# Apportionments to Dependents and Payments to Fiduciaries and Incarcerated Beneficiaries > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2011-228 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** January 14, 2011 - **Citation:** 76 FR 2766 ## Text DEPARTMENT OF VETERANS AFFAIRS 38 CFR Part 5 RIN 2900-AL74 Apportionments to Dependents and Payments to Fiduciaries and Incarcerated Beneficiaries AGENCY: Department of Veterans Affairs. ACTION: Proposed rule. SUMMARY: The Department of Veterans Affairs (VA) proposes to reorganize and rewrite in plain language regulations governing VA compensation, pension, burial, and related benefits, including regulations concerning apportionments, payments to fiduciaries, and payments to incarcerated beneficiaries and fugitive felons. 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 regulations. DATES: Comments must be received by VA on or before March 15, 2011. ADDRESSES: Written comments may be submitted through http://www.regulations.gov; by mail or hand-delivery to: Director, Regulations Management (02REG), Department of Veterans Affairs, 810 Vermont Ave., NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. Comments should indicate that they are submitted in response to “RIN 2900-AL74—Apportionments to Dependents and Payments to Fiduciaries and Incarcerated Beneficiaries.” 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) 461-4902 for an appointment (not a toll-free number). In addition, during the comment period, comments may be viewed online through the Federal Docket Management System (FDMS) at http://www.regulations.gov. FOR FURTHER INFORMATION CONTACT: William F. Russo, Director of Regulations Management (02REG), Department of Veterans Affairs, 810 Vermont Ave., NW., Washington, DC 20420, (202) 461-4902 (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 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 apportionments, payments to fiduciaries, and the manner in which VA reduces or discontinues benefit payments when beneficiaries are incarcerated or are fugitive felons. It also includes proposed rules regarding the adjustment and resumption of benefits based upon receipt of hospital, domiciliary, and nursing home care. 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 Subpart L—Payments and Adjustments to Payments Hospital, Domiciliary, and Nursing Home Care Reductions and Resumptions 5.720 Adjustments to special monthly compensation based on the need for regular aid and attendance while a veteran is receiving hospital, domiciliary, or nursing home care. 5.721 Resumption of special monthly compensation based on the need for regular aid and attendance after a veteran is on temporary absence from hospital, domiciliary, or nursing home care or is discharged or released from such care. 5.722 Reduction of Improved Pension while a veteran is receiving domiciliary or nursing home care. 5.723 Reduction of Improved Pension while a veteran, surviving spouse, or child is receiving Medicaid-covered care in a nursing facility. 5.724 Reduction or discontinuance of Improved Pension based on the need for regular aid and attendance while a veteran is receiving hospital, domiciliary, or nursing home care. 5.725 Resumption of Improved Pension and Improved Pension based on the need for regular aid and attendance after a veteran is on temporary absence from hospital, domiciliary, or nursing home care or is discharged or released from such care. 5.726 Reduction of Section 306 Pension while a veteran is receiving hospital, domiciliary, or nursing home care. 5.727 Reduction of Old-Law Pension while a veteran is receiving hospital, domiciliary, or nursing home care. 5.728 Reduction of Old-Law Pension or Section 306 Pension based on the need for regular aid and attendance while a veteran is receiving hospital, domiciliary, or nursing home care. 5.729 Resumption of Section 306 Pension and Section 306 Pension based on the need for regular aid and attendance after a veteran is on temporary absence from hospital, domiciliary, or nursing home care or is discharged or released from such care. 5.730 Resumption of Old-Law Pension and Old-Law Pension based on the need for regular aid and attendance after a veteran is on temporary absence from hospital, domiciliary, or nursing home care or is discharged or released from such care. Subpart M—Apportionments to Dependents and Payments to Fiduciaries and Incarcerated Beneficiaries Determining Eligibility for Apportionments 5.770 Apportionment claims. 5.771 Special apportionments. 5.772 Veteran's benefits apportionable. 5.773 Veterans disability compensation. 5.774 Benefits not apportionable. 5.780 Eligibility for apportionment of pension. 5.781 Eligibility for apportionment of a surviving spouse's dependency and indemnity compensation. 5.782 Effective date of apportionment grant or increase. 5.783 Effective date of apportionment reduction or discontinuance. 5.784 Special rules for apportioned benefits on death of beneficiary or apportionee. Incompetency and Payments to Fiduciaries and Minors 5.790 Determinations of incompetency and competency. 5.791 General fiduciary payments. 5.792 Institutional awards. 5.793 Limitation on payments for a child. 5.794 Beneficiary rated or reported incompetent. 5.795 Change of name of fiduciary. 5.796 Child's benefits to a fiduciary of an incompetent surviving spouse. 5.797 Testamentary capacity for VA insurance purposes. 5.798 Payment of disability compensation previously not paid because an incompetent veteran's estate exceeded $25,000. Payments to Incarcerated Beneficiaries 5.810 Incarcerated beneficiaries—general provisions and definitions. 5.811 Limitation on disability compensation during incarceration. 5.812 Limitation on dependency and indemnity compensation during incarceration. 5.813 Discontinuance of pension during incarceration. 5.814 Apportionment when a primary beneficiary is incarcerated. 5.815 Resumption of disability compensation or dependency and indemnity compensation upon a beneficiary's release from incarceration. 5.816 Resumption of pension upon a beneficiary's release from incarceration. 5.817 Fugitive felons. Non-Inclusion of Certain Part 3 Rules in Part 5 Endnote Regarding Amendatory Language Paperwork Reduction Act of 1995 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 provisions governing a specific benefit are located in the same subpart, with general provisions pertaining to all compensation and pension benefits also grouped together. This organization will allow claimants, beneficiaries, and their representatives, as well as VA adjudicators, 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 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 claims and benefit application filing procedures, VA's duties, rights and responsibilities of claimants and beneficiaries, general evidence requirements, and general effective dates for new awards, as well as revision of decisions and protection of VA ratings. This subpart was 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. See 72 FR 28770. The third, concerning rules on filing VA benefits claims, was published as proposed on April 14, 2008. See 73 FR 20136. “Subpart D—Dependents and Survivors” would inform readers how VA determines whether an individual is a dependent or a survivor for purposes of determining eligibility for VA benefits. 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 disability compensation and service connection, including direct and secondary service connection. This subpart would inform readers how VA determines service connection and entitlement to disability compensation. 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 has been 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. The second, relating to special ratings and ratings for health care eligibility only, was published as proposed on October 17, 2008. See 73 FR 62004. The third, relating to service-connected and other disability compensation, was published as proposed on September 1, 2010. See 75 FR 53744. “Subpart F—Nonservice-Connected Disability Pensions and Death Pensions” would include information regarding the three types of nonservice-connected pension: Old-Law Pension, Section 306 Pension, and Improved 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 was published as 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. The portion concerning eligibility and entitlement requirements, as well as effective dates, for Improved Pension was published as proposed on September 26, 2007. See 72 FR 54776. “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. This subpart was published as proposed on April 8, 2008. See 73 FR 19021. “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, this subpart, except for several regulations concerning hospital, domiciliary, and nursing home care reductions and resumptions, was published in two separate NPRMs. The first, concerning payments to beneficiaries who are eligible for more than one benefit, was published as proposed on October 2, 2007. See 72 FR 56136. The second, concerning provisions applicable to payment of VA benefits and adjustments to payments, was published as proposed on October 31, 2008. See 73 FR 65212. The hospital, domiciliary, and nursing home care regulations are included in 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. This subpart is the primary subject of this NPRM. 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 this method will assist readers in understanding these proposed regulations where no part 5 counterpart has yet been published. 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 NPRM This NPRM pertains to regulations that govern apportionments of benefits, as well as certain matters pertaining to fiduciaries of incompetent beneficiaries and minors. It also pertains to regulations governing incarcerated beneficiaries and beneficiaries who are fugitive felons. These regulations would be contained in proposed Subpart M of new 38 CFR part 5. This NPRM also includes eleven regulations concerning reductions of VA benefits based on hospitalization at government expense. 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 their existing counterparts in 38 CFR part 3. However, a few substantive differences are proposed, as are some regulations that 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 proposed regulations contained in this NPRM and the current regulations in part 3: Proposed part 5 section or paragraph Based in whole or in part on 38 CFR part 3 section or paragraph 5.720(a) 3.551(a), 3.552(b)(3), 3.556(a), 3.556(f) 5.720(b) 3.501(b)(1) and (2), 3.552(a)(1), (b)(1), (b)(2), and (c) 5.720(c)(1) 3.552(b)(2), 3.501(b)(2) 5.720(c)(2) 3.552(d) and (i) 5.720(c)(3) 3.552(f) and (g) 5.720(c)(4) 3.552(h) 5.720(c)(5) and (6) 3.552(a)(3) 5.720(d) 3.552(a)(1) and (2) 5.720(e)(1) New. 5.720(e)(2) and (3) 3.552(b)(3) 5.720(f) 3.552(k) 5.721 New. 5.722(a)(1) 3.551(e)(1) 5.722(a)(2) 3.551(e)(1) 5.722(a)(3) 3.501(i)(5)(i), 3.551(e)(1) 5.722(b)(1) 3.551(a) 5.722(b)(2) and (b)(3) New. 5.722(b)(4) 3.551(e)(6) 5.722(c) 3.551(e)(3) 5.722(d)(1) 3.501(i)(5)(ii), 3.551(e)(2) 5.722(d)(2) New. 5.722(e) 3.551(e)(4) 5.722(f) 3.551(h) 5.722(g) 3.551(e) 5.723 3.501(i)(6), 3.502(f), 3.551(i) 5.724(a) 3.501(b)(1), 3.552(b)(1) and (e) [third and fourth sentences] 5.724(b) 3.552(a)(1) and (2) 5.724(c) 3.501(i)(3), 3.552(b)(3) 5.724(d) 3.552(k) 5.725 New. 5.726(a)(1) 3.551(a) and (c)(1) 5.726(a)(2) 3.551(g) 5.726(a)(3) 3.551(c)(1) 5.726(a)(4) 3.501(i)(2)(i), 3.551(c)(1) 5.726(a)(5) 3.551(f) 5.726(b)(1) 3.551(a) 5.726(b)(2) and (3) New. 5.726(c) 3.551(c)(3) 5.726(d)(1) 3.501(i)(2)(iii), 3.551(c)(2) 5.726(d)(2) New. 5.727(a)(1) 3.551(b)(1) 5.727(a)(2) 3.551(g) 5.727(a)(3) 3.551(b)(1) 5.727(a)(4)(i) 3.501(i)(1), 3.551(b)(1) 5.727(a)(4)(ii) 3.551(b)(3) 5.727(b)(1) 3.551(a) 5.727(b)(2) and (3) New. 5.727(c)(1) 3.551(b)(2) 5.727(c)(2)(i) New. 5.727(c)(2)(ii) 3.551(b)(3) 5.728(a) 3.501(b)(1), 3.552(b)(1), (e) and (j) 5.728(b) 3.552(e) 5.728(c) 3.552(b)(3) 5.729(a) 3.556(a) 5.729(b) 3.556(b) and (d) [third sentence] 5.729(c) 3.556(c) 5.729(d) 3.556(d) [first sentence] and (e) 5.730(a) 3.556(a)(1) 5.730(b) 3.556(b) 5.730(c) 3.556(e) 5.730(d) 3.556(d) 5.770 3.450 5.771 3.451 5.772(a) 3.452(a) 5.772(b) 3.452(b) 5.772(c) 3.452(c), 3.454 5.772(d) 3.452(d) 5.773 3.453 5.774 3.58, 3.458, 3.503(a)(2), 3.901(c), and 3.902(c) 5.780 3.450(a)(1)(ii), 3.451, and 3.460(b) and (c) 5.781(a) 3.461(a) 5.781(b) 3.461(b)(1) 5.782(a) 3.400(e)(1) 5.782(b)(1) Introduction to 3.400(e) 5.782(b)(2) New. 5.782(b)(3) 3.400(e)(2) 5.782(b)(4) 3.665(f) 5.783(a) 3.500(d)(1) 5.783(b)(1) and (2) 3.500(g) and (n) 5.783(b)(3) New. 5.783(b)(4) New. 5.784(a) 3.1000(b)(2) 5.784(b)(1) 3.1000(b)(1) 5.784(b)(2) 3.1000(b)(3) 5.790(a) 3.353(a) 5.790(b) 3.353(b) 5.790(c) 3.353(c) 5.790(d) 3.353(d) 5.790(e) 3.353(e) 5.790(f)(1) 3.400(x) 5.790(f)(2) 3.400(y) 5.791(a) 3.850(a) 5.791(b) 3.850(c) 5.791(c) 3.850(b) 5.791(d) 3.850(d) 5.791(e) 3.400(n), 3.500(m) 5.792(a) 3.852(a) 5.792(b) 3.852(b), 3.852(d) [first sentence] 5.792(c) 3.852(d) [second sentence] 5.792(d) 3.852(c) 5.792(e) 3.401(d) 5.792(f) 3.501(j) 5.793 3.403(a)(2), 3.854 5.794(a) 3.855(a) 5.794(b)(1) 3.855(b)(1) 5.794(b)(2) 3.855(b)(2) 5.794(b)(3) 3.855(b)(3) 5.795 3.856 5.796 3.857 5.797 3.355 5.798 3.853(c) 5.810(a) 3.665(b) 5.810(b) New. 5.810(c) 3.665(a) and introduction to 3.666 5.810(d) New. 5.810(e) 3.665(a) and introduction to 3.666 5.810(f) 3.665(a) and introduction to 3.666 5.811(a) 3.665(a) and (c) 5.811(b) 3.665(j)(3)(ii) and (k) 5.811(c) 3.665(d)(1) and (2) and (j) 5.812(a) 3.665(a) and (c) 5.812(b) 3.665(d)(3) 5.812(c) 3.665(l) 5.812(d) 3.665(k) 5.813(a) Introduction to 3.666 5.813(b) 3.666(d) 5.814(a)(1) 3.665(a) 5.814(a)(2) 3.665(h) 5.814(b) 3.665(e) 5.814(c) 3.666(a)(1), (a)(2), and (a)(3) 5.814(d) 3.666(b)(1), (b)(2) and (b)(4) 5.814(e) 3.665(f), 3.666(a)(4) and (b)(3) 5.815(a) 3.665(i) 5.815(b) 