What this means
m21-1:VIII.iv.3.D explains monitoring income for veterans in receipt of individual unemployability (iu). In plain terms, the official guidance says changes in the employability of Veterans for whom entitlement to individual unemployability (IU) is established are monitored through a yearly Social Security Administration (SSA) wage data match. It also addresses follow the steps in the table below for dispatch and control of VA Form 21-4140 by the RO when Hines ITC cannot perform batch processing.
How this may help with a claim
Use m21-1:VIII.iv.3.D as an internal VA audit trail for monitoring income for veterans in receipt of individual unemployability (iu), not as a promise of a particular result. Compare the actions recorded in your claim file or decision notice with this source-specific detail: Changes in the employability of Veterans for whom entitlement to individual unemployability (IU) is established are monitored through a yearly Social Security Administration (SSA) wage data match. Follow the steps in the table below for dispatch and control of VA Form 21-4140 by the RO when Hines ITC cannot perform batch processing. If the record does not show the expected action, identify the missing step precisely when asking VA or an accredited representative to review the file.
What to review in your file
- Check the file against this official condition: The Veteran will be required to identify and explain earned income via return of VA Form 21-4140.
- Confirm that the record or notice addresses this source point: Monitoring changes in employability status is not required when the Veteran
- Document how this stated step or exception applies: Monitoring for changes in employability status is not necessary if a discontinuation of IU would not alter the veteran or claimant’s benefit entitlement.
Important limits
m21-1:VIII.iv.3.D is primarily internal workflow guidance about monitoring income for veterans in receipt of individual unemployability (iu). It can help identify what VA was expected to document, but it does not by itself create a claimant deadline, a freestanding entitlement, or a guaranteed remedy. The source also states: Changes in the employability of Veterans for whom entitlement to individual unemployability (IU) is established are monitored through a yearly Social Security Administration (SSA) wage data match. Refer to the table below for procedures for handling the response submitted by a Veteran on VA Form 21-4140.
Search terms when useful
Phrases that may help when searching your claim file or this library.
- Monitoring Income for Veterans in Receipt of Individual Unemployability (IU)
- m21-1:VIII.iv.3.D
- Monitoring Income Receipt
- Individual Unemployability
- Requirements Monitoring Income
- monitoring changes employability status
- discontinuance monitoring changes employability
- automated monitoring income receipt
Original VA guidance
The official VA text of this section
Overview
In This Section
This section contains the following topics:
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| Topic | Topic Name |
| 1 | Requirements and Procedures for Monitoring Income |
| 2 | Handling VA Form 21-4140, Employment Questionnaire |
1. Requirements and Procedures for Monitoring Income
Introduction
This topic contains the requirements and procedures for monitoring income for Veterans in receipt of IU, including
- monitoring changes in employability status
- discontinuance of monitoring for changes in employability status
- automated monitoring for income of Veterans in receipt of IU, and
- regional office (RO) dispatch and control for return of VA Form 21-4140, Employment Questionnaire.
Change Date
August 12, 2022
VIII.iv.3.D.1.a. Monitoring Changes in Employability Status
Changes in the employability of Veterans for whom entitlement to individual unemployability (IU) is established are monitored through a yearly Social Security Administration (SSA) wage data match.
- A Veteran who is identified as having verified earned income over the poverty line and is also in receipt of IU will be sent a due process letter and VA Form 21-4140, Employment Questionnaire, with an accompanying VA Form 21-4138, Statement in Support of Claim, via the Hines Information Technology Center (ITC).
- The Veteran will be required to identify and explain earned income via return of VA Form 21-4140.
Note: The yearly SSA wage data match identifies family or household income that is in excess of poverty level.
References: For more information on
- monitoring changes in employability status, see Individual Unemployability Certification Process Frequently Asked Questions
- periodic certification of continued eligibility, see 38 CFR 3.652
- automated monitoring for income and development for VA Form 21-4140, see M21-1, Part VIII, Subpart iv, 3.D.1.c
- RO dispatch and control for the return of VA Form 21-4140, see M21-1, Part VIII, Subpart iv, 3.D.1.d, and
- handling information from a Veteran explaining other sources for wages reported in the data match, see M21-1, Part VIII, Subpart iv, 3.D.2.e.
