Award Adjustments Necessitated by a Veteran's Return to and Discharge From Active Duty

Overview

In This Section

This section contains the topic: “ Award Adjustments Necessitated by a Veteran’s Return to and Discharge From Active Duty.”

1. Award Adjustments Necessitated by a Veteran’s Return to and Discharge From Active Duty

Introduction

This topic contains information on award adjustments necessitated by a Veteran’s return to and discharge from active duty, including

• relinquishment of benefits upon return to active duty
• handling notice that a Veteran has returned to active duty
• effective date for discontinuing compensation or pension
• discontinuing benefits in the Veterans Benefits Management System -- Awards (VBMS-A) when the Veteran will return to active duty on a date that is in the future
• handling the pending claim of a Veteran who returns to active duty
• action to take upon receipt of
• DD Form 214, Certificate of Uniformed Service, and
• a request for reinstatement of compensation
• rating decisions that show loss of entitlement during periods of active duty
• proper effective date for a grant of entitlement to an increased disability rating or service connection (SC)
• proper application of 38 CFR 3.31, and
• discontinuing and reinstating Department of Veterans Affairs (VA) benefits in the same award action.

Change Date

August 27, 2025

X.v.2.B.1.a. Relinquishment of Benefits Upon Return to Active Duty

Under 38 U.S.C. 5304(c), Veterans receiving Department of Veterans Affairs (VA) disability compensation or pension must relinquish these benefits when they return to active duty. This includes members of the National Guard who are activated under 10 U.S.C. or who serve full time in the Active Guard Reserve under 32 U.S.C..

Notes:

• This restriction does not apply to recipients of Dependency and Indemnity Compensation (DIC). For example, a surviving spouse may concurrently receive active service pay and DIC.
• The title of an activation, be it Title 10, 14, or 32, is not relevant for the purpose of discontinuing compensation due to return to active duty. However, to determine if a period of duty is considered active military, naval, or air service under 38 U.S.C. 101(22) for the purposes of establishing service connection (SC), see M21-1, Part III, Subpart i, 1.A.

References: For more information on

• the prohibition against concurrent receipt of active service pay and VA compensation or pension, see
• 38 CFR 3.654, and
• 38 CFR 3.700(a)(1), and
• full-time service in the
• Reserve, see M21-1, Part III, Subpart i, 1.A.3.b, and
• National Guard, see M21-1, Part III, Subpart i, 1.A.4.b and c.

X.v.2.B.1.b. Handling Notice That a Veteran Has Returned to Active Duty

Follow the instructions in the table below upon receipt of notice that a Veteran has returned to active duty.

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Notes:

• When establishing EP 290 based on VA’s discovery that a Veteran returned to active duty, use the date VA made the discovery as the date of claim.
• If a Veteran requests benefits be discontinued during a training period, discontinue compensation or pension in accordance with the Veteran’s request.

X.v.2.B.1.c. Effective Date for Discontinuing Compensation or Pension

According to 38 CFR 3.501(a) and 3.654(b), an award of compensation or pension to a Veteran will be discontinued effective the day preceding the date of return to active duty. For the purpose of discontinuing an award in VBMS-A because a Veteran returned to active duty, this means

• the last day the Veteran is entitled to benefits is the day preceding the date of return to active duty, and
• the date the Veteran returned to active duty represents the first day of non-payment of VA benefits.

Because system programming requires users to enter the first day of non-payment as the effective date of discontinuance of an award due to a Veteran’s return to active duty, the “effective date of discontinuance” referred to in this section is the date on which the Veteran returned to active duty, not the day preceding it.

Important:

• Preparation of a rating decision that reflects loss of entitlement to benefits based on a Veteran’s return to active duty is not necessary. Discontinue benefits by award action, making the appropriate entries on the BASIC ELIGIBILITY page.
• VA typically learns of a Veteran’s return to active duty after active duty has begun. If a Veteran will return to active duty on a date that is in the future, follow the instructions in M21-1, Part X, Subpart v, 2.B.1.d, for discontinuing the Veteran’s benefits in VBMS-A.

