M21-1 Manual  /  Part XIII, Subpart i, Chapter 2, Section A

Automobile and Adaptive Equipment Allowance Under 38 U.S.C. Chapter 39

M21-1, Part XIII, Subpart i, Chapter 2, Section A

Overview

In This Section

 This section contains the following topics:
TopicTopic Name
1 Eligibility for Automobile Allowance and Adaptive Equipment
2 Applications for Automobile Allowance and Adaptive Equipment
3 Rating Claims for Automobile Allowance and Adaptive Equipment
4 Notifying Claimants of Eligibility for Automobile Allowance and Adaptive Equipment
5 Processing Claims for Automobile Allowance and Adaptive Equipment
6 Processing and Paying Eligibility Requests and Certificates of Eligibility
7 Processing Disagreements with Decisions on Automobile Allowance and Adaptive Equipment Claims

1. Eligibility for Automobile Allowance and Adaptive Equipment

Introduction

 This topic contains information on eligibility for automobile allowance and adaptive equipment, including
  • eligibility requirements for automobile allowance
  • issuing a certificate of eligibility
  • eligibility requirements for adaptive equipment
  • definition of adaptive equipment
  • Veterans who do not qualify for benefits
  • adaptive equipment eligibility for 38 U.S.C. Chapter 31 beneficiaries
  • reduction of benefits due to a tort judgment or settlement, and
  • terminating eligibility for automobile allowance and adaptive equipment.

Change Date

September 17, 2026

XIII.i.2.A.1.a. Eligibility Requirements for Automobile Allowance

 To be eligible for financial assistance in purchasing a new or used automobile (or other conveyance), a Veteran or service member must have acquired one of the following disabilities as a result of injury or disease incurred or aggravated during active military service, or as a result of medical treatment or examination, vocational rehabilitation, or compensated work therapy provided by the Department of Veterans Affairs (VA) under 38 U.S.C. 1151:
  • loss, or permanent loss of use (LOU), of one or both feet
  • loss, or permanent LOU, of one or both hands,
  • permanent impairment of vision in both eyes with a
    • central visual acuity of 20/200 or less in the better eye with corrective glasses, or
    • central visual acuity of more than 20/200 if there is a field defect in which the peripheral field has contracted to such an extent that the widest diameter of visual field has an angular distance no greater than 20 degrees in the better eye, or
  • a severe burn injury, defined as disability caused by deep partial thickness or full thickness burns resulting in scar formation that
    • causes contractures
    • limits motion of one or more extremities or the trunk, and
    • precludes effective operation of an automobile, or
  • amyotrophic lateral sclerosis (ALS).
Notes:
  • Per VAOPGCPREC 60-1990, eligibility for an automobile grant may be based on functional as well as organic LOU of an extremity or blindness. For example, aconversion reaction may cause functional, as opposed to organic, blindness.
  • Eligibility based on burn injury was added by Public Law (PL) 111-275, Veterans’ Benefits Act of 2010, and only applies to claims pending or received on or after October 1, 2011.
  • Eligibility based on ALS was added by regulatory revision to 38 CFR 3.808 effective February 25, 2015, and only applies to claims pending or received on or after that date.

Reference: For more information on the eligibility requirements for the automobile allowance and adaptive equipment, see

