What this means
m21-1:X.v.2.C explains cost-of-living adjustment (cola). In plain terms, the official guidance says when the automated process of adjusting a beneficiary’s award to reflect a cost-of-living adjustment (COLA) fails, it will generate one of the following end products (EPs): It also addresses use the table below to determine the actions to take to manually process a COLA adjustment that was generated for the reason described in the preceding paragraphs.
How this may help with a claim
Use m21-1:X.v.2.C as an internal VA audit trail for cost-of-living adjustment (cola), not as a promise of a particular result. Compare the actions recorded in your claim file or decision notice with this source-specific detail: When the automated process of adjusting a beneficiary’s award to reflect a cost-of-living adjustment (COLA) fails, it will generate one of the following end products (EPs): Use the table below to determine the actions to take to manually process a COLA adjustment that was generated for the reason described in the preceding paragraphs. If 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: processing a COLA when an automated end product (EP) was not established, and
- Confirm that the record or notice addresses this source point: When the automated process of adjusting a beneficiary’s award to reflect a cost-of-living adjustment (COLA) fails, it will generate one of the following end products (EPs):
- Document how this stated step or exception applies: 600 for Pension and Parents’ DIC awards if a notice of adverse action prior to manual adjustment of COLA is required, or
Important limits
m21-1:X.v.2.C is primarily internal workflow guidance about cost-of-living adjustment (cola). 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: When the automated process of adjusting a beneficiary’s award to reflect a cost-of-living adjustment (COLA) fails, it will generate one of the following end products (EPs): Follow the table below for the proper EP to use and actions to take to manually process the failed COLA.
Search terms when useful
Phrases that may help when searching your claim file or this library.
- Cost-of-Living Adjustment (COLA)
- m21-1:X.v.2.C
- Cost-of-Living Adjustment COLA
- Adjusting Award Reflect COLA
- processing COLA when automated
- COLA adjustments apportionments.
- X.v.2.C.1.a. Adjusting Award Reflect
- When automated process adjusting
Original VA guidance
The official VA text of this section
Overview
In This Section
This section contains the topic, “ Adjusting an Award to Reflect a COLA.”
1. Adjusting an Award to Reflect a COLA
Introduction
This topic contains procedures for adjustment of an award to reflect a COLA, including
- adjusting an award to reflect a COLA
- processing a COLA when an automated end product (EP) was not established, and
- COLA adjustments for apportionments.
Change Date
March 9, 2026
X.v.2.C.1.a. Adjusting an Award to Reflect a COLA
When the automated process of adjusting a beneficiary’s award to reflect a cost-of-living adjustment (COLA) fails, it will generate one of the following end products (EPs):
- 692 for compensation, Medal of Honor Pension, and Dependency and Indemnity Compensation (DIC) awards
- 600 for Pension and Parents’ DIC awards if a notice of adverse action prior to manual adjustment of COLA is required, or
- 696 for Pension and Parents’ DIC if no adverse action is needed.
Exception: If the EPs listed above were not established there may have been a Pension or Parent’s DIC related EP 150, 600, 696, or 130 pending at the time of the batch COLA process.
Notes:
- EP 420 – CH 18 Increase Claim – Spina Bifida is established for COLA adjustments for Chapter 18 beneficiaries.
- The automated process will not establish both an EP 600 and an EP 696 for Pension and Parents’ DIC awards for the same COLA year.
Use the table below to determine the actions to take to manually process a COLA adjustment that was generated for the reason described in the preceding paragraphs.
Scroll sideways to see the full table.
