	Introduction

Social Security Disability Insurance (SSDI) replaces a portion of earnings for an eligible worker whose illness or injury—while not necessarily caused by a work-related incident—results in an inability to work. As an insurance program, workers (including active-duty military) and employers in covered occupations, as well as self-employed individuals, contribute to the program through the Federal Insurance Contributions Act (FICA) payroll tax and the Self-Employment Contributions Act (SECA) tax. Conversely, Veterans Disability Compensation (VDC) provides payments to veterans for illnesses and injuries that are caused or aggravated by military service. VDC is a compensation program funded through a mandatory appropriation as part of the Department of Veterans Affairs (VA) annual budget. VDC is not insurance and therefore, neither veterans nor active military personnel contribute directly toward the funding of the program. SSDI and VDC—administered by the Social Security Administration (SSA) and the VA, respectively—are two of the largest federal disability programs. Although SSDI and VDC both serve the goal of providing income security for individuals with disabilities, these programs fundamentally differ in how they define "disability" and determine eligibility for benefits. For example, an individual must be unable to work to be eligible for SSDI benefits, yet employability is not a factor in VDC disability determinations. This report concludes with a discussion of the challenges facing the administration of both programs, including processing delays for pending claims and appeals. These issues will be of particular interest to Congress due to the high numbers of SSDI claims resulting from a combination of the recent economic decline, an increase in the number of baby-boomers approaching retirement age and their most disability-prone years. SSDI Benefits

To ensure that a condition is long-term, a worker only becomes eligible to apply for SSDI five months after the onset of a disability, and the worker is further evaluated to determine if the disability will last longer than 12 months or result in death. Second, claimants must demonstrate that injuries, diseases, or other medical conditions are related to military service. Distinctions Between SSDI and VDC Programs

There are clear differences in the general goals of SSA and VA disability compensation programs that have likely evolved from the SSDI focus on administering benefits primarily for a civilian work population, which contrasts with the VDC focus on compensating individuals for the adverse health conditions connected to military service. Both programs tend to serve populations approaching retirement age as the typical VDC and SSDI recipients are all over the age of 55. In contrast, VDC—aimed at compensating veterans that have sustained injuries or illnesses as a result of military service—determines payment amounts based on the severity of veterans' service-connected condition(s), without regard for the employability of the veterans. Certain veterans who are unemployable, and have a rating of less than 100%, may be granted additional compensation through IU provisions. SSA and the VA have also been criticized for their processes of adjudicating applications, and the high levels of claims and appeals pending. These were two of several government-wide findings that led the Government Accountability Office (GAO) to designate federal disability programs as "high-risk."
Social Security Disability Insurance (SSDI) and Veterans Disability Compensation (VDC)—administered by the Social Security Administration (SSA) and the Department of Veterans Affairs (VA) respectively—are two of the largest federal disability programs, but strongly differ along several dimensions, including the populations served, how each program defines a "disability," as well as varying eligibility requirements.
First, SSDI is an insurance program that replaces a portion of earnings for an eligible worker whose illness or injury—while not necessarily caused by a work-related incident—results in an inability to work. SSDI is one of several federal programs funded through the Federal Insurance Contributions Act (FICA) payroll tax and the Self-Employment Contributions Act (SECA) tax to which all workers and employers in covered occupations (including military personnel) and self-employed individuals make contributions. On the other hand, VDC is not insurance, but is a compensation program in that payments are made to veterans who develop medical conditions that are related to their service in the military. VDC is non-contributory and neither veterans nor active military personnel pay into the program, which is funded through a mandatory appropriation as part of the VA annual budget.
Second, while the purpose of both SSDI and VDC is to provide income security, SSDI provides a financial "safety-net" to eligible civilian and military workers due to their inability to work as a result of long-term or terminal injury or illness. Conversely, VDC provides veterans with tax-free, cash benefits specifically for service-connected illnesses or injuries. The ability to work is not factored into VDC disability determinations, although additional compensation is available for veterans who are unemployable as the result of a service-connected condition(s).
Third, SSDI only compensates workers who are fully disabled, whereas VDC compensates veterans for both partial and fully disabling injuries and illnesses. The VA is further guided by a principle that views disability compensation as an obligation, owed to veterans, for injuries affecting employment that were incurred or aggravated by their service to the country. SSDI benefits are granted solely on medical and economic grounds and other noneconomic factors are not considered. Eligibility requirements generally tend to be more stringent for SSDI than VDC, and most veterans, even if qualified for VDC, will not likely meet the criteria for both programs.
Both SSA and the VA have faced challenges in the administration of benefits and have been criticized for a lack of interagency coordination, processes that are "out-of-sync" with modern conceptions of disability, and extensive processing delays for claims and appeals. These issues led, in part, to a Government Accountability Office (GAO) investigation and determination of federal disability programs as "high risk." Both agencies have made efforts to address issues surrounding pending claims and appeals, but differ in their responses to other recommendations.
This report provides a description and comparative analysis of the SSDI and VDC programs. These issues will be of particular interest to Congress because of the expected increase in the numbers of SSDI and VDC claims. The recent economic decline and aging baby-boomers have continued to place a strain on SSA's resources. The aging of the veteran population and expansion of presumptive conditions policies have contributed to the increase in VDC claims.