XIII.i.2.A.1.b. Issuing a Certificate of Eligibility

 A certificate of eligibility for financial assistance in the purchase of a new or used automobile or other conveyance may be made
  • in an amount not exceeding the amount specified in 38 U.S.C. 3902, and
  • if the eligibility requirements are met.
Prior to January 5, 2023, only one automobile allowance was authorized in the Veteran’s or service member’s lifetime except as specified in 38 U.S.C. 3903(a)(2), which was previously added by PL 112-154 to authorize VA to provide or assist in providing a second automobile or other conveyance when the
  • vehicle previously purchased with VA financial assistance was destroyed as a result of a natural or other disaster
  • destruction was not the Veteran’s or service member’s fault, and
  • Veteran or service member did not receive compensation for the loss from a property insurer.
Effective January 5, 2023, PL 117-333, Veterans Auto and Education Improvement Act of 2022, further amended 38 U.S.C. 3903(a) to change the general limitation on automobile allowance grants that previously restricted this to a once-in-a-lifetime benefit. As of the date of enactment of PL 117-333, VA may provide or assist in providing an additional automobile or other conveyance if more than 30 years have passed since the Veteran or service member most recently received VA financial assistance to purchase an automobile or other conveyance. Important:
  • PL 117-333 did not change the authority to provide or assist in providing a second automobile or other conveyance under the disaster replacement provisions of PL 112-154. A second automobile or other conveyance may still be provided under PL 112-154 when the requirements outlined above are met.
  • The law prohibits VA from making payments for automobile/conveyance grants directly to Veterans or service members. VA is required to pay the benefit to the seller.
Notes:
  • In accordance with the statutory language of 38 U.S.C. 3903(a)(2), the term second automobile allowance will continue to be used when referring to a subsequent automobile allowance under the disaster replacement provisions of PL 112-154, even if it may not technically be the second allowance the claimant receives.
  • In accordance with the statutory language of 38 U.S.C. 3903(a)(3), the term additional automobile allowance will be used when referring to a subsequent automobile allowance under the provisions of PL 117-333 (more than 30 years since the most recent automobile allowance).
  • The term automobile or other conveyance is not defined in the statute or regulation. It is written and interpreted broadly to allow VA the maximum authority to approve the financial assistance. The term encompasses a wide variety of drivable motorized vehicles including, but not limited to, cars and station wagons, sport utility vehicles, minivans or vans, pickup trucks, motor homes, and commercial trucks or farm machines such as a tractor, harvester, or combine.
  • The Chief Medical Director or designee makes the determination as to what is specifically necessary for the disability or individual, including whether a specific requested conveyance is or is not necessary for the disability or individual.
References: For more information on processing requests for
  • additional automobile allowance as authorized by PL 117-333, see M21-1, Part XIII, Subpart i, 2.A.5.b, and
  • second automobile allowance under the disaster replacement provisions of PL 112-154, see M21-1, Part XIII, Subpart i, 2.A.5.c.

XIII.i.2.A.1.c. Eligibility Requirements for Adaptive Equipment

 A Veteran or service member who is eligible for the automobile allowance, as described in M21-1, Part XIII, Subpart i, 2.A.1.a, is also eligible for adaptive equipment. To be eligible to receive only adaptive equipment (as opposed to the automobile allowance and adaptive equipment), the Veteran or service member must be entitled to disability compensation for ankylosis of one or both knees or hips based on Notes:
  • The adaptive equipment benefit may be paid more than once, and it may be paid to either the seller or the Veteran/service member.
  • Adaptive equipment may not be provided for more than two vehicles at a time or during any four-year period.
References: For more information on

XIII.i.2.A.1.d. Definition: Adaptive Equipment

 The term adaptive equipment includes, but is not limited to
  • power steering
  • power brakes
  • power window lifts
  • power seats
  • special equipment necessary to assist the eligible person into and out of the automobile or other conveyance, and
  • nonarticulating trailers solely designed to transport powered wheelchairs, powered scooters, or other similar mobility devices.

XIII.i.2.A.1.e. Veterans Who Do Not Qualify for Benefits

 Even though compensation for disability of paired service-connected (SC) and non-service-connected (NSC) organs is payable under 38 CFR 3.383, Veterans do not qualify for the automobile allowance and adaptive equipment based on bilateral visual impairment if the impairment of vision in one eye is due to an NSC disease or injury. Notes:

Reference: For more information on entitlement to compensation for loss of paired SC and NSC organs or extremities, see 38 U.S.C. 1160.

XIII.i.2.A.1.f. Adaptive Equipment for 38 U.S.C. Chapter 31 Beneficiaries

 Automobile adaptive equipment may be furnished to a beneficiary under 38 U.S.C. Chapter 31 if Veteran Readiness and Employment Service determines that the equipment is necessary to
  • overcome an employment handicap to which an SC disability materially contributes, and
  • achieve the goals of the program of rehabilitation.
Reference: For more information on eligibility for adaptive equipment under 38 U.S.C. Chapter 31, see 38 CFR 21.216(a)(3).

