.742(c)..................................  3.702(d)(1) [last sentence]
                                             and New.
5.742(d) and (e)..........................  New.
5.743(a)..................................  3.400(j)(1).
5.743(b)..................................  3.500(e) [first sentence],
                                             (i), and (x).
5.745.....................................  3.401(e) and 3.750.
5.746(a)..................................  3.654(a) [second sentence]
                                             and 3.700(a)(1)(ii).
5.746(b)..................................  3.654(a) [first sentence]
                                             and 3.700(a)(1)(i).
5.746(c)..................................  3.501(a) and 3.654(b)(1).
5.746(d)(1)...............................  3.654(b)(2) [first
                                             sentence].
5.746(d)(2)(i)............................  New.
5.746(d)(2)(ii)...........................  3.654(b)(2) [third and
                                             fourth sentences].
5.746(d)(3)...............................  New.
5.746(d)(4)...............................  3.654(b)(2) [second
                                             sentence].
5.746(d)(5)...............................  3.654(b)(2) [last sentence].
5.746(e)..................................  3.654(c) and
                                             3.700(a)(1)(iii).
5.747(a)(1)...............................  3.700(a)(2)(iii) [first
                                             sentence].
5.747(a)(2)...............................  3.700(a)(2)(iv).
5.747(b)..................................  3.700(a)(3).
5.747(c)(1)...............................  3.700(a)(5)(i) [first
                                             sentence].
5.747(c)(2)...............................  3.700(a)(5)(ii).
5.747(d)..................................  3.700(a)(2)(iii), (a)(3),
                                             and (a)(5)(i).
5.748.....................................  3.753.
5.750(a)(1)...............................  3.708(a)(1) and (a)(4).
5.750(a)(2)...............................  3.708(a)(2).
5.750(a)(3)...............................  New.
5.750(b)..................................  3.708(a)(3).
5.751(a)(1)...............................  3.708(b)(1) [first
                                             sentence].
5.751(a)(2)...............................  3.708(b)(1) [second
                                             sentence] and 3.958.
5.751(b)..................................  3.708(b)(2).
5.751(c)..................................  3.708(b)(1) [second and
                                             third sentences (excluding
                                             intervening cross
                                             reference)].
5.751(d)..................................  New.
5.751(e)..................................  3.708(a)(3) and 3.708(b)(1)
                                             [last sentence].
5.752.....................................  New.
5.753.....................................  3.710.
5.754(a)..................................  New.
5.754(b) and (c)..........................  3.715.
5.754(d)..................................  3.500(x).
5.756.....................................  3.700 [introduction].
5.757(a)..................................  3.701(a) [sentences one and
                                             two].
5.757(b)..................................  3.701(a) [sentences one and
                                             two].
5.757(c)..................................  3.701(a) and New.
5.757(d)..................................  3.701(a) [first and third
                                             sentences].
5.757(e)(1)...............................  3.701(a) [first and fourth
                                             sentences].
5.757(e)(2)...............................  New.
5.757(e)(3)...............................  3.701(a) [fifth sentence].
5.758(a)..................................  3.711 [first sentence].
5.758(b)..................................  3.711 [last sentence].
5.758(c)..................................  3.960(a).
5.758(d)..................................  3.701(a) [fifth sentence].
5.759(a)(1)(i)............................  3.702(a).
5.759(a)(1)(ii)...........................  3.702(d)(1).
5.759(a)(2)...............................  3.702(a).
5.759(b)..................................  3.702(c).
5.760.....................................  3.702(d)(2) and New.
5.761.....................................  3.700(b)(1).
5.762(a), (b).............................  3.700(b)(2).
5.762(c)..................................  3.659, 3.703, and
                                             3.503(a)(7).
5.763.....................................  3.704(a).
5.764(a)..................................  3.503(a)(8), 3.659(b),
                                             3.703(c), 3.707(a), and
                                             21.3023.
5.764(b), (c), and (d)....................  3.707 and 21.3023.
------------------------------------------------------------------------

    Readers who use this table to compare existing regulatory 
provisions with the proposed provisions, and who observe a substantive 
difference between them, should consult the text that appears later in 
this document for an explanation of significant changes in each 
regulation. Not every paragraph of every current part 3 section 
regarding the subject matter of this rulemaking is accounted for in the 
table. In some instances, other portions of the part 3 sections that 
are addressed in these proposed regulations will appear in subparts of 
part 5 that are being published separately for public comment. For 
example, a reader might find a reference to paragraph (a) of a part 3 
section in the table, but no reference to paragraph (b) of that section 
because paragraph (b) will be addressed in a separate NPRM. The table 
also does not include provisions from part 3 regulations that will not 
be carried forward to part 5. Such provisions are discussed 
specifically under the appropriate part 5 heading in this preamble. 
Readers are invited to comment on the proposed part 5 provisions and 
also on our proposals to omit those part 3 provisions from part 5.

Content of Proposed Regulations

Payments to Beneficiaries Who Are Eligible for More Than One Benefit--
General Provisions

5.740 Definitions Relating to Elections
    Proposed Sec.  5.740 defines four terms applicable to elections. 
The first definition is of the term ``election.'' Current Sec.  
3.701(b) provides that VA may accept a statement meeting the 
requirements of an informal claim as an election. The requirements of 
an informal claim are contained in the first two sentences of current 
Sec.  3.155(a). They are, essentially, any communication or action from 
a claimant or certain other listed persons that indicates an intent to 
apply for one or more VA benefits and that identifies the benefit(s) 
sought. Additionally, current Sec.  3.1(p) requires that all claims be 
in writing.
    We believe that it would be clearer to define an election directly, 
rather than through a reference to informal claims. We also note that 
there is an element inherent in the concept of an ``election'' that is 
not necessarily present in an informal claim, the element of choice, 
and that in practice VA requires that an election be signed by a person 
with authority to make the election. Considering all of these factors, 
we propose to define an election as ``any writing, signed by a person 
authorized by Sec.  5.741, `Persons who may make an election,' 
expressing a choice between two or more VA benefits to which the person 
is entitled, or between VA and other Federal benefits to which the 
person is entitled.'' No substantive change is intended by this 
definition.
    The next two terms that are defined are ``initial election'' and 
``reelection.'' An initial election is the first election that a person 
authorized by Sec.  5.741 makes between two or more benefits. A 
reelection is a later, different election between benefits that were 
the subject of an initial election. We note that ``initial election'' 
and ``reelection'' are not defined in part 3. We think that adding 
these definitions in part 5 will prove

[[Page 56139]]

very helpful to the reader. The definitions are based on VA's current 
election regulations and no substantive change is intended.
    The last term defined is ``timely filed.'' We propose to state 
that, with respect to elections, ``timely filed'' means that a person 
authorized by Sec.  5.741 filed an election within 1 year of VA's 
notice that such an election is required. This definition is consistent 
with the definition of a ``timely filed'' election in current Sec.  
3.750(b). While that definition is in the context of an election 
between VA benefits and military retirement pay, the definition in fact 
applies to all elections. See 38 U.S.C. 5103(b), which provides that 
when VA notifies a claimant that information or evidence is necessary 
to substantiate a claim, such information or evidence must be received 
by VA within 1 year of the date such notice is sent.
5.741 Persons Who May Make an Election
    Proposed Sec.  5.741 describes persons who may make an election. 
Paragraph (a) lists persons who are authorized to sign an election. 
They include a claimant, a beneficiary, or a person authorized to act 
on behalf of a claimant or beneficiary. This list is based in part on 
current Sec.  3.155(a) and Sec.  3.701(b) and in part on long-standing 
VA practice. We have listed a beneficiary as a person authorized to 
sign an election, which is consistent with long-standing VA practice. 
We have also listed persons who are authorized to act on behalf of a 
claimant or beneficiary according to the requirements of certain VA 
regulations in part 13 of title 38 CFR, regarding fiduciaries. This is 
consistent with long-standing VA practice, and no substantive change is 
intended.
    Paragraph (b) of proposed Sec.  5.741 is also based on current 
Sec.  3.155(a), which states that Members of Congress or a claimant or 
beneficiary's duly authorized representative are able to file an 
informal claim. They are, therefore, able to communicate a claimant's 
or beneficiary's intent to elect a particular benefit, as per Sec.  
3.701(b). However, consistent with long-standing VA practice, they are 
not able to sign an election. Further, as stated in Sec.  3.155(b), a 
communication from certain representatives, namely a service 
organization, an attorney, or an agent, may not be accepted unless a 
power of attorney existed at the time the communication was written.
    In keeping with long-standing VA practice, paragraph (b) of 
proposed Sec.  5.741 states that VA will provide notice to the claimant 
or beneficiary of the right to make an election when it receives a 
communication from a Member of Congress or from a claimant or 
beneficiary's duly authorized representative. If VA receives an 
election signed by a person authorized to do so under Sec.  5.741(a) 
within 1 year of the notice, it will then consider the election to have 
been filed on the date it received the communication from the Member of 
Congress or the representative. These procedures are substantively 
consistent with rules in current Sec.  3.701(b), which permit VA to 
accept a statement meeting the requirements of an informal claim as an 
election, and in current Sec.  3.155, which permits VA to accept an 
informal claim from a Member of Congress or representative subject to 
confirmation through filing a benefit application within 1 year from 
the date VA sends the application. The end result would be the same 
under proposed Sec.  5.741(b) as it would be under current part 3 
rules; however, proposed Sec.  5.471(b) does not use the ``informal 
claim'' language, which lacks clarity in the context of benefit 
elections.
5.742 Finality of Elections; Cancellation of Certain Elections
    Proposed Sec.  5.742 states rules for determining when an election 
is ``final.'' As explained in the introductory paragraph of proposed 
Sec.  5.742, this section explains that a final election or reelection 
ordinarily may be changed only by cancellation under paragraph (d) or 
(e) of this section or by reelection, if authorized. The introductory 
paragraph also explains that other provisions of this part specify when 
reelection is authorized and when a final election or reelection is 
irrevocable.
    Provisions similar to proposed Sec.  5.742(a), (b), (d), and (e) 
were previously published as part of another part 5 NPRM, ``Elections 
of Improved Pension; Old-Law Pension and Section 306 Pension,'' which 
was published as proposed on December 27, 2004, 69 FR 77578. These 
provisions were contained in proposed Sec.  5.461(b). We now propose to 
remove that regulation (Sec.  5.461) and address these concepts in this 
NPRM in proposed Sec. Sec.  5.742 and 5.758 instead. This will help 
achieve consolidation of benefit election rules in this NPRM.
    Proposed Sec.  5.742(a) states that an election is final when a 
beneficiary (or someone authorized to act for the beneficiary under 
Sec.  5.741) has negotiated a check for the elected benefit. This is 
based on the last sentence of Sec.  3.702(d)(1) (which is applicable to 
elections of dependency and indemnity compensation (DIC)) and the 
second sentence of Sec.  3.711 (which is applicable to elections of 
Improved Pension). Although Sec.  3.702(d)(1) concerns DIC elections 
and Sec.  3.711 concerns pension elections, it is long-standing VA 
practice to apply this rule to other elections of benefits. We note 
that Sec.  3.711 refers to an exception to the rule that an election is 
final upon negotiation of a check. The exception is found in current 
Sec.  3.714. We have not included this exception in proposed Sec.  
5.742 because Sec.  3.714 is obsolete. VA proposed the removal of Sec.  
3.714 in a prior rewrite package (``Elections of Improved Pension; Old 
Law and Section 306 Pension,'' RIN 2900-AL83). See 69 FR 77578, 77587.
    The vast majority of VA beneficiaries now receive benefits by 
direct deposit or electronic funds transfer rather than by check. In 
such cases the rule regarding negotiating a check in proposed Sec.  
5.742(a) could not apply. To cover benefits received by direct deposit 
or electronic funds transfer, we have proposed new Sec.  5.742(b), 
which states that elections by beneficiaries who receive benefits by 
direct deposit or electronic funds transfer are final when the 
applicable financial institution receives the second payment of the 
elected benefit. This is consistent with long-standing VA practice. The 
reasoning is that a deposit in the beneficiary's account serves as 
notice that the elected benefits are being paid, just as receipt of a 
check is notice that the elected benefits are being paid.
    Proposed Sec.  5.742(c) provides a general rule that an election is 
final if the payee dies before negotiating a check or before receiving 
a second payment by direct deposit or electronic funds transfer. It is 
derived from the more specific provision contained in the last sentence 
of Sec.  3.702(d)(1), which states that an election of DIC is final 
even if the payee dies before negotiating a check. This expansion of 
the rule from Sec.  3.702(d)(1) is consistent with long-standing VA 
practice and allows for the orderly and consistent administration of 
payments to the estates of deceased beneficiaries. In proposed Sec.  
5.742(c), we have also added a provision addressing direct deposit and 
electronic funds transfer, which we have added to be consistent with 
proposed Sec.  5.742(b).
    Proposed Sec.  5.742(d) states that if VA determines that a 
beneficiary was incompetent when he or she elected a benefit, the 
election can be canceled. This is consistent with long-standing VA 
practice and helps ensure that incompetent beneficiaries receive all 
the benefits to which they are entitled under the law.