| If a... | Then... |
|---|---|
| Veterans Service Center is processing the EP 692 | an EP 692 is established with the claim label COLA Adjustment process an award that pays the COLA, and notify the beneficiary of the action taken. |
| pension management center (PMC) is processing the EP 692 (for DIC beneficiaries only) | an EP 692 is established with the claim label PMC COLA Adjustment process an award that pays the COLA, and notify the beneficiary of the action taken. |
| PMC is processing the EP 696 that was automatically established (for pension and Parents’ DIC beneficiaries only) | an EP 696 is established with the claim label PMC COLA Adjustment process an award that complies with the policies expressed in M21-1, Part IX, Subpart iii, 1.H.3 for adjustments based on COLAs, and notify the beneficiary of the action taken. |
| PMC is processing the EP 600 that was automatically established with automatic due process notification (for pension and Parents’ DIC beneficiaries only) | an EP 600 is established with the claim label PMC - Pension COLA Due Process process an award that complies with the policies expressed in M21-1, Part IX, Subpart iii, 1.H.3 for adjustments based on COLA after the expiration of the due process period or notification from the beneficiary, and notify the beneficiary of the action taken. |
Important:
- Notifying the beneficiary of the action taken only requires a brief statement of the reason for the action (the legislative COLA), statement of the change in rate, and the date from which the new rate applies. Decision notice requirements from 38 CFR 3.103(f) are not required. Notification of an award to manually implement a COLA is not an adjudicative decision on a claim.
- EP 130 is the appropriate EP for cases involving apportionments and other payee codes.
- If, during PMC processing of a current-year automatic COLA, additional action is identified (such as prior year COLAs), the claims processor must address the issue(s).
X.v.2.C.1.b. Processing a COLA When an Automated EP Was Not Established
When the automated COLA for Pension or Parents’ DIC awards fails, and an automated EP listed in M21-1, Part X, Subpart v, 2.C.1.a, is not established, the claims processor must manually process a COLA adjustment under the pending EP or by establishing a new EP as described in the table below.
A batch established Veteran level note will be added in the Veterans Benefits Management System (VBMS) that says, COLA claim was not established due to a pending Pension or Parents’ DIC related claim. Please review for potential COLA adjustments.
Follow the table below for the proper EP to use and actions to take to manually process the failed COLA.
Scroll sideways to see the full table.
| If... | Then... |
|---|---|
| EP 600 is pending for a separate reduction, and the failed COLA does not require additional due process | adjust the failed COLA under the pending EP 600, and no additional EP is warranted. |
| EP 600 is pending for a separate reduction, and the failed COLA requires additional due process | Follow the table below. |
| EP 600 is pending for a separate reduction, but the proposed actions are not warranted based on the response from the claimant and the failed COLA does not require due process | process both actions under the pending EP 600. |
| EP 130 or EP 150 is pending and processing the failed COLA simultaneously will not cause a reduction | adjust the automated COLA under the pending EP 150 or EP 130, and no additional EP is warranted. |
| EP 150 is pending, and processing the failed COLA simultaneously will cause a reduction | clear EP 150, and establish EP 600 to issue notice of proposed adverse action. |
| EP 130 or 150 is pending but it is not a valid claim, and the failed COLA has not been processed | follow the existing procedures in the M21-1 for invalid claims establish either an EP 696 if the failed COLA does not require due process, or 600 if due process is required, and process the COLA based on the procedures outlined in M21-1, Part X, Subpart v, 2.C.1.a. |
Notes:
- There should never be an EP 696 and/or pension EP 600 pending at the same time for the same beneficiary.
- An EP 696 should never be cleared when processing a COLA when there is a valid EP 150, 130, or 600 pending for Pension or Parents’ DIC.
X.v.2.C.1.c. COLA Adjustments for Apportionments
All COLA adjustments for apportionments, minus the adjusted rate prescribed by regulation paid to the primary beneficiary, associated with incarceration or hospitalization of a primary beneficiary under 38 CFR 3.451 and M21-1, Part VI, Subpart iv, 2.A, will be applied to the apportionee(s). When there are multiple apportionments, divide the COLA equally to adjust the award for each apportionee. These increases must be processed manually, as discussed in M21-1, Part X, Subpart v, 2.C.1.a.
Note: For legacy apportionments, only those apportionment decisions providing for increases in the amount of the apportionment each time the primary beneficiary receives a COLA will be adjusted. Such increases must also be processed manually.
References: For more information on
- the definition of legacy apportionment, see M21-1, Part VI, Subpart iv, 2.C.1.a
- adjustments for legacy apportionments, see M21-1, Part VI, Subpart iv, 2.D, and
- rounding for fractions of cents associated with apportionments, see M21-1, Part VI, Subpart iv, 2.A.4.c.