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When a veteran is incarcerated for longer than 60 days, their benefits are affected based on specific regulations governing veterans' compensation. Specifically, if a veteran is rated between 20% and 100%, their compensation is reduced to 10%. This reduction is intended to reflect the idea that while incarcerated, the veteran has reduced expenses and is not in need of the full benefit amount.

In this situation, it's crucial to recognize that this policy is designed to ensure that benefits are allocated appropriately based on the veteran's circumstances, particularly when they are not able to use them for their intended purposes during incarceration. Therefore, the reduction to 10% for those with a rating of 20% to 100% is a well-established rule in the administration of veteran benefits.

In contrast, benefits remaining unchanged would not take into account the implications of incarceration, and complete suspension does not align with the provisions that still recognize some level of entitlement during such circumstances. Reducing to half of 20% also does not fit the established legal framework that specifically stipulates a reduction to 10%. Thus, understanding the significance of this reduction provides clarity on how benefits are administered for veterans in unique situations such as incarceration.