XIII.i.2.A.1.g. Reduction of Benefits Due to a Tort Judgment or Settlement

 An automobile allowance or adaptive equipment benefits must be reduced by an “offset amount” in cases where a judgment or settlement of a tort claim against the United States is granted for disability established under 38 U.S.C. 1151, if the tort judgment or settlement
  • becomes final
    • on or after December 10, 2004, but
    • before the date VA awards the automobile allowance or adaptive equipment benefits, and
  • includes an amount specifically designated for automobiles or adaptive equipment.
Notes:
  • Contact local District Counsel to determine whether a judgment or settlement qualifies for offset.
  • If the offset amount exceeds the amount of the automobile allowance or adaptive equipment benefits awarded, the excess amount is offset against VA compensation.
Reference: For more information on tort claims and compensation under 38 U.S.C. 1151, see M21-1, Part VIII, Subpart iv, 6.C.

XIII.i.2.A.1.h. Terminating Eligibility for Automobile Allowance and Adaptive Equipment

 At the time a decision is authorized that rescinds or terminates a Veteran’s eligibility for the automobile allowance and adaptive equipment, claims processors must notify the Veterans Health Administration (VHA) Prosthetic and Sensory Aids Service (PSAS). Send email notification, with a copy of the rating decision Narrative and Codesheet, to VHA-PSAS ([email protected]) and upload the email to the Veteran’s claims folder.

2. Applications for Automobile Allowance and Adaptive Equipment

Introduction

 This topic contains information on applications for automobile allowance and adaptive equipment, including
  • application for
    • automobile allowance, and
    • adaptive equipment only, and
  • handling incomplete applications for the automobile allowance or adaptive equipment.

Change Date

September 17, 2026

XIII.i.2.A.2.a. Application for Automobile Allowance

 A formal claim on VA Form 21-4502, Application for Automobile or Other Conveyance and Adaptive Equipment, is required if the Veteran or service member is applying for the automobile allowance. The application for an automobile or other conveyance is considered an application for the adaptive equipment specified for the claimant’s disability by directive of the Chief Medical Director. The instructions on the VA Form 21-4502contain a list of adaptive equipment that has been preapproved for particular disabilities. Notes: References: For more information on

XIII.i.2.A.2.b. Application for Adaptive Equipment Only

 A formal claim on a VA Form 10-1394, Application for Adaptive Equipment – Automobile or Other Conveyance, is required if the Veteran or service member is eligible for adaptive equipment only. Typically, this form is provided by the outpatient clinic to the Veteran or service member for forwarding to the finance activity or submitted by the prosthetics department on the Veteran’s or service member’s behalf to the local finance activity. A VA Form 10-1394is also required for approval of equipment not specified on the VA Form 21-4502 for the Veteran’s or service member’s particular disability. Notes:
  • There is no time limit for filing a claim for adaptive equipment.
  • Upon receipt of the application, before referring the claim to the rating activity (if necessary)
    • establish an EP as directed in M21-4, Appendix B
    • for initial adaptive equipment claims, select the applicable claim label, either
      • Vehicular Adaptive Equipment, or
      • IDES Vehicular Adaptive Equipment, and
    • send the claimant the notice required under 38 U.S.C. 5103, when needed.
  • Where one of the claim labels listed above is applicable, it is important that it is properly applied to ensure appropriate routing through NWQ.
References: For more information on

XIII.i.2.A.2.c. Handling Incomplete Applications for the Automobile Allowance or Adaptive Equipment

 If an application from a person on active duty is incomplete in any essential part or the medical evidence or service status is insufficiently documented
  • return the application to the VA prosthetics department, if it is responsible for the deficiency; otherwise
  • advise the service member of the deficiency, and
  • ask the service member to obtain the necessary evidence.

3. Rating Claims for Automobile Allowance and Adaptive Equipment

Introduction

This topic contains information on rating claims for automobile allowance and adaptive equipment, including

  • referring automobile allowance or adaptive equipment claims to the rating activity
  • when to prepare a rating decision on eligibility for automobile allowance or adaptive equipment
  • definition of deep partial thickness and full thickness burns, and
  • determining eligibility based on burn injury.

Change Date

September 17, 2026

XIII.i.2.A.3.a. Referring Automobile Allowance or Adaptive Equipment Claims to the Rating Activity

 If prior rating decisions do not establish the existence of a qualifying SC disability, refer the claim to the rating activity following completion of any necessary development.

