VA generally considers “substantially gainful  employment” to be employment above the federal poverty guidelines— $11,490 for an individual with no dependents in 2013. The Number of Older TDIU Beneficiaries Has Increased

The number of older beneficiaries (age 65 and older) increased for each  of the 5 years we examined and by fiscal year 2013, they represented the  majority (54 percent) of the TDIU population, as shown in figure 4. By  2013, 180,043 beneficiaries fell within this age group, representing a 73  percent increase from fiscal year 2009. Of these older beneficiaries,  56,578 were 75 years of age and older in fiscal year 2013 while 10,567  were 90 years of age and older. The number of younger beneficiaries  (under 40 years of age) increased by 56 percent from fiscal year 2009  through 2013, although they made up a small proportion (5 percent) of  the overall TDIU population in fiscal year 2013. VBA’s Guidance, Quality Assurance Approach, and Income Verification Procedures Do Not Ensure That TDIU Decisions Are Well Supported

		VBA Has Provided Incomplete Guidance on How to Determine a Veteran’s Unemployability

VBA provides guidance to rating specialists to help them determine if  veterans meet the eligibility requirements for TDIU benefits. Another rating specialist denied benefits for a veteran who was a  retired dentist. However, because all three conditions related  to the veteran’s quality of vision, the rating specialist noted in the file her  difficulty separating the effect of the service-connected disability from the  non-service-connected glaucoma and macular degeneration due to the  man’s age. Federal internal  control standards state that agencies should assess performance using  control activities, such as quality assurance checks, and that performance  information should provide agency officials with information on the extent  to which claims decisions are complete, accurate, and consistent. VBA Does Not Verify Self- Reported Income Eligibility Information

While VBA requires TDIU claimants and beneficiaries to provide  information on their employment earnings, VBA places the benefits at risk  of being awarded to ineligible veterans by not using third-party data  sources to independently verify self-reported earnings. Options for Revising TDIU Eligibility Requirements

		We Identified Seven Options That Have Been Proposed by Others to Revise TDIU Eligibility Requirements and the Benefit Structure

Based on a review of literature, we identified a number of options  proposed by others for revising the TDIU benefit: six focused on revising  eligibility requirements and one that would change the benefit structure. Based on interviews with selected experts and representatives of  veterans service organizations (VSO), we identified a range of potential  strengths and challenges associated with each option. When discussing  the potential strengths and challenges of each option, the experts and  VSO representatives commonly mentioned the equity of the proposed  change, an increase or decrease of VA’s management and administration  efforts and cost, and the effect on veterans. Could reduce the total amount of benefits paid out by VA since  some beneficiaries would receive reduced benefit payments as  they earn income beyond the maximum income. Advisory Committee Recommended Revisions to TDIU, but VA Has Not Taken Action

In 2012, the Advisory Committee on Disability Compensation made  recommendations to VA regarding potential revisions to the TDIU benefit,  and while VA concurred with those recommendations, it has yet to take  actions in response to them. As a consequence, the committee recommended that the agency (1)  study whether age should be considered when deciding if a veteran is  unemployable and (2) require a vocational assessment for all TDIU  applicants. We heard about the  subjectivity and challenges in the claims decision-making process  throughout our visits to VBA regional offices, which elevate the need to  use a thorough process to ensure that rating specialists are bringing  reasonably consistent judgments to benefit decisions—which for some  individual veterans, could result in 50 or more years of benefits. In  addition, VA does not use available third-party earnings data to verify  veterans’ self-attested employment history and income information. 2. Key contributors to this report are listed in  appendix V.

Appendix I: Objectives, Scope, and Methodology

This report: (1) examines age-related trends in the population of Total  Disability Individual Unemployability (TDIU) beneficiaries and benefit  payments, (2)assesses how the Department of Veteran Affairs’ (VA)  procedures position the agency to ensure that TDIU benefit decisions are  supported, and (3) describes suggested options for redesigning TDIU  benefits and eligibility requirements. For example, the data provided by VA did not include  information such as when a new beneficiary began receiving TDIU  benefits or data on how much each beneficiary received in monthly  disability payments for the full fiscal year—both of which would affect how  much VA paid in benefits for the fiscal year. These  approaches include:
Special accuracy reviews: VBA periodically conducts special  reviews of claims decisions to assess the accuracy in processing  specific types of claims.
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 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.

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.