The Department of Veterans Affairs (VA) provides monthly disability compensation, based on a disability rating ranging from 0 to 100 percent, to veterans with disabling conditions caused or aggravated by their military service. In recognition of its position that there are cases where this benefit does not adequately compensate individual veterans in their particular circumstances, VA provides supplemental compensation for veterans with a demonstrated need.Specifically, Total Disability Individual Unemployability (TDIU) benefits are generally provided to disabled veterans, irrespective of age, who are unable to maintain “substantially gainful employment”—that is, employment with earnings above the federal poverty guidelines—due to service-connected disabilities. The TDIU supplement increases an eligible veteran’s disability rating to 100 percent.
In fiscal year 2013, over 330,000 of the approximately 3.7 million veterans VA compensated for disabilities incurred during active military service received TDIU benefits. From fiscal years 2009 through 2013, the number of TDIU beneficiaries increased by 22 percent and payments to those receiving TDIU benefits (i.e., the base disability payment plus the TDIU supplement) increased by 30 percent. TDIU payments reached $11 billion in fiscal year 2013. The population of veterans who receive these supplemental benefits has been growing, which has led to questions about TDIU benefits, including whether this supplement to the regular disability compensation benefit should be provided to veterans past retirement age. Because of the challenges agencies face in keeping their criteria for evaluating disability and determining compensation consistent with advances in medicine, technology, and changes in the labor market and society, GAO has designated federal disability programs a government-wide high-risk area.
Veterans who are eligible for TDIU do not actually receive separate TDIU payments. Instead, TDIU serves as a method by which veterans can have their disability rating raised to 100 percent and receive larger disability payments.
In a June 2015 report, GAO found that in fiscal year 2013, older beneficiaries (aged 65 and older) represented the majority (54 percent) of the TDIU population—a 73 percent increase from fiscal year 2009. Further, nearly 57,000 were 75 years of age and older, while 10,567 were 90 years of age and older. The increase in the share of beneficiaries over age 65 was mostly attributed to new beneficiaries who received the benefit for the first time, as shown in the figure below. From fiscal years 2009 through 2013, the number of older beneficiaries receiving the benefit for the first time more than doubled to 13,259. Of these new older beneficiaries, 2,801 were aged 75 and over, while 408 were 90 and over.
Sources of the Increase in the Older Total Disability Individual Unemployability (TDIU) Beneficiary Population, Fiscal Years 2009-2013
Veterans of all ages are eligible for TDIU benefits so long as they meet the eligibility criteria and have a single service-connected disability rated at least 60 percent or multiple disabilities with a combined rating of at least 70 percent (with at least one disability rated at 40 percent or higher). In addition, the veteran must be unable to obtain or maintain “substantially gainful employment,” which VA refers to as unemployability, as a result of these service-connected disabilities. Unlike other benefit programs, such as Social Security Disability Insurance (SSDI), VA does not consider reaching retirement age to be a cause for ineligibility and has established that age is not to be a factor in evaluating entitlement to TDIU. In SSDI, once program beneficiaries reach their full retirement age, the amount of their benefit payment remains the same although their benefit converts to a Social Security retirement benefit.
A number of options have been proposed by disability compensation committees and research organizations to revise the TDIU eligibility requirements and benefit structure, including setting age limits for those eligible for the benefit. The Congressional Budget Office (CBO), as part of a broader examination to reduce the federal deficit in 2013, proposed that VA no longer make TDIU payments to veterans who are past their full Social Security retirement age, and that such veterans’ disability payments revert to the amount associated with the veteran’s rated disability level. CBO also noted most TDIU beneficiaries began collecting TDIU benefits later in life and had therefore likely worked enough to earn Social Security benefits which they would receive during retirement in addition to their VA disability-level payment. CBO concluded that because most veterans who are older than retirement age would not be in the labor force because of their age, a lack of earnings for those veterans would probably not be attributable to service-connected disabilities. CBO estimated that providing TDIU benefits only to those veterans younger than their full Social Security retirement age would reduce costs by $15 billion from 2015 through 2023. In addition, in its 2012 report, the Advisory Committee on Disability Compensation made recommendations to VA on potential revisions to the TDIU benefit. The committee recommended that the agency study whether age should be considered when deciding if a veteran is unemployable. In its comments to the committee, VA concurred with the recommendation to study whether age should be considered. However, at the time of GAO’s June 2015 report, VA did not have a plan for conducting such a study. As a result, VA may be missing an opportunity to achieve significant cost savings.