3.665(i)(1) and (i)(3) 5.815(c) 3.665(i)(2) and (i)(3) 5.815(d) 3.665(m) 5.816 3.666(c) 5.817(a) 3.665(n)(1) and 3.666(e)(1) 5.817(b) 3.665(n)(2) and (3); 3.666(e)(2) and (3) Readers who use this table to compare the proposed provisions with the existing regulatory provisions and 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 repeated in 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 Subpart L: Payments and Adjustments to Payments Hospital, Domiciliary, and Nursing Home Care Reductions and Resumptions We propose to rewrite current §§ 3.551, 3.552, and 3.556, by dividing the disability compensation and pension provisions in those sections into separate sections. Each section would address different VA benefits. Section 5.720 Adjustments to Special Monthly Compensation Based on the Need for Regular Aid and Attendance While a Veteran Is Receiving Hospital, Domiciliary, or Nursing Home Care Proposed § 5.720 includes provisions for discontinuing special monthly compensation (SMC) that is payable because a veteran is in need of regular aid and attendance or a higher level of care while receiving hospital, domiciliary, or nursing home care. In proposed § 5.720(a), we would define the terms “hospital care”, “domiciliary or nursing home care”, “temporary absence”, and “regular” and “irregular” discharge or release for purposes of §§ 5.720 through 5.730. Current 38 CFR 3.551(a) defines the terms “hospitalized” and “hospitalization” to include “[h]ospital treatment in a Department of Veterans Affairs hospital or in any hospital at Department of Veterans Affairs expense” and “[i]nstitutional, domiciliary or nursing home care in a Department of Veterans Affairs institution or domiciliary or at Department of Veterans Affairs expense.” We propose to not include the terms “institution” or “institutional” in the definition of “hospital care” in § 5.720(a)(1) or elsewhere in §§ 5.720-5.730 because, with respect to specific types of VA care or facilities, the terms are obsolete. In 1978, Congress amended 38 U.S.C. 3203(a)(1), the precursor to 38 U.S.C. 5503(a), in part by replacing a reference to “hospital treatment, institutional, or domiciliary care” with references to “domiciliary care” and “hospital or nursing home care.” See Veterans' and Survivors' Pension Improvement Act of 1978, Public Law 95-588, section 307, 92 Stat. 2497, 2510. Despite this change of terminology in the authorizing statute applicable to Improved Pension, VA kept references to “institutional” care in its part 3 regulations on hospitalization adjustments because the statutes applicable to Section 306 Pension and Old-Law Pension still refer to institutional care and do not refer to nursing home care. However, VA has interpreted “institutional care” in these statutes to include “nursing home care”. Accordingly, as stated in § 3.551(a), VA applies the definition of “hospitalized” that includes “nursing home care” to §§ 3.551 through 3.556, including to those provisions pertaining to Section 306 Pension and Old-Law Pension. Therefore, in keeping with current 38 U.S.C. 5503(a), we have not included any reference to institutional care in proposed §§ 5.720-5.730. Current 38 CFR 3.556(f) defines a “regular” discharge as one which “is granted because of having received maximum hospital benefits.” To further clarify the definition, in proposed § 5.720(a)(3), we would define the term “regular discharge or release” to mean “a veteran, surviving spouse, or child is discharged or released at the order of a medical professional based on that professional's opinion that there is no medical reason to continue care.” VA's regulations on reduction of pension benefits refer only to veterans and surviving spouses. We propose to add “child” to paragraphs (a)(3)-(a)(5) to make these definitions consistent with Veterans' Benefits Act of 2010, Public Law 111-275, section 606, 124 Stat. 2886. Proposed § 5.720(a)(4), defining “irregular discharge or release,” is derived from current § 3.556(f), which defines the term specifically, and current § 3.552(b)(3), which implicitly defines the term as it applies to readmissions to hospital, domiciliary, or nursing home care. Proposed § 5.720(a)(4) defines the term to mean a discharge or release from a period of hospital, domiciliary, or nursing home care for any of the following reasons: refusal to accept treatment, neglect of treatment, obstruction of treatment, disciplinary reasons, refusal to accept transfer to another facility, leaving a facility against medical advice, or failure to return from unauthorized or authorized absence. The current rules do not explicitly address those patients who leave hospital, domiciliary, or nursing home care without authorization from the staff and fail to return. VA's practice is to treat such an absence as an irregular discharge or release even if the patient is not formally discharged or released at the time of departure. Accordingly, proposed § 5.720(a)(4), defining “irregular discharge or release” would include situations in which a veteran, surviving spouse, or child fails to return from unauthorized absence. Proposed § 5.720(a)(5) would define “temporary absence” to mean “a veteran, surviving spouse, or child is placed on non-bed care status or authorized absence.” The definition derives from current § 3.556(a). We would also clarify that a temporary absence is not a discharge or release. In proposed § 5.720(c), describing how to calculate the reduced rate of SMC, we have identified the benefits to be reduced and the new rates by referring to the appropriate part 5 regulations as a convenience for the reader. Identification by implementing regulation is not a substantive change from current § 3.552, which identifies a given benefit by the benefit's authorizing statute and verbal description. More specifically, in proposed § 5.720(c)(4), derived from current § 3.552(h), we identify the benefit to be reduced as SMC under § 5.326(i). Because the reference to § 5.326(i) signifies only SMC payable under 38 U.S.C. 1114(m) for blindness in both eyes leaving a veteran so significantly disabled as to need regular aid and attendance, § 5.720(c)(4) identifies the same benefit as § 3.552(h) does, and it is unnecessary to state in proposed § 5.720(c)(4) that vision must be better than light perception only. Such language is necessary in § 3.552(h) because SMC under section 1114(m) may be paid for either blindness in both eyes having only light perception or for blindness in both eyes leaving the veteran so significantly disabled as to be in need of regular aid and attendance. Only SMC based on the latter condition is reduced based on hospital, domiciliary, or nursing home care, and only SMC based on the latter condition is payable under § 5.326(i); therefore, further clarification is unnecessary in § 5.720(c)(4). In proposed paragraphs (c)(1) and (f)(1), we have clarified that SMC paid under 38 U.S.C. 1114(r) is discontinued or not payable while a veteran is receiving hospital care that is provided at United States Government expense. We also specify that the discontinuance required by paragraph (c)(1) is made only for the receipt of hospital care and is not made for the receipt of domiciliary or nursing home care. Both of these clarifications are based upon the plain language of the authorizing statute, 38 U.S.C. 5503(c). In proposed § 5.720(c)(2)(ii), we have referred to a veteran who “has been awarded the intermediate or next higher rate based on additional disability that is independently ratable.” Although current § 3.552(i) refers more specifically to “disability independently ratable at 50 percent or 100 percent”, such specificity is unnecessary. The reference in § 5.720(c)(2)(ii) to proposed § 5.331(d)(1) and (e)(1) implies that the veterans described are those with disability independently ratable at 50 percent or higher (under § 5.331(d)(1)) or 100 percent (under § 5.331(e)(1)). Further, if the proposed rule was specific, it is possible that it would be misconstrued to exclude veterans with disability independently ratable at 60, 70, 80, or 90 percent. Proposed § 5.720(d) restates in plain language exceptions contained in § 3.552(a)(1) and (a)(2). As we have proposed elsewhere in part 5, we would substitute the phrase “loss of use” for the current term “paralysis”. See 73 FR 62004, 62013, 62023 (Oct. 17, 2008) (pertaining to proposed § 5.330(d)). The term “paralysis” is not defined for VA purposes. It is a term most commonly associated with inability to move or have sensation in a body part as a result of an injury or of a disease of the nervous system. This is a narrow definition that does not address disabilities resulting from muscle or bone damage. The phrase “loss of use” is used extensively by VA personnel in rating disabilities involving the extremities and therefore is an appropriate substitute term. The phrase “loss of use” will be clearer to the reader. Proposed § 5.720(e)(1) is a new provision that states explicitly a rule that is implicit in current § 3.552(b)(3). Under § 3.552(b)(3), from which § 5.720(e)(2) and (3) are derived, VA will, in certain circumstances, immediately reduce a veteran's rate of SMC if the veteran is readmitted to hospital, domiciliary, or nursing home care after a prior period of care for which VA had reduced or discontinued the veteran's SMC. That rule applies if the veteran was given an irregular discharge or release from the prior period of care and the readmission is less than 6 months thereafter. In contrast, proposed § 5.720(e)(1) provides that a readmission to care following a regular discharge from a prior period of care will be treated as if it were an initial admission (i.e., the reduction will not be immediate). Under 38 U.S.C. 5503(c), VA is authorized to immediately reduce benefits only if the readmission follows an irregular discharge, not a regular discharge. The new provision explicitly states current VA practice and is favorable to veterans. Proposed § 5.720 includes references to several SMC regulations—§§ 5.323, 5.324, 5.326, 5.328, 5.330, 5.331, 5.332, and 5.333—which were published as proposed on October 17, 2008. See 73 FR 62004. Section 5.721 Resumption of Special Monthly Compensation Based on the Need for Regular Aid and Attendance After a Veteran Is on Temporary Absence From Hospital, Domiciliary, or Nursing Home Care or Is Discharged or Released From Such Care There is no regulation in current 38 CFR part 3 or any statute in 38 U.S.C. regarding resumption of benefits after a veteran whose special monthly compensation based on the need for regular aid and attendance was reduced due to hospital, domiciliary, or nursing home care is discharged or released from such care. Proposed § 5.721 would fill this gap. We have modeled this section on the rules in current § 3.556, “Adjustment on discharge or release”, which concerns resumptions of pension benefits upon discharge or release from hospital, domiciliary, or nursing home care. VA has applied these provisions to thousands of veterans' awards over more than 20 years. VA staff can administer them efficiently, and they result in fair and consistent adjustments of veterans' benefits. Section 5.721(b) would incorporate language from current § 3.556(e), which sets out the rules for resuming benefits following regular discharge or release from hospital, domiciliary, or nursing home care. Section 3.556(e) states that the award resuming benefits “will be based on the most recent rating”. The intent of this provision is to ensure that the veteran is paid the proper amount upon discharge or release. For consistency, we have also inserted similar language in §§ 5.725(c)(1) and (2), 5.729(d), and 5.730(c) and (d). Throughout § 5.721(b) and these other sections, instead of using the phrase “based on the most recent rating”, we would state, “Payment will be resumed at the rate in effect before the reduction based on [receipt of such care], unless the evidence of record shows that a different rate is required.” The use of this broader language throughout these regulations would also encompass beneficiaries whose benefits are not based on a rating decision, such as Improved Pension recipients 65 years of age or over (to whom proposed § 5.725(c)(2) might apply). We use the same language in the proposed regulations that govern the resumption of benefits following an irregular discharge. Similar language is not contained in current § 3.556(d), which covers irregular discharge or release. VA regulations originally made no distinction between regular and irregular discharges or releases; the award of benefits following either type of discharge or release was to be based on “the last valid rating.” Vet. Reg. No. 6(c), Instruction No. 2, para. IV(e) (Oct. 18, 1934). When VA amended its regulations to distinguish between these types of discharges or releases, VA inadvertently failed to provide for the resumption of the rate in effect prior to the period of care that ended with the irregular discharge or release. See R&PR 1256(A) (Mar. 4, 1947). Section 5.722 Reduction of Improved Pension While a Veteran Is Receiving Domiciliary or Nursing Home Care Proposed § 5.722 addresses the reduction of Improved Pension while a veteran is receiving domiciliary or nursing home care. In proposed § 5.722(a), we would clarify that the requirement that VA reduce Improved Pension being paid to a veteran who receives domiciliary or nursing home care for three full calendar months applies only if such care is continuous. This is consistent with long-standing VA practice. Proposed § 5.722(b) would provide that VA will not reduce a veteran's Improved Pension if any one of the exceptions listed applies. Although current § 3.551 provides exceptions to the reduction of pension, the current regulation is not complete. It is important to clearly state when VA will not reduce Improved Pension payable to a veteran who is receiving