Reference: For more information on making entries on the BASIC ELIGIBILITY page in VBMS-A, see the VBMS Awards User Guide.

X.v.2.B.1.d. Discontinuing Benefits in VBMS-A When the Veteran Will Return to Active Duty on a Date That Is in the Future

VBMS-A currently lacks the functionality to discontinue benefits from a future date entered in the EVENT DATE field. Until this functionality is added, claims processors must use the workaround described in the table below to discontinue benefits from a future effective date in VBMS-A.

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X.v.2.B.1.e. Handling the Pending Claim of a Veteran Who Returns to Active Duty

VA is prohibited from paying compensation or pension to a Veteran while the Veteran is receiving active service pay. If, however, a Veteran files a claim before returning to active duty, VA may not deny the claim solely because the Veteran returned to active duty.

Rationale: If VA ultimately grants the Veteran’s claim, it may pay the Veteran any benefits due for the period preceding the return to active duty.

Important: According to VAOPGCPREC 10-2004, the return of a Veteran to active duty under the circumstances described above does not change VA’s duty to assist in substantiating a pending claim, to include providing the Veteran an examination, when necessary, to decide the claim.

Reference: For more information on handling the pending claim of a Veteran who returns to active duty, see M21-1, Part X, Subpart v, 2.A.

X.v.2.B.1.f. Action to Take Upon Receipt of DD Form 214

Following receipt of DD Form 214 or other credible evidence showing a Veteran has been released from active duty,

• ensure VA properly discontinued benefits effective the day the Veteran returned to active duty, and
• notify the Veteran that VA will reinstate benefits effective the day following release from active duty if the Veteran submits a request for reinstatement within one year of that date.

X.v.2.B.1.g. Action to Take Upon Receipt of a Request for Reinstatement of Compensation

Follow the steps in the table below following receipt of a request for reinstatement of compensation from a Veteran who is no longer on active duty.

Important:

• VA does not require a Veteran to use a prescribed form to request reinstatement of benefits unless the Veteran is concurrently pursuing an initial or supplemental claim.
• Accept as a request for reinstatement of compensation a Veteran’s communication of an intent to file (ITF) a claim for VA disability benefits.

References: For more information on

• the use of prescribed forms, see M21-1, Part II, Subpart iii, 1.A.1.a.
• informal claims received prior to March 24, 2015, see M21-1, Part II, Subpart iii, 2.H, and
• handling a
• communication of an ITF, see M21-1, Part II, Subpart iii, 2.A, and
• request for an application for VA benefits, see M21-1, Part II, Subpart iii, 2.G.

Scroll sideways to see the full table.

Note: The establishment of a rating EP triggers an automatic request for STRs through the Department of Defense’s Healthcare Artifacts and Images Management Solution (HAIMS) unless the

• Veteran is a member of the Reserve or National Guard, and
• corporate record shows the Veteran’s most recent period of active duty ended prior to
• September 1, 2014, if the period of active duty was in the Coast Guard, or
• January 1, 2014, if the period of active duty was in a branch of service other than the Coast Guard.

References: For more information on

• reinstating benefits following release from active duty, see 38 CFR 3.654(b)(2)
• handling notice of a Veteran’s return to active duty and subsequent discharge that VA received more than one year after discharge occurred, see M21-1, Part X, Subpart v, 2.B.1.k
• resuming a claim VA previously suspended based on an inability to develop the claim due to the Veteran’s return to active duty, see M21-1, Part X, Subpart v, 2.A
• EPs, see M21-4, Appendix B, and
• HAIMS, see M21-1, Part III, Subpart ii, 2.B.1.c.