VIII.iv.3.D.1.b. Discontinuance of Monitoring for Changes in Employability Status
Monitoring changes in employability status is not required when the Veteran
- has not been identified in the SSA data match as having verified earned income above the poverty line
- has an IU rating that has been in effect for 20 or more continuous years, or
- has had an IU rating replaced with a 100-percent schedular evaluation.
Notes:
- Monitoring for changes in employability status is not necessary if a discontinuation of IU would not alter the claimant’s benefit entitlement. In this situation, development for VA Form 21-4140 may be discontinued.
- A review of the rating Codesheet, particularly the special monthly compensation (SMC) paragraph text entries, will reflect whether payment of SMC is contingent on a grant of entitlement to IU. When payment of SMC is contingent on a grant of entitlement to IU, continued monitoring of employability status is required even in spite of the presence of a 100-percent schedular evaluation.
References: For more information on
- protection of evaluations, see 38 CFR 3.951(b), and
- entitlement to SMC associated with IU, see M21-1, Part VIII, Subpart iv, 3.C.4.e.
VIII.iv.3.D.1.c. Automated Monitoring for Income of Veterans in Receipt of IU
Veterans in receipt of IU are monitored for receipt of earned income by an SSA data match. The table below describes the automated monitoring process. When the automated process cannot occur, refer to M21-1, Part VIII, Subpart iv, 3.D.1.d for procedures to follow.
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| Step | Action |
|---|---|
| 1 | Upon receipt of wage files from SSA, Hines ITC will run a data match to identify those Veterans receiving IU who are shown to have verified earned income over the poverty line. |
| 2 | Hines ITC will automatically generate and send a notice of proposed adverse action letter with an attached VA Form 21-4140 and VA Form 21-4138 to the identified Veterans. |
| 3 | Hines ITC will batch establish an end product (EP) 600 with the claim label Predetermination – Rating Issue to control for the return of VA Form 21-4140 and the due process period set a suspense date for 65 days from the month the due process letter is issued by Hines ITC, and add the special issue Annual Eligibility Report to each claim in the batch process. Important: Claims processors should add this special issue flash if it was not automatically added by Hines ITC. |
| 4 | Upon expiration of the suspense date, refer to M21-1, Part VIII, Subpart iv, 3.D.2 for actions to take based on receipt or non-receipt of VA Form 21-4140. |
VIII.iv.3.D.1.d. RO Dispatch and Control for Return of VA Form 21-4140
Claims identified in the income match that cannot be batch processed by Hines ITC will require manual review and action by the regional office (RO).
Follow the steps in the table below for dispatch and control of VA Form 21-4140 by the RO when Hines ITC cannot perform batch processing.
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| Step | Action |
| 1 | The Office of Field Operations (OFO) sends an annual e-mail to RO leadership of cases in its jurisdiction (based on the Veteran’s address) in which the Veteran has been identified as being in receipt of income above the poverty threshold, and is in receipt of individual unemployability, but did not receive due process through the batch process. |
| 2 | The RO will establish EP 600 with the claim label Predetermination – Rating Issue ensure the SUPPRESS ACKNOWLEDGEMENT LETTER checkbox is selected so the Hines ITC-generated acknowledgement letter is not automatically sent to the Veteran, and add the special issue Annual Eligibility Report. |
| 3 | Provide the Veteran with due process to propose to discontinue entitlement to IU based on receipt of earned income by sending the Veteran notice of proposed adverse action and including VA Form 21-4140 and VA Form 21-4138 using the IU Eligibility Review Due Process letter. |
| 4 | Utilizing a suspense date of 65 days, establish tracked items for due process, and return of VA Form 21-4140. |
| 5 | Provide an e-mail response to OFO confirming that due process was sent on identified claims. |
2. Handling VA Form 21-4140
Introduction
This topic contains the procedures for procedures for handling VA Form 21-4140, including
- handling failure to return VA Form 21-4140
- receipt of VA F orm 21-4140 following discontinuation of IU
- reviewing responses received on VA Form 21-4140
- handling VA Form 21-4140 returned with
- no reported wages
- reported Veteran wages, and
- sufficient explanation of income, and
- sufficiency of notice of proposed adverse action
Change Date
August 12, 2022
VIII.iv.3.D.2.a. Handling Failure to Return VA Form 21-4140
Follow the steps in the table below for procedures to follow when the Veteran does not return VA Form 21-4140.