XIII.i.2.A.3.b. When to Prepare a Rating Decision on Eligibility for Automobile Allowance or Adaptive Equipment

 Prepare a rating decision whenever
  • a claim for automobile allowance or adaptive equipment is received from a Veteran or service member and the issue
    • has not been previously considered, or
    • was previously denied and a qualifying request for decision review under 38 CFR 3.2500 has been received, or
    • the issue of eligibility for automobile allowance or adaptive equipment is inferred from a disability rating that fulfills the applicable disability criteria.
    Important: If the Veteran or service member submits a claim for a subsequent automobile allowance, process the request in accordance with the instructions M21-1, Part XIII, Subpart i, 2.A.5.b or c, as applicable. References: For more information on requests for decision review, including

XIII.i.2.A.3.c. Definition: Deep Partial Thickness and Full Thickness Burns

Deep partial thickness burns occur when there is complete destruction of the epidermis and severe damage to the dermal layer. Full thickness burns occur when there is complete destruction of the epidermis and dermis. There may also be damage to the underlying subcutaneous fat layer.

XIII.i.2.A.3.d. Determining Eligibility Based on Burn Injury

 To determine eligibility for financial assistance in the purchase of an automobile or other conveyance and adaptive equipment based on burn injury, the rating activity should
  • look for any full thickness or deep partial thickness scars that cause contracture and limit motion of one or more extremities or the trunk and
  • review medical and lay statements for credible evidence that the burn injury precludes effective operation of an automobile.
Notes:
  • If the extent or cause of the limitation is not clear, request an examination for the joint or joints affected to clarify the extent of the disability and/or its link to the SC injury.
  • Do not request a medical opinion as to whether the functional limitation of the severe burn scar prevents effective operation of an automobile. This is a legal, rather than a medical, determination.
Reference: For more information on considering issues within the scope of the claim, see M21-1, Part V, Subpart ii, 3.A.2.

4. Notifying Claimants of Eligibility for Automobile Allowance and Adaptive Equipment

Introduction

 This topic contains information on notifying claimants of decisions on eligibility for automobile allowance and adaptive equipment, including notifying claimants of
  • eligibility for automobile allowance or adaptive equipment, and
  • the reason for denial of a claim for automobile allowance or adaptive equipment.

Change Date

 September 17, 2026

XIII.i.2.A.4.a. Notifying Claimants of Eligibility for Automobile Allowance or Adaptive Equipment

 Use the table below to inform the claimant of how to apply for automobile allowance or adaptive equipment when a rating decision infers and establishes basic eligibility in connection with a claim for compensation.
If the Veteran or service member is eligible for …Then …
the automobile allowance
  • furnish VA Form 21-4502, if one is not of record, and
  • instruct the claimant to complete and return the form as indicated in the form instructions.
adaptive equipment only
  • furnish VA Form 10-1394, and
  • instruct the claimant to and return the form as indicated in the form instructions.

XIII.i.2.A.4.b. Notifying Claimants of the Reason for Denial of a Claim for Automobile Allowance or Adaptive Equipment

 If an application is not approved, fully inform the claimant of the
  • evidence considered
  • findings favorable to the claimant under 38 CFR 3.104(c), and
  • reason for denial.
References: For more information on
  • completing the rating decision narrative, see M21-1, Part V, Subpart iv, 1.A, and
  • disagreements related to denial of a claim for automobile allowance and/or adaptive equipment, see M21-1, Part XIII, Subpart i, 2.A.7.

5. Processing Claims for Automobile Allowance and Adaptive Equipment

Introduction

 This topic contains information on processing claims for automobile allowance and adaptive equipment, including
  • reviewing VA Form 21-4502 and determining prior payment status
  • processing requests for
    • additional automobile allowance based on PL 117-333, and
    • second automobile allowance based on destruction as a result of natural or other disaster
  • entitlement based on vehicle lease, and
  • determining whether the vehicle is purchased or leased.

