Veterans' Benefits:

Improving the Integrity of VA's Unemployability Compensation Program

HRD-87-62: Published: Sep 21, 1987. Publicly Released: Oct 22, 1987.

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Joseph F. Delfico
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In response to a congressional request, GAO reviewed the Veterans Administration's (VA) Unemployability Compensation Program to determine whether: (1) veterans receiving unemployability benefits were reporting their earnings to VA as required; and (2) access to tax information would enable VA to better administer the program.

GAO found that: (1) 90 percent of the veterans receiving unemployability benefits failed to report their earnings; (2) veterans received potential overpayments of over $10 million during 1984 and 1985; (3) VA rating boards used different criteria in determining marginal earnings, which resulted in unequal and inconsistent eligibility determinations for unemployability benefits; (4) although access to tax information could improve payment accuracy, granting VA access to any tax information would raise privacy concerns; and (5) VA did not have the medical evidence it needed to evaluate veterans for employment in 75 percent of its files.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Section 8051 of the Omnibus Budget Reconciliation Act of 1990 gave VA the authority to use IRS and Social Security Administration (SSA) data to verify the income of certain compensation and pension beneficiaries and health care recipients. This authority expires September 30, 1992.

    Matter: To improve the VA eligibility determination process, Congress should consider amending section 6103(1)(7) of the Internal Revenue Code to permit VA access to tax information. Congress would need to weigh the potential benefits of such disclosure with: (1) privacy concerns; and (2) Internal Revenue Service (IRS) concerns that expanding access in this way could affect voluntary compliance with the tax system.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: VA published amended regulations on August 3, 1990 which define marginal employment to promote consistency in making determinations of marginal employment.

    Recommendation: The Administrator of Veterans Affairs should amend VA guidelines to clarify how marginal employment is defined for unemployability compensation so that the criteria used in making determinations of marginal employment are consistent between rating boards.

    Agency Affected: Veterans Administration

  2. Status: Closed - Implemented

    Comments: VA issued a change to its operations manual directing its field stations to: (1) annotate the form used for requesting physical exams to indicate that the reason for the exam is unemployability; and (2) request the physician to provide observations on how the service-connected medical condition impairs the veteran's functional capability. VA decided not to implement part two of the recommendation.

    Recommendation: The Administrator of Veterans Affairs should revise guidelines on determining eligibility for unemployability compensation by: (1) informing the examining physician that the results of the medical examination will be used for a determination of unemployability and requesting that he provide observations on how the service-connected medical condition impairs the veteran's functional capacity in daily living; and (2) obtaining vocational information during an interview with the veteran by a professional in a Vocational Rehabilitation and Counseling Division. The interview should take place after the medical evaluation, but prior to the unemployability benefit award decision by a rating board. In addition to a work history, the vocational information should provide information on such things as how the veteran's service-connected condition affects job skills and employment potential.

    Agency Affected: Veterans Administration


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    Priority Open Recommendations:

    Internal Revenue Service
    GAO-20-548PR: Published: Apr 23, 2020. Publicly Released: Apr 30, 2020.

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