[[Page 56140]]

    Proposed Sec.  5.742(e) states that a beneficiary can cancel an 
election if he or she made the election based on erroneous information 
that was provided by VA. However, VA must determine that the 
information was erroneous based on the same evidence of record used 
previously to provide the erroneous information. One example of this 
rule's application would be if VA mistakenly informed a claimant or 
beneficiary that he or she would be entitled to a higher rate if a 
particular benefit were elected and then later determines that this was 
not the case (based on the same evidence of record at the time that VA 
mistakenly informed the claimant or beneficiary of his or her 
entitlement to a higher rate). This is consistent with long-standing VA 
practice and helps ensure that beneficiaries are not unfairly deprived 
of VA benefits.
    Note that when provisions similar to Sec.  5.742(d) and (e) were 
previously proposed as Sec.  5.461(b)(2) and (3), they provided that a 
request to cancel the election must be received within 1 year from the 
date that the election had become effective. Following internal 
reconsideration of this provision, we have determined that this 
limitation might be overly narrow in some cases. Therefore, proposed 
Sec.  5.742(d) and (e) contain no such limitation.
5.743 General Effective Dates for Awarding, Reducing, or Discontinuing 
VA Benefits Because of an Election
    Proposed Sec.  5.743(a) is based on current Sec.  3.400(j)(1), 
which states the general effective date rule for elections. (Other part 
5 provisions may contain specific additional effective date rules.) 
Under current Sec.  3.400(j)(1), unless otherwise provided, the 
effective date of an award of elected VA benefits is ``the date of 
receipt of election, subject to prior payments.'' The effective date is 
``subject to prior payments'' in order to avoid impermissible 
concurrent payment of benefits which a beneficiary cannot lawfully 
receive for the same time period. This could potentially occur when a 
person receiving Benefit A elects to receive Benefit B instead, and the 
award of Benefit B is retroactive for some period of time. Because 
Benefit A and Benefit B cannot be received for the same time period, VA 
would offset the payments already issued for Benefit A against the 
amount payable for Benefit B. Proposed paragraph (a)(2) provides for 
this offset. The reader should note that no substantive change is 
intended in paragraph (a)(2). The offset is provided for in current 
Sec.  3.400(j)(1), and proposed Sec.  5.743(a)(2) merely explains it in 
more detail.
    Section 3.400(j)(1) covers situations where a beneficiary elects a 
different benefit. It does not address situations where a claim is 
pending and an election is timely filed under Sec.  5.740(d). In such 
cases, VA's long-standing practice has been to assign an effective date 
that is the same as the effective date VA would assign for the awarded 
benefit if no election were required. We have added such language to 
Sec.  5.743(a) to address such situations.
    Paragraph (b) provides the effective date for reduction or 
discontinuance when VA reduces or discontinues a benefit because 
another benefit is elected. It is based on current Sec.  3.500(e) 
(first sentence), pertaining to Federal employees' compensation, Sec.  
3.500(i), pertaining to elections in general, and Sec.  3.500(x), 
pertaining to the Radiation Exposure Compensation Act of 1990. We have 
consolidated these three effective date provisions in proposed Sec.  
5.743(b). We note that part 3 regulations provide effective dates for 
reductions and discontinuances of VA benefits in terms of the last date 
of entitlement to payment at the previous rate. We believe that it is 
clearer to state that the effective date for a reduction or 
discontinuance is the first day of payment of the new reduced rate or 
``no-pay date,'' rather than as the last day of the old rate. This 
approach is consistent throughout the rewrite project. We have taken 
that approach in proposed paragraph (b).

Payments From Service Departments and the Effects of Those Payments on 
VA Benefits for Veterans

5.745 Entitlement to Concurrent Receipt of Military Retired Pay and VA 
Disability Compensation
    Proposed Sec.  5.745 pertains to the concurrent receipt of military 
retirement pay and VA disability compensation. It closely follows the 
language of current Sec.  3.750, which was recently amended. No 
substantive changes are proposed.
    Section 3.401(e) contains the effective date rules for elections 
between military retirement pay and VA disability compensation. We have 
incorporated these provisions into Sec.  5.745(e). No substantive 
change is intended.
5.746 Prohibition Against Receipt of Active Military Service Pay and VA 
Benefits for the Same Period
    Proposed Sec.  5.746(a) defines active military service pay. It is 
based on current Sec.  3.654(a) and Sec.  3.700(a)(1)(ii). We propose 
to state ``active military service pay'' rather than ``active service 
pay'' for clarity. No substantive change is intended.
    Proposed Sec.  5.746(b) states the general rule that VA will not 
pay disability compensation or pension for any period in which the 
veteran received active military service pay. It is based on Sec.  
3.700(a)(1)(i) and the first sentence of Sec.  3.654(a). However, we 
have not included the reference to ``retirement pay'' found in current 
Sec. Sec.  3.654(a) and 3.700(a)(1)(i), since VA does not administer 
any veteran's benefit titled ``retirement pay.'' VA previously paid 
emergency officers' retirement pay (EOR), which is no longer a viable 
benefit. Therefore, references to EOR would not be carried forward to 
new part 5. Although military retirement pay may also be discontinued 
when a veteran returns to active duty, VA does not administer that 
benefit.
    Proposed Sec.  5.746(c) states the effective date of discontinuance 
of payments for VA benefits during active duty status. It is based on 
current Sec. Sec.  3.501(a) and 3.654(b)(1). We propose to state that 
VA will discontinue payments ``effective the day the veteran begins 
active duty service.'' This is consistent with our proposal throughout 
the Rewrite Project to state effective dates for discontinuances as the 
actual day payment stops, rather than the last day benefits are paid.
    Title 10 U.S.C. 12316 gives veterans who return to active duty the 
right to continue to receive VA compensation or pension rather than 
active duty pay. This principle is not stated in current Sec.  3.654 
but we believe it is important for veterans to be aware of this right. 
Accordingly, we have included this information in proposed Sec.  
5.746(c).
    Proposed Sec.  5.746(d) concerns the resumption of payments for VA 
benefits after release from active duty. It is based on current Sec.  
3.654(b)(2). Current Sec.  3.654(b)(2) provides that compensation will 
be authorized based on the degree of disability found to exist at the 
time the award is resumed, and that the disability will be evaluated on 
the basis of all facts, including records from the service department 
relating to the most recent period of active service. The practical 
consequence of this is that while the effective date for the resumption 
of payments can be as early as the day following release from active 
duty, the award that will generate those payments can be delayed while 
VA evaluates the degree of current disability.
    In some cases, however, it might be clear from the record that the 
degree of impairment resulting from a service-connected disability had 
already become ``static'' when the veteran returned to active duty. A 
``static'' disability is one that has stabilized and

[[Page 56141]]

is unlikely to either progress or improve. For example, the impairment 
resulting from an injury may remain permanently the same after the 
injury has fully healed. In the case of such static service-connected 
disabilities, the processing of resumed payments need not be delayed to 
reassess current impairment because impairment is not expected to 
change.
    Accordingly, we propose to provide in proposed Sec.  5.746(d)(2)(i) 
that VA will resume payments for service-connected disabilities at the 
same disability level that was in effect immediately prior to entering 
active duty if the evidence of record shows that the level of 
disability was static at the time of entry. This proposed provision is 
consistent with long-standing VA practice and prevents unnecessary 
delays in resuming VA disability compensation payments for veterans 
returning from military service where the degree of impairment for a 
service-connected disability is already known. This would not preclude 
the veteran from requesting an increase if he or she believed the 
disability had worsened. As provided in proposed Sec.  5.746(d)(2)(ii), 
other disabilities (which may have gotten better or worse during the 
period of active duty) would continue to be evaluated before resumed 
payments are awarded.
    Proposed new Sec.  5.746(d)(3) clarifies how the provisions of 
current Sec.  3.31, concerning delayed beginning dates for certain VA 
benefit payments, applies to payments resumed under Sec.  5.746(d). 
With one exception, Sec.  3.31 does not apply because its application 
is limited to ``original, reopened, or increased awards'' and does not 
apply to awards that ``provide only for continuity of entitlement with 
no increase in rate of payment.'' See Sec.  3.31(b). The exception is 
that Sec.  3.31 does apply to the portion of the payment that 
represents the amount of the increase if the disability evaluation is 
increased.
    Members of the Reserves and National Guard cannot receive both 
training pay and VA compensation or pension payments at the same time. 
However, they may waive their VA benefits in order to receive their 
training pay, which may be a greater amount. Proposed Sec.  5.746(e) 
combines and updates the rules relating to waiver of VA benefits while 
on training duty that are located in current Sec. Sec.  3.654(c) and 
3.700(a)(1)(iii). We have omitted a now obsolete reference to 
``retirement pay'' for the reasons noted above. We have clarified that 
the waivers apply to pay received by Reservists and National Guard 
members for active duty for training or inactive duty for training and 
included a cross reference to Sec.  5.23, which explains how VA 
classifies Reserve and National Guard duty. (The text of proposed Sec.  
5.23 may be found at 69 FR 4833.) We have also clarified that while VA 
does continue to accept prospective waivers, each waiver is good for 
not more than 1 year. In most cases, VA generates annual waiver forms 
to send to veterans based upon training duty data provided by the 
Department of Defense.
5.747 Effect of Military Readjustment Pay, Disability Severance Pay, 
and Separation Pay on VA Benefits
    Proposed Sec.  5.747 is derived from current Sec.  3.700(a)(2) 
through (5). We propose not to repeat current Sec.  3.700(a)(2)(i) and 
(ii), concerning readjustment pay under former 10 U.S.C. 687 and 3814, 
because they are no longer necessary. These sections of title 10, 
United States Code, were repealed by Sec. Sec.  109(a) and 214 of the 
Defense Officer Personnel Management Act (the Act) in 1980. Public Law 
96-513, 94 Stat. 2835, 2870 and 2885. The repeal was effective 
September 15, 1981. Public Law 96-513, section 701(a), 94 Stat. 2955.
    Although a savings provision was included in the Act, which allows 
persons who were on active duty on September 14, 1981, and were 
subsequently involuntarily separated from service, to elect payment 
under repealed 10 U.S.C. 687 and 3814, it is unlikely that there are 
still any eligible recipients. Therefore it is unlikely that the 
application of Sec.  3.700(a)(2)(i) and (ii) would be required under 
proposed new part 5. Should that be necessary in a specific case, VA 
may always proceed under the applicable statutes.
    Proposed Sec.  5.747(a) pertains to lump-sum readjustment pay. 
Paragraph (a)(1) of proposed Sec.  5.747 repeats nearly verbatim the 
first sentence of current Sec.  3.700(a)(2)(iii). It describes the 
recoupment of lump-sum readjustment from VA compensation. Paragraph 
(a)(2) is derived from 3.700(a)(2)(iv), and describes the prohibition 
against recoupment of lump-sum readjustment pay from VA compensation 
awarded for a subsequent period of service.
    Proposed Sec.  5.747(b) is derived from current Sec.  3.700(a)(3) 
and restates the conditions under which VA will recoup disability 
severance pay from a subsequent award of VA disability compensation. We 
have not included provisions regarding nondisability severance pay 
because it is highly unlikely that there will be any remaining eligible 
recipients. Nondisability severance pay was authorized under former 10 
U.S.C. 8786, which was repealed by the Act in 1980. Although the 
savings provision allows personnel who were on active duty on September 
14, 1981, to be awarded nondisability severance pay, it is highly 
unlikely that it would still be awarded, since, due to the passage of 
time, such personnel would now be eligible for retirement benefits. The 
purpose of nondisability severance pay was to provide for service 
members who were involuntarily separated from the military prior to 
eligibility for retirement benefits. Now that these personnel would 
more than likely be eligible for retirement benefits, we believe a 
regulation pertaining to nondisability severance pay is no longer 
necessary.
    We note that Sec.  3.700(a)(3) indicates that VA will recoup the 
total amount of disability severance pay from an award of VA 
compensation when entitlement to VA compensation was established on or 
after September 15, 1981, even if the award for VA compensation is not 
for the same disability for which disability severance pay was granted. 
While this may be true for recoupment of nondisability severance pay, 
this proposed rule would explain that it is not true for disability 
severance pay. Under 10 U.S.C. 1212(c), VA must only recoup disability 
severance pay from VA compensation when the VA compensation is for the 
same disability for which disability severance pay was granted.
    The current regulation reflects an ambiguity existing between two 
statutes. Section 1212(c) permits VA to recoup disability severance pay 
from VA compensation when the VA compensation is for the same 
disability for which disability severance pay was granted. However, 10 
U.S.C. 1174(h)(2) states more broadly that if a veteran received 
separation pay, severance pay, or readjustment pay under any provision 
of law based on service in the armed forces, VA must deduct the ``total 
amount'' of such payment from VA disability compensation payments to 
the veteran. The current provision in section 3.700(a)(3) may suggest 
the view that the general rule stated in section 1174(h)(2) supersedes 
the more specific, but earlier-enacted rule in section 1212(c). 
However, the Supreme Court has stated that ``it is a commonplace of 
statutory construction that the specific governs the general.'' Morales 
v. TWA, 504 U.S. 374, 384 (1992). Further, section 1161 of title 38, 
United States Code, which governs VA disability compensation awards, 
continues to refer to 10 U.S.C. 1212(c), rather than 10 U.S.C. 
1174(h)(2), as the statute governing payment of disability compensation 
in cases involving

[[Page 56142]]

disability severance pay. Accordingly, the provision in this proposed 
rule that VA will recoup disability severance pay from VA disability 
compensation only where both awards involve the same disability more 
accurately reflects the requirements of the governing statutes. For the 
reasons stated above, provisions regarding nondisability severance pay 
are no longer necessary and are not included in proposed Sec.  5.747.
    Proposed Sec.  5.747(c) pertains to recoupment of separation pay 
and special separation benefits. Paragraph (c)(1) of proposed Sec.  
5.747 repeats nearly verbatim the first sentence of current Sec.  
3.700(a)(5)(i). It describes the recoupment of separation pay from VA 
compensation. Paragraph (c)(2) of proposed Sec.  5.747 is derived from 
current Sec.  3.700(a)(5)(ii), and describes the prohibition against 
recoupment of separation pay from VA compensation awarded for a 
subsequent period of service.
    Proposed Sec.  5.747(d) states the amount VA must recoup from VA 
disability compensation for lump-sum readjustment pay, disability 
severance pay, separation pay, or special separation benefits paid to 
veterans upon their separation from service. It consolidates portions 
of current Sec. Sec.  3.700(a)(2)(iii), (a)(3), and (a)(5)(i).
    There is one change concerning the amount of special separation 
benefits awarded under 10 U.S.C. 1174a that VA must recoup. Current 
Sec.  3.700(a)(5) provides, in part, that VA will recoup the full 
amount of special separation benefits paid on or before September 30, 
1996, but will reduce the amount recouped by the amount of Federal 
income tax withheld from special separation benefits paid after 
September 30, 1996. That was accurate at the time that Sec.  
3.700(a)(5) was drafted. However, section 8208 of the Transportation 
Equity Act for the 21st Century, Public Law 105-178, 112 Stat. 107, 495 
(1998), extended the provision allowing the deduction of Federal income 
tax withholding back to December 5, 1991, the date that section 1174a 
was added to title 10, United States Code. Public Law 102-190, section 
661(a)(1), 105 Stat. 1290, 1394 (1991). Thus, the deduction of Federal 
income tax withheld from the amount VA must recoup applies to all 10 
U.S.C. 1174a special separation benefits. Proposed Sec.  5.747(d)(2) 
reflects this change.
5.748 Concurrent Receipt of VA Disability Compensation and Retirement 
Pay by Certain Officers of the Public Health Service
    Proposed Sec.  5.748 is based on current Sec.  3.753 with no 
substantive change. We have added authority citations.