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| Step | Action |
|---|---|
| 1 | Refer the claims folder to the rating activity. |
| 2 | Prepare a rating decision reflecting reduction to the schedular evaluation effective the date indicated in the LAST PAID DATE field on the AWARD INFORMATION tab in Share (see 38 CFR 3.501(f)) or the date specified in the notice of proposed adverse action, whichever is later. Important: If entitlement to Dependents’ Educational Assistance (DEA) or SMC was previously established based on the grant of IU, address DEA in the rating if otherwise warranted. |
| 3 | Refer the claims folder to the authorization activity to reduce the award. Notify the Veteran of the reduction and any loss of entitlement to DEA or SMC. Advise the Veteran that if the Department of Veterans Affairs (VA) receives evidence showing continued unemployability within one year of the date of the decision notice, IU will be restored from the date of the reduction. Advise the regional processing office (RPO) of jurisdiction of the loss of entitlement to DEA if a 38 U.S.C. Chapter 35 record exists under the Veteran’s claim number. |
Reference: For more information on RPO
- jurisdiction, see M22-4, Part III, 1.02, and
- e-mail addresses, see M21-1, Part XIII, Subpart i, 1.B.3.b..
VIII.iv.3.D.2.b. Receipt of VA Form 21-4140 Following Discontinuation of IU
If the Veteran provides a completed VA Form 21-4140 after the notification of IU discontinuation is sent, accept VA Form 21-4140 as a prescribed form for a claim for IU, as described in M21-1, Part II, Subpart iii, 1.A.1.a, and revise the prior decision, as warranted, in accordance with the facts found.
Reference: For more information on periodic certification of continued eligibility, see 38 CFR 3.652.
VIII.iv.3.D.2.c. Reviewing Responses Received on VA Form 21-4140
A VA Form 21-4140 and VA Form 21-4138 are sent only to Veterans identified in the wage data match as having received income. The notice of proposed adverse action sent by Hines ITC asks the Veteran to explain the income and provide documentation of the income source.
When a Veteran returns VA Form 21-4140, the income must be explained as requested in the notice of proposed adverse action.
- Analyze all submitted evidence in accordance with M21-1, Part V, Subpart ii, 1.A to determine whether the evidence continues to show the Veteran is incapable of gainful employment.
- The Veteran must submit evidence that documents the source of the reported income for the applicable scenario. For example, if the income is
- spousal income and taxes were filed jointly, a Veteran must submit documentation of the income source such as a spouse’s Form W-2, Wage and Tax Statement, or
- the result of the Veteran’s employment and the Veteran is
- no longer employed, the Veteran must submit evidence documenting the cessation of employment such as a statement from the former employer providing the date of termination, or
- currently employed, but employment has not been for a continuous year, the Veteran must submit evidence explaining employment status such as a statement from the employer stating the dates employed.
- Review VA Form 21-4140 provided by the Veteran to determine if additional clarification is needed. If a signed VA Form 21-4140 is received but necessary information, such as wage data, is missing or requires clarification, it is permissible to telephone the Veteran to obtain the clarifying information orally and document any contact with the Veteran on VA Form 27-0820.
- If Veterans fail to check the No box, indicating that they have not worked, but sign the VA Form 21-4140, indicating that they have not been employed by VA or others or self-employed at any time during the previous 12 months, claims folders should still be referred to the rating activity as described in the table below.
- A phone call to the Veteran cannot be used to substitute for a signature on VA Form 21-4140.
- Although VA Form 21-4138 is provided to the Veteran and will often prove helpful in explaining the income source
- a Veteran’s statement, without adequate documentation, is generally not sufficient to verify the source of the income, and
- submission of VA Form 21-4138 is not required as a part of the Veteran’s response.
Refer to the table below for procedures for handling the response submitted by a Veteran on VA Form 21-4140.
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| If the Veteran... | Then... |
|---|---|
| returns a signed VA Form 21-4140 checks the block indicating unemployment has continued for the past 12 months, and does not provide an explanation and documentation detailing the source of the income | consider the response a fraudulent response and follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.d. |
| returns a signed VA Form 21-4140 checks the block indicating unemployment has continued for the past 12 months, and provides an inadequate explanation and/or insufficient documentation detailing the source of the income with no indication of a return to work | follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.d. |
| returns a signed VA Form 21-4140, and confirms a return to work | follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.e. |
| returns a signed VA Form 21-4140 checks the block indicating unemployment has continued for the past 12 months, and provides an adequate explanation detailing the source of the income | follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.f. |
Note: When a Veteran reports employment that is characterized by temporary interruptions in work status, such as a customary seasonal break that is characteristic of that job or occupation, but is otherwise continuous employment, follow the guidance in 38 CFR 3.343(c)(2).
