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. 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. 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. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. 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Summary: 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. 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. 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.