Payments From Federal Agencies and the Effects of Those Payments on VA 
Benefits for Veterans and Survivors

5.750 Election Between VA Benefits and Compensation Under the Federal 
Employees' Compensation Act for Death or Disability Due to Military 
Service
    Proposed Sec.  5.750 is based on current Sec.  3.708(a), pertaining 
to benefits payable under the Federal Employees' Compensation Act 
(FECA), based on service in the U.S. Armed Forces before January 1, 
1957. (FECA compensation is also payable based on Federal civilian 
employment, which is the subject of proposed Sec.  5.751.) Paragraph 
(a)(1) of proposed Sec.  5.750 is based on current Sec.  3.708(a)(1) 
and (a)(4). Current Sec.  3.708(a)(1) is entitled ``initial election.'' 
We have changed this to ``election required,'' because ``initial 
election'' might imply that a reelection is possible. Under 5 U.S.C. 
8116(b), however, an election between VA benefits and FECA compensation 
generally is irrevocable and thus is not subject to a subsequent 
reelection (with an exception noted in proposed Sec.  5.750(a)(2)). 
Thus, the title has been changed to ``election required.'' In addition, 
we have added a provision indicating that an election between VA 
benefits and FECA compensation is irrevocable, aside from the exception 
provided for in proposed Sec.  5.750(a)(2). We believe that providing 
this clarification will be helpful to the reader. No substantive change 
is intended.
    Paragraph (a)(2) of proposed Sec.  5.750 is based on current Sec.  
3.708(a)(2). We have changed the heading from ``right of reelection'' 
to ``right to elect DIC in lieu of FECA compensation at any time.'' We 
believe the heading ``right of reelection'' is too broad, and may imply 
that any election involving FECA compensation is subject to reelection. 
As noted above, this is not the case. We believe the new, more specific 
heading, is more accurate and more helpful to the reader. No 
substantive change is intended. The basis for allowing a one-time 
election of DIC is the statutory provision under 38 U.S.C. 1316, which 
prohibits any return to FECA compensation once DIC has been granted.
    Paragraph (a)(3) of proposed Sec.  5.750 provides that if a veteran 
makes an election of FECA compensation instead of VA disability 
compensation for a particular disability, and the veteran subsequently 
is awarded increased VA compensation based on a subsequent increased 
impairment of that disability, the veteran may elect to receive FECA 
compensation or VA compensation as to that additional disability. The 
basis for this policy is that the increase in payment is considered a 
new award that is subject to an initial election.
    Paragraph (b) of proposed Sec.  5.750 is based on current Sec.  
3.708(a)(3), and involves the effect of a surviving spouse's election 
of FECA compensation or VA benefits on the rights of children. We have 
divided the provisions of current Sec.  3.708(a)(3) into proposed Sec.  
5.750(b)(1) and (b)(2). Proposed Sec.  5.750(b)(1) addresses situations 
where the rights of the child are controlled by the surviving spouse. 
Proposed Sec.  5.750(b)(2) addresses situations where the rights of the 
child are independent of the surviving spouse.
    We have added an authority citation at the end of proposed Sec.  
5.750, which includes section 8116(b) of title 5, United States Code, 
which is the statute governing elections between VA benefits and FECA 
compensation, section 501(a) of title 38, United States Code, which is 
the statute authorizing the Secretary of VA to prescribe regulations 
that are necessary or appropriate to carry out the laws administered by 
VA, and section 1316(b) of title 38, United States Code, which is the 
statute pertaining to elections between DIC and FECA compensation.
5.751 Election Between VA Benefits and Compensation Under the Federal 
Employees' Compensation Act for Death or Disability Due to Federal 
Civilian Employment
    Proposed Sec.  5.751 is based primarily on current Sec. Sec.  
3.708(b) and 3.958, regarding FECA compensation for death or disability 
due to Federal civilian employment. However, paragraph (d) of proposed 
Sec.  5.751 is new.
    Proposed Sec.  5.751(a)(1) is based on current Sec.  3.708(b)(1), 
and states the requirement that an individual must make an election 
between FECA compensation and VA disability compensation or dependency 
and indemnity compensation (DIC) if both FECA compensation and VA 
benefits are awarded based on the same disability or death.
    Proposed Sec.  5.751(a)(2) is based on current Sec. Sec.  
3.708(b)(1) and 3.958. It states that an individual may receive FECA 
compensation and VA benefits at the same time if there was an award 
prior to September 13, 1960, approving such

[[Page 56143]]

receipt. In such cases, an election between FECA compensation and VA 
benefits is not required.
    Proposed Sec.  5.751(b) is based on current Sec.  3.708(b)(2) and 
states that there is no prohibition against concurrent payment of FECA 
compensation and VA compensation if entitlement to each benefit is 
based on a different disability or death. An election between FECA 
compensation and VA benefits is not required in such cases.
    Proposed Sec.  5.751(c) is based on current Sec.  3.708(b)(1) and 
states that a Federal civilian employee's election between FECA 
compensation and VA benefits for the same disability is irrevocable, 
with the exception of the situation addressed in paragraph (d) of 
proposed Sec.  5.751.
    Paragraph (d) of proposed Sec.  5.751, which is similar to 
paragraph (a)(3) of proposed Sec.  5.750, provides for the situation 
where a veteran has elected FECA compensation, but later there is an 
increase in the disability which would warrant an increase in VA 
compensation. The veteran may elect between FECA compensation and VA 
compensation as to that additional disability. The basis for this 
policy is that the increase in payment is considered a new award that 
is subject to an initial election.
    Paragraph (e)(2) of proposed Sec.  5.751 is based on current Sec.  
3.708(b)(1) and states that a child who is eligible for DIC or other VA 
benefits independent of a surviving spouse may receive those benefits 
concurrently with the payment of FECA compensation to the surviving 
spouse. We have added paragraph (e)(1) to address a situation where the 
surviving spouse's election controls the rights of a child. This is the 
same provision as found in current Sec.  3.708(a)(3) and proposed Sec.  
5.750(b)(1), which apply to elections involving FECA compensation based 
on disability or death due to military service. The provision equally 
applies to elections involving FECA compensation based on a disability 
or death due to civilian employment, so we have included it in proposed 
Sec.  5.751(e)(1).
    We have added an authority citation at the end of proposed Sec.  
5.751, which includes section 8116(b) of title 5, United States Code, 
which is the statute governing elections between VA benefits and FECA 
compensation, and section 501(a) of title 38, United States Code, which 
is the statute authorizing the Secretary of VA to prescribe regulations 
which are necessary or appropriate to carry out the laws administered 
by VA.
5.752 Procedures for Elections Between VA Benefits and Compensation 
Under the Federal Employees' Compensation Act
    This is a new regulation which sets out the special election 
procedures that apply to elections between VA benefits and compensation 
under the Federal Employees' Compensation Act (FECA). Unlike other 
elections involving VA benefits, an election between VA benefits and 
FECA compensation is made with the U.S. Department of Labor's Office of 
Workers' Compensation Programs (OWCP), not with VA. The procedures 
described in proposed Sec.  5.752 are based on long-standing VA 
practice; no substantive change to these procedures is intended.
5.753 Payment of VA Benefits and Civil Service Retirement Benefits for 
the Same Period
    Proposed Sec.  5.753 is a restatement of current Sec.  3.710 
without substantive change.
5.754 Effect of Payment of Compensation Under the Radiation Exposure 
Compensation Act of 1990 on Payment of Certain VA Benefits
    Proposed Sec.  5.754 is based on current Sec.  3.715, which was 
recently amended, pertaining to the concurrent receipt of Radiation 
Exposure Compensation Act of 1990 (RECA) compensation and VA benefits. 
In addition, we have added paragraph (d), which is based on current 
Sec.  3.500(x), regarding the effective date of discontinuance or 
reduction of VA benefits due to receipt of RECA compensation. In 
keeping with the practice used throughout proposed part 5, we have 
reframed this discontinuance effective date rule in terms of the first 
day that benefits are not paid rather than in terms of the last day 
benefits are paid. In addition, we have changed the cite to current 
Sec.  3.309(d), which appears in current Sec.  3.715, to Sec.  5.268, 
``Service connection for diseases presumed to be due to exposure to 
ionizing radiation,'' which was published as proposed on July 27, 2004. 
See 69 FR 44614.

Rules Concerning the Receipt of Multiple VA Benefits

5.756 Prohibition Against Concurrent Receipt of Certain VA Benefits 
Based on the Sservice of the Same Veteran
    Proposed Sec.  5.756 is based on portions of the introduction to 
Sec.  3.700 that relate to disability and death compensation, 
dependency and indemnity compensation (DIC), and pension benefits. The 
text has been simplified and restructured for clarity. No substantive 
changes are intended.
    Paragraph (a) of proposed Sec.  5.756 is based on the first 
sentence of current Sec.  3.700. We note that this sentence refers to 
veterans, because it states that not more than one award will be paid 
to any person ``based on his or her own service.'' Although the first 
sentence of current Sec.  3.700 refers to ``compensation,'' we have 
specified in proposed Sec.  5.756 that this is ``disability 
compensation.''
    Paragraph (b) of proposed Sec.  5.756 is based on the second 
sentence of current Sec.  3.700. Although Sec.  3.700 refers to 
``dependents,'' proposed Sec.  5.756(b) refers to ``survivors,'' which 
is the term used throughout Part 5 to refer to persons who may receive 
benefits based on the death of a veteran. Dependents of a VA 
beneficiary are not entitled to compensation, pension, or DIC in their 
own right, and the prohibition on payment of multiple benefits 
therefore is not applicable to dependents. We note that dependents may 
receive apportionments of amounts otherwise payable to VA 
beneficiaries. In such cases, however, the prohibition on multiple 
benefits and the rights of election apply to the beneficiary, rather 
than the apportionee, except where a statute or regulation expressly 
provides otherwise (see proposed Sec.  5.757(e)(3)). Additionally, 
although the second sentence of current Sec.  3.700 refers to 
``compensation,'' we have specified that this is ``death 
compensation.'' This is not a substantive change, because the current 
rule has no application to awards of disability compensation, a benefit 
awarded only to living veterans. The reader should see the discussion 
in the preamble regarding proposed Sec.  5.757 for a further 
explanation of the effort to be more specific when referring to 
compensation.
    Although the introduction to Sec.  3.700 includes references to 
other benefits, including emergency officers', regular or reserve 
retirement pay, and naval pension, these references have not been 
repeated in proposed Sec.  5.756, for the following reasons. Regarding 
emergency officers' retirement pay, we note that there are no longer 
any veterans receiving this benefit. Therefore, there are no 
regulations pertaining to this benefit that will be included in 
proposed part 5. Regarding military retirement pay, we plan to 
specifically address the concurrent receipt of military retirement pay 
and VA benefits in another regulation, Sec.  5.745. Regarding naval 
pension, we note that the concurrent receipt of naval pension and VA 
benefits will be addressed in subpart H of proposed part 5 in a 
separate NPRM.

