Veterans' Disability Benefits: Improvements Needed to Better Ensure VA Unemployability Decisions Are Well Supported
Published: 2015-07-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The population of veterans who receive these supplemental benefits has been growing. GAO was asked to testify on its recent review of VA’s management of these benefits. GAO issued a report in June 2015 that discussed the results of its review.
Like the June 2015 report, this statement (1) examined age-related trends in the population of TDIU beneficiaries and benefit payments; (2) assessed the procedures used for benefit decision-making; and (3) described suggested options for revising the benefit.
section_title: What GAO Found
paragraphs: The number of veterans receiving Total Disability Individual Unemployability (TDIU) benefits has been increasing, as has the total amount of benefit payments, especially among older veterans. VA generally provides TDIU benefits to disabled veterans who are unable to maintain employment with earnings above the federal poverty guidelines due to service-connected disabilities. To be eligible for TDIU benefits, a veteran must have a single service-connected disability rated at least 60 percent or multiple disabilities with a combined rating of at least 70 percent (with at least one disability rated at 40 percent or higher). In addition, the veteran must be unable to obtain or maintain “substantially gainful employment” as a result of these service-connected disabilities. In fiscal year 2013, over 330,000 veterans received this benefit, a 22 percent increase from fiscal year 2009, while the TDIU disability payments increased by 30 percent. GAO estimated that $5.2 billion was spent in fiscal year 2013 for the supplement. These trends occurred alongside GAO also found that VA’s procedures do not ensure that TDIU benefit decisions are well supported. Specifically, (1) VBA’s guidance for determining unemployability, and thus benefit eligibility, is incomplete and formatted and delivered inefficiently; (2) VBA’s quality assurance approach may not comprehensively assess TDIU benefit decisions; and (3) self-reported income eligibility information is not verified with third-party earnings data. GAO also identified seven options proposed by experts for revising TDIU eligibly requirements and the benefit structure. Six options focus on eligibility requirements, such as considering additional criteria when determining unemployability and applying an age cap of 65. A seventh option would affect the benefit structure by lowering—but not immediately eliminating—the TDIU benefit payments as beneficiaries earn income beyond the eligibility limit.
section_title: What GAO Recommends
paragraphs: In its June 2015 report, GAO recommended that VA issued 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.

section_title: Letter
paragraphs: I am pleased to discuss our work on the Department of Veterans Affairs  (VA) Total Disability Individual Unemployability (TDIU) benefits. The TDIU  benefit is a supplemental benefit created by VA to allow veterans to be  deemed totally disabled even if they do not meet the criteria for a 100  percent rating. To be eligible for TDIU benefits, a veteran must have a  single service-connected disability rated at least 60 percent or multiple  disabilities with a combined rating of at least 70 percent (with at least one  disability rated at 40 percent or higher). In addition, the veteran must be  unable to obtain or maintain “substantially gainful employment” as a result  of these service-connected disabilities.
In fiscal year 2013, over 330,000 of the approximately 3.7 million veterans  VA compensated for disabilities incurred during active military service  received TDIU benefits. The number of older veterans receiving TDIU  benefits has been increasing, as has the total amount of benefit  payments. From 2009 to 2013, the disability payments to those receiving  TDIU benefits—the base payment plus the supplement—increased by 30  percent (to $11 billion in fiscal year 2013). For that year, we estimated  $5.2 billion in payments for the supplement alone. These benefit trends  have occurred alongside advances in medicine and technology and  changes in the labor market and society. These trends have led to  questions and suggested changes regarding TDIU benefits. My remarks  today are based on our report issued on June 2, 2015, and like that report  my statement (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.
For our June report, we obtained and analyzed data from VA regarding  new and continuing beneficiaries covering fiscal years 2009 through 2013  (the most recently available data); examined relevant federal laws,  regulations and procedures for new and continuing claim determination  decisions; conducted interviews with VA and its Veterans Benefits  Administration (VBA) officials in their central office and regional offices  as well as disability experts familiar with TDIU benefits and  representatives of veterans service organizations (VSO); and reviewed  options presented for revising the TDIU eligibility and benefit structure.  We conducted a total of 11 in-person discussion groups with rating  specialists—the VA officials who review TDIU claims—across 5 of the  regional offices; each discussion group consisted of 2 to 3 rating  specialists, for a total of 29 rating specialists. In addition, we conducted a  non-generalizable file review of 34 randomly-selected claims, including  those resulting in granted and denied benefits that were decided between  April 2012 and April 2014. A more detailed explanation of our  methodology is available in our report.this statement is based in accordance with generally accepted  government auditing standards. Those standards require that we plan  and perform the audit to obtain sufficient, appropriate evidence to provide  a reasonable basis for our findings and conclusions based on our audit  objectives. We believe that the evidence we obtained provides a  reasonable basis for our findings and conclusions based on our audit  objectives.