domiciliary or nursing home care. Therefore, we have added provisions in proposed paragraphs (b)(2) and (3) to expand upon the rules carried forward from current § 3.551. The additions are exceptions for veterans maintained in a State soldiers' home or receiving domiciliary or nursing home care in a State home and the only payment made by VA to the State for the State home is the per diem rate under 38 U.S.C. 1741. The provisions reflect VA's long-standing practice not to reduce benefits when one of the described situations occurs. Regarding veterans receiving care in a State home, such practice is mandated by 38 U.S.C. 1741. Section 1741(e) specifically provides that per diem payments to a State may not be considered a liability of a third party or otherwise be used to offset or reduce any other payment made to assist veterans. Although proposed § 5.722 generally pertains to veterans who have no spouse for VA purposes, the law provides for apportionment of pension benefits to a veteran's spouse in certain situations. See 38 U.S.C. 5503(a)(2). We have included in proposed paragraph (c) a cross reference to proposed § 5.772(c)(2)(ii), which provides the specific provision relating to such apportionments. The maximum amount that may be apportioned to the spouse is the difference, if any, between $90 and the amount that the veteran would be entitled to receive if he or she were being paid as a married veteran. That information is contained in current § 3.454(b)(3) and its part 5 counterpart, § 5.772(c)(2)(ii). We have not included the information about the rate payable to a married veteran in § 5.722(c), even though it is contained in its part 3 counterpart, current § 3.551(e), which refers to 38 U.S.C. 1521(c). By eliminating the redundant material, proposed § 5.722(c) is easier to read and understand than current § 3.551(e). Proposed § 5.722(d)(1) is based on current §§ 3.501(i)(5)(ii) and 3.551(e)(2), which govern payments when a veteran is readmitted within 6 months after a period of domiciliary or nursing home care for which Improved Pension was reduced. Proposed paragraph (d)(2) is a new provision, which provides that, if a veteran is readmitted 6 months or more after a period of domiciliary or nursing home care for which Improved Pension was reduced, the readmission will be considered a new admission. This new provision, based on a long-standing VA procedure, would make § 5.722 more explicit and easier to apply than current § 3.551. Proposed § 5.722(f) would address veterans who are provided nursing home care as part of a prescribed program of rehabilitation under 38 U.S.C. chapter 17. The provisions are derived from current § 3.551(h) with a few changes. The reference to “Chief Medical Director” is outdated because Congress has changed the title “Chief Medical Director” to “Under Secretary for Health.” Public Law 102-405, section 302(a), 106 Stat. 1972, 1984 (1992). We use the current title. Proposed § 5.722(g) would state that, “If a veteran becomes entitled to Improved Pension while receiving domiciliary or nursing home care, VA will reduce pension, or pay a reduced rate of pension, in accordance with this section.” This rule is implicit in both the statute, 38 U.S.C. 5503(a), and current § 3.551(e), but is explicit in part 5 to reflect current VA practice regarding new awards of Improved Pension. We have intentionally not included the provisions in current § 3.551(d) applicable to reduction of Improved Pension for veterans receiving care before February 1, 1990. The current paragraph provides that if a veteran without spouse or child was receiving hospital, domiciliary, or nursing home care before February, 1, 1990, VA will reduce the veteran's pension during such care. With the passage of time, these provisions are now unnecessary. It is unlikely that VA would now retroactively reduce a veteran's Improved Pension because of care provided more than 20 years in the past. Consequently, we have also not included current § 3.501(i)(4), which contains effective dates for reductions under § 3.551(d). Similarly, we also propose to omit the provisions of current § 3.551(e)(5), which provide that effective February 1, 1990, Improved Pension is no longer reduced because of hospital care unless the veteran is receiving Improved Pension based on the need for regular aid and attendance. Such language is unnecessary because proposed § 5.722 is limited to domiciliary or nursing home care. Provisions related to hospital reductions before February 1, 1990, would not be included in part 5. Section 5.723 Reduction of Improved Pension While a Veteran, Surviving Spouse, or Child Is Receiving Medicaid-Covered Care in a Nursing Facility Proposed § 5.723 concerns situations in which a veteran, surviving spouse, or child is receiving Medicaid-covered nursing facility care. It is a plain language rewrite of current §§ 3.501(i)(6), 3.502(f), and 3.551(i), except that we have added “child” to make the rule consistent with Veterans Benefits Act of 2010, Public Law 111-275, section 606, 124 Stat. 2886. We propose to use the term “nursing facility” instead of the term “nursing home”, which is used in the current regulation, because the authorizing statute, 38 U.S.C. 5503(d), uses the term “nursing facility”. Proposed § 5.723(a) includes an exception that is contained in 38 U.S.C. 5503(d)(1)(B) that is not contained in part 3. For veterans receiving care in a State home to which VA makes per diem payments under 38 U.S.C. 1741, VA does not reduce benefits under this section. In proposed § 5.723(b), we have updated the reference to § 3.103(b)(2), contained in current §§ 3.501(i)(6)(i) and 3.502(f)(1), to refer instead to its proposed part 5 counterpart, § 5.83(b), “Right to notice of decisions and proposed adverse actions”, which was published as proposed on May 10, 2005. See 70 FR 24680, 24687. Proposed § 5.723(d) is a new provision that states, “If a veteran, surviving spouse, or child described in paragraph (a) of this section becomes entitled to Improved Pension while receiving Medicaid-covered care in a nursing facility, then VA will not pay more than $90 per month while the veteran, surviving spouse, or child receives such care.” This rule is implicit in both 38 U.S.C. 5503(d) and current § 3.551(i), but is explicit in part 5 to reflect current VA practice regarding new awards of Improved Pension under these circumstances. Section 5.724 Reduction or Discontinuance of Improved Pension Based on the Need for Regular Aid and Attendance While a Veteran Is Receiving Hospital, Domiciliary, or Nursing Home Care Proposed § 5.724 includes provisions for reduction of Improved Pension based on the need for regular aid and attendance while a veteran is receiving hospital, domiciliary, or nursing home care. It is a plain language rewrite of applicable provisions involving Improved Pension in current §§ 3.501 and 3.552. Proposed § 5.724(b) is based on current § 3.552(a)(1) and (2) and 38 U.S.C. 5503(b). Section 5503(b) prohibits the reduction of any type of VA pension (including Improved Pension based on the need for regular aid and attendance) for VA hospital, institutional, or domiciliary care for Hansen's disease. We have included similar language regarding VA hospital, domiciliary, or nursing home care for Hansen's disease in both § 5.724(b)(2) and § 5.728(b)(2). Current § 3.552(a)(2) states that Improved Pension based on the need for regular aid and attendance will not be reduced if the “pensionable disability is blindness (visual acuity 5/200 or less) or concentric contraction of visual field to 5 degrees or less.” The term “pensionable disability” used in § 3.552(a)(2) is imprecise because more than one disability may serve as the basis for pension entitlement. The description of blindness in § 3.552(a)(2) is based on the description in § 3.351(c)(1), which provides that a veteran or surviving spouse with that level of blindness will be considered to be in need of regular aid and attendance. Therefore, “pensionable disability” as used in § 3.552(a)(2) refers to the disability causing the need for regular aid and attendance, in this case, blindness of the level described in § 3.351(c)(1). (The part 5 equivalent to current § 3.351(c)(1) is § 5.390(b)(1) or (2), which was published as proposed on September 26, 2007. See 72 FR 54776, 54794.) We have drafted proposed § 5.724(b)(1)(iii) to state the intended concept in plain language. Section 5.725 Resumption of Improved Pension and Improved Pension Based on the Need for Regular Aid and Attendance After a Veteran Is on Temporary Absence From Hospital, Domiciliary, or Nursing Home Care or Is Discharged or Released From Such Care Current § 3.556, “Adjustment on discharge or release”, is the only regulation in current 38 CFR part 3 regarding resumption of pension benefits after a veteran is discharged or released from hospital, domiciliary, or nursing home care. However, much of § 3.556 refers to Old-Law and Section 306 Pensions. In proposed § 5.725, we would use § 3.556 as the basis for a new rule regarding resumptions of Improved Pension and Improved Pension based on the need for regular aid and attendance. Based on VA's experience in applying § 3.556, this new rule will result in fair, consistent adjustments of Improved Pension and Improved Pension based on the need for regular aid and attendance. Section 5.726 Reduction of Section 306 Pension While a Veteran Is Receiving Hospital, Domiciliary, or Nursing Home Care Proposed § 5.726, based on the portions of current 38 CFR 3.551 that pertain to Section 306 Pension, provides for reduction of Section 306 Pension when a veteran is receiving hospital, domiciliary, or nursing home care. Proposed § 5.726(a)(2), regarding proof of dependents, is based on current § 3.551(g) as it applies to Section 306 Pension. We propose to omit from part 5 the first two sentences of current § 3.551(g), which read, “The veteran will be considered to have neither spouse, child nor dependent parent in the absence of satisfactory proof. Statements contained in the claims folder concerning the existence of such dependents will be considered a prima facie showing.” The first sentence is superfluous because there must be satisfactory proof of every fact to be proven in a veteran's claim. The second sentence guides VA staff to refrain from seeking evidence of dependents if such evidence is already of record. This guidance is more appropriately contained in internal VA procedures or training publications. Proposed § 5.726(a)(4) is based on current § 3.551(c)(1), which applies the same effective date of reduction for domiciliary care as for hospital or nursing home care. However, § 3.501(i)(2), which is based on § 3.551(c), provides two different effective dates of reduction for Section 306 Pension recipients, one for domiciliary care (§ 3.501(i)(2)(i)) and a later one for hospital or nursing home care (§ 3.501(i)(2)(ii)). The effective date under § 3.551(c)(1) for all three types of care is the same as the date used in § 3.501(i)(2)(i) for domiciliary care. The basis for the conflict between the two current rules, §§ 3.551(c)(1) and 3.501(i)(2)(ii), began in 1979, when both §§ 3.501 and 3.551 were amended to implement section 307 of Public Law 95-588, 92 Stat. 2497, 2510 (amending former 38 U.S.C. 3203(a), currently section 5503). 44 FR 45930, 45940-41 (Aug. 6, 1979). Prior to being amended, §§ 3.501(i)(2) and 3.551(c) provided for the reduction in pension to begin after two full calendar months of VA-furnished hospital, domiciliary, or nursing home care. 38 CFR 3.501(i)(2) and 3.551(c) (1978). With regard to VA-furnished hospital and nursing home care, section 307 of Public Law 95-588 delayed the reduction by one full month. 92 Stat. at 2510. VA applied this liberalization to both Improved Pension and Section 306 Pension. 44 FR at 45940-41. However, in VAOPGCPREC 19-90, 55 FR 40990 (Oct. 5, 1990), VA's General Counsel held that the liberalizations made to the limitation contained in former 38 U.S.C. 3203(a) were not intended to apply to Section 306 Pension. Therefore, in February 1991, VA proposed amendments to § 3.551 to comply with VAOPGCPREC 19-90. 56 FR 7630, 7632 (Feb. 25, 1991). When the final rule was published in December 1991, VA also amended § 3.501(i), purportedly “to conform with the newly adopted amendments to [§ 3.551].” 