[[Page 56144]]

5.757 Elections Between VA Disability or Death Compensation and Pension
    Paragraphs (a) and (b) of proposed Sec.  5.757(a) are based on 
portions of the first two sentences of current Sec.  3.701(a). The 
first sentence of current Sec.  3.701(a) states that, except as 
otherwise provided, a person entitled to receive pension or 
compensation under more than one law or section of a law administered 
by VA may elect to receive either benefit, regardless of whether it is 
the greater or lesser benefit, even though the election reduces the 
benefits payable to his or her dependents. The second sentence of 
current Sec.  3.701(a) states that such person may at any time elect or 
reelect the other benefit. These two sentences of current Sec.  
3.701(a) have been slightly reworded and reorganized into paragraph (a) 
of proposed Sec.  5.757, pertaining to elections between disability 
compensation and pension, and paragraph (b) of proposed Sec.  5.757, 
pertaining to elections between death compensation and pension. We have 
not included the provisions regarding the effect of an election on 
dependents and survivors in these new paragraphs, however. Instead, we 
have included them in paragraphs (d) and (e)(1) of proposed Sec.  
5.757. These paragraphs, as discussed below, deal exclusively with the 
effect of an election on a dependent or survivor.
    There are several matters that we seek to clarify in proposed Sec.  
5.757. First, we note that some current part 3 regulations are not 
specific about what is included when the term ``compensation'' is used. 
This could lead to misinterpretation. Therefore, we are attempting to 
be more specific in part 5. When current Sec.  3.701 refers to 
``compensation,'' it is referring to disability or death compensation 
and not dependency and indemnity compensation (DIC). In that regard, we 
adopt the analysis included in paragraph 8 of VA General Counsel 
Opinion VAOPGCPREC 4-92, which states that it is clear not only from 
the context of section 3.701, but from its history that the term 
``compensation'' used in that section refers only to disability and 
death compensation, not DIC. The Opinion goes on to state that other 
provisions dealing with concurrent payments and elections use the term 
DIC when reference to that benefit is intended. See 38 CFR 3.700 and 
3.703 through 3.709.
    Further, the Opinion states that Sec.  3.701 was primarily derived 
from former 38 CFR 4.52 (1956), which predated establishment of the DIC 
program. See Transmittal Sheet 200 (May 29, 1959). Section 3.702 
(``Dependency and indemnity compensation''), in contrast, incorporates 
terms of former 38 CFR 4.424, et seq. (1958), which implemented the DIC 
program. See Transmittal Sheet 200 (May 29, 1959). Also noted in the 
Opinion, Sec.  3.701(a) permits reelection of the other benefit at any 
time, while Sec.  3.702(d) states that an election to receive DIC is 
final and the claimant may not thereafter reelect death pension or 
compensation.
    In addition to clarification of the term ``compensation,'' we have 
also clarified the term ``pension,'' which can refer to Improved 
Pension, Old-Law Pension, Section 306 Pension, or Improved Death 
Pension, depending on the context. In paragraphs (a) and (b) of 
proposed Sec.  5.757, we specifically state that the option to freely 
elect or reelect between disability and death compensation and pension 
applies to elections and reelections involving Improved Pension or 
Improved Death Pension. We have set out the election rules pertaining 
to Old-Law Pension and Section 306 Pension in a separate paragraph, 
which is paragraph (c) of proposed Sec.  5.757.
    Paragraph (d) of proposed Sec.  5.757 pertains to the effect of a 
veteran's election on the rights of dependents. It is based on the 
third sentence of current Sec.  3.701(a), which states that an election 
by a veteran controls the rights of all dependents in that case. We 
have also included the provision from the first sentence of current 
Sec.  3.701(a), which states that an election may result in a reduction 
of the benefits payable to a dependent.
    Paragraph (e)(1) of proposed Sec.  5.757 pertains to the effect of 
a surviving spouse's election on the rights of a child. It is based on 
the fourth sentence of current Sec.  3.701(a), which states that an 
election by a surviving spouse controls the claims of all children 
including children over 18 and children not in the custody of the 
surviving spouse. We have also included a provision stating that the 
election may result in a reduction of the benefits payable to a child. 
This is based on the provision from the first sentence of current Sec.  
3.701(a), which states that a person's election may result in a 
reduction of the benefits payable to a dependent.
    Paragraph (e)(2) of proposed Sec.  5.757 contains an exception to 
the general rule stated in paragraph (e)(1). This exception is not 
contained in current Sec.  3.701. It is based on 38 U.S.C. 1542, which 
states that children who are not in the custody of a surviving spouse 
have independent eligibility for Improved Death Pension. For the text 
of proposed Sec.  5.417 (corresponding to current Sec.  3.57(d)), 
referenced in proposed Sec.  5.757(e)(2), see 70 FR 
, 
.
    Paragraph (e)(3) of proposed Sec.  5.757 contains another exception 
to the general rule stated in paragraph (e)(1). It is based on the 
fifth sentence of current Sec.  3.701(a)(1), which states that the 
election of Improved Pension by a surviving spouse shall not prejudice 
the rights of any child receiving an apportionment on December 31, 
1978. It has been slightly reworded for the sake of clarity, and we 
have added the terms Old-Law pension and Section 306 Pension to 
describe the apportionment. No substantive change is intended.
    We note that we have not included the last two sentences of current 
Sec.  3.701(a) in proposed Sec.  5.757 because they are redundant of 
current Sec.  3.960(d). They state that termination of the marriage of 
a surviving spouse who lost eligibility for Section 306 or Old-Law 
Pension because of that marriage does not restore eligibility for that 
pension. Regulations pertaining to the Section 306 Pension and Old-Law 
Pension programs are addressed in a separate NPRM. This includes a 
proposed regulation addressing the provisions of current Sec.  
3.960(d). See proposed Sec.  5.470, ``Reasons for Discontinuing or 
Reducing Section 306 or Old-Law Pension,'' 69 FR 77578, 77589.
    Paragraph (f) of proposed Sec.  5.757 is a restatement of current 
Sec.  3.701(c). In general, it states that when a person who is 
receiving VA pension or compensation is entitled to a higher rate under 
another law (that is, another VA compensation or pension program), VA 
will not pay that person under the other law unless that person makes 
an election.
5.758 Electing Improved Pension Instead of Old-Law Pension or Section 
306 Pension
    A version of proposed Sec.  5.758 was previously published as part 
of another part 5 NPRM, ``Elections of Improved Pension; Old-Law 
Pension and Section 306 Pension,'' which was published on December 27, 
2004, at 69 FR 77578. The regulation was proposed Sec.  5.461, 
``Electing Improved Pension Instead of Old-Law or Section 306 
Pension.'' We now propose to remove that regulation (Sec.  5.461) and 
place it in this NPRM as proposed Sec.  5.758 instead. This will help 
achieve consolidation of benefit election rules in this NPRM.
    Proposed Sec.  5.758(a), (b), and (c) are the same as previously 
proposed Sec.  5.461(a), (c), and (d), respectively, with minor 
editorial changes. Readers should refer to the remarks at 69 FR 77578, 
77580-81 for comments concerning those paragraphs.

[[Page 56145]]

    Previously proposed Sec.  5.461(a) states the basic rule that, 
subject to certain exceptions, ``a pension beneficiary who was entitled 
to receive Old-Law Pension or Section 306 Pension on December 31, 1978, 
may instead elect (choose) to receive Improved Pension.'' It is 
restated in proposed Sec.  5.758(a), and is based on current Sec.  
3.711.
    Previously proposed Sec.  5.461(c) states that if a veteran's 
spouse is also a veteran eligible to elect Improved Pension, neither 
veteran may receive Improved Pension unless both elect to receive it. 
It is restated in proposed Sec.  5.758(b), and is based on current 
Sec.  3.711.
    Previously proposed Sec.  5.461(d) states that if a beneficiary 
does not elect Improved Pension, VA will continue to pay that 
beneficiary Old-Law Pension or Section 306 Pension at the monthly rate 
in effect on December 31, 1978, unless that rate must be reduced or 
discontinued under proposed Sec.  5.470 or another regulation in this 
part. It is restated in proposed Sec.  5.758(c), and is based on 
current Sec.  3.960(a). For the text of Sec.  5.470, cited in proposed 
Sec.  5.758(c), see 69 FR 77578, 77589.
    Previously proposed Sec.  5.461(b) contains rules concerning the 
finality of elections. These provisions are now contained in proposed 
Sec.  5.742.
    The last provision of proposed Sec.  5.758, paragraph (d), is based 
on the fifth sentence of current Sec.  3.701(a). We note that this 
provision also appears in proposed Sec.  5.757(e)(3). We believe it is 
helpful to the reader to place the provision in both places (Sec.  
5.757(e)(3) and Sec.  5.758(d)), as the subject matter is appropriate 
for both regulations.
5.759 Election Between Death Compensation and Dependency and Indemnity 
Compensation
    Proposed Sec.  5.759 is a plain language restatement of paragraphs 
(a), (c), and (d)(1) of current Sec.  3.702. It applies to elections 
between DIC and death compensation.
    Paragraph (a) of proposed Sec.  5.759 is based on current Sec.  
3.702(a). It states that a person entitled to receive both death 
compensation and DIC must choose one or the other benefit. It also 
states that a claim for service-connected death benefits will be 
considered a claim for DIC, subject to confirmation from the applicant. 
This is a plain language restatement of Sec.  3.702(a). No substantive 
change is intended. Paragraph (a) also restates the rule contained in 
current Sec.  3.702(d)(1) that an election to receive DIC instead of 
death compensation is final once the beneficiary receives payment for 
DIC.
    Paragraph (b) of proposed Sec.  5.759 is based on current Sec.  
3.702(c), which states that a claim for DIC may not be filed or 
withdrawn after the death of the surviving spouse, child, or parent.
    We propose not to carry forward paragraphs (b), (e), and (f) of 
current Sec.  3.702 because they are obsolete. Current paragraph (b) 
pertains only to surviving spouses receiving death compensation, the 
amount of which is based in part on the existence of a child who has 
attained the age of 18 years. Such a situation is highly unlikely, 
since death compensation is only awarded for deaths occurring before 
January 1, 1957. It is highly unlikely that a surviving spouse of a 
veteran who died before January 1, 1957, would have a dependent child.
    Paragraph (e) of current Sec.  3.702 provides for a surviving 
spouse to elect death compensation if he or she becomes eligible, even 
though DIC has been paid to a child or children of the veteran. This 
provision is no longer necessary, as it is highly unlikely that a 
surviving spouse would choose to receive death compensation instead of 
DIC, because the rate of DIC is higher than the rate of death 
compensation.
    Paragraph (f) of current Sec.  3.702 is also obsolete. It attempted 
to ensure that, under a complex and staggered rate-setting system for 
DIC benefits, the lowest possible DIC payment (for a service-connected 
death) was equal to or greater than the lowest possible payment made 
for a nonservice-connected death. However, in 1992, Congress reformed 
the DIC program by passing Public Law 102-568. Effective January 1, 
1993, even the lowest possible DIC rate always exceeds the highest 
possible death pension rate.
5.760 Electing Improved Death Pension Instead of Dependency and 
Indemnity Compensation
    Proposed Sec.  5.760 is based on current Sec.  3.702(d)(2), which 
states that a surviving spouse who is receiving DIC may elect to 
receive Improved Death Pension instead. This is a simple restatement of 
the current provision, with no substantive change. However, we have not 
included the reference to November 2, 1994 because, under 1317(b), as 
enacted by Public Law 103-446, the right of election applies to anyone 
who is now or will become entitled to DIC, irrespective of when the 
award originally became effective.
5.761 Concurrent Receipt of Disability Compensation, Pension, or Death 
Benefits by a Surviving Spouse Based on the Service of More Than One 
Veteran
    Paragraphs (a), (b), and (c)(1) of proposed Sec.  5.761, concerning 
the payment of multiple VA benefits to a surviving spouse, are based on 
the first sentence of current Sec.  3.700(b)(1), which provides that a 
surviving spouse's receipt of death pension, death compensation, or 
dependency and indemnity compensation (DIC) as the survivor of one 
veteran, or receipt of pension or disability compensation in his or her 
own right as a veteran, does not bar the payment of death pension, 
death compensation, DIC, or an apportionment of compensation or pension 
to that surviving spouse because of the death or disability of a 
different veteran.
    Current Sec.  3.700(b)(1) includes a reference to current Sec.  
3.700(a)(4). The proposed part 5 equivalent of Sec.  3.700(a)(4) is 
Sec.  5.464, ``Multiple pension awards not payable.'' Therefore we 
reference Sec.  5.464 instead of Sec.  3.700(a)(4) in proposed Sec.  
5.761. For the text of proposed Sec.  5.464, see 69 FR 77578, 77589.
    Proposed Sec.  5.761(c)(2) is based on the second, third, and 
fourth sentences of Sec.  3.700(b)(1). These sentences describe the 
election the surviving spouse is entitled to make for death benefits 
based on the death of more than one veteran to whom the surviving 
spouse was married. The current regulation states that when a surviving 
spouse elects death benefits based on the death of one veteran, then 
the death benefits to which the surviving spouse is entitled based on 
the death of another veteran are put in ``suspense.'' Rather than 
referring to this ``suspension of benefits'' in the proposed 
regulation, we propose merely to state that a surviving spouse may 
``elect'' or ``reelect'' such benefits. The terms ``elect'' and 
``reelect'' are more consistent with other regulations in this NPRM and 
are clearer to readers. No substantive change is intended.
5.762 Payment of Multiple VA Benefits to a Surviving Child Based on the 
Service of More Than One Veteran
    Paragraphs (a) and (b) of proposed Sec.  5.762 are based on current 
Sec.  3.700(b)(2), pertaining to concurrent receipt of VA benefits by a 
child. Paragraph (c) of proposed Sec.  5.762 is primarily based on 
current Sec. Sec.  3.659 and 3.703, both of which are entitled, ``Two 
parents in same parental line.'' It is also based on long-standing VA 
practice.