Change Date

 September 17, 2026

XIII.i.2.A.5.a. Reviewing VA Form 21-4502 and Determining Prior Payment Status

 Follow the steps in the table below to determine whether prior payment of an automobile allowance has been made following receipt and review of VA Form 21-4502, with claimant-completed entries in Sections
  • I, Veteran/Service Member's Identification Information, and
  • II, Application Information.
StepAction
1 Does the claims folder contain a copy of a prior VA Form 21-4502 annotated by the finance activity indicating prior payment of the automobile allowance?
  • If yes, go to Step 10.
  • If no, go to the next step.
Important: Historically, when a VA Form 21-4502 was processed, the form was filed in the left flap of a paper claims folder. However, it is important to review the entire paper claims folder or electronic claims folder (eFolder) to identify a prior payment.
2 Does the claimant’s corporate record show one or more of the following corporate flashes:
  • Auto Allowance Paid – Initial
  • Second Auto Allowance Paid – Catastrophe, or
  • Addl Auto Allowance Paid – 30+ years?
  • If yes, go to Step 10.
  • If no, go to the next step.
Note: The corporate flashes listed above are added by the finance activity when payment of an automobile allowance is authorized. Reference: For more information on corporate flashes, see M21-4, Appendix E, 1.b.
3 Does the Share M15 screen display
  • a Y in the Auto Allowance Paid field, or
  • the terminal digit of the year in which the last payment was made in the Auto Adaptive Equipment field?
  • If yes, go to Step 10.
  • If no, go to the next step.
4 Did a prior rating decision address the issue of eligibility for the automobile allowance?
  • If yes, go to the next step.
  • If no,
    • send a Section 5103 notice to the claimant, if necessary
    • refer the claim to the rating activity for consideration after the duty-to-notify/assist response period has expired, and
    • go to Step 7.
5 Did the prior rating decision establish eligibility for the automobile or allowance?
  • If yes, go to Step 8.
  • If no, go to the next step.
6 When eligibility for the automobile allowance was previously denied by rating decision, was the current claim accompanied by a qualifying request for decision review under 38 CFR 3.2500?
7 In connection with the current claim, did the rating activity establish eligibility for either the automobile allowance or adaptive equipment?
  • If yes, go to Step 11.
  • If no,
    • deny the claim, and
    • notify the claimant accordingly.
Reference: For more information on decision notice requirements, see M21-1, Part VI, Subpart i, 1.B.1.b.
8 Does either of the following situations apply?
  • There is indication that adaptive equipment payments have been made.
  • There is any other evidence indicating a prior automobile allowance may have been paid.
  • If yes,
    • send a request to the finance activity to
      • review for prior payment, and
      • provide the most recent payment date of automobile allowance, if prior payment was made, and
    • after the finance activity completes the review and returns the requested information,
      • place the response in the claims folder, and
      • go to the next step.
  • If no, go to Step 11.
9 Does the finance activity’s review show that a prior payment for an automobile or conveyance was made?
  • If yes, go to the next step.
  • If no, go to Step 11.
10 Follow the instructions in the table below when there is evidence of prior payment of an automobile allowance.
If the claim is for …Then …
an automobile or conveyance, and the Veteran or service member is not contending entitlement to a second allowance based on the disaster replacement provisions of PL 112-154process the claim in accordance with M21-1, Part XIII, Subpart i, 2.A.5.b.
an automobile or conveyance and the Veteran or service member
  • is contending entitlement to a second allowance based on the disaster replacement provisions of PL 112-154, and
  • has not previously received a second allowance under the provisions of PL 112-154
 process the claim in accordance with M21-1, Part XIII, Subpart i, 2.A.5.c.
an automobile or conveyance and the Veteran or service member
  • is contending entitlement to a second allowance based on the disaster replacement provisions of PL 112-154, but
  • previously received a second allowance under the provisions of PL 112-154
 process the claim in accordance with M21-1, Part XIII, Subpart i, 2.A.5.b. Note: If a second allowance under the disaster replacement provisions of PL 112-154 was previously paid, then the claim must be considered under the general provisions for additional automobile allowance authorized by PL 117-333.
adaptive equipment
  • prior payment does not necessarily disqualify the application, and
  • go to the next step.
11 Complete VA Form 21-4502, Section III, Certificate of Eligibility, by entering all the qualifying disabilities.
12 Have VA Form 21-4502 signed (in wet or digital/electronic format) by the Veterans Service Center Manager (VSCM) or by a designee no lower than coach. Reference: For more information on signatures, see M21-1, Part II, Subpart i, 2.B.2.
13
  • Release the VA Form 21-4502 with Section III completed to the applicant along with the decision notification letter
  • clear the pending EP, and
  • if there is a claim for adaptive equipment, refer the claim to the finance activity.
References: For more information on
  • decision notice requirements, see M21-1, Part VI, Subpart i, 1.B.1.b, and
  • the requirement of referring claims for adaptive equipment to the finance activity, see M21-1, Part XIII, Subpart i, 2.A.6.f.
14 Place a copy of the VA Form 21-4502 in the claims folder.