56 FR 65848 (Dec. 19, 1991). However, amended § 3.501(i)(2)(ii) did not conform with § 3.551(c)(1). Id. at 65849, 65850. Accordingly, § 3.551(c)(1), as amended, is consistent with former 38 U.S.C. 3203(a)(1) and VAOPGCPREC 19-90, but § 3.501(i)(2)(ii) is not. Therefore, we propose not to include any equivalent to § 3.501(i)(2)(ii) in part 5. The second sentence of § 3.551(f) uses the phrase, “exclusive of authorized absences in excess of 96 hours.” The phrase is redundant of the reference to authorized absences in the first sentence of paragraph (f), so we propose not to include it in part 5. Current § 3.551(f) also contains a reference to a 90-day period of hospitalization. However, paragraph (f) refers solely to calculating hospitalization periods under paragraph (c), which only refers to 60-day periods. The “90-day” reference is another artifact of the 1979 amendments, discussed above, and is no longer necessary. Therefore, we propose not to include the reference in part 5. Proposed § 5.726(b) would state the circumstances in which VA will not reduce Section 306 Pension while the veteran is receiving hospital, domiciliary, or nursing home care. The paragraph would incorporate current § 3.551(a) and add two other exceptions that are based on long-standing VA practice, that is, veterans receiving care in a State soldiers' home or in a State home. See the discussion earlier in this NPRM related to proposed § 5.722(b)(2) and (3) for more information concerning these exceptions to the general reduction rule. Provisions regarding apportionment of Section 306 Pension benefits to the veteran's spouse are included in proposed § 5.726(c). We have included a cross reference to proposed § 5.772, which provides the specific rules relating to such apportionments. Proposed § 5.726(d)(2) provides that if a veteran is readmitted 6 months or more after a period of hospital, domiciliary, or nursing home care, the readmission will be considered a new admission. This provision, based on a long-standing VA procedure, has been added to increase the clarity of the rule stated in current § 3.551. Section 5.727 Reduction of Old-Law Pension While a Veteran Is Receiving Hospital, Domiciliary, or Nursing Home Care Proposed § 5.727 addresses veterans receiving Old-Law Pension and the reduction of such benefits while the veteran is receiving hospital, domiciliary, or nursing home care. Proposed § 5.727(a)(1) is based on current § 3.551(b)(1). Current § 3.551(b)(1) unnecessarily contains the term “dependent parent” as it refers to dependents of a veteran who is in receipt of Old-Law Pension. Prior to being amended in 1972, 38 CFR 3.551(b) applied to reductions of disability compensation and pension. Whereas a veteran receiving disability compensation may receive an additional allowance for dependent parents, payment of Old-Law Pension is neither adjusted nor otherwise affected because of a dependent parent. See 38 U.S.C. 503, 521, 522 (1958) (providing the statutory authority for Old-Law Pension, as in effect June 30, 1960, prior to amendment by Pub. L. 86-211). When § 3.551(b) was amended in 1972 to apply only to pension, the term was nevertheless retained. See 37 FR 19132, 19133 (Sept. 19, 1972). In addition to being unnecessary, the use of “dependent parent” in § 3.551(b) is potentially misleading because it implies that a veteran receiving Old-Law Pension could have a dependent parent. Therefore, in proposed § 5.727(a)(1), we are not including the term. Proposed § 5.727(a)(2), regarding proof of dependents, is based on current § 3.551(g) as it applies to Old-Law Pension. In proposed § 5.727(a)(4)(i), we clarify that VA excludes any month (other than the month of admission) that contains an authorized absence from its calculation of the effective date. This rule is not stated in current § 3.551(b)(1) but is based on current § 3.551(b)(3), which pertains to veterans who have been irregularly discharged and then readmitted prior to the effective date of the reduction. To the extent that this clarification is not explicit in part 3, including it in part 5 is favorable to veterans. To apply the rule excluding periods of authorized absence only when a veteran has been irregularly discharged would be unfair to veterans who have complied with their care. Proposed § 5.727(a)(4)(ii) describes the effect of an irregular discharge that occurs prior to the initial reduction of Old-Law Pension. The first sentence is based on § 3.551(b)(3) and provides that the reduction is effective without regard to the irregular discharge if the readmission occurs before the general effective date. The second sentence of proposed § 5.727(a)(4)(ii) provides that if the veteran is readmitted after the first day of the seventh calendar month after the month of admission to hospital, domiciliary, or nursing home care, the readmission will be considered a new admission. Although this provision is not explicitly stated in part 3, it is based on current VA practice and is favorable to veterans. Proposed § 5.727(b) would state the circumstances in which VA will not reduce Old-Law Pension while the veteran is receiving hospital, domiciliary, or nursing home care. The paragraph would include language from current § 3.551(a) and add two other exceptions based on long-standing VA practice. See the discussion above related to proposed § 5.722(b)(2) and (3) for more information concerning these exceptions to the general reduction rule. Proposed § 5.727(c)(2)(i) is a new provision based on paragraph (a)(1) of 38 U.S.C. 3203 (the predecessor to current 38 U.S.C. 5503) as in effect on June 30, 1960, which provides that if a veteran is readmitted to VA hospitalization following an irregular discharge from a prior VA hospitalization during which Old-Law Pension was reduced, Old-Law Pension will be reduced effective from the date of readmission. See Public Law 85-857, 72 Stat. 1105, 1234 (1958). That paragraph, as it pertains to Old-Law Pension, was amended by section 3 of Public Law 89-362, 80 Stat. 30 (1966), to limit the rule to readmissions that are within 6 months of the date of irregular discharge or release from the prior hospitalization. Section 5.728 Reduction of Old-Law Pension or Section 306 Pension Based on the Need for Regular Aid and Attendance While a Veteran Is Receiving Hospital, Domiciliary, or Nursing Home Care Proposed § 5.728 would provide for reduction of Old-Law Pension or Section 306 Pension based on the need for regular aid and attendance while a veteran is receiving hospital, domiciliary, or nursing home care. It is a plain language rewrite for clarity of the Old-Law Pension and Section 306 Pension provisions in current 38 CFR 3.501 and 3.552. VA intends no substantive change by this rewording. As discussed above regarding § 5.724(b), the term “the pensionable disability” used in § 3.552(a)(2) refers to the disability for which the veteran is receiving regular aid and attendance under § 3.351(c)(1). There is no part 5 equivalent to § 3.351(c)(1) for either Old-Law Pension or Section 306 pension. Therefore, § 5.728(b)(1)(iii) would simply state the blindness criteria. Current § 3.552(e) and (j) in part refer to a reduced rate of Section 306 Pension based on the need for regular aid and attendance that applies “if the veteran was age 78 or older on December 31, 1978.” There are no beneficiaries who fit this category as they would be at least 109 years old. Accordingly, similar references do not need to be carried forward to part 5. Section 5.729 Resumption of Section 306 Pension and Section 306 Pension Based on the Need for Regular Aid and Attendance After a Veteran Is on Temporary Absence From Hospital, Domiciliary, or Nursing Home Care or Is Discharged or Released From Such Care We propose to separate the provisions of current 38 CFR 3.556 into two new sections, § 5.729 for Section 306 Pension and § 5.730 for Old-Law Pension. We intend no substantive changes as a result of the separation. This would provide readers with a clear and organized description of the rules governing the resumption of Section 306 Pension and Old-Law Pension after the monthly pension rates are reduced under § 5.726, “Reduction of Section 306 Pension while a veteran is receiving hospital, domiciliary, or nursing home care”, or under § 5.727, “Reduction of Old-Law Pension while a veteran is receiving hospital, domiciliary, or nursing home care.” The proposed regulations will also address the resumption of pension based on the need for regular aid and attendance under these two pension programs when the benefit is reduced under § 5.728, “Reduction of Old-Law Pension or Section 306 Pension based on the need for regular aid and attendance while a veteran is receiving hospital, domiciliary, or nursing home care.” Proposed § 5.729 would restate the portions of current § 3.556 that pertain to the resumption of benefits under the Section 306 Pension program after a veteran is on temporary absence, or is discharged or released from hospital, domiciliary, or nursing home care. In § 3.556(c) and (e), the phrase “subject to prior payments” refers to the prior payments made at the reduced rate. It is implicit that VA will not make duplicative payments for these amounts when it resumes payment of the unadjusted (full) rate. Stating in only some regulations that VA makes payments subject to prior payments could cause confusion about the absence of that language in other regulations. For example, current § 3.556(a) does not contain the phrase “subject to prior payments”; whereas § 3.556(c) does contain the phrase. In order to avoid such confusion, we have not used this phrase in § 5.729 or § 5.730. Proposed § 5.729(d)(2) contains one difference from current § 3.556(e). It addresses the effective date of the discontinuance of an apportionment following a regular discharge or release from hospital care. The current rule provides a later effective date if an overpayment to the apportionee would result under the general effective date rule. As explained by VA's General Counsel in VAOPGCPREC 74-90, 55 FR 43253 (Oct. 26, 1990), such an alternative date is impermissible. We have explained this more fully below in the discussion of proposed § 5.783. Therefore, we have not included the alternative effective date rule in proposed § 5.729(d)(2). Section 5.730 Resumption of Old-Law Pension and Old-Law Pension Based on the Need for Regular Aid and Attendance After a Veteran Is on Temporary Absence From Hospital, Domiciliary, or Nursing Home Care or Is Discharged or Released From Such Care Proposed § 5.730 would restate the portions of current 38 CFR 3.556 that pertain to Old-Law Pension. It would address the resumption of benefits under the Old-Law Pension program after a veteran is discharged or released from hospital, domiciliary, or nursing home care. Other Changes to Hospital Reduction Rules Finally, we would omit current 38 CFR 3.558 from proposed part 5 because it implements 38 U.S.C. 5503(b) as in effect prior to its repeal on December 27, 2001. See Public Law 107-103, § 204(a)(1), 115 Stat. 976, 990 (2001) (repealing 38 U.S.C. 5503(b) and redesignating former subsection 5503(d) as 5503(b)). It required VA to withhold benefits from certain incompetent veterans and provided for resumption of payment of those benefits under prescribed circumstances. Because VA no longer withholds benefits from incompetent veterans, current § 3.558 cannot apply to a claim to which part 5 would apply. For consistency throughout part 5, we would not use the phrase “involving aid and attendance”. We would use the phrase “based on the need for * * * aid and attendance”, which is more accurate. For the same reason, part 5 would use the phrase “regular aid and attendance” rather than “aid and attendance”. Subpart M: Apportionments to Dependents and Payments to Fiduciaries and Incarcerated Beneficiaries Determining Eligibility for Apportionments We propose to repeat the provisions of VA's current apportionment regulations (38 CFR 3.450-3.461) in part 5 with minimal changes because VA is currently reviewing its apportionment program to determine if the program can be improved. We expect that §§ 3.450-3.461 will be amended following that review. VA will then include these new rules in part 5. Section 5.770 Apportionment Claims Proposed § 5.770 is based on current 38 CFR 3.450. Paragraph (a)(2) of § 3.450 refers to apportioning the “compensation * * * payable to the surviving spouse”. Paragraph (d) of § 3.450 states, “Any amounts payable for children under §§ 3.459, 3.460 and 3.461 will be equally divided among the children.” The reference to “compensation” in § 3.450(a)(2) and the reference to § 3.459 in § 3.450(d) both pertain to the apportionment of death compensation. We propose not to refer to compensation payable to a surviving spouse in § 5.770. We also propose not to include an equivalent to current § 3.459 or any reference thereto. There are less than 300 beneficiaries currently receiving death compensation. Except for one small group of beneficiaries, death compensation is payable only if the veteran died prior to January 1, 1957. VA has not received a claim for death compensation in more than 10 years, and we do not expect to receive any claims for apportionment of death compensation. Dependency and indemnity compensation (DIC) is a much greater benefit than death compensation. VA automatically awards DIC rather than death compensation pending confirmation of the DIC election. See 38 CFR 3.702, “Dependency and indemnity compensation”. Because of the small number of beneficiaries of death compensation and the unlikelihood of a claim for apportionment of such benefits, the provisions concerning death compensation do not need to be carried forward to part 5. We propose not to include paragraph (f) of current § 3.450, which states, “Prior to release of any amounts[,] the relationship of the claimant and the dependency of a parent will be fully developed, and the necessary evidence secured.” In every apportionment claim, VA must verify the relationships of all claimants and fully develop the claim for relevant evidence. Other proposed part 5 VA regulations would state how VA determines dependency (for example, RIN 2900-AL94, “Dependents and Survivors”, 71 FR 55052, Sept. 20, 2006); therefore, there is no need to propose an equivalent to § 3.450(f). We propose not to include paragraph (g) of current § 3.450, a cross reference to § 3.460, “Death pension”, because it does not aid the reader's understanding of the apportionment process and is therefore unnecessary. Section 5.771 Special Apportionments Proposed § 5.771 restates current 38 CFR 3.451 and reorganizes the content for clarity. In particular, in § 5.771(a), we have clarified that the section applies without regard to any other apportionment provision not merely without regard to those apportionment provisions where hardship is shown. We have also clarified that § 5.774(b) and (c), the part 5 equivalents to § 3.458(b) and (c), are exceptions to that rule. However, we have not limited the exception to only paragraphs (b) and (c) of § 5.774. We also included § 5.774(f), which is based on current §§ 3.458(f), 3.901(c), and 3.902(c). The statutory authority for apportionment based on hardship is 38 U.S.C. 5307 which provides, generally, that the specified benefits “may” be apportioned as prescribed by the Secretary. The permissive language of the apportionment statute indicates that Congress