Under FECA, the federal workers’ compensation  program, benefits may be provided to the survivors of federal civilian  employees who die as a result of work-related injuries and illnesses. For Most Recent Survivors, DIC Replaced Between 35 and 55 Percent of the VA Disability Compensation or Military Pay Previously Paid to the Veteran or Servicemember

For more than half the survivors who began collecting benefits in fiscal  years 2004-2008, DIC replaced between 35 and 55 percent of the VA  disability compensation or military pay previously paid to the veteran or  servicemember. Most of the DIC recipients in this group survived a  totally disabled veteran or a low- to mid-grade enlisted servicemember,  such as an Army sergeant. veteran would have received $2,823 per month in VA compensation in 20 and, after his death, the surviving spouse would have received $1,154 month—the basic flat-rate DIC payment—for a replacement rate of 41  percent. This prior income can include VA disability  compensation and military pay, which cease upon the death of the veteran  or servicemember. On the low end of the replacement scale, for about 1 of 10 survivors DIC  replaced less than 35 percent of the veteran’s prior disability  compensation or the servicemembers’ military pay. Many were survivors of veterans who  received relatively low VA compensation prior to their death because they  were considered partially disabled. For example, a veteran with a spouse  and a 30 percent rated disability received $421 per month in VA disability  compensation in 2009. 4). DIC Benefits Are Generally Higher Than Survivor Benefits Paid by Federal Retirement Programs, but Are Usually Lower Than Federal Workers’ Compensation Survivor Benefits

The amount paid by DIC to survivors of disabled veterans and  servicemembers is generally higher than the amount paid by CSRS and  FERS retirement programs to survivors of comparably paid federal  employees. Such comparisons are difficult, however, because DIC  provides a flat rate payment while CSRS and FERS survivor payments are  determined by the salary and years of employment of the deceased  employee. As a result, there is a range of payment amounts for survivors of  federal employees. When we looked at veterans/servicemembers and federal  employees with comparable pay and experience, we found that for most  survivors, DIC provides higher benefits than the federal retirement  programs because it gives more money to survivors of lower-paid  individuals. 7.) Appendix I: Objectives, Scope, and Methodology

Our review focused on (1) the extent to which Dependency and Indemnity  Compensation (DIC) replaces Department of Veterans Affairs (VA)  disability compensation or active duty military pay lost due to the death of  a veteran or servicemember, and (2) how DIC benefits compare to benefits  for survivors of civilian federal employees. Analysis of VA Data on DIC Recipients

We obtained and analyzed data from VA’s Benefits Delivery Network  (BDN) data system on all survivors who received DIC payments in  September 2008, the last month of fiscal year 2008. These data included  information on individual DIC recipients, such as the recipient’s age and  the level of DIC payments the recipient received. To determine the extent to which  DIC replaces military pay lost due to the death of a servicemember on  active duty, we estimated the pay of the servicemember prior to death. Similarly, we calculated  survivor benefits for servicemembers who died on active duty and for  federal employees with comparable years of service and pay at the time of  death.
Why GAO Did This Study

The Dependency and Indemnity Compensation (DIC) program provides monthly payments to the survivors of those who died as a result of a service-connected disability or while on active duty in the military. In fiscal year 2008, the Department of Veterans Affairs (VA) paid over $4.7 billion to about 354,000 survivors, replacing a portion of income lost with the death of the veteran or servicemember. The Veterans' Benefits Improvement Act of 2008 directed the Government Accountability Office (GAO) to study the DIC program and the levels of payments it provides. This report addresses (1) the extent to which DIC replaces VA disability compensation or active duty military pay lost due to the death of a veteran or servicemember, and (2) how DIC benefits compare to benefits for survivors of civilian federal employees. GAO obtained and analyzed data on DIC payments, VA disability compensation, and military pay rates. GAO also obtained information on survivor benefits under federal employee retirement and workers' compensation programs. GAO did not include in its analysis other sources of income survivors may receive, such as Social Security, private pensions, and life insurance. Lastly, GAO interviewed officials from VA and groups representing veterans, servicemembers, and their survivors.

What GAO Found

For more than half of survivors who recently began collecting DIC, the benefit replaced between 35 and 55 percent of the VA disability compensation or estimated military pay lost due to the death of a veteran or servicemember. Because DIC provides generally flat payments, the rate at which it replaced lost income varied according to the amount of prior income, such as VA disability compensation. The most common survivor was an older female spouse of a totally disabled veteran who, in 2009, received $1,154 per month--the base DIC payment--compared with $2,823 per month paid in VA disability compensation to the disabled veteran prior to death. In these cases, DIC replaced 41 percent of prior compensation. There were, however, DIC recipients at the far ends of the scale. For example, for surviving spouses of mid-ranked officers who died on active duty, the flat rate DIC payment represented 19 percent of prior military pay; for survivors of partially disabled veterans who had received relatively low VA disability compensation, the flat rate DIC payment sometimes represented more than 100 percent of prior compensation. When comparing survivor benefits for DIC with those for comparably paid civilian federal employees, DIC benefits are generally higher than survivor benefits paid by federal retirement programs, but lower than those paid by federal workers' compensation. The DIC program's flat payment structure differs from federal programs in which payment amounts are based on employee salaries and years of employment. We found that for most survivors, DIC provides higher benefits than the federal retirement programs because it gives more money to survivors of lower paid individuals, who comprise the majority of DIC recipients. In contrast, DIC payments are almost always less than workers' compensation payments for survivors of federal employees who die as a result of job-related injuries. For comparable employees, the salary levels of nearly all servicemembers in 2009 would result in higher survivor payments under workers' compensation than under the DIC program.