	Background

Under VA’s Disability Compensation program, the agency can award total  (100 percent) disability compensation to veterans who cannot work  because of service-connected disabilities, even though their schedular  rating is less than 100 percent. When the present value of IU benefits is considered over a veteran’s  lifetime, the value of these added benefits depends upon the veteran’s  schedular rating at the time he or she begins receiving IU benefits and the  length of time these benefits are received. To illustrate the potential  amount of added benefits that could be received due to IU, we estimated  the lifetime present value of the increase in disability compensation  benefits for veterans with schedular disability ratings between 60 and 90  percent who began receipt of IU benefits in 2005 at different ages. For example, for  younger veterans, those at age 20 in 2005, the estimated lifetime present  value of these benefits can range from almost $300,000 to over $460,000. For  veterans awarded IU benefits at age 75 in 2005, the lifetime present value  of these benefits can range from about $89,000 to about $142,000. When we analyzed VA data to determine the age at which veterans begin  receiving IU benefits, we found that just under half of new IU beneficiaries  were awarded IU benefits at the age of 60 or older. VA’s Decision-making Criteria, Guidance, and Procedures Do Not Ensure That IU Decisions Are Well Supported

VA’s regulations and guidelines for awarding IU benefits do not ensure  that its decisions are well supported. In  addition, VA guidelines do not give rating specialists the procedures to  obtain the employment and earnings history, and vocational assessments  needed to support IU decisions. As a result, VA rating specialists and some  vocational rehabilitation staff told us that unemployability benefits have  sometimes been granted to veterans who have employment potential. VA Lacks Key Criteria and Guidance Needed to Determine Unemployability

VA rating specialists making IU decisions are required to determine  whether the claimant is capable of obtaining or retaining substantially  gainful employment, which agency guidelines define as “that which is  ordinarily followed by  to earn their  livelihood with earnings common to the particular occupation in the  community where the veteran resides.” However, VA regulations and  guidelines do not provide the criteria and guidance that are needed to  determine whether a claimant has the ability to obtain or retain  substantially gainful employment or is unemployable because of his or her  service-connected disabilities. . . the  veteran’s current . VA’s Earnings Enforcement Process is Inefficient and Ineffective

VA has an inefficient and ineffective process to enforce the earnings limit  for ongoing eligibility for IU benefits. However,  this process relies on old data, outdated and time-consuming procedures,  insufficient guidance, and weak eligibility criteria. Moreover, the agency  does not track and review its enforcement activities to better ensure their  effectiveness. VA’s Practices to Manage Its Disability Benefits Lag Behind Other Disability Programs

Private-sector and SSA disability programs provide important features that  VA’s IU benefits lack. Yet, VA is among the federal disability  programs we have identified as high-risk, in part, because it is poorly  positioned to provide meaningful and timely support to help veterans with  disabilities return to work. VA’s management of IU benefits exemplifies  these problems. Approaches from other disability programs demonstrate  the importance of providing return-to-work services and using vocational  expertise to assess the claimant’s condition and provide the appropriate  services. Incorporating return-to-work practices in IU decision making  could help VA modernize its disability program to enable veterans to  realize their full productive potential without jeopardizing the availability  of benefits for veterans who cannot work. 2. 3. Appendix I: IU Beneficiaries and Estimated Expenditures

We estimated the number of Individual Unemployability (IU) beneficiaries  for 1996 to 2005 from monthly internal Department of Veterans Affairs  (VA) reports on activity under the Disability Compensation program.
Why GAO Did This Study

As part of its Disability Compensation program, the Department of Veterans Affairs (VA) provides Individual Unemployability (IU) benefits to veterans of any age who are unemployable because of service-connected disabilities. Over the last decade, the number of IU beneficiaries and benefit costs have more than tripled. In 2005, about 220,000 veterans received an estimated $3.1 billion in IU benefits. In response to a congressional request, GAO assessed VA's management of IU benefits. This report (1) examines the added value of IU benefits for veterans of selected ages and disability ratings, (2) assesses the criteria, guidance, and procedures used for initial decision making, (3) assesses VA's ongoing eligibility enforcement procedures, and (4) compares VA's decision-making and enforcement procedures with those used by other disability programs.

What GAO Found

Under VA's disability compensation program, VA can award IU benefits (that is, total disability compensation) to veterans of any age who cannot work because of service-connected disabilities even though VA did not rate their impairments at the total disability level. The added value of IU benefits over a veteran's lifetime depends upon the veteran's level of impairment at the time he or she begins receiving IU benefits and the length of time these benefits are received. To illustrate the potential amount of IU benefits that could be received, GAO estimated the lifetime present value of the added benefits in disability compensation for veterans with different impairment levels who began receipt of IU benefits in 2005 at different ages. GAO found that the lifetime present value of these benefits can range from about $300,000 to over $460,000 for veterans age 20 in 2005, and about $89,000 to about $142,000 for veterans age 75 in 2005. GAO also found that just under half (45.6 percent) of new IU beneficiaries was awarded IU benefits at the age of 60 or older, and 19.2 percent were age 75 or older. VA's criteria, guidance, and procedures for awarding IU benefits do not ensure that its IU decisions are well supported. VA regulations and guidelines lack key criteria and guidance that are needed to determine unemployability. VA guidelines also do not give rating specialists the procedures to obtain the employment history and vocational assessments needed to support IU decisions. As a result, some VA staff told us that IU benefits have been granted to some veterans with employment potential. In addition, VA's process for ensuring the ongoing eligibility of IU beneficiaries is inefficient and ineffective. This enforcement process relies on old data, outdated, time-consuming manual procedures, insufficient guidance, and weak eligibility criteria. Moreover, the agency does not track and review its enforcement activities to better ensure their effectiveness. VA is among the federal disability programs GAO has identified as high risk and in need of modernization, in part, because it is poorly positioned to provide meaningful and timely support to help veterans with disabilities return to work. Specifically, VA's compensation program does not reflect the current state of science, technology, medicine, and the labor market. VA's management of IU benefits exemplifies these problems because its practices lag behind those of other disability programs. Approaches from other disability programs demonstrate the importance of providing return-to-work services and using vocational expertise to assess the claimant's condition and provide the appropriate services. Incorporating return-to-work practices in IU decision making could help VA modernize its disability program to enable veterans to realize their full potential without jeopardizing the availability of benefits for veterans who cannot work.