intended VA to have significant discretion to determine when an apportionment will be made. However, in exercising that discretionary authority, VA may not violate other statutes. The prohibitions on apportionment in § 5.774(f) are mandated by other statutes. See 38 U.S.C. 6103, 6104, and 6105. Further, the phrase in § 3.451, “may be specially apportioned between the veteran and his or her dependents or the surviving spouse and children”, would have a second “between”, to read, “* * * between the veteran and his or her dependents or between the surviving spouse and a child”. The parallel structure clarifies that there are two sets of apportionment options. Additionally, proposed § 5.771(b)(2) refers to the “net worth, income, and expenses” of the primary beneficiary and the apportionment claimants instead of referring to “other resources and income” as stated in § 3.451. This change reflects VA's long-standing practice and helps VA accurately determine the extent of any hardship. Section 5.772 Veteran's Benefits Apportionable Proposed § 5.772 is based primarily on current 38 CFR 3.452. In proposed § 5.772(a), we added the condition that “the veteran is not reasonably discharging his or her responsibility for the spouse's or child's support,” to be consistent with similar language in proposed § 5.770(a)(1)(ii). Proposed § 5.772(c), is based on current § 3.454 as well as § 3.452(c). Current § 3.454 is essentially redundant of § 3.452(c). Although current § 3.454(a) specifies that if an incompetent veteran is receiving care in a government institution and is entitled to pension VA will pay $25 per month as an institutional award and pay the balance of the pension to the veteran's spouse or child or, if the veteran has no spouse or child but has a dependent parent, apportion pension to the dependent parent as a special apportionment. We have not included this specific information in § 5.772(c) because it is obsolete. To the extent that § 3.454(a) provides that an institutional award is limited to $25, it conflicts with 38 CFR 13.61, which does not limit the amount of such payments. (Section 13.61 is discussed further below in conjunction with proposed § 5.792.) To the extent that it provides that the balance of pension will be apportioned to a veteran's spouse or child, it conflicts with proposed § 5.792(d), which is based on current § 3.852(c) and is discussed further below, which provides that the amount of the apportionment will be determined based on hardship. Because the amount of the institutional award is not fixed by regulation, VA determines the amount of the apportionment on a case-by-case basis. Finally, VA does not apportion a veteran's pension to a dependent parent. A parent may not be a dependent for disability pension. Whereas a veteran receiving disability compensation may receive an additional allowance for dependent parents, Congress authorizes an increased maximum annual pension rate only for a spouse or child, not for a dependent parent. See 38 U.S.C. 1542. We would also not include § 3.454(b)(2). To the extent that § 3.454(b)(2) is based on a reduction under current § 3.551(d) (reducing Improved Pension for veterans receiving care before February 1, 1990) it is unnecessary, as explained above with regard to proposed § 5.722. To the extent that § 3.454(b)(2) is purportedly based on a reduction under § 3.551(e), it is obsolete. VA no longer reduces Improved Pension to $60 under current § 3.551(e). The $60 was increased to $90, effective February 1, 1990, by Public Law 101-237, section 111, 103 Stat. 2062, 2064-65 (1989). Section 5.773 Veterans Disability Compensation Proposed § 5.773 is based on current 38 CFR 3.453, which states, “Rates of apportionment of disability compensation, service pension or retirement pay will be determined under § 3.451.” “Service pension” is another term for Spanish-American War pension. We propose to not include this benefit in § 5.773 because there are only about 200 surviving beneficiaries receiving such pension and they are survivors of deceased veterans. It is very unlikely that VA will receive an apportionment claim from a dependent of one of these beneficiaries. “Retirement pay” refers to emergency officers' retirement pay. There are no longer any veterans receiving this benefit. Therefore, we also propose not to include this benefit in § 5.773. Section 5.774 Benefits Not Apportionable Proposed § 5.774 is based on current 38 CFR 3.458. It would restate § 3.458, using plainer language and reorganized for clarity. Paragraph (c) of § 3.458 states that VA will not apportion benefits “[f]or purported or legal spouse of the veteran if it has been determined that he or she has lived with another person and held herself or himself out openly to the public to be the spouse of such other person, except * * *” Under the apportionment statute 38 USC 5307 VA may not apportion benefits to a “purported” spouse, so the distinction between “purported” spouse and “legal” spouse is unnecessary. We therefore propose not to include such language in paragraph (c) of § 5.774. Paragraph (d) of § 3.458 states that a veteran's benefits may not be apportioned “[w]here the child of the disabled person has been legally adopted by another person, except the additional compensation payable for the child.” The exception in § 3.458(d) is limited to disability compensation and does not mention the additional dependency and indemnity compensation payable to a surviving spouse for the child. However, current § 3.58 states, “A child of a veteran adopted out of the family of the veteran either prior or subsequent to the veteran's death is nevertheless a child within the meaning of that term as defined by § 3.57 and is eligible for benefits payable under all laws administered by the Department of Veterans Affairs.” Consistent with § 3.58, we propose to include “the additional dependency and indemnity compensation payable to a surviving spouse for the child” in the exception in § 5.774(d), which is otherwise derived from current § 3.458(d). In proposed § 5.774(e)(2), we have included the relevant effective date provision based on current § 3.503(a)(2). In proposed § 5.774(f), we have included a cross reference to the provisions on forfeiture for fraud (§ 5.676), treasonable acts (§ 5.677), and subversive activity (§ 5.678), which were published as proposed on May 31, 2006. See 71 FR 31056, 31064-66. Those proposed regulations contain the complete rules on forfeiture and apportionments when benefits have been forfeited. In proposed § 5.774(f)(1) we have combined the provisions contained in current §§ 3.458(f)(1), 3.901, and 3.902. Current § 3.458(f)(1) prohibits an apportionment for forfeitures declared before September 2, 1959, if a veteran's dependent “is determined by [VA] to have been guilty of mutiny, treason, sabotage, or rendering assistance to an enemy of the United States or its allies.” Current §§ 3.901 (forfeiture for fraud) and § 3.902 (forfeiture for treason), both permit apportionments to a beneficiary's dependents under certain circumstances if the forfeiture was declared prior to September 2, 1959, but prohibit an apportionment to any dependent who participated in the acts causing the forfeiture. Accordingly, proposed § 5.774(f)(1) states that benefits will not be apportioned to any beneficiary's dependent who is determined by VA to have been guilty of mutiny, treason, sabotage, or rendering assistance to an enemy of the United States or its allies or who participated in the acts that caused forfeiture for fraud or treasonable acts. Section 5.780 Eligibility for Apportionment of Pension Proposed § 5.780 is based on current 38 CFR 3.460, regarding death pension. Proposed § 5.780 states that apportionment of Improved Death Pension will be based on proposed § 5.771, “Special apportionments.” Because this same rule applies to disability pension, we propose to include it here. Part 3 does not contain a specific regulation to this effect for disability pension; however, the hardship standard in current § 3.451, “Special apportionments”, applies “[w]ithout regard to any other provision regarding apportionment”. To be consistent with § 5.770(a)(1)(ii), we included the condition that “the veteran is not reasonably discharging his or her responsibility for the spouse's or child's support”. Proposed § 5.780 would not include the second sentence of the introductory paragraph of current § 3.460. Although not apparent from the current regulation, this provision only applies to surviving spouses of Spanish-American War veterans. See 38 U.S.C. 1536(a) (stating that surviving spouses of Spanish-American War veterans will receive $75 instead of $70 if married to the veteran during the period of war). As discussed above regarding proposed § 5.773, we are not specifically including Spanish-American War pension in part 5. If an apportionment claim were to arise, we would adjudicate it under proposed § 5.771, “Special apportionments”. We think that it is reasonable and appropriate that an apportionment claimant should be required to demonstrate hardship in order to receive an apportionment of nonservice-connected death pension. Proposed § 5.780 would also not include the provisions in current § 3.460(a) regarding apportionment of death pension benefits payable to dependents of the Civil and Indian wars. There are only two individuals receiving VA death pension based on Civil War service and no individuals receiving benefits based on Indian Wars service. Because it is very unlikely that VA will receive an apportionment claim from one of these beneficiary's dependents, we propose not to include those provisions of current § 3.460(a). If an apportionment claim were to arise, we would adjudicate it under proposed § 5.771, “Special apportionments”. Section 5.781 Eligibility for Apportionment of a Surviving Spouse's Dependency and Indemnity Compensation Proposed § 5.781 is based on current 38 CFR 3.461. We propose not to include the last sentence of current § 3.461(b)(1) in proposed § 5.781. This sentence limits apportionments such that “the surviving spouse's share will not be reduced to an amount less than 50 percent of that to which the surviving spouse would otherwise be entitled.” This sentence is obsolete and was added in 1940 when the death compensation program did not allow for additional benefits for each child. There are now situations in which it would be fair and appropriate for VA to apportion more than 50 percent of a surviving spouse's dependency and indemnity compensation (DIC) award. For example, if there were five minor children, the additional benefit payable for the children (from December 1, 2008 through November 30, 2009) would be $1,430 ($286 multiplied by 5). If an apportionment of $286 were awarded to each child, the total amount apportioned ($1,430) would be more than 50 percent of the surviving spouse's award of $2,584 (basic surviving spouse rate of $1,154 plus the $1,430 for the children). Therefore, we propose not to include the 50-percent limitation in proposed § 5.781. We propose not to include § 3.461(b)(2) in proposed § 5.781. Paragraph (b)(2) of § 3.461 provides that, “The additional amount of aid and attendance, where applicable, will be added to the surviving spouse's share and not otherwise included in the computation.” This provision is obsolete. In the DIC program, the dependents' allowances for children under age 18 are the same whether or not the surviving spouse is entitled to additional special monthly DIC for regular aid and attendance. We also propose not to include current § 3.461(b)(3) in proposed § 5.781. Under that current rule, if a surviving spouse has elected to receive DIC instead of death compensation, the child's share of an apportionment will be either the rate prescribed by the Under Secretary for Benefits or the share that would have been payable as death compensation, but not more than the total DIC amount. There is no longer any circumstance in which the child's death compensation apportionment could be greater than the total DIC amount. The DIC rate, in all cases, will be greater than the death compensation rate. Therefore, the language is obsolete. Section 5.782 Effective Date of Apportionment Grant or Increase Proposed § 5.782 is based on current 38 CFR 3.400(e) and 3.665(f). Proposed paragraph (a) states the general rule that the effective date of an apportionment or an increased apportionment is the first day of the month after the month in which VA receives an apportionment claim or a claim for an increased apportionment. The first two exceptions to the general rule are based on the introduction of current § 3.400(e) stating, “On original claims, in accordance with the facts found.” Proposed § 5.782(b)(1) provides the effective date of an apportionment award where a primary beneficiary has a claim for VA benefits pending on the date that VA receives an apportionment claim. Proposed § 5.782(b)(2) provides the effective date where an apportionment claim is received within one year of the award of benefits to the primary beneficiary and the dependant has not yet been established on the primary beneficiary's award. The effective date of the apportionment will be the same as the effective date of the primary beneficiary's award, if the apportionment claimant is otherwise shown to be entitled to an apportionment from that date. Section 5.783 Effective Date of Apportionment Reduction or Discontinuance Proposed § 5.783 is based on current 38 CFR 3.500(d), (g), and (n). Proposed § 5.783(a), based on current § 3.500(d)(1), provides the general effective date rule for discontinuance or reduction of an apportionment. As explained by VA's General Counsel in VAOPGCPREC 74-90, 55 FR 43253 (Oct. 26, 1990), current § 3.500(d)(1) means that VA should discontinue an apportionment effective the first day of the month following the date that the reason for the