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Breaking Down Service-Connected Compensation for Incarcerated Veterans
soldier is put in handcuffs
When a veteran is incarcerated for more than 60 days, the veteran’s non-service connected pension will be stopped and the veteran’s service-connected disability compensation will be reduced. If a SC veteran is receiving more than 10 percent SC disability compensation, the amount will be reduced to the 10 percent SC level. If the veteran is receiving 10 percent SC disability compensation, the compensation will be halved.
However, a veteran can choose to have his benefit “apportioned” to his/her dependents. Under the Apportionment laws, the remaining part of an incarcerated veteran’s benefit can be given to the dependents while the veteran is incarcerated. Also, if the veteran is divorced and has dependent children, the benefits also can be apportioned to the dependents either by act of the veteran or request of the dependents. Below are the regulations for apportionment under 38 CFR.
3.450    General..........3.450-1
3.451    Special apportionments..........3.451-1
3.452    Situations when benefits may be apportioned..........3.452-1
3.453    Veterans compensation or service pension or retirement pay..........3.453-1
3.454    Veterans disability pension..........3.454-1
3.458    Veteran’s benefits not apportionable..........3.458-1
3.459    Death compensation..........3.459-1
3.460    Death pension..........3.460-1
3.461    Dependency and indemnity compensation..........3.461-1
§3.450  General.
            (a)        (1) All or any part of the pension, compensation, or emergency officers’ retirement pay payable on account of any veteran may be apportioned.
                                    (i) On behalf of his or her spouse, children, or dependent parents if the veteran is incompetent and is being furnished hospital treatment, institutional, or domiciliary care by the United States, or any political subdivision thereof.
                                    (ii) If the veteran is not residing with his or her spouse, or if the veteran’s children are not residing with the veteran and the veteran is not reasonably discharging his or her responsibility for the spouse’s or children’s support.
                        (2) Where any of the children of a deceased veteran are not living with the veteran’s surviving spouse, the pension, compensation, or dependency and indemnity compensation otherwise payable to the surviving spouse may be apportioned.  (Authority: 38 U.S.C. 5307)
            (b) Except as provided in §3.458(e), no apportionment of disability or death benefits will be made or changed solely because a child has entered active duty with the air, military, or naval services of the United States.
            (c) No apportionment will be made where the veteran, the veteran’s spouse (when paid “as wife” or “as husband"), surviving spouse, or fiduciary is providing for dependents. The additional benefits for such dependents will be paid to the veteran, spouse, surviving spouse, or fiduciary.
            (d) Any amounts payable for children under §§3.459, 3.460 and 3.461 will be equally divided among the children.
            (e) The amount payable for a child in custody of and residing with the surviving spouse shall be paid to the surviving spouse. Amounts payable to a surviving spouse for a child in the surviving spouse’s custody but residing with someone else may be apportioned if the surviving spouse is not reasonably contributing to the child’s support.
            (f) 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.
            (g) The provisions of §3.460 are applicable where the surviving spouse is entitled to a higher rate of pension under the circumstances described in that section.
            [26 FR 1594, Feb. 24, 1961, as amended at 26 FR 7266, Aug. 11, 1961; 27 FR 6974, July 24, 1962; 32 FR 13226, Sept. 19, 1967; 37 FR 6678, Apr. 1, 1972; 44 FR 45939, Aug. 6, 1979]