M21-1 Manual  /  Part X, Subpart v, Chapter 2, Section B

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

M21-1, Part X, Subpart v, Chapter 2, Section B

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

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.
If ...Then ...
the Veteran provided written or telephonic notification or other credible evidence to establish the date of return to active duty
  • discontinue benefits according to the instructions in M21-1, Part X, Subpart v, 2.B.1.c, using the date the Veteran provided, and
  • in the decision notice, 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.
VA received notice the Veteran returned to active duty from a source other than the Veteranfollow the instructions in the table below.
StepAction
1Determine the date the Veteran returned to active duty by using the
  • Defense Personnel Records Information Retrieval System (DPRIS), or
  • Veterans Information Solution (VIS).
    • Important:
    • If the Veteran’s period of active duty started on or after October 1, 2020, claims processors may use the information shown in the rows below the heading Guard/Reserve Active Service (GRAS) in VIS that reflect non-training periods (identifiable by the presence of No in the column titled TRAINING) when discontinuing a Veteran’s benefits based on the return to active duty. If a discrepancy exists between the data VIS displays and any of the following, assume the data in VIS is incorrect:
      • unvoided and uncorrected DD Form 214, Certificate of Uniformed Service
      • DD Form 214 that is corrected by a DD Form 215, Correction to DD Form 214, Certificate of Uniformed Service, and/or
      • orders that were not rescinded or revoked.
    • Prior to October 1, 2020 (the start of fiscal year 2021), the non-training periods shown in VIS were included in the number of training days printed on VA Forms 21-8951, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances, when the Veteran was paid out of National Guard/Reserve component funds.
    • Data displayed under the heading Active Duty Service Periods in VIS is generally accurate but may be superseded by certain documentary evidence, as explained in M21-1, Part III, Subpart i, 1.B.3.c.
2Does VIS or DPRIS confirm the Veteran had an unreported period of active duty?
  • If yes, go to the next step.
  • If no,
    • annotate the source document to reflect that no action is necessary because there is no unreported period of active duty
    • clear an end product (EP) 290, and
    • disregard the remaining steps in this table.
3Clear an EP 290 unless this EP was previously cleared for the period(s) of active duty under review.
4
  • Establish EP 600 - Return to Active Duty, and
  • add
    • a contention(s) of Return to Active Duty followed by the begin date and end date (if known)
    • the Potential Under/Overpayment special issue, and
    • the Return to Active Duty Proposal tracked item.
Notes:
  • When simultaneously processing multiple non-sequential return to active duty dates
    • consolidate the active duty dates that require action under one EP 600, and
    • cancel any EP 600 that was consolidated.
  • If the Veteran is in receipt of Veterans Pension benefits, the contentionmust include the Pension contention classification.
5Notify the Veteran that VA proposes to discontinue benefits effective the date(s) the Veteran returned to active duty. In the notice, ask the Veteran to submit the following with regard to the time period(s) in question:
  • a copy of the orders or separation document(s), or
  • other evidence of the duty performed.
Notes: Reference: For more information on preparing a notice of proposed adverse action, see M21-1, Part X, Subpart ii, 3.A.
6After the Veteran responds or has had 65 days to respond to the notice,
  • take the proposed action unless the Veteran
    • requested a hearing within 30 days of the notice, or
    • submits evidence showing VA should not take the proposed action, and
  • disregard the remaining steps in this table.
In the decision notice, if the latest of the end dates is unknown, then inform 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. Note: Follow the instructions in M21-1, Part X, Subpart ii, 3.B.3, if a Veteran requests a hearing in response to a notice of proposed adverse action.
References: For more information on
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.
StepAction
1Select Return to Active Duty from the drop-down box in the DECISION field on the BASIC ELIGIBILITY page.
2Enter the current date in the EVENT DATE field.
3Enter the effective date for the (future) discontinuation of benefits in the AWARD EFFECTIVE DATE field.
4Generate the award (discontinuation).
5Use Redesigned Automated Decision Letters to prepare a decision notice.

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
StepAction
1Did VA accept the request for reinstatement as a Benefits Delivery at Discharge (BDD) claim, or will VA concurrently process a claim the Veteran submitted with the request for reinstatement under the BDD program?Note: Claims processors skip the instructions in Steps 2 through 5 of this table if the Veteran filed a BDD claim, as VA takes actions similar to those described in these steps during the course of processing the BDD claim. References: For more information on
2Use DPRIS or VIS to confirm the date the Veteran was discharged from active duty.

Note: If attempts to confirm the date of discharge through DPRIS or VIS are unsuccessful, ask the Veteran to provide official documentation (such as a DD Form 214 or order to duty) that shows the date of discharge.