[[Page 56146]]

With few exceptions, VA is prohibited from paying a benefit to a child, 
based on the service of one parent, while paying a benefit to the same 
child, based on the service of a different parent in the same parental 
line. ``Same parental line'' is not defined in current VA regulations. 
It means that a child has more than one veteran father or more than one 
veteran mother for VA purposes. For example, if a child's biological 
father, who is a veteran, dies, and another male veteran subsequently 
adopts the child, VA considers the child to have two fathers in the 
same parental line. We have added a definition of ``same parental 
line'' in paragraph (c)(1) of proposed Sec.  5.762.
    The prohibition against a child's concurrent receipt of death 
benefits for more than one parent in the same parental line applies 
only to DIC or death compensation (but not death pension) between 
January 1, 1957, and June 8, 1960. In other words, a child could 
receive death pension for one parent at the same time as DIC or death 
compensation for another parent in the same parental line if both 
parents died before June 9, 1960. From June 9, 1960, and thereafter, 
the prohibition against concurrent receipt includes all three death 
benefits. The effective dates of these prohibitions are included in the 
introductory paragraph of current Sec.  3.659 and paragraph (a) of 
current Sec.  3.703. We have restated the effective dates of these 
prohibitions in plain language in paragraph (c)(3) of proposed Sec.  
5.762.
    Paragraph (c)(4) of proposed Sec.  5.762 is based on the last 
sentence of current Sec.  3.703(b), which states that a child has the 
right to elect or reelect one or more times to receive benefits based 
on the death of either parent in the same parental line. It is 
rewritten in plain English; no substantive change is intended.
    Paragraph (c)(5) of proposed Sec.  5.762 is based on current Sec.  
3.659(a), which describes the offset VA applies when a child makes a 
reelection.
    Paragraph (c)(6)(i) of proposed Sec.  5.762 is based on current 
Sec.  3.703(c). It addresses the effect of a child's election on other 
beneficiaries. It has been rewritten for improved clarity. No 
substantive changes are intended. The reference to ``dependents' 
educational assistance'' (DEA) in current Sec.  3.703(c) has not been 
repeated because proposed Sec.  5.762 involves death benefits only, and 
the effects of a child's election of DEA are included in proposed Sec.  
5.764, ``Payment of Survivors' and Dependents' Educational Assistance 
and VA pension or dependency and indemnity compensation for the same 
period.''
    Paragraph (c)(6)(ii) of proposed Sec.  5.762 is based on current 
Sec.  3.659(b), which describes the effective date of an award based on 
the child's election, and current Sec.  3.503(a)(7), which states the 
effective date of discontinuance of pension, compensation, or DIC in 
two-parent cases. These provisions are rewritten in plain English; no 
substantive change is intended.
5.763 Payment of Multiple VA Benefits to More Than One Child Based on 
the Service of the Same Veteran
    Proposed Sec.  5.763 is a plain language rewrite of current Sec.  
3.704(a). We have limited the application of Sec.  5.763 to Improved 
Pension, dependency and indemnity compensation (DIC), and Survivors' 
and Dependents' Educational Assistance (DEA). We have not included a 
reference to death compensation, as it is highly unlikely that there 
will be any children receiving death compensation. We have not included 
references to Old-Law Pension or Section 306 Pension, as it has been 
indicated in other regulations that VA cannot pay increased rates for 
Old-Law or Section 306 Pension.
    We note that current Sec.  3.704(b) is addressed in a separate 
NPRM, subpart G, which is titled, ``Dependency and Indemnity 
Compensation Benefits.'' The rule was published as proposed Sec.  
5.536(h) in that NPRM on October 21, 2005. See 70 FR 61326.
5.764 Payment of Survivors' and Dependents' Educational Assistance and 
VA Death Pension or Dependency and Indemnity Compensation for the Same 
Period
    Proposed Sec.  5.764 is a plain language restatement of current 
paragraphs (a) and (b) of Sec.  3.707, as well as Sec. Sec.  
3.503(a)(8), 3.659(b), and 3.703(c) concerning Survivors' and 
Dependents' Educational Assistance (DEA). We have removed the 
references to ``compensation,'' which are referring to death 
compensation, because it is highly unlikely that a current recipient of 
DEA would be eligible for death compensation, since death compensation 
may only be awarded for deaths occurring before January 1, 1957. 
Proposed Sec.  5.764 is also based on Sec.  21.3023, which contains the 
specific substantive criteria for elections of DEA.
    Proposed Sec.  5.764(a)(1) states that a child over the age of 18 
must elect between VA pension or DIC and DEA, because VA cannot pay DEA 
to such a child at the same time it pays the child pension or DIC. It 
is based on current Sec.  3.707(a) and current Sec.  21.3023(a).
    Proposed Sec.  5.764(a)(2) is based on current Sec.  3.703(c) and 
states that when an election is made by a child with more than one 
parent in the same parental line, VA will determine the entitlement and 
the rate of benefits payable to other beneficiaries in the same case as 
if the child electing DEA did not exist. This is a plain language 
restatement of current Sec.  3.703(c).
    Proposed Sec.  5.764(a)(3) states the applicable effective dates 
when a child elects DEA. It is a plain language restatement of current 
Sec. Sec.  3.503(a)(8) and 3.659(b).
    Proposed Sec.  5.764(b) is based on current Sec.  3.707(a) and 
current Sec.  21.3023(b). It states that a child who is under the age 
of 18 or helpless may receive VA pension or DIC at the same time as 
DEA.
    Proposed Sec.  5.764(c) is based on current Sec.  3.707(b) and 
current Sec.  20.3023(d). It states that a surviving spouse may receive 
VA pension or DIC at the same time as DEA.
    Proposed Sec.  5.764(d) is based on Sec.  3.707(a) and directs the 
reader to the provisions of current Sec.  20.3023 for specific criteria 
regarding elections of DEA.

Non-Inclusion of Other Part 3 Provisions

    As discussed earlier in this NPRM, there are certain regulations or 
portions of regulations that we propose not to carry forward to part 5.
    We propose that paragraphs (j)(2) through (j)(6) of current Sec.  
3.400 not be repeated in new part 5. These are effective-date 
provisions for the election of pension payable under Public Law 86-211 
(``Section 306 Pension''). New entitlement under this program is no 
longer possible. A separate NPRM pertains to continuing awards of 
Section 306 Pension. See 69 FR 77578.
    We propose not to include the provisions of current Sec.  3.751 in 
part 5 because it is redundant of the provisions of current Sec.  
3.750, which are included in Sec.  5.740 and Sec.  5.745. Furthermore, 
current Sec.  3.751 provides that military retirees are not entitled to 
``statutory awards'' of disability compensation in addition to military 
retired pay. ``Statutory award'' is a term that in VA vernacular means 
an award of special monthly compensation (SMC) under paragraphs (k) 
through (s) of 38 U.S.C. 1114. We believe that proposed part 5 would 
make it sufficiently clear that disability compensation includes SMC. 
In addition, some readers could be confused by the term ``statutory 
award'' in this context, particularly the second reference to it in 
Sec.  3.751. Because all VA benefits are provided according to

[[Page 56147]]

statute, some readers might erroneously believe that a veteran must 
waive military retired pay in order to receive a clothing allowance or 
Medal of Honor Pension, for example, when this is not the case.
    We propose that Sec.  3.754 concerning emergency officers' 
retirement pay (EOR) not be included in proposed part 5 because there 
are no longer any veterans affected by this rule and this rule is 
obsolete.

Endnote Regarding Amendatory Language

    We intend to ultimately remove part 3 entirely, but we are not 
including amendatory language to accomplish that at this time. VA will 
provide public notice before removing part 3.

Paperwork Reduction Act

    This document contains provisions constituting a collection of 
information, at 38 CFR 5.764 under the provisions of the Paperwork 
Reduction Act (44 U.S.C. 3501-3521). No new or proposed revised 
collections of information are associated with this proposed rule. The 
information collection requirements for Sec.  5.764 are currently 
approved by the Office of Management and Budget (OMB) and have been 
assigned OMB control number 2900-0098.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed regulatory 
amendment will not have a significant economic impact on a substantial 
number of small entities as they are defined in the Regulatory 
Flexibility Act, 5 U.S.C. 601-612. This proposed amendment would not 
affect any small entities. Therefore, pursuant to 5 U.S.C. 605(b), this 
proposed amendment is exempt from the initial and final regulatory 
flexibility analysis requirements of sections 603 and 604.

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Executive 
Order classifies a ``significant regulatory action,'' requiring review 
by the Office of Management and Budget (OMB) unless OMB waives such 
review, as any regulatory action that is likely to result in a rule 
that may: (1) Have an annual effect on the economy of $100 million or 
more or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities; (2) create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) materially alter 
the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or (4) 
raise novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in the Executive 
Order.
    The economic, interagency, budgetary, legal, and policy 
implications of this proposed rule have been examined and it has been 
determined to be a significant regulatory action under the Executive 
Order because it is likely to result in a rule that may raise novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in an expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any 1 year. This proposed rule would have no such effect 
on State, local, and tribal governments, or on the private sector.

Catalog of Federal Domestic Assistance Numbers and Titles

    The Catalog of Federal Domestic Assistance program numbers and 
titles for this proposal are 64.102, Compensation for Service-Connected 
Deaths for Veterans' Dependents; 64.104, Pension for Non-Service-
Connected Disability for Veterans; 64.105, Pension to Veterans 
Surviving Spouses, and Children; 64.109, Veterans Compensation for 
Service-Connected Disability; 64.110, Veterans Dependency and Indemnity 
Compensation for Service-Connected Death; and 64.127, Monthly Allowance 
for Children of Vietnam Veterans Born with Spina Bifida.

List of Subjects in 38 CFR Part 5

    Administrative practice and procedure, Claims, Disability benefits, 
Pensions, Radioactive materials, Veterans.

    Approved: June 22, 2007.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

    For the reasons set forth in the preamble, VA proposes to amend 38 
CFR Part 5, as proposed to be added at 69 FR 4832, January 30, 2004, 
and as amended, by adding subpart L as follows:

PART 5--COMPENSATION, PENSION, BURIAL, AND RELATED BENEFITS

Subpart L--Payments and Adjustment to Payments

Payments to Beneficiaries Who Are Eligible for More Than One Benefit--
General Provisions

Sec.
5.740 Definitions relating to elections.
5.741 Persons who may make an election.
5.742 Finality of elections; cancellation of certain elections.
5.743 General effective dates for awarding, reducing, or 
discontinuing VA benefits because of an election.
5.744 [Reserved]

Payments From Service Departments and the Effects of Those Payments on 
VA Benefits for Veterans

5.745 Entitlement to concurrent receipt of military retired pay and 
VA disability compensation.
5.746 Prohibition against receipt of active military service pay and 
VA benefits for the same period.
5.747 Effect of military readjustment pay, disability severance pay, 
and separation pay on VA benefits.
5.748 Concurrent receipt of VA disability compensation and 
retirement pay by certain officers of the Public Health Service.
5.749 [Reserved]

Payments From Federal Agencies and the Effects of Those Payments on VA 
Benefits for Veterans and Survivors

5.750 Election between VA benefits and compensation under the 
Federal Employees' Compensation Act for death or disability due to 
military service.
5.751 Election between VA benefits and compensation under the 
Federal Employees' Compensation Act for death or disability due to 
Federal civilian employment.
5.752 Procedures for elections between VA benefits and compensation 
under the Federal Employees' Compensation Act.
5.753 Payment of VA benefits and civil service retirement benefits 
for the same period.
5.754 Effect of payment of compensation under the Radiation Exposure 
Compensation Act of 1990 on payment of certain VA benefits.
5.755 [Reserved]

Rules Concerning the Receipt of Multiple VA Benefits

5.756 Prohibition against concurrent receipt of certain VA benefits 
based on the service of the same veteran.

[[Page 56148]]

5.757 Elections between VA disability or death compensation and 
pension.
5.758 Electing Improved Pension instead of Old-Law Pension or 
Section 306 Pension.
5.759 Election between death compensation and dependency and 
indemnity compensation.
5.760 Electing Improved Death Pension instead of dependency and 
indemnity compensation.
5.761 Concurrent receipt of disability compensation, pension, or 
death benefits by a surviving spouse based on the service of more 
than one veteran.
5.762 Payment of multiple VA benefits to a surviving child based on 
the service of more than one veteran.
5.763 Payment of multiple VA benefits to more than one child based 
on the service of the same veteran.
5.764 Payment of Survivors' and Dependents' Educational Assistance 
and VA death pension or dependency and indemnity compensation for 
the same period.
5.765-5.769 [Reserved]

    Authority: 38 U.S.C. 501(a) and as noted in specific sections.

Subpart L--Payments and Adjustments to Payments

Payments to Beneficiaries Who Are Eligible for More Than One Benefit--
General Provisions


Sec.  5.740  Definitions relating to elections.

    (a) Election means any writing, signed by a person authorized by 
Sec.  5.741, ``Persons who may make an election,'' expressing a choice 
between two or more VA benefits to which the person is entitled, or 
between VA and other Federal benefits to which the person is entitled.
    (b) Initial election means the first election a person, authorized 
by Sec.  5.741, makes between two or more benefits.
    (c) Reelection means an election a person, authorized by Sec.  
5.741, makes between benefits that were the subject of an initial 
election.
    (d) Timely filed with respect to elections means that a person, 
authorized by Sec.  5.741, files an election between two or more 
benefits within 1 year of VA's notice that such an election is 
required.

(Authority: 38 U.S.C. 501(a), 5103(b))


    Cross reference: Sec.  5.572 ``Effective dates for reduction or 
discontinuance based on increased income-parents' DIC.''


Sec.  5.741  Persons who may make an election.