VIII.iv.3.D.2.d. Handling VA Form 21-4140 Returned With No Reported Wages
Follow the steps in the table below when a Veteran returns VA Form 21-4140 and does not
- indicate a return to work, and/or
- provide a sufficient explanation of wages.
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| Step | Action |
|---|---|
| 1 | Refer the claims folder to the rating activity. |
| 2 | Prepare a rating decision reflecting reduction to the schedular evaluation effective the date indicated in the LAST PAID DATE field on the AWARD INFORMATION tab in Share (see 38 CFR 3.501(f)) or the date specified in the notice of proposed adverse action, whichever is later, and explaining in the rating narrative that the reason for the rating reduction is failure to provide requested evidence. Important: If entitlement to DEA or SMC was previously established based on the grant of IU, address DEA in the rating if otherwise warranted. |
| 3 | Refer the claims folder to the authorization activity to reduce the award. Notify the Veteran of the reduction and any loss of entitlement to DEA or SMC. Advise the Veteran that if VA receives evidence showing continued unemployability within one year of the date of the decision notice, IU will be restored from the date of the reduction. Advise the RPO of jurisdiction of the loss of entitlement to DEA if a 38 U.S.C. Chapter 35 record exists under the Veteran’s claim number. Add the corporate flash, Annual IU Eligibility Review-Fraud, to the claim. |
VIII.iv.3.D.2.e. Handling VA Form 21-4140 Returned With Reported Veteran Wages
Refer to the table below for procedures for handling the Veteran’s report of income and employment information on VA Form 21-4140.
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| If the Veteran returns VA Form 21-4140 and... | Then... |
|---|---|
| indicates possible gainful employment for 12 months or more | follow the steps in the table below. |
| regained employment is reported, but it has not been sustained for 12 months | refer the claims folder to the rating activity for a rating decision reflecting confirmed and continued entitlement to IU which will be reviewed if sustained employment is shown, and then refer the claims folder to the authorization activity to notify the Veteran. Important: There is no need to establish a review examination to determine if sustained employment is shown. If continued employment is shown when the next annual data match occurs, entitlement to IU will be reviewed at that time. |
| provides wage information but fails to sign the form | return VA Form 21-4140 to the Veteran indicating that the form is incomplete using the Form Not Complete letter, and advising the Veteran that a signature is required, and establish a 30 days suspense date. Note: If the form is returned with a signature, follow the most appropriate procedure based on the income reported, or returned without a signature or not returned, follow the procedures in M21-1, Part VIII, Subpart iv, 3.D.2.a. |
VIII.iv.3.D.2.f. Handling VA Form 21-4140 Returned With Sufficient Explanation of Income
When a Veteran returns VA Form 21-4140 and provides a sufficient explanation of wages, as discussed in M21-1, Part VIII, Subpart iv, 3.D.2.c, complete a rating decision to confirm and continue entitlement to IU and DEA.
Note: A Veteran’s response indicating no employment and/or wages is unacceptable and considered a fraudulent response when the Veteran is the only beneficiary on the record. However, evidence that sufficiently documents the income is not the Veteran’s earned income, as discussed in M21-1, Part VIII, Subpart iv, 3.D.2.c, is acceptable to support a continued rating of IU.
VIII.iv.3.D.2.g. Sufficiency of Notice of Proposed Adverse Action
The notice of proposed adverse action described in M21-1, Part VIII, Subpart iv, 3.D.1.c and d that is sent as a part of the automated income match process is sufficient for discontinuation of IU due to any of the following:
- failure to complete VA Form 21-4140, described in M21-1, Part VIII, Subpart iv, 3.D.2.a
- insufficient response on a VA Form 21-4140, described in M21-1, Part VIII, Subpart iv, 3.D.2.c, or
- return to gainful employment, described in M21-1, Part VIII, Subpart iv, 3.D.2.d.