subsections: section_title: The TDIU Beneficiary Population and Benefit Costs Are Growing, Especially Among Older Veterans
paragraphs: As we reported in June 2015, in fiscal year 2013, 332,934 veterans  received TDIU benefits, an increase of 22 percent since fiscal year 2009.  Overall, TDIU beneficiaries make up a substantial portion (45 percent) of  the group of all veterans who receive benefit payments at the 100 percent  disability compensation rate. This population of TDIU beneficiaries  increased in each of the 4 years we compared to the following year.  Moreover, the number of older beneficiaries (aged 65 and older)  increased for each of the years we examined and by fiscal year 2013,  they represented the majority (54 percent) of the TDIU population—a 73  percent increase from fiscal year 2009. Further, 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 increase in  beneficiaries over age 65 was mostly attributed to new beneficiaries who  were receiving the benefit for the first time as shown in figure 1. Between  2009 and 2013, the number of new older beneficiaries more than doubled  to 13,259. Of these new older beneficiaries, 2,801 were aged 75 and over  while 408 were 90 and over.
We estimated that, in fiscal year 2013, the TDIU benefit was a $5.2 billion  supplemental payment above what beneficiaries would have received in  the absence of TDIU benefits. Although VA does not track the overall  costs of TDIU benefits, we used disability compensation payment rate  information, data on the TDIU beneficiary population, and data on the  population of all new beneficiaries to calculate this estimate.
section_title: VBA’s Benefit Decision-Making Procedures Do Not Ensure TDIU Decisions Are Well Supported
paragraphs: In our June 2015 report, we found that VBA’s guidance, quality assurance  approach, and income verification procedures do not ensure that TDIU  decisions are well supported. Specifically, we identified the following  challenges in decision-making procedures:  Incomplete guidance on how to determine unemployability: VBA  provides guidance to rating specialists to help them determine if  veterans meet the eligibility requirements for TDIU benefits. This  guidance tasks rating specialists, based upon the evidence at hand, to  determine veterans’ unemployability; it also recognizes that the  process is subjective and involves professional interpretation.  However, the guidance provided by VBA on which factors to consider  when determining if a veteran is “unemployable” is incomplete in three  ways, creating potential variation in TDIU claim decisions.
First, rating specialists in some (5 of 11) of the discussion groups  we held at five regional offices disagreed on whether they are  permitted to consider additional factors not specifically mentioned  in VBA’s guidance such as, enrollment in school, education level,  or prior work history when assessing an applicant’s employability.  For example, one rating specialist recently reviewed a claim for  TDIU that was submitted by a veteran suffering from traumatic  brain injury. The rating specialist found that the veteran was  enrolled in school part time and earning A’s in engineering  classes, which the specialist felt clearly demonstrated  employability. However, another rating specialist within the group  stated that the veteran’s enrollment in classes would not be part of  her decision-making.
Second, rating specialists noted that for those factors that rating  specialists can consider in their decision-making process, such as  whether the veteran receives Social Security Disability Insurance  benefits, the guidance is silent on which, if any, should be given  greater priority or weight. We confirmed that this information was  not in the manual or guidance provided by VBA. Rating specialists  in the majority (7 of 11) of the discussion groups specifically noted  that they could come to an opposite decision when reviewing the  same evidence due to the fact that they weighted certain factors  differently. For example, a rating specialist told us that a medical  opinion was always weighted more heavily than all other evidence  in the veteran’s file while another specialist expressed a hesitancy  to rely too much on the examiner’s opinion.
Third, the guidance does not provide instruction on how to  separate extraneous factors from allowable ones. Findings from  our case file review illustrates this issue: One file described a 77- year-old veteran claiming TDIU benefits for blindness that was  caused by (1) a service-connected disability, (2) glaucoma, and  (3) macular degeneration. 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.
