Veterans' Disability Benefits:

VA Can Better Ensure Unemployability Decisions Are Well Supported

GAO-15-464: Published: Jun 2, 2015. Publicly Released: Jul 2, 2015.

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What GAO Found

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 2009 through 2013, the most recent data available, there was a 22 percent increase in the number of veterans receiving these benefits, and a 73 percent increase in the subgroup of beneficiaries aged 65 and older. Moreover, among new beneficiaries in 2013, about 2,800 veterans were 75 and older, of which more than 400 were 90 and older. These trends have given rise to questions about what constitutes “unemployability.” Only a small proportion, 4 to 6 percent, of beneficiaries had benefits discontinued during these years—about 70 percent of which were due to the death of the beneficiary. During the 5-year study period, disability payments to those receiving Individual Unemployability—the base payment plus the supplement—increased by 30 percent (to $11 billion in fiscal year 2013). For that year, GAO estimated $5.2 billion for the supplement alone.

VA's procedures do not ensure that Individual Unemployability benefit decisions are well-supported. For example, contrary to federal internal control standards, the guidance on determining unemployability is incomplete for ensuring consistency. In discussion groups with GAO, VA's rating specialists said they disagreed on the factors they need to consider when determining unemployability, weighed the same factors differently, and had difficulty separating allowable from non-allowable factors. Some specialists said these challenges create the risk that two raters could examine the same evidence and reach an opposite decision to approve or deny a claim. Also, VA's quality assurance approach primarily checks the procedural accuracy of decisions and does not ensure a comprehensive assessment of whether decisions are complete, accurate, and consistent. In addition, VA does not independently verify self-reported earnings information supplied by applicants and beneficiaries, although the agency has access to Internal Revenue Service data for this purpose. VA officials said they are waiting for a data system, expected in 2016, to conduct verifications. However, by postponing verification of self-reported earnings, the benefit is at risk of being awarded to ineligible veterans.

Based on a review of literature, GAO identified various options for revising eligibility requirements and the structure of the Individual Unemployability benefit. Six options focus on eligibility requirements, such as considering additional criteria when determining unemployability and applying an age cap of 65. The seventh option would change the benefit structure by reducing payments as beneficiaries earn income in excess of the poverty threshold. Experts and representatives of veterans service organizations (VSO) that GAO interviewed identified the potential strengths of each option (such as improved decision accuracy) and potential challenges (such as increased need for fiscal and administrative resources). In addition, VA's advisory committee recommended in 2012 that the agency study age and require vocational assessments when weighing veterans' unemployability; VA agreed to study both, but has not yet taken action.

Why GAO Did This Study

VA generally provides Individual Unemployability benefits to disabled veterans of any age who are unable to maintain employment with earnings above the federal poverty guidelines due to service-connected disabilities. Because the population of veterans who receive these supplemental benefits has been growing, GAO was asked to review VA's management of these benefits.

This report (1) examines age-related trends in the population of Individual Unemployability beneficiaries and benefit payments; (2) assesses the procedures used for benefit decision-making; and (3) describes suggested options for revising the benefit. GAO analyzed fiscal year 2009 through 2013 data provided by VA—the most recent years available; reviewed applicable federal laws, regulations, and program policies; visited six regional offices selected for their differing accuracy rates, workload, and geography; reviewed a non-generalizable sample of claims; and spoke with rating specialists, experts, and VSO representatives.

What GAO Recommends

GAO recommends that VA issue updated guidance to determine eligibility; identify a comprehensive quality assurance approach to assess benefit decisions; verify veterans' self-reported income; and move forward on studies suggested by its advisory committee. VA concurred with all of GAO's recommendations.

For more information, contact Daniel Bertoni, (202) 512-7215, bertonid@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: VA reported in March 2017 that an internal workgroup is in the final stage of collecting and analyzing the data to determine if age should be a factor in deciding Total Disability Individual Unemployability (TDIU), and whether or not to use positive vocational assessments to disallow TDIU claims. VA reported that the workgroup is also in the process of completing an Inter-Rater Variability Assessment (IRVA) to examine the disparity in rating decisions involving entitlement to TDIU and service connection. After completion of the internal study on TDIU and the IRVA, targeted for September 30, 2017, the workgroup will submit its preliminary analysis and recommendations to VBA leadership for a decision on the next courses of action for future policy decisions and will then update any related guidance, as appropriate.

    Recommendation: To help ensure that Total Disability Individual Unemployability (TDIU) decisions are well supported and TDIU benefits are provided only to veterans whose service-connected disabilities prevent them from obtaining or retaining substantially gainful employment, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to update the TDIU guidance to clarify how rating specialists should determine unemployability when making TDIU benefit decisions. This updated guidance could clarify whether factors such as enrollment in school, education level, and prior work history should be used and if so, how to consider them; and whether or not to assign more weight to certain factors than others. Updating the guidance would also give VBA the opportunity to re-examine the applicability, if at all, of other factors it has identified as extraneous.

