VA provides monthly disability compensation to veterans with disabling conditions caused or aggravated by their military service. Since 1925, VA has used the Veterans Affairs Schedule for Rating Disabilities (VASRD) to assign disability ratings to veterans based upon the existence and severity of service-connected disabilities. The severity of a disability is based on an average reduction in earning capacity across a group of veterans with similar physical or mental impairments brought on by their service. This degree of severity is expressed as a percentage and is often referred to as a “schedular rating.” For veterans with multiple service- connected disabilities, VA calculates the rating using a table that applies a formula for combining multiple ratings into a single rating. The rating dictates the amount of monthly compensation—set by law—a veteran receives, as shown in table 1. Veterans receiving a 100 percent rating are deemed to have a total disability. In 1934, VA revised its disability compensation program to establish TDIU compensation. VA has testified that the TDIU supplemental benefit was created to allow veterans to be deemed totally disabled even if they do not meet the criteria for a 100 percent rating. VA provided the rationale that while the rating schedule is intended to identify impaired earnings reduction for the average veteran, it does not always adequately compensate individual veterans based on their particular circumstances. The TDIU benefit was established during the Depression, when Social Security retirement benefits were passed into law. In 1945, VA established that age was not to be considered a factor in evaluating entitlement to TDIU. Today, TDIU benefits are generally a way VA can increase an eligible veteran’s schedular disability rating to 100 percent based on the veteran’s inability to earn income above the amount set by federal poverty guidelines because of their service-connected disabilities. To be eligible for TDIU compensation, 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. VA generally considers “substantially gainful employment” to be employment above the federal poverty guidelines— $11,490 for an individual with no dependents in 2013. VA refers to the inability to maintain gainful employment as “unemployability.” Because a TDIU award yields a higher rating percentage, it leads to higher levels of compensation above the base schedular rating amount. For example, the rating for a veteran with no dependents could be increased from 60 percent ($1,026 per month) to 100 percent ($2,816 per month), an increase of $1,790 per month—or $21,480 a year. Disability compensation claims processing, including TDIU claims, is performed at 57 VBA regional offices. See figure 1 for a description of how TDIU-related claims processing is performed. Veterans are assigned a VASRD rating through VBA’s review of their service-connected disabilities. When a claim for TDIU benefits is raised, a rating specialist determines if the veteran meets the schedular rating requirements and is unemployable. The rating specialist considers additional evidence— beyond that related to the veterans’ military service and medical diagnosis required to decide a disability compensation claim—to decide whether the veteran’s service-connected disabilities make them unemployable. In determining unemployability, the rating specialist reviews the veteran’s employment history as well as the reason(s), if any, for termination of employment. Unlike other benefit programs, such as Social Security Disability Insurance (SSDI), VA does not consider reaching retirement age as a cause for ineligibility. Once veterans begin receiving TDIU benefits, VBA reviews TDIU beneficiaries’ employment and income annually to determine whether they continue to meet the eligibility requirements. VA terminates the supplemental TDIU benefits for those who do not provide the required information or are determined no longer eligible. VA requires beneficiaries to annually self-certify their employment and income. Specifically, in an Employment Questionnaire required for the continuation of TDIU benefits, the beneficiaries report their employment status during the previous 12 months including the type of work, hours worked, time lost for illness, and highest gross earnings per month. A beneficiary’s income can exceed the income threshold for twelve consecutive months before VA discontinues the TDIU benefit. VBA measures the accuracy of disability compensation claim decisions mainly through its Systematic Technical Accuracy Review (STAR), including TDIU claims. Specifically, for each of the 57 regional offices, completed claims are randomly sampled each month and the data are used to produce estimates of the accuracy of all completed claims. VA reports national estimates of accuracy from STAR reviews to Congress and the public through its annual performance and accountability report and annual budget submission. VBA also produces regional office