    (a) General. VA will accept an election signed by a claimant or 
beneficiary, or if applicable, by any one of the following persons 
acting on behalf of a claimant or beneficiary:
    (1) The spouse of a claimant or beneficiary if the claimant or 
beneficiary has been declared to be an incompetent veteran under Sec.  
13.57 of this chapter.
    (2) The legal custodian of a claimant or beneficiary if the 
claimant or beneficiary is a minor under Sec.  13.58 of this chapter.
    (3) A fiduciary that VA designates, under Sec.  13.55 of this 
chapter.
    (4) A court-appointed fiduciary, under Sec.  13.59 of this chapter.
    (5) The chief officer of the institution in which the veteran is 
receiving care and treatment, and whom VA has designated as a payee, 
under Sec. Sec.  13.55(b)(6) and 13.61 of this chapter.
    (b) Elections from a Member of Congress or duly authorized 
representative. This paragraph (b) applies if VA receives a 
communication from a Member of Congress or from a claimant or 
beneficiary's duly authorized representative indicating that a claimant 
or beneficiary wishes to elect a VA benefit. (If the communication is 
from a service organization, attorney, or agent, there must be a power 
of attorney in effect at the time the communication was written.) If VA 
receives such a communication, VA will provide notice to the claimant 
or beneficiary that a person listed in paragraph (a) of this section 
must sign such an election. If a properly signed election is then 
timely filed under Sec.  5.740(d), VA will consider the properly signed 
election to have been filed on the date it received the communication 
from the Member of Congress or the duly authorized representative.

(Authority: 38 U.S.C. 501(a), 5103(b)(1))

Sec.  5.742  Finality of elections; cancellation of certain elections.

    This section explains when an election or reelection becomes final. 
A final election or reelection ordinarily may be changed only by 
cancellation under paragraph (d) or (e) of this section or by 
reelection, if authorized. Other provisions of this part specify when 
reelection is authorized and when a final election or reelection is 
irrevocable.
    (a) Finality of an election when benefits are received by check. 
Except as otherwise provided in this section, if the beneficiary 
receives payment of the elected benefit by check, the election is final 
when the beneficiary (or a person authorized to act on the 
beneficiary's behalf under Sec.  5.741) negotiates the first check for 
the elected benefit.
    (b) Finality of an election when benefits are received by direct 
deposit or electronic funds transfer. Except as otherwise provided in 
this section, if the beneficiary receives payment of the elected 
benefit by direct deposit or electronic funds transfer, the election is 
final when the applicable financial institution receives the second 
payment of the elected benefit.
    (c) Finality of an election when a beneficiary dies after filing an 
election. When a beneficiary dies after filing an election, but before 
the beneficiary had negotiated the check or before the applicable 
financial institution had received the second payment for the elected 
benefit, the election is final even though it would not be considered 
final under paragraph (a) or (b) of this section.
    (d) Cancellation of an election made by an incompetent person. If 
VA finds that a beneficiary was mentally incompetent when he or she 
elected a benefit, the beneficiary, or another person listed in Sec.  
5.741(a) who is acting on behalf of the beneficiary, may cancel that 
election.
    (e) Cancellation of elections that were based on erroneous VA 
information. A beneficiary who elected a benefit based on erroneous 
information that was provided by VA may cancel the election. For this 
right to cancellation to apply, VA must make a determination that it 
previously provided erroneous information. This determination must be 
based on the same evidence that VA used when it previously provided the 
erroneous information.

(Authority: 38 U.S.C. 501(a))

Sec.  5.743  General effective dates for awarding, reducing, or 
discontinuing VA benefits because of an election.

    (a) General effective date for award; offset--(1) Effective date of 
award. Unless otherwise provided in this part, when a claim is pending 
and an election is timely filed under Sec.  5.740(d), the effective 
date for an award of an elected benefit shall be the same as the 
effective date VA would assign for the awarded benefit if no election 
were required. Unless otherwise provided in this part, when a 
beneficiary elects a different benefit, the effective date for an award 
of the elected VA benefit is the date VA receives the election.
    (2) Offset. Payments of the elected benefit are subject to an 
offset. The payments will be offset by any payments the beneficiary 
received for another benefit for the same period. This offset will 
occur only if the two benefits cannot be received concurrently.
    (b) Effective date of reduction or discontinuance. Unless otherwise 
provided in this part, when VA must reduce or discontinue payments 
because a beneficiary elected a different VA

[[Page 56149]]

benefit, or a non-VA benefit, the effective date of the reduction or 
discontinuance is the same date as the effective date of the award of 
the different VA benefit or the non-VA benefit.

(Authority: 38 U.S.C. 5110, 5112, 5304, 5305)

Sec.  5.744  [Reserved]

Payments From Service Departments and the Effects of Those Payments on 
VA Benefits for Veterans


Sec.  5.745  Entitlement to concurrent receipt of military retired pay 
and VA disability compensation.

    (a) Definition of military retired pay. For the purposes of this 
part, military retired pay is payment received by a veteran that is 
classified as retired pay by the Service Department, including retainer 
pay, based on the recipient's service as a member of the Armed Forces 
or as a commissioned officer of the Public Health Service, the Coast 
and Geodetic Survey, the Environmental Science Services Administration, 
or the National Oceanic and Atmospheric Administration.
    (b) Payment of both military retired pay and disability 
compensation or Improved Pension--(1) Compensation. Subject to 
paragraphs (b)(2) and (b)(3) of this section, a veteran who is entitled 
to military retired pay and disability compensation for a service-
connected disability rated 50 percent or more, or a combination of 
service-connected disabilities rated at 50 percent or more, under the 
schedule for rating disabilities (38 CFR part 4, subpart B), or based 
on a determination of individual unemployability under 38 CFR 4.16, is 
entitled to receive both payments subject to the phase-in period 
described in paragraph (c) of this section.
    (2) Chapter 61 disability retirees retiring with 20 or more years 
of service. Disability retired pay payable under 10 U.S.C. Chapter 61 
to a veteran with 20 or more years of creditable service may be paid 
concurrently with disability compensation to a qualifying veteran 
subject to the following:
    (i) Any waiver required during the phase-in period under paragraph 
(c)(1)(ii) of this section; and
    (ii) If the veteran's disability retired pay exceeds the amount of 
retired pay the veteran would have received had the veteran retired 
based on length of service, the veteran must waive that excess amount 
of disability retired pay in order to receive VA disability 
compensation.
    (3) Chapter 61 disability retirees retiring with less than 20 years 
of service. Veterans who receive disability retired pay under 10 U.S.C. 
Chapter 61 with less than 20 years of creditable service are not 
eligible for concurrent receipt.
    (4) Improved Pension. A veteran may receive Improved Pension and 
military retired pay at the same time without having to waive military 
retired pay. However, in determining entitlement to Improved Pension, 
VA will treat military retired pay in the same manner as countable 
income from other sources.
    (c) Waiver--(1) When a waiver is necessary. (i) A waiver of 
military retired pay is necessary in order to receive disability 
compensation when a veteran is eligible for both military retired pay 
and disability compensation but is not eligible under paragraphs (b)(1) 
or (b)(2) of this section to receive both benefits at the same time.
    (ii) All veterans who are eligible to receive both military retired 
pay and disability compensation at the same time under paragraphs 
(b)(1) or (b)(2) of this section, except those receiving compensation 
for a disability rated 100 percent, must file a waiver in order to 
receive the maximum allowable amount of disability compensation during 
the phase-in period. For veterans receiving disability compensation 
based on a VA determination of individual unemployability, the phase-in 
period ends on December 30, 2009. For all other veterans, the phase-in 
period ends on December 31, 2013. After the phase-in period, veterans 
retired under 10 U.S.C. Chapter 61 who are eligible for concurrent 
receipt must still file a waiver under the circumstances described in 
paragraph (b)(2)(ii) of this section.

(Authority: 10 U.S.C. 1414, 38 U.S.C. 5304, 5305)


    (2) How to file a waiver of military retired pay. A veteran may 
request a waiver of military retired pay in any written, signed 
statement, including a VA form, which reflects a desire to waive all or 
some military retired pay. The statement must be submitted to VA or to 
the Federal agency that pays the veteran's military retired pay. VA 
will treat a claim for VA disability compensation filed by a veteran 
who is entitled to military retired pay as a waiver.
    (d) Elections and the right to reelect either benefit. (1) A 
veteran who has filed a waiver of military retired pay under this 
section has elected to receive disability compensation. A veteran may 
reelect between benefits covered by this section at any time by 
submitting a written, signed statement to VA or to the Federal agency 
that pays the veteran's military retired pay.
    (2) An election filed within 1 year from the date of notification 
of VA entitlement will be considered as ``timely filed'' for effective 
date purposes. If the veteran is incompetent, the 1-year period will 
begin on the date that notification is sent to the next friend or 
fiduciary. In initial determinations, elections may be applied 
retroactively if the claimant was not advised of his or her right of 
election and its effect.
    (e) Effective date rules for elections. (1) If an election is 
timely filed under paragraph (d)(2) of this section, the effective date 
of the election will be the date of entitlement to the elected benefit.
    (2) If a waiver is properly filed under paragraph (c), the 
effective date of the waiver will be the day following discontinuance 
or reduction of retirement pay.
    (3) If a reelection is made under paragraph (d)(1) of this section, 
the effective date of the election will be the date that the reelection 
is received by VA.

(Authority: 38 U.S.C. 5304(a), 5305)

Sec.  5.746  Prohibition against receipt of active military service pay 
and VA benefits for the same period.

    (a) Definition of active military service pay. For the purposes of 
this section, active military service pay means pay that a veteran 
receives for active duty, active duty for training, or inactive duty 
training. Active military service pay does not include pay for time 
spent by members of the Reserve Officer Training Corps in drills as 
part of their activities as members of the corps.
    (b) Prohibition against receipt of VA benefits at the same time as 
active military service pay. VA will not pay disability compensation or 
pension to a veteran for any period for which the veteran receives 
active military service pay.
    (c) Effective date of discontinuance of payments for VA benefits 
during active duty status. Unless the veteran elects to receive VA 
benefits instead of active military service pay, VA will discontinue 
payments effective the day the veteran begins active duty service. If 
VA does not know the exact date of the veteran's return to active duty, 
VA will discontinue payments effective the first day of the month that 
follows the month for which it last paid benefits. If the exact date of 
the veteran's return to active duty thereafter becomes known, VA will 
then discontinue payments effective as of that date.
    (d) Resumption of payments for VA benefits on release from active 
duty--

[[Page 56150]]

    (1) Effective date. If otherwise in order, VA will resume payments 
effective the day after the date of release from active duty if VA 
receives a claim to resume payments within 1 year after the date of 
release. Otherwise, the effective date is 1 year prior to the date VA 
receives the claim to resume payments.
    (2) Rate--(i) Static service-connected disabilities. If the 
evidence of record shows that the level of disability had become static 
at the time of entry into active duty, VA will resume payments for a 
service-connected disability at the same disability level that was in 
effect immediately prior to entering active duty.
    (ii) Non-static service-connected disabilities. Except as provided 
in paragraph (d)(2)(i) of this section, VA will resume payments based 
on the degree of disability found to exist when the award is resumed. 
VA will ascertain the degree of disability by considering all the 
facts, including facts provided in records from the service department 
relating to the most recent period of active military service.
    (3) Application of Sec.  3.31. Resumptions under paragraph (d) of 
this section are not subject to Sec.  3.31 of this chapter, 
``Commencement of the period of payment,'' except to the extent that 
the disability evaluation is increased.
    (4) Prior service-connection awards. In determining whether 
disability compensation payments should be resumed under paragraph (d) 
of this section, VA will not disturb prior determinations of service 
connection except as provided in Sec.  3.105 of this chapter.
    (5) New claims for service connection. If the veteran incurs or 
aggravates a disability during the subsequent period of service, VA 
will not award service connection for the new disability unless it 
receives a claim for service connection for that disability.
    (e) Waiver of VA benefits during active duty for training or 
inactive duty for training--(1) Waiver of VA benefits. Veterans who are 
Reservists and National Guard members may waive their VA pension or 
compensation for periods of active duty for training or inactive duty 
for training (see Sec.  5.23, ``How VA classifies Reserve and National 
Guard duty). Waivers may cover anticipated periods of training; 
however, each waiver is effective for not more than 1 year.
    (2) Readjustments. VA may authorize retroactive payments of 
previously waived VA pension or compensation if readjustment is in 
order because the veteran did not receive service pay for a period of 
training duty as anticipated. However, VA must receive a claim for 
readjustment within 1 year after the end of the fiscal year during 
which VA benefits were waived.

(Authority: 10 U.S.C. 12316; 38 U.S.C. 501(a), 5304(c))

Sec.  5.747  Effect of military readjustment pay, disability severance 
pay, and separation pay on VA benefits.

    (a) Lump-sum readjustment pay. This paragraph (a) applies when 
entitlement to disability compensation was established on or after 
September 15, 1981.
    (1) Recoupment of lump-sum readjustment pay. A veteran who has 
received a lump-sum readjustment payment may also receive disability 
compensation for disability incurred in or aggravated by service prior 
to the date of receipt of the lump-sum readjustment payment. However, 
the lump-sum readjustment payment will be recouped from the disability 
compensation.
    (2) Disability compensation for disability incurred or aggravated 
in subsequent service is not subject to recoupment. The veteran must 
receive the full amount of the monthly compensation including 
additional amounts for dependents, payable for a service-connected 
disability that was incurred in or aggravated in a period of service 
that is subsequent to the period on which the readjustment pay was 
based.