XIII.i.2.A.5.b. Processing Requests for Additional Automobile Allowance Based on PL 117-333

 Follow the steps in the table below to process claims for additional automobile allowance based on the provisions of PL 117-333 (additional allowance authorized if more than 30 years have passed since the most recent automobile allowance). Important: If the claim is for a second automobile allowance based on destruction by natural or other disaster and a second allowance under PL 112-154 has not previously been paid, process the claim in accordance with M21-1, Part XIII, Subpart i, 2.A.5.c.
StepAction
1 Did the prior payment review (described in M21-1, Part XIII, Subpart i, 2.A.5.a) confirm the date that the most recent automobile allowance was paid?
  • If yes, go to Step 3.
  • If no, go to the next step.
2 When there is evidence of prior payment of an automobile allowance but the most recent payment date is unclear,
  • send a request to the finance activity for the most recent payment date of automobile allowance, and
  • after the finance activity returns the requested information,
    • place the response in the claims folder, and
    • go to the next step.
3 In the eFolder in the Veterans Benefits Management System (VBMS), edit the SUBJECT field of the VA Form 21-4502 to identify the evidence that shows the date the most recent automobile allowance payment occurred. Note: The most recent automobile allowance payment could be an initial (first-time) automobile allowance or a subsequent payment, such as a second automobile allowance granted under PL 112-154. Reference: For more information on editing document properties, see the VBMS User Guide.
4 Did the prior payment review and/or response from the finance activity confirm that the most recent automobile allowance was paid more than 30 years ago?
  • If yes, go to the next step.
  • If no,
    • deny the claim, and
    • notify the claimant accordingly.
Reference: For more information on decision notice requirements, see M21-1, Part VI, Subpart i, 1.B.1.b.
5 Complete VA Form 21-4502, Section III, Certificate of Eligibility, by entering all the qualifying disabilities.
6 Have VA Form 21-4502 signed (in wet or digital/electronic format) by the VSCM or by a designee no lower than a coach. Reference: For more information on signatures, see M21-1, Part II, Subpart i, 2.B.2.
7
  • Release the VA Form 21-4502 with Section III completed to the applicant, and
  • send a decision notification letter that includes the language shown below, inserted as free text following VBMS-generated language.
Please note, although your application with Section III, Certificate of Eligibility, is completed and signed for obtaining an additional automobile allowance, you may not be eligible to receive adaptive equipment on the purchased vehicle if there are at least two automobiles or other conveyances for which you have received adaptive equipment within the past four years. (38 CFR 17.158(a)).The only exception to 38 CFR 17.158(a) is when there is an event that is beyond the control of the eligible person, such as where the vehicle was lost due to fire, theft, accident, or court action, when repairs are so costly as to be prohibitive, or a different vehicle is required due to a change in the eligible person's physical condition. Important: Please contact your local Veterans Health Administration (VHA) Prosthetic and Sensory Aids Service (PSAS) prior to obtaining any (new or used) adaptive equipment. VA may deny claims for payment or reimbursement if eligibility has not been established or eligibility for new or used adaptive equipment is not verified by VHA.

Reference: For more information on decision notice requirements, see M21-1, Part VI, Subpart i, 1.B.1.b.

8
  • Clear the pending EP, and
  • if there is a claim for adaptive equipment, refer the claim to the finance activity.
Reference: For more information on the requirement of referring claims for adaptive equipment to the finance activity, see M21-1, Part XIII, Subpart i, 2.A.6.f.
9 Place a copy of VA Form 21-4502 in the claims folder.

