38 CFR § 3.666 - Incarcerated beneficiaries and fugitive felons—pension.
If any individual to or for whom pension is being paid under a public or private law administered by the Department of Veterans Affairs is imprisoned in a Federal, State or local penal institution as the result of conviction of a felony or misdemeanor, such pension payments will be discontinued effective on the 61st day of imprisonment following conviction. The payee will be informed of his or her rights and the rights of dependents to payments while he or she is imprisoned as well as the conditions under which payments to him or to her may be resumed on his or her release from imprisonment. However, no apportionment will be made if the veteran or the dependent is a fugitive felon as defined in paragraph (e) of this section. Payments of pension authorized under this section will continue until notice is received by the Department of Veterans Affairs that the imprisonment has terminated.
(1) If the veteran continues to be eligible except for the provisions of this section, and
(2) If the annual income of the spouse or child is such that death pension would be payable.
(3) At the rate payable under the death pension law or the rate which the veteran was receiving at the time of imprisonment, whichever is less.
(4) From the day following the date of discontinuance of payments to the veteran, subject to payments made to the veteran over the same period, if a claim or intent to file a claim as set forth in § 3.155(b) is received within 1 year after notice to the veteran as required by this section and any necessary evidence is received within 1 year from the date of request; otherwise payments may not be made for any period prior to the date of receipt of a new claim or intent to file a claim as set forth in § 3.155(b).
(3) From the day following the date of discontinuance of payments to the disqualified person, subject to payments made to that person over the same period if evidence of income is received within 1 year after date of request; otherwise payments may not be made for any period prior to the date of receipt of a claim or intent to file a claim as set forth in § 3.155(b).
(4) The income limitation applicable to eligible persons will be that which would apply if the imprisoned person did not exist.
(c) Resumption of pension upon release from incarceration. Pension will be resumed as of the day of release if notice is received within 1 year following release; otherwise resumption will be effective the date of receipt of such notice. Where an award or increased award was made to any other payee based upon the disqualification of the veteran, surviving spouse, or child while in prison, such award will be reduced or discontinued as of date of last payment and pension will be resumed to the released prisoner at a rate which will be the difference, if any, between the total pension payable and the amount which was paid to the other person or persons through the date of last payment and thereafter the full rate.
(d) Veteran entitled to compensation. If an imprisoned veteran is entitled to a lesser rate of disability compensation, it shall be awarded as of the 61st day of imprisonment in lieu of the pension the veteran was receiving if the veteran has neither spouse nor child. If the veteran has a spouse or a child, compensation will be awarded only after the veteran has been furnished an explanation of the effect of electing compensation on the amount available for apportionment. If the veteran then requests compensation, it shall be awarded from the date veteran requests the Department of Veterans Affairs to take such action.
(e) Fugitive felons.
(1) Pension is not payable on behalf of a veteran for any period during which he or she is a fugitive felon. Pension or death pension is not payable on behalf of a dependent of a veteran for any period during which the veteran or the dependent is a fugitive felon.
(2) For purposes of this section, the term fugitive felon means a person who is a fugitive by reason of:
(i) Fleeing to avoid prosecution, or custody or confinement after conviction for an offense, or an attempt to commit an offense, which is a felony under the laws of the place from which the person flees; or
(ii) Violating a condition of probation or parole imposed for commission of a felony under Federal or State law.
(3) For purposes of paragraph (e) of this section, the term felony includes a high misdemeanor under the laws of a State which characterizes as high misdemeanors offenses that would be felony offenses under Federal law.