(Authority: 10 U.S.C. 1174(h)(2); 38 U.S.C. 501(a))


    (b) Disability severance pay--(1) Recoupment of disability 
severance pay when VA compensation is awarded for a severance 
disability. When VA disability compensation is awarded based on the 
same disability or disabilities for which the veteran received 
disability severance pay, VA will recoup from the disability 
compensation award the full amount of the disability severance pay.
    (2) Rate of recoupment of disability severance pay. Generally, VA 
will recoup disability severance pay from VA disability compensation at 
the rate payable for the initial determination of the degree of the 
disability for which the veteran was awarded disability severance pay. 
However, the veteran must receive the full amount of the monthly 
compensation including additional amounts for dependents, payable for 
any additional nonseverance pay disabilities.
    (i) Definition of ``initial determination of the degree of 
disability''. The ``initial determination of the degree of disability'' 
means the first regular schedular compensable rating determined under 
part 4 of this chapter. The ``initial determination of the degree of 
disability'' must be made without consideration in whole or in part of 
a need for hospitalization or a period of convalescence. It does not 
include a temporary 100 percent rating assigned under Sec. Sec.  4.28, 
4.29, or 4.30 of this chapter.
    (ii) Rate of recoupment prior to an initial determination of the 
degree of disability. When a veteran is receiving a temporary 
evaluation assigned under Sec. Sec.  4.28, 4.29, or 4.30 of this 
chapter and VA has not yet made an initial determination of the degree 
of disability, VA will recoup at the rate payable, based on that 
temporary evaluation, for the disability or disabilities for which the 
severance pay was granted.
    (iii) Rate of recoupment after an initial determination of the 
degree of disability. After making an initial determination of the 
degree of disability, VA will recoup VA disability compensation at the 
monthly rate payable for the degree of disability assigned. VA will not 
thereafter change the rate of recoupment based on reevaluations of the 
veteran's disability that lead to an increased rating.

(Authority: 10 U.S.C. 1174(h) and 1212(c); 38 U.S.C. 501, 1161)


    (c) Separation pay and special separation benefits. This paragraph 
(c) applies when entitlement to disability compensation was established 
on or after September 15, 1981.
    (1) Recoupment of separation pay and special separation benefits. A 
veteran who has received separation pay or special separation benefits 
may also receive disability compensation for a disability incurred in 
or aggravated by service prior to the date of receipt of separation pay 
or special separation benefits. However, the separation pay or special 
separation benefits will be recouped from the disability compensation.
    (2) Disability compensation for disability incurred or aggravated 
in subsequent service is not subject to recoupment. The veteran must 
receive the full amount of the monthly compensation including 
additional amounts for dependents, payable for a service-connected 
disability that was incurred in or aggravated in a period of service 
that is subsequent to the period on which the separation pay or special 
separation benefits were based.

(Authority: 10 U.S.C. 1174, 1174a)


    (d) Amount recouped--(1) Lump-sum readjustment pay, disability 
severance pay, and separation pay-- (i) Payments

[[Page 56151]]

received before October 1, 1996. VA will recoup from VA disability 
compensation the total amount of lump-sum readjustment pay, disability 
severance pay, and separation pay a veteran received before October 1, 
1996, regardless of the amount of Federal income tax withheld from such 
payments.
    (ii) Payments received after September 30, 1996. VA will recoup 
from VA disability compensation the total amount of lump-sum 
readjustment pay, disability severance pay, and separation pay a 
veteran received after September 30, 1996, less the amount of Federal 
income tax withheld from such payments.
    (2) Special separation benefits. VA will recoup from VA disability 
compensation the total amount of special separation benefits under 10 
U.S.C. 1174a less the amount of Federal income tax withheld from such 
payments.

(Authority: 10 U.S.C. 1174, 1174a, 1174(h)(2), 1212(c))

Sec.  5.748  Concurrent receipt of VA disability compensation and 
retirement pay by certain officers of the Public Health Service.

    Disability compensation may be paid concurrently with retirement 
pay to an officer of the commissioned corps of the Public Health 
Service, who was receiving disability compensation on December 31, 
1956, as follows:
    (a) An officer who incurred a disability before July 29, 1945, but 
retired unrelated to disability prior to such date.
    (b) An officer who incurred a disability before July 29, 1945, but 
retired unrelated to disability between July 4, 1952, and December 31, 
1956.
    (c) An officer who incurred a disability between July 29, 1945, and 
July 3, 1952, but retired unrelated to disability between July 4, 1952, 
and December 31, 1956.

(Authority: Sec. 501(b), Pub. L. 84-881, 70 Stat. 881; E.O. 9575, 10 
FR 7895; E.O. 10349, 17 FR 3769)

Sec.  5.749  [Reserved]

Payments From Federal Agencies and the Effects of Those Payments on VA 
Benefits for Veterans and Survivors


Sec.  5.750  Election between VA benefits and compensation under the 
Federal Employees' Compensation Act for death or disability due to 
military service.

    (a) General-- (1) Election required. An individual who is entitled 
to compensation from the U.S. Department of Labor's Office of Workers' 
Compensation Programs under the Federal Employees' Compensation Act 
(FECA) for a disability or death incurred before January 1, 1957, due 
to service in the Armed Forces, and who is also entitled to VA pension, 
compensation, or dependency and indemnity compensation (DIC) based on 
the same disability or death (including compensation or DIC payable 
under 38 U.S.C. 1151, ``Benefits for persons disabled by treatment or 
vocational rehabilitation'') must elect whether to receive FECA 
compensation or the applicable VA benefit. An election under this 
paragraph (a)(1) is irrevocable once the election becomes final under 
Sec.  5.742, with the exception of the situation addressed in paragraph 
(a)(2) of this section.
    (2) Right to reelect DIC in lieu of FECA compensation at any time. 
An individual who is receiving benefits under FECA based on death in 
military service may elect at any time to receive DIC in lieu of FECA 
compensation. However, such an election of DIC is irrevocable once the 
election becomes final under Sec.  5.742.
    (3) Future increases in impairment. If a veteran makes an election 
of FECA compensation instead of VA disability compensation for a 
particular disability, and there is subsequent increased impairment 
based on that disability, the award of increased compensation based on 
the increased impairment will be considered a new benefit and the 
veteran may elect to receive FECA compensation or VA compensation as to 
that increased impairment. If the veteran elects VA compensation for 
the increase, VA will pay only the difference between the rate payable 
for the increased evaluation and the rate payable for the prior 
evaluation.
    (b) Effect of a surviving spouse's election of FECA compensation or 
VA benefits on the rights of children-- (1) Cases in which a spouse's 
entitlement controls a child's entitlement. If a child's entitlement to 
VA benefits is controlled by the surviving spouse's entitlement, the 
surviving spouse's election controls the rights of any of the veteran's 
children, even if the child is not in the custody of the surviving 
spouse and even if the child is not entitled to receive any benefits 
under FECA. If the surviving spouse elects to receive FECA 
compensation, the child's VA benefits will be discontinued on the same 
day that the surviving spouse's VA benefits are discontinued.
    (2) Cases in which a child has independent entitlement. If a child 
is entitled to DIC or other VA benefits independent of the surviving 
spouse's entitlement, the child may receive such benefits at the same 
time that the surviving spouse receives FECA compensation.

(Authority: 5 U.S.C. 8116(b); 38 U.S.C. 501(a), 1316(b), 1317(a))

Sec.  5.751  Election between VA benefits and compensation under the 
Federal Employees' Compensation Act for death or disability due to 
Federal civilian employment.

    (a) When both VA benefits and Federal Employees' Compensation Act 
(FECA) compensation are based upon the same disability or death-- (1) 
Election required. Except as otherwise provided in this section, an 
individual who is entitled to compensation from the U.S. Department of 
Labor's Office of Workers' Compensation Programs under FECA for a 
disability or death due to Federal civilian employment and who is also 
entitled to VA compensation or dependency and indemnity compensation 
(DIC) based on the same disability or death must elect whether to 
receive FECA compensation or the applicable VA benefit.
    (2) No election is required for VA awards approved prior to 
September 13, 1960. Any award approved prior to September 13, 1960, 
authorizing VA benefits concurrently with an award of FECA compensation 
for a disability or death due to Federal civilian employment is not 
subject to the election requirement in paragraph (a)(1) of this 
section.
    (b) When VA benefits and FECA compensation are each based on a 
different disability or death. There is no prohibition against 
concurrent payment of FECA compensation and VA compensation if 
entitlement to each benefit is based on a different disability or 
death. The election described in paragraph (a)(1) of this section is 
not required in such cases.
    (c) Election is irrevocable. An election to receive FECA 
compensation or VA benefits under this section is irrevocable once the 
election becomes final under Sec.  5.742. There is no right of 
reelection.
    (d) Future increases in disability. If a veteran makes an election 
of FECA compensation instead of VA disability compensation for a 
particular disability, and there is subsequent increased impairment 
based on that disability, the award of increased compensation based on 
the increased disability will be considered a new benefit and the 
veteran may elect to receive FECA compensation or VA compensation as to 
that increased disability.
    (e) Effect of a surviving spouse's election of FECA compensation or 
VA benefits on the rights of children-- (1) Cases in which a spouse's 
entitlement controls a child's entitlement. If a

[[Page 56152]]

child's entitlement to VA benefits is controlled by the surviving 
spouse's entitlement, the surviving spouse's election controls the 
rights of any of the veteran's children, even if the child is not in 
the custody of the surviving spouse and even if the child is not 
entitled to receive any benefits under FECA. If the surviving spouse 
elects to receive FECA compensation, the child's VA benefits will be 
discontinued on the same day that the surviving spouse's VA benefits 
are discontinued.
    (2) Cases in which a child has independent entitlement. If a child 
is entitled to DIC or other VA benefits independent of the surviving 
spouse's entitlement, the child may receive such benefits at the same 
time that the surviving spouse receives FECA compensation.

(Authority: 5 U.S.C. 8116(b); 38 U.S.C. 501(a))

Sec.  5.752  Procedures for elections between VA benefits and 
compensation under the Federal Employees' Compensation Act.

    (a) Procedures prior to VA receipt of an election between Federal 
Employees' Compensation Act (FECA) compensation and VA benefits. When 
there is evidence showing that a claimant is receiving benefits from 
the U.S. Department of Labor's Office of Workers' Compensation Programs 
(OWCP) under FECA for the same disability or death for which VA 
benefits are claimed, VA will--
    (1) Advise OWCP of the pertinent facts in the case, including the 
disabilities for which VA benefits are payable, and request that OWCP 
obtain the election; and
    (2) Deny the VA claim, advise the claimant of the facts VA 
furnished to OWCP, and inform the claimant that OWCP will contact the 
claimant concerning rights of election.
    (b) Procedures when there is an election of VA benefits instead of 
FECA compensation. If OWCP informs VA that the claimant has elected VA 
benefits, VA will pay benefits effective the date of receipt of the 
claim for VA benefits (or other effective date assigned under this 
chapter based on such claim). VA will offset FECA payments made during 
the period between the effective date of the VA award and the date of 
election.


Sec.  5.753  Payment of VA benefits and civil service retirement 
benefits for the same period.

    VA will pay VA benefits to an eligible claimant or beneficiary at 
the same time that the claimant or beneficiary is receiving civil 
service retirement benefits. However, VA will consider payments of 
civil service retirement benefits as income where income is a factor in 
entitlement to VA benefits except as otherwise provided in this part.

(Authority: 38 U.S.C. 501(a))

Sec.  5.754  Effect of payment of compensation under the Radiation 
Exposure Compensation Act of 1990 on payment of certain VA benefits.

    (a) Disability compensation. (1) A radiation-exposed veteran, as 
defined in 38 CFR 3.309(d)(3), who receives a payment under the 
Radiation Exposure Compensation Act of 1990, as amended (42 U.S.C. 2210 
note) (RECA), will not be denied disability compensation to which the 
veteran is entitled under 38 CFR 3.309(d) for months beginning after 
March 26, 2002.
    (2) A veteran who is not a ``radiation-exposed veteran,'' as 
defined in 38 CFR 3.309(d)(3), is not entitled to VA disability 
compensation for disability caused by a disease that is attributable to 
exposure to radiation for which the veteran has received a payment 
under RECA.
    (b) Dependency and indemnity compensation (DIC). A person who 
receives a payment under RECA based upon a veteran's death will not be 
denied DIC to which the person is entitled under 38 CFR 3.5 and 3.22 
for months beginning after March 26, 2002.
    (c) Offset of RECA payment against VA benefits. Notwithstanding 
paragraphs (a)(1) or (b) of this section, the amount of a RECA payment 
will be deducted from the amount of disability compensation payable 
pursuant to Sec.  3.309(d) or the amount of DIC payable.
    (d) Effective date of discontinuance of VA benefits. This paragraph 
applies when VA must discontinue VA disability compensation to an 
individual because that individual received RECA compensation. In such 
a case, VA will discontinue its benefits effective the first day of the 
month that RECA benefits are issued.

(Authority: 38 U.S.C. 1112(c)(4), 1310(c); 42 U.S.C. 2210 note)

Sec.  5.755  [Reserved]

Rules Concerning the Receipt of Multiple VA Benefits


Sec.  5.756  Prohibition against concurrent receipt of certain VA 
benefits based on the service of the same veteran.

    (a) Veterans. VA may not pay to a veteran an award of disability 
compensation and an award of disability pension at the same time based 
on the veteran's own service.
    (b) Survivors. VA may not pay to a survivor more than one award of 
death pension, death compensation, or dependency and indemnity 
compensation (DIC) based on the service of the same veteran.

(Authority: 38 U.S.C. 5304(a)(1))

Sec.  5.757  Elections between VA disability or death compensation and 
pension.