In light of these challenges, in our June 2015 report, we recommended  that VA instruct VBA to update the guidance to clarify how rating  specialists should determine unemployability when making TDIU benefit  decisions. This update could clarify if factors such as enrollment in  school, education level, and prior work history should be used and if so,  how to consider them, and whether to assign more weight to certain  factors than others. VA concurred with this recommendation and stated  that VBA will review and identify improvements to TDIU policies and  procedures to provide clearer guidance including the extent to which age,  education, work history, and enrollment in training programs are factors  claims processors must address. VA anticipates that its Compensation  Service will complete this review and provide options to VBA for a  decision by the end of January 2016.
Format and delivery of guidance is inefficient: Rating specialists in  the majority (7 of 11) of our discussion groups at five regional offices  reported that VBA’s guidance for reviewing TDIU claims is formatted  and delivered in ways that make it difficult for them to efficiently  complete their decision-making responsibilities. For example, TDIU  guidance is delivered using multiple formats, including—but not  limited to—manuals, policy and procedure letters, monthly bulletins,  and e-mails. Thus, rating specialists lack a definitive source for TDIU  benefit decision guidance. In addition, VBA officials acknowledged the  manual for TDIU benefit decisions is outdated and stated they issue  interim guidance in many forms between manual updates because  such updates are time-consuming and difficult to do on a regular  basis. VBA officials also told us they have completed two of the four  stages for a web portal that will house all existing guidance and will  subsequently consolidate the guidance into one processing manual,  which they are in the process of rewriting. Officials told us they plan to  complete the consolidation by the end of fiscal year 2015.
Quality assurance approach may not be comprehensive: VBA’s  quality assurance approach—accomplished mainly through its  Systematic Technical Accuracy Review (STAR)—may not be  providing a comprehensive assessment of TDIU claim decisions.Specifically, the agency’s current approach does not allow it to identify  variations in these decisions or ascertain the root causes of variation  that may exist. VBA’s quality assurance standards indicate that for the  quality assurance officer to decide that the rating specialist made an  error, it must be clear and undebatable; the officer cannot substitute  his or her professional opinion with the opinion of the rating specialist  who made the original decision. Because of this high standard, a  STAR review of a sample of claims finalized during the first three  quarters of fiscal year 2014 determined that nearly 95 percent of TDIU  claims (872 of 920) were error-free. Of the 48 claims found to contain  an error, all the errors were found to be “procedural,” such as an  incorrect date for the onset of unemployability. No “decisional”  errors—that is, an error on the decision to grant or deny the benefit— were found. According to VBA officials, it is unlikely that they will find  many decisional errors because there is so much individual judgment  allowed in TDIU claim decisions, and VBA’s quality assurance  standards do not allow for the reevaluation of the professional opinion  of the original rating specialist.
While we recognize that TDIU benefit decisions have an inherently  subjective component, in June 2015, we recommended that VA identify  other quality assurance approaches to comprehensively assess TDIU  benefit claim decisions. The approach should assess the completeness,  accuracy and consistency of decisions and ascertain the root causes of  any significant variation so that VBA can take corrective actions as  appropriate. This effort could be informed by the approaches VBA uses to  assess non-TDIU claims. For example, as we reported in 2014, VBA  conducted a targeted review of military sexual trauma claims using a  consistency questionnaire to test rating specialists’ understanding and  interpretation of policies in response to concerns that related post- traumatic stress disorder claims were not being accurately decided.
VA  concurred with this recommendation and stated that quality assurance  staff would add TDIU-specific questions to the In-Process Review  checklist at the regional offices by September 2015. Based on the results  of the reviews, VA stated that VBA will determine the most effective  approach for assessing the accuracy and consistency of TDIU decisions.
Self-Reported income eligibility information is not verified: VBA  requires TDIU claimants and beneficiaries to provide information on  their employment earnings, but it places the benefits at risk of being  awarded to ineligible veterans by not using third-party data sources to  independently verify self-reported earnings. To begin receiving and  remain eligible for TDIU benefits, veterans must meet certain income  eligibility requirements. Rating specialists use information provided  by claimants to request additional information from employers and,  when possible, verify the claimant’s reported income, especially for  the year prior to applying for the benefit. However, VBA officials and  our file review indicated that employers provide the requested  information only about 50 percent of the time. If VBA does not receive  verification from a veteran’s employer after multiple attempts, it  accepts the veteran’s claimed earnings. VBA previously conducted  audits of existing beneficiaries’ reported income by obtaining income  verification matches from Internal Revenue Service (IRS) earnings  data through an agreement with the Social Security Administration  (SSA). However, the agency is no longer doing so despite having  standing agreements with the IRS and SSA to do so. In 2012, VBA  suspended income verification matches to allow for the development  of a new system that would allow for more frequent, electronic  information sharing. However, that system was never developed.