XIII.i.2.A.5.c. Processing Requests for Second Automobile Allowance Based on Destruction as a Result of Natural or Other Disaster

 Regional offices must refer all claims for a second automobile allowance based on the disaster replacement provisions of PL 112-154 to Compensation Service for an advisory opinion, unless review of the claims folder demonstrates that the
  • requirements of PL 112-154are clearly not met, and/or
  • second allowance under PL 112-154 was previously paid.
Follow the steps in the table below to route claims for second automobile allowances based on PL 112-154 to Compensation Service for review. Important: If a second automobile allowance under PL 112-154 was previously paid, process the claim as a claim for additional automobile allowance in accordance with M21-1, Part XIII, Subpart i, 2.A.5.b.
StepAction
1 Prepare a memorandum using the format prescribed in M21-1, Part X, Subpart v, 1.A.1.h, and in it, include the following:
  • Veteran’s or service member’s name
  • file number
  • date of previous automobile allowance grant
  • make, model, and year of vehicle purchased with previous grant
  • circumstances surrounding the vehicle’s destruction, including date (month, day, and year) of destruction
  • city and state where vehicle was located at the time of destruction
  • description of the disaster and damage done to the vehicle, and
  • verbal or written confirmation certifying to VA that the Veteran or service member has not received compensation from an insurer for the loss.
2 Treat the memorandum as the equivalent of an administrative decision, and follow the instructions in M21-1, Part X, Subpart v, 1.C.2.i to obtain and document all required signatures.
3 Upload the memorandum and any other relevant documentation to the eFolder in VBMS.
4 Add the
  • Compensation Service Review – Opinion special issue indicator to at least one contention, and
  • Compensation Service Case Review tracked item.
5 Is the claim being processed in the NWQ environment?
  • If yes, take no further action, as the claim will be routed to Compensation Service automatically.
  • If no, manually broker the claim to Compensation Service (Washington DC).
Important: Send any questions concerning the processing or referral of requests for second automobile allowances under PL 112-154 to VAVBAWAS/CO/214DADVISORYANDSRT. References: For more information on
  • eligibility requirements for a second automobile allowance based on destruction as a result of natural or other disaster, see
  • NWQ claims processing, see the NWQ Playbook, and
  • brokering claims, see the VBMS Core User Guide.

XIII.i.2.A.5.d. Entitlement Based on Vehicle Lease

 The transfer of possession of a vehicle under a contract amounting to a lease does not qualify for the automobile allowance under 38 U.S.C. 3902(a).

XIII.i.2.A.5.e. Determining Whether the Vehicle Is Purchased or Leased

 Use the table below to determine whether the vehicle is purchased or leased.
When the …Then the agreement is a …
applicant and vendor are absolutely bound at the outset to a purchase and sale purchase.
  • applicant
    • retains the option of considering the payments as rent, and
    • is not obligated to purchase the vehicle at the end of the lease period, or
  • dealer retains the right to take the car back even after the applicant meets all the payments due
lease.

6. Processing and Paying Eligibility Requests and Certificates of Eligibility

Introduction

 This topic contains information on processing and paying eligibility requests and certificates of eligibility, including
  • payment if the vehicle was purchased before adjudicative action established eligibility
  • receiving eligibility requests for vehicles acquired prior to receipt of allowance
  • processing eligibility requests for vehicles acquired prior to receipt of allowance
  • finance activity responsibility to record and report payment of the automobile allowance
  • preventing duplicate payment of the automobile allowance, and
  • referring adaptive equipment claims to the finance activity.

Change Date

August 8, 2025

XIII.i.2.A.6.a. Payment if the Vehicle Was Purchased Before Adjudicative Action Established Eligibility

 Ordinarily, an application on VA Form 21-4502 is completed and approved by the authorization activity to certify eligibility before the claimant takes possession of, or title to, the vehicle. However, payment of the automobile allowance is not precluded if the vehicle was purchased before the adjudicative action establishing eligibility, provided the claimant was actually eligible on the date on which the claimant signed the sales contract. The claimant’s eligibility is controlled by the effective date of the qualifying disability.