    (a) Elections between disability compensation and Improved Pension. 
A person who is entitled to receive both disability compensation and 
Improved Pension may elect or reelect at any time to receive either 
benefit unless otherwise provided in this part, regardless of whether 
it is the greater or lesser benefit.
    (b) Elections between death compensation and death pension. A 
person who is entitled to receive both death compensation and death 
pension may elect or reelect at any time to receive either benefit 
unless otherwise provided in this part, regardless of whether it is the 
greater or lesser benefit.
    (c) Elections between disability compensation and Old-Law Pension 
or Section 306 Pension. A person who is entitled to receive both 
disability compensation and Old-Law Pension or Section 306 Pension may 
elect to receive either benefit. Such person may reelect at any time to 
receive the other benefit unless otherwise provided in this part, 
regardless of which is the greater or lesser benefit.
    (d) Effect of a veteran's election of disability compensation or 
pension on other beneficiaries. A veteran's election of disability 
compensation or pension under this section controls the right of any 
dependent in that case, even though the election results in the 
reduction of the benefit payable to the dependent.
    (e) Effect of a surviving spouse's election on the rights of a 
child--(1) General--the election of the surviving spouse controls the 
claims of the child. An election by a surviving spouse controls the 
claims of all children including children over 18 and children not in 
the custody of the surviving spouse, even though the election results 
in the reduction of the benefit payable to a child.
    (2) Exception--when a surviving spouse elects death compensation. 
When a surviving spouse elects death compensation instead of Improved 
Death Pension, an otherwise eligible child is not precluded from 
receiving Improved Death Pension if the child is not in the custody of 
a surviving spouse. See Sec.  5.417 Child custody for Improved Pension.
    (3) Exception--when a surviving spouse elects Improved Death 
Pension. A surviving spouse's election of

[[Page 56153]]

Improved Death Pension does not affect the benefits of a surviving 
child who was receiving a separate apportioned award of Section 306 
Pension or Old-Law Pension on December 31, 1978.
    (f) Change from one law to another. Except as otherwise provided, 
where payments of pension or compensation are being made to a person 
under one law, the right to receive benefits under another law being in 
suspension, and a higher rate of pension or compensation becomes 
payable under the other law, benefits at the higher rate will not be 
paid for any date prior to the date of receipt of an election.

(Authority: 38 U.S.C. 501(a), 1542, 5304)

Sec.  5.758  Electing Improved Pension instead of Old-Law Pension or 
Section 306 Pension.

    (a) Right to elect Improved Pension. Except as otherwise provided 
in this section, a pension beneficiary who was entitled on December 31, 
1978 to receive Old-Law Pension or Section 306 Pension, may elect at 
any time to receive Improved Pension instead. An election to receive 
Improved Pension instead of Old-Law Pension or Section 306 Pension is 
irrevocable once the election becomes final under Sec.  5.742. There is 
no right to reelection.
    (b) When a veteran's spouse is also a veteran who is eligible to 
elect Improved Pension. If a veteran who is eligible to elect Improved 
Pension under this section has a spouse who is also a veteran who is 
eligible to elect Improved Pension under this section, neither veteran 
may receive Improved Pension unless both elect to receive it.
    (c) When a beneficiary chooses to receive Old-Law Pension or 
Section 306 Pension instead of Improved Pension. If a pension 
beneficiary who is eligible to elect Improved Pension under this 
section does not do so, VA will continue to pay that beneficiary Old-
Law Pension or Section 306 Pension at the monthly rate in effect on 
December 31, 1978, unless that rate must be reduced or discontinued 
under Sec.  5.470, ``Reasons for discontinuing or reducing Section 306 
Pension or Old-Law Pension,'' or under another regulation in this part.
    (d) Effect of a surviving spouse's election of Improved Pension on 
the rights of a child. A surviving spouse's election of Improved 
Pension does not affect the benefits of a surviving child who was 
receiving, on December 31, 1978, a separate apportioned award of 
Section 306 Pension or Old-Law Pension.

(Authority: 38 U.S.C. 501(a); Sec. 306(a) and (b), Pub. L. 95-588, 
92 Stat. 2508)

Sec.  5.759  Election between death compensation and dependency and 
indemnity compensation.

    (a) Election between benefits is required. A person who is eligible 
for both death compensation and dependency and indemnity compensation 
(DIC) must elect to receive one or the other benefit.
    (1) Persons currently receiving death benefits. (i) A person who is 
currently receiving death compensation may elect to receive DIC.
    (ii) An election to receive DIC instead of death compensation is 
irrevocable once the election becomes final under Sec.  5.742. There is 
no right to reelection.
    (2) Persons claiming entitlement to service-connected death 
benefits. VA will treat a claim for service-connected death benefits as 
a claim for DIC, subject to confirmation by the claimant, unless the 
claimant specifically requests death compensation.
    (b) Limitation of election. An election of DIC may not be filed or 
withdrawn after the death of the surviving spouse, child, or parent. 
See also Sec.  5.742(c) (concerning the finality of an election of DIC 
when the beneficiary dies before negotiating a DIC check).

(Authority: 38 U.S.C. 1317(a))


    Cross-reference: Sec.  5.512, ``Eligibility for death compensation 
or death pension instead of dependency and indemnity compensation.''


Sec.  5.760  Electing Improved Death Pension instead of dependency and 
indemnity compensation.

    A surviving spouse who is entitled to receive dependency and 
indemnity compensation (DIC) may elect to receive Improved Death 
Pension instead of DIC.

(Authority: 38 U.S.C. 1317(b))

Sec.  5.761  Concurrent receipt of disability compensation, pension, or 
death benefits by a surviving spouse based on the service of more than 
one veteran.

    (a) Concurrent receipt of disability compensation or pension and 
death benefits. Except as otherwise provided in Sec.  5.464, ``Multiple 
pension awards not payable,'' if a surviving spouse is receiving 
disability compensation or pension in his or her own right as a 
veteran, the surviving spouse is not barred from receiving:
    (1) An apportionment of disability compensation or pension based on 
another veteran's disability, or
    (2) Death pension, death compensation, or dependency and indemnity 
compensation (DIC) due to the death of another veteran.
    (b) Entitlement to death benefits based on the death of more than 
one veteran. Except as otherwise provided in this regulation or in 
Sec.  5.464, ``Multiple pension awards not payable,'' if a beneficiary 
is receiving death pension, death compensation, or DIC as the surviving 
spouse of one veteran, the beneficiary is not barred from receiving 
death pension, death compensation, or DIC due to the death of a 
different veteran.
    (c) Limitation--A surviving spouse is entitled to payment of only 
one award of death benefits at one time based on the death of more than 
one veteran to whom the surviving spouse was married--(1) Payment 
limitation. VA may not pay more than one death pension, death 
compensation, or DIC award at a time to a surviving spouse based on the 
death of more than one veteran to whom the surviving spouse was 
married.
    (2) Election. A surviving spouse who is eligible for death pension, 
death compensation, or DIC because of the deaths of more than one 
veteran to whom he or she was married may elect, or reelect, benefits 
based on the death of any one such deceased spouse. The election or 
reelection may be made at any time. Benefits payable in the elected 
case will be offset by any payments the surviving spouse received based 
on the death of the other spouse for the same period. The offset will 
occur only if the surviving spouse was entitled to benefits in the 
elected case prior to the date of receipt of the election under Sec.  
5.567, ``Effective dates for DIC or death compensation awards,'' or 
Sec.  5.431, ``Effective dates for Improved Death Pension.''

(Authority: 38 U.S.C. 5304(b)(1), (3))

Sec.  5.762  Payment of multiple VA benefits to a surviving child based 
on the service of more than one veteran.

    (a) A surviving child is entitled to concurrent receipt of 
disability compensation or pension and death benefits. If a surviving 
child is receiving disability compensation or pension in his or her own 
right as a veteran, the surviving child is not barred from receiving:
    (1) An apportionment of disability compensation or pension based on 
another veteran's disability, or
    (2) Death pension, death compensation, or dependency and indemnity 
compensation (DIC) due to the death of another veteran.
    (b) A surviving child is entitled to more than one award of death 
benefits based on the death of more than one veteran. Except as 
otherwise provided in paragraph (c) of this section or in Sec.  5.464, 
``Multiple pension awards not payable,'' if a surviving child is 
receiving death pension, death

[[Page 56154]]

compensation, or DIC as the surviving child of one veteran, the 
surviving child is not barred from receiving death pension, death 
compensation, or DIC due to the death of a different veteran.
    (c) Exception--child with more than one parent in the same parental 
line--(1) Definition. Same parental line means that the child has more 
than one veteran father or more than one veteran mother for VA 
purposes.
    (2) A surviving child is entitled to payment of no more than one 
death benefit due to the death of more than one parent in the same 
parental line. Except for insurance and as provided in this paragraph 
(c), VA cannot pay more than one death benefit to, or based on the 
existence of, a surviving child because of the death of more than one 
parent in the same parental line.
    (3) Exception: More than one death benefit is payable when the 
death of both parents in the same parental line occurred prior to June 
9, 1960. If both fathers or both mothers died before June 9, 1960, a 
child who receives DIC for one parent may receive death pension for the 
other parent. Unless both fathers or both mothers died before January 
1, 1957, such a child may not receive DIC or death compensation for the 
other parent. If both parents died before January 1, 1957, there is no 
prohibition on concurrent receipt of death benefits.
    (4) Surviving child's right to elect or reelect. If a surviving 
child is entitled to benefits because of the death of more than one 
parent in the same parental line, the child has the right to elect or 
reelect one or more times to receive benefits because of the death of 
either such parent.
    (5) Benefits that are awarded as a result of a surviving child's 
reelection are subject to an offset. VA will award benefits to the 
electing child according to the child's reelection. However, VA will 
offset the new award by subtracting the amount of any payments for the 
same period which VA previously made under the prior award to or based 
on the existence of that child.
    (6) Effect of a surviving child's election on the beneficiaries of 
the other parent in the same parental line. (i) When a surviving child 
elects benefits because of the death of one veteran, and a surviving 
spouse and/or another surviving child are eligible for benefits because 
of the death of another veteran in the same parental line, VA will 
determine the benefit rate to the surviving spouse and/or the other 
surviving child as if the surviving child making the election did not 
exist.
    (ii) Effective date. If VA determines that benefits payable to the 
surviving spouse and/or the other surviving child should be increased, 
reduced, or discontinued as a result of the election or reelection, 
such increase, reduction, or discontinuance is effective the first day 
of the month following the month for which VA last paid benefits.

(Authority: 38 U.S.C. 5304)

Sec.  5.763  Payment of multiple VA benefits to more than one child 
based on the service of the same veteran.

    (a) Scope. This section applies when two or more children are 
eligible to receive the same type of VA benefit based on the service of 
a veteran, and at least one of the children is also eligible to receive 
a different type of VA benefit based on the service of the same 
veteran. The types of VA benefits referred to in this section are as 
follows:
    (1) Improved Pension.
    (2) Dependency and indemnity compensation (DIC).
    (3) Survivors' and Dependents' Educational Assistance (DEA).
    (b) General rule. This paragraph (b) applies when one of the 
children is eligible for more than one type of VA benefit as provided 
in paragraph (a) of this section and that child chooses to receive a 
benefit that is different than the type the remaining child receives. 
Except as provided in paragraph (c) of this section, VA cannot--
    (1) Increase the rate of payment to the remaining child; or
    (2) Pay a rate to each remaining child that is greater than the 
rate payable if all children were receiving the same type of VA 
benefit.
    (c) Exception to general rule. The limitation in paragraph (b) of 
this section does not apply if the child elects DEA. Unless the child 
electing DEA is under the age of 18 or helpless, VA will pay benefits 
to the remaining child as if the child electing DEA did not exist. See 
38 CFR 21.3023(b) (pertaining to restrictions on concurrent receipt of 
DEA and other VA benefits).

(Authority: 38 U.S.C. 3512, 3562)

Sec.  5.764  Payment of Survivors' and Dependents' Educational 
Assistance and VA death pension or dependency and indemnity 
compensation for the same period.

    (a) Child who has reached age 18--(1) Election is required. (i) A 
child who has reached the age of 18 and is not helpless may not receive 
VA death pension at the same time as he or she receives Survivors' and 
Dependents' Educational Assistance (DEA) under 38 U.S.C. chapter 35, 
and must elect between VA death pension and DEA.
    (ii) A child who has reached the age of 18 and is not helpless may 
not receive dependency and indemnity compensation (DIC) at the same 
time as he or she receives DEA benefits, and must elect between DIC and 
DEA.
    (2) Effect of election on other beneficiaries when there is more 
than one parent in the same parental line. In cases where a child has 
more than one parent in the same parental line, if the child elects to 
receive benefits based on one parent, VA will consider the child's 
entitlement for purposes of determining the entitlement and rate of 
other survivors of that parent. For benefits based on the other 
parent's service, VA will determine the entitlement and rate of the 
survivors of that parent as if the child did not exist.
    (3) Effective date. VA will discontinue the electing child's VA 
death pension or DIC effective the day preceding the beginning date of 
the DEA allowance. VA will increase payments, pay a reduced rate, or 
discontinue VA death pension or DIC to the remaining beneficiaries 
effective the beginning date of the DEA award to the child.
    (b) Child who is under age 18 or helpless. Generally, a helpless 
child or a child who is younger than 18 may receive VA death pension or 
DIC at the same time as DEA under 38 U.S.C. chapter 35.
    (c) Surviving spouse. A surviving spouse may receive VA death 
pension or DIC at the same time as DEA under 38 U.S.C. chapter 35.
    (d) Additional criteria. Provisions concerning concurrent receipt 
of DEA and VA death pension or DIC are set forth in Sec.  21.3023 of 
this chapter.

(Authority: 38 U.S.C. 3562)

Sec. Sec.  5.765-5.769  [Reserved]

 [FR Doc. E7-19280 Filed 10-1-07; 8:45 am]
BILLING CODE 8320-01-P