To better ensure beneficiaries’ eligibility, in June 2015, we recommended  VA instruct VBA to verify the self-reported income provided by veterans  (1) applying for TDIU benefits and (2) undergoing the annual eligibility  review process by comparing such information against IRS earnings  data. VA concurred with this recommendation and stated that VBA is developing an upfront verification process including expanding the data  sharing agreement with SSA, which enables VBA to receive federal tax  information via an encrypted electronic transmission through a secure  portal. VBA expects to implement this new process for TDIU claimants by  January 2016.
section_title: Options for Revising TDIU Eligibility Requirements
paragraphs: With regard to the options for revising TDIU eligibility requirements and  the benefit structure, in our June 2015 report, we identified a number of  options proposed by others as described in table 1. More specifically,  six options focused on revising eligibility such as changing existing  requirements in various ways, for example, setting age limits, lowering the  disability rating requirement, or increasing the income threshold. A  seventh option would affect the benefit structure by lowering—but not  immediately eliminating—the TDIU benefit payments as beneficiaries  earn income beyond the eligibility limit.
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. 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 as potential strengths and  challenges. For example, a couple of the options present possible  opportunities for VA to better target TDIU benefits to veterans who are  unemployable, but implementation of these options could pose  challenges in ensuring that all veterans are treated equitably. Each of the  seven options and the potential strengths and challenges identified by  stakeholders that we interviewed are summarized in our report.
In addition to these options, in its 2012 report, 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.  Specifically, 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. Taking the committee’s advice into consideration could better  position the agency to meet federal internal control standards. In its  comments to the committee, VA noted that before it could proceed with  the vocational assessment requirement, it needed to complete a study on  whether it was possible to disallow TDIU benefits for veterans whose  assessment indicated they would be employable after rehabilitation. In  light of VA’s agreement with the committee’s recommendations, we  subsequently recommended in our June 2015 report that VBA develop a  plan to study (1) whether age should be considered when deciding if  veterans are unemployable and (2) whether it is possible to disallow TDIU  benefits for veterans whose vocational assessment indicated they would  be employable after rehabilitation.recommendation and stated that Compensation Service initiated a review  of TDIU policies and procedures in April 2015 including consideration of  age and vocational assessments in claim decisions. VBA expects to  complete an action plan to initiate any studies, legislative proposals, or  proposed regulations deemed necessary, by July 2015.
In conclusion, the benefits veterans are entitled to, as well as VA’s  decisions on what constitutes a work disability, are in need of constant  refinement to keep pace with changes in medicine, technology, and the  modern work environment. Within this broad context, VA can position  itself to better manage the TDIU benefit and look for opportunities to  strengthen the assessments of its eligibility decisions. Having a strong  framework for program integrity is important for any federal program, and  in light of the multi-billion dollar—and growing—TDIU benefit, taking steps  to ensure payments are properly awarded to veterans is essential.  Moreover, VA has the opportunity to benefit from the attention the TDIU  benefit has received by various experts, including its own advisory  committee. The options and potential strengths and challenges identified  by experts and VSO representatives may warrant consideration in any  broader benefit refinement discussions and efforts to improve the TDIU  benefit design and eligibility criteria going forward. VA generally agreed  with our conclusions in our June 2015 report and concurred with all of our  recommendations and made plans to address them.
Chairman Miller, Ranking Member Brown, and Members of the  Committee, this concludes my prepared remarks. I would be happy to  answer any questions that you or other members of the committee may  have.
For further information regarding this testimony, please contact Daniel  Bertoni at (202) 512-7215 or bertonid@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this statement. Key contributors to this testimony include  Brett Fallavollita (Assistant Director), Melissa Jaynes, Kurt Burgeson,  David Chrisinger, Alexander Galuten, and Kirsten Lauber.
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