apportionment no longer exists. We propose not to include an equivalent of § 3.500(d)(2) in proposed § 5.783. The rule from paragraph § 3.500(d)(2) has been described by the General Counsel, in VAOPGCPREC 74-90, as “constitutionally faulty” because it provides a later effective date if an overpayment would result by applying the general rule. As explained by the General Counsel, delaying the effective date for the administrative convenience of avoiding an overpayment deprives a veteran of VA benefits that Congress intended the veteran to have and causes such a veteran to receive a lesser amount of VA benefits than a veteran to whom the general rule could apply. With the exception eliminated, the remaining rule is the same as the general rule and unnecessary as a separate provision. Paragraph (b) of proposed § 5.783 provides the most common exceptions to the general rule stated in proposed paragraph (a). Proposed paragraph (b)(3) explicitly states the principle, implied by VA's current apportionment regulations, that when the primary benefit is discontinued, the apportionment is discontinued effective the same day. Proposed paragraph (b)(4) informs the reader that when a primary beneficiary is released from incarceration, the effective date of discontinuance of the apportionment will be set in accordance with § 5.815 or § 5.816. Section 5.784 Special Rules for Apportioned Benefits on Death of Beneficiary or Apportionee Proposed § 5.784 is based on current 38 CFR 3.1000(b). In a prior proposed part 5 rulemaking—the portion concerning accrued benefits—we proposed § 5.563, “Special rules when a beneficiary dies while receiving apportioned benefits”, as the part 5 equivalent to current § 3.1000(b). That section was published as proposed on October 1, 2004. See 69 FR 59072, 59088. Because the rule relates more to apportionments than to accrued benefits, we would place this rule with the other apportionment rules instead of where it was previously proposed. Further, we have clarified how the payment of benefits in these circumstances relates to the payment of accrued benefits. Proposed § 5.784(a) is based on § 3.1000(b)(2). We have clarified that the apportionment should be paid to the apportionee and should not be treated as accrued benefits that were due to the deceased beneficiary. Further, we have included death benefits in § 5.784(a) even though § 3.1000(b)(2) applies only to apportionments of a veteran's benefits. In practice, VA applies the rule expressed in § 3.1000(b)(2) to death benefits as well. Proposed § 5.784(b)(1) is based on current § 3.1000(b)(1), which provides that when a person receiving an apportioned share of a veteran's benefits dies, all or any part of an unpaid apportionment is payable to the veteran or to the veteran's surviving dependents. The current rule essentially repeats the broad authority given to VA under 38 U.S.C. 5121(a)(1); however, it does not specify how VA makes determinations concerning payment to survivors. Proposed § 5.784(b)(1), following long-standing VA practice, provides for payment of the unpaid apportionment to the veteran, if the veteran survives, or to the surviving dependents of a deceased veteran. We propose to use the same order of priority specified in 38 U.S.C. 5121(a)(2), which is applicable to accrued benefits due to the veteran to determine which dependents of a deceased veteran are entitled to these funds. This is accomplished through a cross reference to proposed § 5.551(b)(1), “Persons entitled to accrued benefits.” Section 5.551 was published as proposed on October 1, 2004. See 69 FR 59072, 59085-86. If there are no eligible claimants who are dependents, then under 38 U.S.C. 5121(a)(5), VA may pay the unpaid apportionment to reimburse the person who bore the expense of the deceased person's last sickness or burial. Proposed § 5.784(b)(2) is based on current § 3.1000(b)(3), which provides that when a child receiving an apportionment of a surviving spouse's death benefits dies, then the unpaid apportionment is payable only as reimbursement to the person who bore the expense of the deceased child's last sickness or burial. Current § 3.1000(b)(3) appears to conflict with current § 3.1000(a)(3), which provides that when a child beneficiary dies, then accrued benefits are payable to the surviving children of the veteran. Current § 3.1000(b)(3) is based on an outdated interpretation of the predecessor to 38 U.S.C. 5121(a). Prior to the establishment of the dependency and indemnity compensation (DIC) and Improved Pension programs, VA benefits were payable directly to a child only if there were no surviving spouse. Prior to the existence of those programs, the correct interpretation of the accrued benefits statute was that if there were a surviving spouse and the child apportionee died, the only provision of the statute that could apply was that portion providing for payment as reimbursement of expenses of the last sickness or burial. See Administrator's Decision, Veterans Administration, No. 666 (Sept. 22, 1945). However, under the current VA benefits system, a surviving child may directly receive Improved Death Pension benefits and, if 18 years of age or older, DIC benefits. Therefore, it is illogical to continue to interpret 38 U.S.C. 5121(a)(4)—which provides for payment to the surviving children—as not applying merely because there is a current surviving spouse. Accordingly, in § 5.784(b)(2), we propose that upon the death of a child receiving an apportionment of a surviving spouse's death benefits, the apportionment is first payable as accrued benefits to the veteran's surviving child. If there is no surviving child claimant, only then are benefits payable to reimburse the person who bore the expense of the last sickness or burial of the apportionee. Incompetency and Payments to Fiduciaries and Minors We propose to repeat the provisions of VA's current fiduciary regulations (38 CFR 3.353, 3.355, and 3.850 through 3.857) in part 5 with minimal changes. We are doing this because VA is currently rewriting its fiduciary regulations (RIN 2900-AM90, “Fiduciary Activities”) to conform to the Veterans Benefits Improvement Act of 2004, Public Law 108-454, which increased protections for VA beneficiaries. See 118 Stat. 3612. Upon the completion of that rulemaking, we will incorporate the revised part 3 fiduciary regulations into part 5. Section 5.790 Determinations of Incompetency and Competency Proposed § 5.790 is based on current §§ 3.353 and 3.400(x) and (y). Proposed § 5.790(c) is based on current 38 CFR 3.353(c) which begins, “Unless the medical evidence is clear, convincing and leaves no doubt as to the person's incompetency, the [agency of original jurisdiction] will make no determination of incompetency without a definite expression regarding the question by the responsible medical authorities.” The phrase “clear, convincing and leaves no doubt” is inconsistent with traditional legal evidentiary standards. Traditionally, “clear and convincing” is a distinct standard. “Leaves no doubt”, however, suggests a significantly higher standard. Further, if compared to the standard for conviction in a criminal case (“beyond a reasonable doubt”), “leaves no doubt” could be considered an even higher standard that is inconsistent with other areas of the law. Therefore, we are removing the term “leaves no doubt” and instead simply specifying a “clear and convincing” standard. “Clear and convincing” is a high evidentiary standard that will permit VA to make a determination of incompetency without requesting an essentially unnecessary medical opinion. Further, the standard is sufficiently high to prevent unwarranted determinations of incompetency. See Thomas v. Nicholson, 423 F.3d 1279, 1283 (Fed. Cir. 2005) (“The `clear and convincing' standard is `reserved to protect particularly important interests in a limited number of civil cases' where there is a clear liberty interest at stake, such as commitment for mental illness, deportation, or denaturalization.”) (citations omitted). Proposed paragraph (f) is the part 5 counterpart to current § 3.400(x) and (y). In proposed § 5.790, we have updated references in current § 3.353—to §§ 3.102, 3.103, and 3.327(a)—to refer instead to their respective proposed part 5 counterparts—§§ 5.3(b)(2), 5.83, and 5.102. Proposed § 5.3(b)(2) was published on March 31, 2006. See 71 FR 16464, 16475. Proposed §§ 5.83 and 5.102 were published on May 10, 2005. See 70 FR 24680, 24687-88, 24689-90. Section 5.791 General Fiduciary Payments Proposed § 5.791 is based on current § 3.850. In proposed § 5.791(a), to be consistent with the statutory authority of 38 U.S.C. 5502(a)(1), we clarify that the phrase “regardless of any legal disability” applies only to any legal disability on the part of the beneficiary. Also, in order to ensure that readers are aware of fiduciary-related regulations located elsewhere in title 38, we have added a cross reference to part 13 at the end of § 5.791(a). Proposed § 5.791(c) and (d) are based on current § 3.850(b) and (d) respectively. The part 3 rules are identical in substance to provisions in §§ 13.63 and 13.62 of part 13. In part 5, we propose to use the same language used in the part 13 regulations and provide cross references thereto in order to eliminate confusion about whether the slightly different phrasing between the part 3 regulations and the part 13 regulations is intended to convey a different meaning. Although the regulations are redundant, it is useful to VA personnel to have the same rules located in distinct parts of the CFR. VA's adjudication personnel typically refer to part 3, whereas VA's fiduciary personnel typically refer to part 13. Proposed paragraph (e) of § 5.791 is the part 5 counterpart to current §§ 3.400(n) and 3.500(m). Section 5.792 Institutional Awards Proposed § 5.792(a) is based on current § 3.852(a), pertaining to payments to the chief officer of a facility housing an incompetent veteran. However, we propose to track language from 38 CFR 13.61 instead of tracking the current part 3 language. Under current § 3.852, institutional awards may be made only when no fiduciary has been appointed, when payments to an unsatisfactory fiduciary have been discontinued, or when a fiduciary is not furnishing funds required for the veteran's comforts and desires. These conditions reflect limitations on VA's statutory authority to appoint fiduciaries that existed prior to 1974. In 1974, Public Law 93-295 liberalized the provisions for payments to and appointment of fiduciaries. See Public Law 93-295, section 301, 88 Stat. 180, 183-84. Under § 13.61, an institutional award may be made if it would adequately provide for the veteran's needs and eliminate the need for appointment of another fiduciary. Because VA's authority to make an institutional awards is no longer limited to the circumstances provided in § 3.852(a), we propose that § 5.792(a) should reflect VA's current practice as stated in § 13.61. Current § 3.852(b) likewise no longer reflects current VA practice. Accordingly, in proposed § 5.792(b), which is based upon § 3.852(b), we have stated the current practice. Current § 3.852(b) contains obsolete monthly limits on amounts payable to chief officers of VA or non-VA institutions that house incompetent veterans. Those limits conflict with 38 CFR 13.61, which states that “all or part” of an institutionalized veteran's award may be paid to the chief officer if certain conditions are met. Under § 13.61, the amount of an institutional award is based on a determination by the Veterans Service Center Manager regarding the amount necessary to provide for the veteran's needs. We believe that is the appropriate standard for institutional awards, and we therefore would not repeat the monetary limits in § 3.852(b). Rather, in proposed § 5.792(b)(1), we refer to § 13.61. Proposed § 5.792(b)(2) is based on the first sentence of § 3.852(d). We have included the rule as part of paragraph (b) of § 5.792 because, like the rest of § 5.792(b), it pertains to non-VA institutional awards. In proposed § 5.792(b)(3), which is based upon § 3.852(b)(1), we would clarify that the paragraph applies to non-VA institutional awards to reflect current VA practice. We propose not to include equivalents to § 3.852(b)(2) and (3) in part 5 because those provisions are obsolete. They state procedures necessary because of limits on the amount of institutional awards that, as discussed above, are obsolete. The procedures described in § 3.852(b)(2) and (3) are likewise obsolete. We propose to include the second sentence of current § 3.852(d) as § 5.792(c) with only minor changes for readability. Proposed § 5.792(d) is based on current § 3.852(c), which states, “Where there arises a situation as enumerated in paragraph (a)(1) of this section, apportionment to dependents will be under § 3.451.” Dependents may apply for an apportionment of any institutionalized incompetent veteran's benefits and are not limited to the circumstances in § 3.852(a)(1). We therefore propose to state in § 5.792(d), “An institutionalized incompetent veteran's benefits may be apportioned to his or her dependents under § 5.771, Special apportionments.” Proposed paragraphs (e) and (f) are the part 5 counterparts to current §§ 3.401(d) and 3.501(j) respectively. We note that proposed § 5.792(e) provides the effective-date rule for payments to the chief officer of both VA and non-VA institutions and uses the phrasing of § 3.401(d)(2). In current, § 3.401, paragraph (d)(1) provides the effective-date rule for non-VA institutions, and paragraph (d)(2) provides the effective-date rule for VA institutions. Although paragraphs (d)(1) and (d)(2) are phrased differently, the rule provided in both is the same. Proposed § 5.792(e) follows the phrasing of § 3.401(d)(2) because that paragraph is clearer than § 3.401(d)(1). Since the sections on incompetency and