  • Go to the next step after the Veteran provides documentation.
  • If the Veteran fails to provide documentation within 30 days,
    • deny the request for a reinstatement of benefits, and
    • disregard the remaining steps in this table.
3 Follow the instructions in the table below.
If …Then …
  • the Veteran is requesting reinstatement only (the Veteran is not pursuing an initial or supplemental claim) and
  • all of the Veteran's service-connected (SC) disabilities are static (no future review examination is indicated on the most recent rating decision)
  • establish EP 290, and
  • go to Step 6.
  • the Veteran is requesting reinstatement only (the Veteran is not pursuing an initial or supplemental claim), and
  • the Veteran has an SC disability that is not static, but the designated date for the review examination is a future date
  • establish EP 290, and
  • go to Step 6.
Exception: Go to Step 4 instead of Step 6 if
  • the Veteran is a member of the Reserve or National Guard, and
  • the 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.
  • the Veteran is requesting reinstatement only (the Veteran is not pursuing an initial or supplemental claim)
  • the Veteran has an SC disability that is not static, and
  • the designated date for reexamination of the non-static disability falls between the current date and the dates during which the Veteran was on active duty
  • establish EPs 290 (for reinstatement) and 310 (for reexamination of the non-static disability), and
  • go to Step 5.
the Veteran is requesting reinstatement and concurrently pursuing an initial or supplemental claim
  • establish EP 290 (for reinstatement) and the rating EP that corresponds with the type of claim the Veteran is concurrently pursuing, and
  • go to Step 5.
Notes:
  • Establish EP 310, in addition to the other EPs referenced in this cell, if
    • the Veteran has an SC disability that is not static, and
    • the designated date for reexamination of the non-static disability falls between the current date and the dates during which the Veteran was on active duty.
  • Do not establish EP 310 if the only contention associated with the concurrently filed claim is entitlement to an increased disability rating for (a) non-static disability(ies) that is(are) subject to immediate reexamination.
4Note: Take no action on the STRs after they’re obtained. The purpose of the action described in this step is to ensure STRs from the Veteran’s most recent period of active duty are available for the rating activity to review in connection with the future review examination.
5Follow the instructions in the table below.
StepAction
1Is the Veteran a member of the Reserve or National Guard?
  • If yes, go to the next step in this embedded table.
  • If no, go to Step 6.
2Does the corporate record show the Veteran’s most recent period of active duty ended on or after 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)?
  • If yes, go to Step 6.
  • If no, go to the next step in this embedded table.
3
6If VA received the Veteran’s request for reinstatement
  • within one year of discharge from active duty, reinstate compensation for all SC disabilities (static and non-static) effective the day following the date of discharge, or
  • one year or more after the date of discharge, reinstate compensation for all SC disabilities (static and non-static) effective one year prior to the date VA received the claim.
Important:
  • Reinstate compensation by award action without a rating decision, except under the circumstances described in M21-1, Part X, Subpart v, 2.B.1.h.
  • When applicable, withhold benefits to
    • prevent concurrent payment of VA benefits and military retired pay (MRP), and/or
    • recoup a Veteran’s separation benefit.
  • Follow the instructions in the VBMS Awards User Guide to ensure the Veteran’s benefits are
    • discontinued effective the date the Veteran returned to active duty, and
    • reinstated from the appropriate effective date following discharge.​​​​​​​
References: For more information on
7Was a rating EP established in Steps 1 or 3 of this table?
  • If yes, go to the next step.
  • If no, take no further action.
Note: EP 290 is not a rating EP.
8Undertake any necessary development, to include issuing Section 5103 notice, if the Veteran is pursuing an initial or supplemental claim.Reference: For more information on the circumstances under which it is necessary to issue Section 5103 notice, see
9Follow the instructions in the table below for each of the Veteran's non-static, SC disabilities.
If the designated date for the future review examination ...Then ...
falls between the current date and the dates during which the Veteran was on active dutyschedule the Veteran for a review examination unless the evidence of record is sufficient to assign a disability rating without an examination report.
is a future datedo not schedule the examination until the review examination control referenced in M21-1, Part IV, Subpart ii, 1.B, matures.
Example:Scenario:
  • A Veteran with two non-static, SC disabilities (a back disorder and a knee disorder) is discharged from active duty.
    • The designated date for a review examination of the back disorder is June 2025.
    • The designated date for a review examination of the knee disorder is July 2029.
  • Award action to reinstate the Veteran's benefits is being taken in August of 2025.
Result: The only non-static disability that is subject to reexamination concurrent with reinstatement of the Veteran’s benefits is the back disorder.
10Refer the claim to the rating activity for a decision
  • after development is complete (if initiated), and/or
  • following receipt of examination reports (if requested) and STRs (if new STRs exist).
Note: Do not postpone rating action based solely on the absence of the Veteran’s STRs if the evidence of record supports an award of the benefit the Veteran is seeking. In such cases,
  • process the rating decision
  • continue the EP at authorization, and
  • refer the STRs to the rating activity when the STRs arrive.
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

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

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 3.31do 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

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.

Source: VA M21-1 Adjudication Procedures Manual, M21-1, Part X, Subpart v, Chapter 2, Section B (U.S. government work, reproduced for reference). Browse all sections →