Full retirement age, which ranges from ages 65 to 67 depending on an individual’s year of birth, is the age at which Social Security pays unreduced retirement benefits.
Congressional Budget Office, Options for Reducing the Deficit: 2014 to 2023 (Washington, D.C.: November 2013), 48.
The Advisory Committee is composed of experts with experience in the provision of VA disability compensation or who are leading medical or scientific experts in relevant fields.The committee is required to issue reports no less than every 2 years and include recommendations deemed to be appropriate. In addition, the committee, when consulted by the Secretary of Veterans Affairs, is required to provide, among other things, an ongoing assessment of the effectiveness of the schedule for rating disabilities and advice on the most appropriate means of responding to the needs of veterans with respect to disability compensation.
In light of VA’s agreement with the recommendations of the Advisory Committee on Disability Compensation, GAO recommended in June 2015 that the Secretary of Veterans Affairs direct the Under Secretary for Benefits to take the following action:
A change to the TDIU benefit eligibility standards could result in cost savings. Specifically, if VA determined that Individual Unemployability benefits should be restricted to veterans younger than their full Social Security retirement age, the agency could save an estimated $15 billion from 2015 through 2023, according to the Congressional Budget Office.
The information contained in this analysis is based on findings from the products listed in the related GAO products section. GAO obtained and analyzed data from VA on new and continuing beneficiaries covering fiscal years 2009 through 2013 (the most recently available data); examined relevant federal laws, regulations, and procedures for new and continuing claim determination decisions; conducted interviews with VA and Veterans Benefits Administration officials in their central office and regional offices, as well as disability experts familiar with TDIU benefits and representatives of veterans service organizations; and reviewed options presented for revising the TDIU eligibility and benefit structure. GAO also conducted a total of 11 in-person discussion groups with rating specialists across five of the regional offices; each discussion group consisted of two to three rating specialists, for a total of 29 rating specialists.
Table 21 in appendix V lists the program GAO identified that might have opportunities for cost savings or revenue enhancement.
GAO provided a draft of its June 2015 report to VA. VA concurred with GAO’s recommendations and stated that the agency had initiated a review of TDIU policies and procedures in April 2015, including consideration of age in claim decisions. VA’s Veterans Benefits Administrationexpected to complete an action plan to initiate any studies, legislative proposals, or proposed regulations deemed necessary by July 2015. In August 2015, VA reported that its disability compensation policy staff was in the process of completing a review of TDIU policies and procedures. As of December 24, 2015, VA reported it had tentatively defined the scope of an internal study on TDIU, which is pending department-level review and approval. If this internal study on TDIU is approved, VA anticipates that the study will begin in fiscal year 2016 with a target completion date of September 30, 2017. GAO continues to track VA’s actions related to the recommendation.
GAO provided a draft of this report section to VA for review and comment. VA responded and indicated that the proposed internal study on TDIU, which is to include the consideration of age and vocational assessments, was approved in late December 2015. A workgroup is focusing on obtaining data sets related to TDIU. VA maintained the target completion date of September 30, 2017.
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The number of veterans receiving Total Disability Individual Unemployability (TDIU) benefits has been increasing, as has the total amount of benefit payments, especially among older veterans. VA generally provides TDIU benefits to disabled veterans who are unable to maintain employment with earnings above the federal poverty guidelines due to service-connected disabilities. To be eligible for TDIU...
The number of older veterans receiving Individual Unemployability benefits, a disability supplement, has been increasing, as has the total amount of benefit payments. In fiscal year 2013, 330,000 veterans received this benefit, which the Department of Veterans Affairs (VA) provides to disabled veterans of any age who are unemployable because of service-connected disabilities. From fiscal years 200...