X.v.2.B.1.h. Rating Decisions That Show Loss of Entitlement During Periods of Active Duty

At one point in the past, it was common practice for the rating activity to prepare a rating decision that reflected a Veteran’s loss of entitlement to disability compensation when the Veteran returned to active duty. The authorization activity then discontinued the Veteran’s benefits based on the rating decision.

As indicated in M21-1, Part X, Subpart v, 2.B.1.c, the authorization activity now administratively (without a rating decision) discontinues a Veteran’s benefits when the Veteran returns to active duty.

When claims processors identify a rating decision that reflects loss of entitlement to disability compensation during a period or periods of active duty,

• the rating activity must prepare a rating decision that removes all previous Active Duty Discontinuance selections from the Codesheet, per the instructions in M21-1, Part V, Subpart iv, 1.C.6.d, and
• the authorization activity must
• promulgate the rating decision
• recreate the previously coded discontinuances by way of award action, and
• ensure updates to the Codesheet are reflected in the corporate record.

X.v.2.B.1.i. Proper Effective Date for a Grant of Entitlement to an Increased Disability Rating or SC

If, in connection with a request for reinstatement of disability compensation following discharge, a Veteran files, and VA grants, a claim for

• an increased disability rating, assign an effective date in accordance with the instructions in M21-1, Part V, Subpart ii, 4.A.5.f
• SC for a new disability, assign an effective date in accordance with the instructions in M21-1, Part V, Subpart ii, 4.A.3.a, or
• SC for a disability for which VA previously denied SC, assign an effective date in accordance with the instructions in M21-1, Part X, Subpart ii, 2.A.

X.v.2.B.1.j. Proper Application of 38 CFR 3.31

The reinstatement of compensation VA previously discontinued because a Veteran returned to active duty does not constitute a new award of or increase in benefits. Therefore, the requirement in 38 CFR 3.31 to award benefits effective the first of the month following the month of entitlement is not for application.

The provisions of 38 CFR 3.31 do apply if, in connection with a Veteran’s request for reinstatement, VA awards additional benefits based on the

• establishment of SC for a new disability or a disability for which VA previously denied SC
• assignment of an increased disability rating to an existing, SC disability, and/or
• Veteran's claim to add a new dependent.

Example:

Scenario:

• A Veteran with a static, SC knee disorder, which VA rated 10-percent disabling, returns to active duty on August 1, 2020.
• VA discontinues the Veteran’s benefits effective the date she returned to active duty.
• The Veteran’s active duty ends August 15, 2021.
• On August 18, 2021, the Veteran files a request for reinstatement of her compensation and a claim for an increased rating for the knee disorder.
• VA determines the knee disorder worsened during service and subsequently assigns the knee disorder a disability rating of 30 percent.

Result: The effective date of the award that reinstates compensation at the rate payable for a disability rated 10-percent disabling is August 16, 2021. Although the Veteran is entitled to the 30-percent disability rating for the knee disorder effective August 18, 2021, the proper effective date of payment for the increased award, per 38 CFR 3.31, is September 1, 2021.

References: For more information on the effective date of

• the increased disability rating referenced in the preceding paragraph, see M21-1, Part V, Subpart ii, 4.A.5.f, and
• payment under 38 CFR 3.31, see M21-1, Part VI, Subpart i, 1.A.2.b.

X.v.2.B.1.k. Discontinuing and Reinstating VA Benefits in the Same Award Action

Sometimes, VA may not discover that a Veteran in receipt of VA benefits returned to active duty and was subsequently discharged until years after the fact. When retroactively discontinuing benefits during the period of active duty, do not discontinue benefits beyond the date of discharge, even though the Veteran did not notify VA of the discharge within one year.

Example:

Scenario: On August 10, 2020, a Veteran in receipt of compensation reports a period of active duty that began December 15, 2017, and ended January 5, 2019.

Action: Discontinue the Veteran’s compensation effective December 15, 2017, and reinstate it effective January 6, 2019.