    Agency Affected: Department of Veterans Affairs

  2. Status: Open

    Priority recommendation

    Comments: VA is developing an upfront verification process by expanding the data sharing agreement with Social Security Administration (SSA), which enables VA to receive federal tax information via an encrypted electronic transmission through a secure portal. Once a Total Disability Individual Unemployability (TDIU) claim is received, VA will request the reported income through the secured SSA portal and receive a response within 10-16 days. VA reported that process will serve as a more efficient way to receive income data in a timely manner and maintain the integrity of the TDIU benefit while reducing improper payments. The development and implementation of the upfront verification process for TDIU claimants is anticipated to be completed by July 21, 2017. Meanwhile, VA has reinstituted the data match agreement with SSA through December 2017, which collects earned income (employment wages). The agreement allows VBA to compare reported income earnings of TDIU beneficiaries to earnings actually received. In addition, VA completed the upfront income verification manual guidance and is planning to pilot the guidance prior to implementation. VA also has drafted new manual guidance for the annual eligibility review process and the documents are currently under review. As of March 2017, VA reported delays and stated it planned to fully implement the annual eligibility review process by June 30, 2017.

    Recommendation: To help ensure that TDIU decisions are well supported and TDIU benefits are provided only to veterans whose service-connected disabilities prevent them from obtaining or retaining substantially gainful employment, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to verify the self-reported income provided by veterans (a) applying for TDIU benefits and (b) undergoing the annual eligibility review process by comparing such information against IRS earnings data, which VBA currently has access to for this purpose. VA could also explore options to obtain more timely earnings data from other sources to ensure that claimants are working within allowable eligibility limits

    Agency Affected: Department of Veterans Affairs

  3. Status: Open

    Comments: As of March 2017, a VA workgroup is in the final stages of collecting and analyzing the data to determine if age should be a factor in deciding TDIU, and whether or not the agency will use positive vocational assessments to disallow TDIU claims. Additionally, the workgroup is in the process of completing an Inter-Rather Variability Study (IRVA) to examine the disparity in rating decisions involving entitlement to TDIU and service connection. After completion of the internal study on TDIU and the IRVA, targeted for September 30, 2017, he workgroup will submit its preliminary analysis and recommendations and VA will then decide on the next courses of action for future policy decisions. Due to VA's earlier conclusions, in April 2015, that no immediate changes to its current guidance were necessary, and in the spirit of this recommendation, the status will remain open until the completion of these ongoing efforts.

    Recommendation: To help ensure that TDIU decisions are well supported and TDIU benefits are provided only to veterans whose service-connected disabilities prevent them from obtaining or retaining substantially gainful employment, in light of VA's agreement with the recommendations made by the Advisory Committee on Disability Compensation, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to develop a plan to study the complex TDIU policy questions on (1) whether age should be considered when deciding if veterans are unemployable and (2) whether it is possible to disallow TDIU benefits for veterans whose vocational assessment indicated they would be employable after rehabilitation.

    Agency Affected: Department of Veterans Affairs

  4. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) conducted in-process reviews to determine if Total Disability Individual Unemployability (TDIU) claims were warranted and consistency studies on the determined effective dates of TDIU benefit. For the in-process reviews, VA added two new questions that will allow the agency to identify which claim decisions have errors associated with TDIU benefits. In addition, a December 2015 consistency study focused on the effective date determinations and identified and remediated a substantial knowledge gap in determining such dates. VA will continue to use in-process reviews and consistency studies to assess TDIU decisions and will take corrective action when warranted. Nevertheless, GAO continues to believe that the integrity of the TDIU benefit decision-making process remains at risk and that VA can position itself to better manage the TDIU benefit. As VA addresses the other report recommendations concerning the eligibility criteria, guidance, and management of this benefit, comprehensive quality assurance approaches remain vital. It is imperative that VA conduct assessments that consider the completeness, accuracy and consistency of TDIU benefit decisions. GAO?s report noted that rating specialists may be using and interpreting evidence differently to determine a veteran's unemployability, and thus eligibility, and that little is known about the consistency of TDIU decisions across individuals in the same regional office as well as across regional offices. Such concerns remain and GAO encourages VA to continue to explore other options that will allow the agency to more fully obtain adequate assurance of the overall soundness of the TDIU benefit decision-making process.

    Recommendation: To help ensure that TDIU decisions are well supported and TDIU benefits are provided only to veterans whose service-connected disabilities prevent them from obtaining or retaining substantially gainful employment, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to identify other quality assurance approaches that will allow the agency to conduct a comprehensive assessment of TDIU benefit claim decisions. The approach should allow VBA to assess if decisions are complete, accurate, and consistent, and ascertain the root causes of any significant variation so that the Veterans Benefits Administration (VBA) can take corrective actions as appropriate. This effort could be informed by the approaches VBA uses to assess non-TDIU claims.

    Agency Affected: Department of Veterans Affairs

 

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