payments to fiduciaries and minors were written in 38 CFR parts 3 and 13, VA has established Pension Management Centers to process pension claims. The Pension Management Center Manager has the same authority as a Veterans Service Center Manager regarding these matters. We therefore propose to add “Pension Management Center Manager” to “Veterans Service Center Manager” in the following paragraphs: §§ 5.790(b)(2) and (b)(3), 5.791(a)(2)-(4), 5.792(a), and 5.794(a)(2) and (a)(3). Section 5.793 Limitation on Payments for a Child Proposed § 5.793 is based on current § 3.854. The second sentence of proposed § 5.793(a), stating that VA will retroactively pay the child any benefits that were not paid for a period before the child attained the age of majority, is based on current § 3.403(a)(2). Section 5.794 Beneficiary Rated or Reported Incompetent Proposed § 5.794 is based on current § 3.855, “Beneficiary rated or reported incompetent.” Section 5.795 Change of Name of Fiduciary Proposed § 5.795 is a plain language restatement of current § 3.856, with changes to make the regulation gender-neutral. We propose not to include paragraph (l) of current § 3.500 in part 5. This paragraph indicates that VA would suspend a payment because of a fiduciary's name change and provides the effective date therefore. This provision is obsolete. It refers to § 3.856. When VA amended § 3.856 to remove the rule about suspending benefits, VA failed to amend § 3.500(l) accordingly. See VA Compensation and Pension Transmittal Sheet 203 (May 29, 1959). Section 5.796 Child's Benefits to a Fiduciary of an Incompetent Surviving Spouse Proposed § 5.796 is a plain language restatement of current § 3.857. Section 5.797 Testamentary Capacity for VA Insurance Purposes Proposed § 5.797 is a plain language rewrite of current § 3.355, which involves the testamentary capacity of an insured to execute designations or changes of beneficiary or designations or changes of option. We also made the regulation gender-neutral. Current § 3.355(c) begins, “Lack of testamentary capacity should not be confused with insanity or mental incompetence. An insane person might have a lucid interval during which he would possess testamentary capacity. On the other hand, a sane person might suffer a temporary mental aberration during which he would not possess testamentary capacity.” We propose to omit this guidance about the relationship between testamentary capacity and insanity or mental incompetence. Elsewhere in proposed part 5, we have substantially revised the definition of insanity from the current definition in § 3.354. See 71 FR 16464, 16468-69 (Mar. 31, 2006) (discussing the proposed definition of “insanity” in § 5.1); see also 69 FR 4820, 4830 (Jan. 30, 2004) (discussing use of “lack of mental capacity to contract” versus use of “insane” in proposed § 5.38). The guidance in § 3.355(c) is not essential to understanding and applying the general rule that there is a rebuttable presumption that every insured person possesses testamentary capacity when performing a testamentary act. Given the proposed revisions to the definition of insanity, we have not included this additional guidance in proposed § 5.797(c). We believe that retaining the guidance from § 3.355(c) would only confuse readers about how to apply the general rule. At the end of proposed § 5.797(c), we have added a cross reference to the benefit-of-the-doubt rule in § 5.3(b)(2), which was published as proposed on March 31, 2006. See 71 FR at 16475. We believe that the cross reference will aid readers in understanding the last sentence of § 5.797(c), which states, “[R]easonable doubt should be resolved in favor of testamentary capacity.” Section 5.798 Payment of Disability Compensation Previously Not Paid Because an Incompetent Veteran's Estate Exceeded $25,000 Proposed § 5.798 is based on current § 3.853(c). Under § 3.853, VA discontinued disability compensation to an incompetent veteran who had no dependents and had an estate that exceeded $25,000. There are no part 5 equivalents to § 3.853(a) and (b). Paragraph (a) of § 3.853 limits the discontinuance of disability compensation to the period from November 1, 1990, through September 30, 1992. Part 5, as proposed, will not apply to the payment of benefits for that period. (Accordingly, we also propose not to include § 3.501(n), which provides the effective date for a discontinuance under § 3.856(a) in part 5.) Paragraph (b) of § 3.853 pertains to the resumption of benefits prior to October 1, 1992, and is likewise unnecessary. However, the first sentence of paragraph (c) of § 3.853 provides that disability compensation that has been withheld under § 3.853 must be paid to the veteran in a lump-sum if the veteran is subsequently rated competent for a continuous period of more than 90 days. It is possible that a veteran whose disability compensation was discontinued under § 3.853(a) and has not yet been paid under § 3.853(c) will regain competency for more than 90 days. Therefore, proposed § 5.798 provides for the lump-sum payment of that withheld disability compensation under such circumstances. We propose not to include the second sentence of § 3.853(c), which states, “However, a lump-sum payment shall not be made to or on behalf of a veteran who, within such 90-day period, dies or is again rated incompetent.” This sentence is unnecessary because, any veteran “who, within such 90-day period, dies or is again rated incompetent” could not possibly satisfy the requirements of the first sentence of paragraph (c). Payments to Incarcerated Beneficiaries The next seven regulations in this NPRM include general provisions relating to payments to incarcerated beneficiaries. Throughout these seven regulations, we propose to use the term “incarcerated” rather than “imprisoned”. Although the relevant pension statute uses the term “imprisoned” ( see 38 U.S.C. 1505) and the relevant compensation statute uses the term “incarcerated” (38 U.S.C. 5313), we have determined that the terms are synonymous. We propose to use “incarceration” because we believe it is the term more commonly used by the public. Section 5.810 Incarcerated Beneficiaries—General Provisions and Definitions Proposed § 5.810(a) defines terms for the purposes of the rules regarding incarcerated beneficiaries. Proposed paragraph (a)(1) defines the term “incarceration”. The first sentence of proposed § 5.810(a)(1) provides that confinement in a privately owned and privately managed penal institution pursuant to a contract with a Federal, State, or local unit of government will be considered to be “incarceration.” This clarification has become necessary because Federal, State, and local governments have become increasingly reliant on private contractors to provide prison services. In August 2006, VA's General Counsel held that incarceration in a private facility under a contract with a State is incarceration in a “State penal institution”. VAOPGCPREC 5-2006, 72 FR 5801 (Feb. 7, 2007). Subsequently, the authorizing statutes, 38 U.S.C. 1505 and 5313, were amended from “Federal, State, or local penal institution” to “Federal, State, local, or other penal institution.” See Public Law 109-461, section 1002, 120 Stat. 3403, 3464-65 (Dec. 22, 2006). The next sentence of proposed § 5.810(a)(1) describes types of internment not considered to be “incarceration” and is derived from current § 3.665(b). The current regulation defines the term “release from incarceration” and includes a list of programs within this definition. The list includes participation in a work release or halfway house program, parole, and completion of sentence. By defining participation in work release and similar programs as “release from incarceration”, the current rule implicitly excludes those programs from the definition of incarceration. Proposed § 5.810(a)(1) explicitly states that work release, parole, and residence in a halfway house are not included in the definition of incarceration. Proposed § 5.810(a)(1) includes residential re-entry centers. “Residential re-entry center” is a term now used by the Federal Bureau of Prisons as an alternative to the traditional term, “halfway house”. See Federal Bureau of Prisons, Community Corrections, http://www.bop.gov/locations/cc/index.jsp. The proposed rule also lists two forms of confinement that VA's General Counsel has determined are not “incarceration”. First, we adopt the rationale set out in VAOPGCPREC 59-91, 56 FR 50149, 50151 (Oct. 3, 1991), holding that participating in a community control program is not incarceration. Second, the proposed rule codifies the holding of VA's General Counsel that a veteran is not subject to reduction of compensation and pension benefits under 38 U.S.C. 1505 and 5313 while the veteran is incarcerated in a foreign prison. VAOPGCPREC 10-2001, 66 FR 33309, 33313 (June 21, 2001). Although that General Counsel opinion only addressed veterans, its rationale would apply likewise to all beneficiaries whose benefits are subject to reduction or discontinuance because of incarceration. This is so because 38 U.S.C. 1505 and 5313 apply to any VA beneficiary who is incarcerated, not only to veterans. Proposed paragraph (a)(2) defines the term “felony” and is derived from the definition contained in current § 3.665(b). Although the definitions of “incarceration” and “felony” are derived from current § 3.665, which pertains only to disability compensation, the proposed definitions would apply to pension, and dependency and indemnity compensation (DIC), as well as disability compensation. Current § 3.666, as it pertains to incarcerated beneficiaries and pension benefits, does not define “felony” or “incarceration”. The definitions in current § 3.665 are generic, however, and in the interest of consistency and uniformity, we propose to apply them to compensation and to pension cases. Proposed § 5.810(b) explains how to categorize foreign offenses and states that a felony includes an offense that is prosecuted by a foreign country if the offense is equivalent to a felony under the laws of the United States. Likewise, a misdemeanor includes an offense that is prosecuted by a foreign country if the offense is equivalent to a misdemeanor under the laws of the United States. This proposed paragraph is new and reflects an additional conclusion of VA's General Counsel in VAOGCPREC 10-2001 (discussed above regarding incarceration in a foreign prison). The General Counsel concluded that if a veteran is transferred to a Federal, State, or local penal institution in the United States to serve the remainder of a sentence for a foreign conviction of an offense that is equivalent to a felony (or a misdemeanor under 38 U.S.C. 1505) under the laws of the United States, then the veteran is thereafter subject to reduction of pension and compensation benefits under 38 U.S.C. 1505 and 5313. As explained above regarding incarceration in a foreign prison, although the opinion only addressed veterans, the rationale of the opinion would apply to all beneficiaries whose benefits are subject to reduction or discontinuance because of incarceration. Proposed § 5.810(c) states that VA begins counting the 60-day period of incarceration that must precede a reduction under §§ 5.811 through 5.813 on the day after the beneficiary is convicted of a felony (or of a misdemeanor for pension). This explains that time served prior to conviction will not be considered as part of the 60-day period. In addition, paragraph (c) would state that VA begins counting the 60-day period even if the beneficiary is not sentenced on the same day that he or she is convicted, if the beneficiary is incarcerated as of that date, and that a new 60-day period begins on the first full day of reincarceration after a conditional release. This accords with 38 U.S.C. 1505 and 5313, which are concerned with the time spent imprisoned for a felony, or for a misdemeanor in pension cases, and not with the amount of time that the beneficiary is sentenced to serve. It also accords with VAOPGCPREC 3-2005, 72 FR 5801, 5802 (Feb. 7, 2007), and current VA policy. Proposed § 5.810(d) is a new paragraph that explicitly states the requirement that claimants or beneficiaries inform VA if they are incarcerated. We think that this is logical, fair, and consistent with other current provisions that require claimants or beneficiaries to inform VA of changes in circumstances affecting entitlement to benefits. See § 3.652, “Periodic certification of continued eligibility”, and § 3.660(a)(1), “Dependency, income and estate”. In addition, enabling VA to adjust benefits promptly on the 61st day would be advantageous to claimants, beneficiaries, and VA because if benefits are not promptly adjusted, VA must establish an overpayment and recoup the debt. Proposed § 5.810(e) restates portions of current § 3.665(a) and the introductory language of current § 3.666 pertaining to notice to incarcerated beneficiaries regarding potential apportionees and conditions under which VA may resume benefits. We intend no substantive change. Section 5.811 Limitation on Disability Compensation During Incarceration Proposed § 5.811 pertains to the limitations on the amount of disability compensation payable to a veteran who has been incarcerated for more than 60 days following conviction of a felony. Proposed § 5.811(a) restates current § 3.665(a) and (c), but where the current rule refers to a reduction of disability compensation, in part 5 we would refer to a “limit” on disability compensation, because the rule affects ongoing awards as well as awards of increased disability compensation based on increased disability. Moreover, because the amount of unpaid disability compensation may be apportioned, see § 5.814, it is not entirely accurate to characterize VA's actions as a “reduction”. Finally, we also note that the applicable statute, 38 U.S.C. 5313, also uses the term “limitation”. We intend no substantive change. In a parenthetical sentence in § 5.811(a)(2), we propose to clarify that the limitation of payment amounts under that paragraph applies only to the payment of disability compensation after September 30, 1980. Similarly, a parenthetical sentence in proposed § 5.811(a)(3) states that the payment limitation under paragraph (a)(3) applies only to the payment of disability compensation after March 31, 2002. This language incorporates the applicability date of Public Law 107-103, § 506(c), 115 Stat. 976, 996 (2001), which states, “This section shall apply with respect to the payment of compensation for months beginning on or after the end of the 90-day period beginning on the date of the enactment of this Act.” The Act was enacted on December 27, 2001, the 90-day period from the date of enactment ended on March 26, 2002, and the first month thereafter was April 2002. No similar provision is shown in current § 3.665(c)(3). We are correcting this omission in part 5. Proposed § 5.811(b) repeats current § 3.665(k) as it pertains to retroactive payments of disability compensation during incarceration. Proposed § 5.811(c) states the maximum rates of disability compensation payable to an incarcerated veteran. It is based on paragraphs (d) and (j) of § 3.665. Although current § 3.665 addresses increased disability compensation in § 3.665(j)(2) and existing or initial awards in § 3.665(d)(1) and (2), the resulting rate of payment is the same whether the award is an existing, initial, or increased award. VA will not pay veterans covered by this rule more than the 10-percent disability rate or one-half the 10-percent rate. To assist the reader, we propose to specify that for such veterans, the rate of disability compensation payable under 38 U.S.C. 1114(a) may not exceed the rate payable for a veteran rated 10 percent disabled. In paragraph (c)(2), we propose to restate the parenthetical statement from current § 3.665(d)(2), “(even though the rate for 38 U.S.C. 1114(k) or (q) is paid)”, by stating that the rate provided in proposed (c)(2) applies “even if such a veteran is entitled to special monthly compensation under 38 U.S.C. 1114(k) or (q).” The parenthetical in current § 3.665(d)(2) clarifies that, even if a veteran with a disability rating of less than 20 percent is entitled to receive compensation in an amount equal to or greater than the 20 percent rate, the veteran's rate of compensation would nevertheless be reduced under current § 3.665 (proposed § 5.811) to one-half the 10-percent rate. Such a situation could arise if a veteran with a disability rating of less than 20 percent were also entitled to special monthly compensation under 38 U.S.C. 1114(k) or (q). We have restated the language from the parenthetical to be clearer. Current § 3.665(j)(3) pertains to additional circumstances in which VA will withhold increased disability compensation that is awarded to a veteran after he or she is incarcerated—generally, circumstances involving veterans who committed felonies before October 8, 1980, but were not incarcerated on October 1, 1980. Section 5313 specifies the circumstances under which VA may limit disability compensation to incarcerated veterans. Those circumstances are stated in proposed § 5.811(a). We are therefore not incorporating the provisions of § 3.665(j)(3) in part 5. Section 5.812  Limitation on Dependency and Indemnity Compensation During Incarceration Proposed § 5.812(a), derived from current § 3.665(a) and (c), states the general rule that VA will limit dependency and indemnity compensation (DIC) if the beneficiary has been incarcerated for more than 60 days following conviction of a felony. We have not included any reference to death compensation in proposed § 5.812 or in proposed § 5.815, which pertains to the resumption of benefits and is also based on § 3.665. As explained above regarding proposed § 5.770, VA does not expect to receive any more claims for death compensation, and the provisions concerning death compensation do not need to be carried forward to part 5. Any action pertaining to death compensation will be processed or adjudicated under part 3. In the second sentence of § 5.812(a)(2), we propose to clarify that the limitation of payment amounts under that paragraph applies only to the payment of DIC after September 30, 1980. Proposed § 5.812(b), derived from current § 3.665(d)(3), establishes that VA will not pay DIC at a rate greater than one-half of the amount of disability compensation payable to a veteran rated 10 percent disabled. The current rule requires VA to pay that amount but does not recognize that one-half of the 10 percent disability compensation rate could be higher than the parents' DIC rate. Therefore, the proposed rule clarifies that the rate cannot be “more than” one-half of the 10 percent disability compensation rate. Proposed § 5.812(c), restates with no substantive changes current § 3.665(l) concerning parents' DIC rates when one parent is incarcerated. Proposed § 5.812(d) repeats current § 3.665(k) as it pertains to retroactive payments of DIC during incarceration. Section 5.813 Discontinuance of Pension During Incarceration Proposed § 5.813, derived from the first sentence and paragraph (d) of current § 3.666, pertains to the discontinuance of pension to or for a person who is incarcerated for more than 60 days following conviction of a felony or of a misdemeanor. No substantive changes are intended. Section 5.814 Apportionment When a Primary Beneficiary is Incarcerated Proposed § 5.814 addresses apportionment of benefits not paid to an incarcerated beneficiary. It is based on several provisions in current §§ 3.665 and 3.666. Proposed paragraph (a) restates in plain language the part 3 rules regarding notice. It is derived from the third sentence of current § 3.665(a) and from § 3.665(h), which apply to disability compensation and to dependency and indemnity compensation (DIC). Proposed § 5.814(a)(1) provides for VA notice to dependents of their potential entitlement to an apportionment and proposed paragraph (a)(2) provides for VA notice to apportionees that VA immediately discontinues an apportionment when the primary beneficiary is released. Although current § 3.666, regarding pension, does not contain similar provisions, VA's long-standing practice has been to provide the same notice when a beneficiary is incarcerated, regardless of the type of benefit. Accordingly, notice under proposed § 5.814(a) is provided regardless of whether the benefit is disability compensation, DIC, or pension. Proposed paragraph (b) pertains to apportionments of disability compensation and DIC and is based on current § 3.665(e). The net worth of the apportionee claimants has been included as a factor in determining individual need. Net worth is not listed as a factor in current § 3.665(e); however, its inclusion in proposed § 5.814(b) will help VA determine individual need more accurately. Proposed paragraph (c) restates current paragraphs (a)(1), (a)(2), and (a)(3) of current § 3.666 concerning apportionments of pension to a veteran's spouse or child when the veteran is incarcerated. Section 9 of the Veterans' Pension Act of 1959, Public Law 86-211, 73 Stat. 432, repealed Old-Law Pension and replaced it with Section 306 Pension, effective July 1, 1960. Public Law 95-588, 92 Stat. 2497 (1978), repealed Section 306 Pension and replaced it with Improved Pension, effective January 1, 1979. Under these changes in law, no one may become entitled under a pension program once it has been repealed. Therefore, VA can only apportion Old-Law Pension or Section 306 Pension to a dependent who was recognized by VA as a dependent while those pension programs were still in effect. We have stated this limitation in proposed paragraph (c). Further, we clarify that references in § 3.666(a)(2) and (3) to “death pension” refer to Improved Death Pension because VA does not make new eligibility or rate determinations for the repealed pension programs. Proposed § 5.814(d) is based on current § 3.666(b)(1), (2), and (4). When a surviving spouse or child is incarcerated and thereby disqualified from receiving pension, an unincarcerated surviving spouse or child may receive the pension amount that would be payable to him or her if the incarcerated surviving spouse or child did not exist. See 38 U.S.C. 1505(c). Under 38 U.S.C. 1505(c), this payment is not characterized as an apportionment; however, the effective-date provisions of proposed §§ 5.814(e) and 5.816(c) apply just as they would if the payment were an apportionment. Proposed § 5.814(e) is based on current § 3.665(f) and paragraphs (a)(4) and (b)(3) of current § 3.666, which pertain to the effective date of apportionment of a beneficiary's unpaid disability compensation, DIC, or pension benefits. Note that the rule in current § 3.666(b)(3), pertaining to death pension, differs from the rule contained in current §§ 3.665(f), pertaining to disability compensation and DIC, and 3.666(a)(4), pertaining to disability pension. Therefore, proposed § 5.814(e)(2)(ii), pertaining to death pension, provides that the effective date of the apportionment is the 61st day of the primary beneficiary's incarceration following conviction if evidence of income is received no later than 1 year after the date of VA's request for the evidence; whereas, proposed § 5.814(e)(2)(i), pertaining to disability compensation, DIC, and disability pension, provides that the retroactive effective date applies only if a claim for an apportionment is received no later than 1 year after the notice to the incarcerated beneficiary required by proposed § 5.810(e) and if any necessary evidence is received no later than 1 year after the date it is requested by VA. The proposed rule is consistent with the effective dates provided in the respective part 3 provisions. Additionally, proposed § 5.813(e)(3) would clarify that VA will not re-pay an apportionee any benefits already paid to an incarcerated primary beneficiary. This is the meaning of the phrase in the current part 3 paragraphs, “subject to payments made to the [primary beneficiary] over the same period”. If VA paid the primary beneficiary a portion of payments that it should have paid the apportionee beginning on the effective date of the apportionment award and ending on the first day of the month that follows the month for which VA last paid the primary beneficiary, then the benefits are considered as having been paid to the apportionee. In this manner, the family unit retains appropriate benefits and the primary beneficiary's overpayment is lessened or in some cases eliminated. Recouping an overpayment from the incarcerated beneficiary to then pay the same funds to the beneficiary's family would impose an unnecessary administrative burden on VA. Proposed § 5.813(e)(3) is consistent with the purpose of 38 U.S.C. 1505 and 5313(b) of eliminating a double burden on the taxpayers because the incarcerated veteran is already being supported by government funds provided for the operation of the penal institution. See VAOPGCPREC 3-2005, 72 FR 5801 (Feb. 7, 2007). Section 5.815 Resumption of Disability Compensation or Dependency and Indemnity Compensation Upon a Beneficiary's Release From Incarceration Proposed § 5.815 is derived from paragraphs (i) and (m) of current § 3.665 and pertains to resumptions of disability compensation or dependency and indemnity compensation (DIC) when a beneficiary is released from incarceration. Proposed paragraph (a) states that VA will resume payment to a beneficiary effective the date of release if VA is informed of the release less than 1 year after the date of release; otherwise, VA will resume payments effective the date VA is informed of the release. Proposed paragraph (a) states that VA will resume payments to the beneficiary upon release “if the beneficiary remains entitled * * *.” This clause makes explicit an obvious point, which part 3 left implicit. The rules in proposed § 5.815(a) are subject to proposed paragraphs (b) and (c), which pertain to resumption of benefits where benefits were apportioned during the beneficiary's incarceration. Current § 3.665(i)(3) provides the rule for resumption of benefits when an apportionment has been made to a dependent parent. This rule differs from the rule in § 3.665(i)(2) for resumptions of benefits involving apportionments to a dependent spouse or child who has not been reunited with the incarcerated beneficiary. Section 3.665(i)(3) provides that an apportionment to a dependent parent made solely because the beneficiary is incarcerated will be discontinued after the veteran has been released from incarceration—essentially treating the parent as having been reunited with the released beneficiary, regardless of whether that is the case. Accordingly, in the introductory paragraphs of proposed § 5.815(b) and (c), we have stated that for purposes of those paragraphs, a dependent parent apportionee, receiving an apportionment under § 5.814(b), will be considered as having been reunited with the released beneficiary. No substantive change from current § 3.665(i)(3) is intended. Section 5.816 Resumption of Pension Upon a Beneficiary's Release From Incarceration Proposed § 5.816 governs the resumption of pension benefits when a beneficiary whose benefits were discontinued is released from incarceration. The proposed regulation is derived from current § 3.666(c). We propose to make it clear that the beneficiary must show entitlement to the benefit for VA to resume it. In proposed § 5.816(b), we provide rules for resumptions of disability pension involving apportionments. In proposed § 5.816(c), we provide separate rules for resumptions of death pension involving an allocation. In current § 3.666(c), the same rules describes [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2011-228. Public record. Not legal advice.