accuracy estimates, which it uses to manage the compensation benefits program. Beginning in October 2012, VBA began using data from STAR reviews to also produce issue-based estimates of accuracy that measure the accuracy of decisions on the individual medical conditions within each claim. VBA also performs local quality reviews conducted by regional office quality review teams (QRT) formed to assess and monitor quality of staff performance and decisions. Specifically, QRTs review completed claims to assess individual rating specialist’s performance. In addition, QRTs review in-process claims, which are claims that the specialists have not yet finalized, to identify common errors and help prevent inaccurate decisions. See appendix II for additional information on these and other VBA quality assurance measures. In November 2014, we issued a report on VBA’s quality assurance efforts. We found, among other matters, that VBA had not always followed generally accepted statistical practices when calculating accuracy rates through STAR reviews, resulting in imprecise performance information. We also identified shortcomings in QRT practices and implementation that could reduce their effectiveness. We made a number of recommendations to VA to improve its measurement and reporting of accuracy, review the multiple sources of policy guidance available to claims processors, enhance local data systems, and evaluate the effectiveness of quality assurance activities. VA concurred with our recommendations. See appendix II for additional information on STAR and QRT reviews. In fiscal year 2013, 332,934 veterans received TDIU benefits, an increase of 22 percent since fiscal year 2009, as shown in table 2. In 2013, there were 31,159 veterans who began receiving TDIU for the first time; that is, new beneficiaries. Moreover, the number of new beneficiaries increased in each of the 4 years we compared to the subsequent year and represented about 9 to 10 percent of the overall TDIU population in each of the 5 years we examined. Similar to the number of new beneficiaries, the number of beneficiaries whose benefits were discontinued also increased in each of the 4 years we compared; these discontinued beneficiaries comprised from 4 to 6 percent of the TDIU population. Overall, of the 74,224 beneficiaries whose benefits were discontinued from fiscal year 2009 through fiscal year 2013, 69 percent were discontinued due to the death of the beneficiary. Benefits were discontinued for the remaining 31 percent because beneficiaries generally either (1) earned enough income to exceed the income threshold, (2) failed to submit the required annual Employment Questionnaire for the continuation of benefits, or (3) received a change to their schedular rating. Overall, TDIU beneficiaries make up a substantial portion of the group of veterans who receive benefit payments at the 100 percent disability compensation rate. In fiscal year 2013, there were 3.7 million veterans receiving disability benefits and those with service-connected disabilities who receive benefit payments at the 100 percent disability compensation rate accounted for 712,000 of the 3.7 million, as shown in figure 2. Within the population of veterans whose benefits were paid at the 100-percent rate, TDIU beneficiaries made up 45 percent. According to data provided by VA, TDIU beneficiaries received disability compensation payments totaling approximately $11 billion in fiscal year 2013, as shown in figure 3, which represented a 30 percent increase—or approximately $2.5 billion—since fiscal year 2009. In fiscal year 2013, over two-thirds of TDIU beneficiaries had dependent family members, which increased their benefits payments, while 31 percent were single with no dependents. These TDIU beneficiaries received higher benefit payments depending on (1) whether the beneficiary had a spouse, dependent parent, and/or child and (2) the number of such dependents. For example, when comparing the payments beneficiaries received in fiscal year 2013, a TDIU beneficiary with no dependents received $2,816 per month, a beneficiary with a spouse and no other dependents received $2,973, while a beneficiary with a spouse and one child received $3,088. We estimate that, in fiscal year 2013, the TDIU benefit was a $5.2 billion supplemental payment above what beneficiaries would have received at their regular scheduled rating in the absence of TDIU benefits. VA does not track the overall costs of TDIU benefits, so 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. For more information on how we calculated this estimate, see appendix I. The number of older beneficiaries (age 65 and older) increased for each of the 5 years we examined and by fiscal year 2013, they represented the majority (54 percent) of the TDIU population, as shown in figure 4. By 2013, 180,043 beneficiaries fell within this age group, representing a 73 percent increase from fiscal year 2009. 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.