XIII.i.2.A.6.b. Receiving Eligibility Requests for Vehicles Acquired Prior to Receipt of Allowance

 The Veterans Service Center (VSC) receives requests in duplicate for eligibility data for reimbursement of adaptive equipment for a vehicle acquired prior to receipt of the automobile allowance from the medical center or outpatient clinic. The request identifies the claimant and the reason for the request. Example: “Was claimant eligible under 38 U.S.C. 3902 on [Date expense was incurred for purchase, installation, repair, or reinstallation of adaptive equipment]?”

XIII.i.2.A.6.c. Processing Eligibility Requests for Vehicles Acquired Prior to Receipt of Allowance

 After receiving eligibility requests for vehicles acquired prior to receipt of the automobile allowance, use the table below to determine eligibility.
If …Then …
the claimant has not previously filed a claim for the automobile allowance and adaptive equipment determine basic eligibility as described in M21-1, Part XIII, Subpart i, 2.A.1.
  • there is evidence of entitlement or non-entitlement on record, or
  • a determination of basic eligibility has already been made
  • determine the eligibility of the claimant for an automobile allowance on the date furnished by the medical facility
  • annotate the request form to show Claimant (was) (was not) eligible on [date furnished by the medical facility]
  • add a copy of the eligibility request in the claims folder, and
  • return the annotated form to the requester.
a request for eligibility for adaptive equipment only is received (based on SC ankylosis) review the claims folder to determine if the Veteran or service member is eligible. If the Veteran/service member is eligible, annotate the request to show
  • eligibility because of SC ankylosis of one or both knees or hips.
  • If eligibility is not established, furnish a copy of the rating decision.

XIII.i.2.A.6.d. Finance Activity Responsibility to Record and Report Payment of the Automobile Allowance

 When the VA Form 21-4502 with Section IV, Receipt for Automobile or Other Conveyance and Adaptive Equipment, completed by the claimant is returned and scheduled for payment, the finance activity Note: If VA Form 21-4502 is received in the VSC with Sections III and IV already completed, the claims processor must
  • cancel the pending EP, if one was established, and
  • route the form to the finance activity for processing.
Reference: For more information on corporate flashes, see M21-4, Appendix E, 1.b.

XIII.i.2.A.6.e. Preventing Duplicate Payment of the Automobile Allowance

 The VSC permanently retains the annotated copy(ies) of VA Form 21-4502 in the claims folder to prevent duplicate payment of the automobile allowance in the event a subsequent claim is received and the criteria for a subsequent (second or additional) automobile allowance provided in 38 U.S.C. 3903(a) are not met. Reference: For more information on the circumstances in which a subsequent automobile allowance may be warranted, see M21-1, Part XIII, Subpart i, 2.A.1.b.

XIII.i.2.A.6.f. Referring Adaptive Equipment Claims to the Finance Activity

 Refer all claims for adaptive equipment to the finance activity. The finance activity will determine if the adaptive equipment is preapproved for reimbursement based upon the effective date of entitlement, the Veteran’s SC disability, or specific authorization by the local VA outpatient clinic. If it is not, then the finance activity will forward the claim to the outpatient clinic serving the applicant's residence. The designee of the Chief Medical Director will consider the claim. The prosthetic department will signify its approval by completing VA Form 10-1394. This form is then returned to finance for payment. These claims may be independent of any initial or subsequent application for an automobile, and may involve repair, replacement, or reinstallation of adaptive equipment.

7. Processing Disagreements With Decisions on Automobile Allowance and Adaptive Equipment Claims

Change Date

March 1, 2019

XIII.i.2.A.7.a. Disagreements With Decisions on Automobile Allowance and Adaptive Equipment Claims

 Use the table below to determine the next steps when the claimant files a disagreement relating to the denial of a claim for automobile allowance and/or adaptive equipment.
If …Then the …
the denial resulted from a determination that the criteria for basic eligibility were not met authorization activity addresses the disagreement and processes any pending legacy appeals.
  • the claimant has established basic eligibility to the automobile allowance and adaptive equipment, and
  • the issue is the result of denial by the medical facility for certain adaptive equipment
  • authorization activity transfers the claims folder to the medical facility to prepare a decision on the issue, and
  • medical facility returns the decision and claims folder to the authorization activity for release of the decision.
a legacy substantive appeal is filed because of denial by the medical facility authorization activity forwards the claims folder to the medical facility for processing and certification of the legacy appeal.

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