News & Information

CCH® UNEMPLOYMENT INSURANCE — 11/23/10

CRS compares differences between SSA and VA disability programs

The Congressional Research Service earlier this year sought to clarify why one group of individuals with disabilities may be eligible for benefits under the Veterans Disability Compensation program (VDC), but ineligible for benefits under the Social Security Disability Insurance program under the Title II of the Social Security Act (SSDI). That objective resulted in a report that compares the distinguishing characteristics of each program.

According to the report, there are three primary differences between the two programs:

• SSDI is an insurance program that replaces a portion of earnings for an insured worker whose illness or injury, which is not necessarily work-related, results in an inability to perform any substantial gainful activity. The program is funded through payroll taxes paid under the Federal Insurance Contributions Act or the Self-Employment Contributions Act. VDC is not insurance. It is a compensation program that pays benefits to veterans who develop medical conditions that are related to their military service. The program is funded through a mandatory appropriation under the VA budget rather than from contributions by veterans or active military personnel.
• SSDI is a safety-net to both civilians and military workers due to their inability to work as a result of long-term or terminal illness, providing benefits that may be subject to taxation. While VDC is also a safety-net, it provides veterans with tax-free cash benefits for service-connected illnesses or injuries. The inability to work is not a prerequisite for benefit entitlement; however veterans who are unemployable as a result of a service-connected condition are eligible for additional compensation.
• SSDI only compensates workers who are fully disabled; however, VDC will compensate veterans for both fully as well as partially disabling conditions. While SSDI is an entitlement, the VA regards disability compensation as on obligation owed to veterans, for injuries that were incurred or aggravated by their service to the country. Eligibility for SSDI tends to be more stringent than VDC and most veterans will not likely meet the criteria for both programs.

SSDI is a much larger program, with more than 7.7 million individuals at the end of fiscal year 2009 receiving payments at a cost of $8.3 billion per month. Under VDC during the same period, there were 3.1 million individuals receiving benefits. The cost of that program will reach approximately $3.6 billion in FY2010.

VDC eligibility and determination

In contrast to the five-step determination process for Social Security claims that requires a determination that a claimant is not earning more than substantial gainful activity ($1,000 per month for non-blind individuals in 2010 and 2011), has a severe impairment that significantly limits the ability to do work, and either meets or equals a “listed” impairment or has a “residual functional impairment” that prevents the individual from performing prior work or any other work in the national economy, eligibility for VDC benefits uses a two-step process. First, a claimant must prove that he or she is a military veteran and did not receive a dishonorable discharge from service. Second, claimants must demonstrate that injuries, diseases or other medical conditions are related to military service. Veterans are given the benefit of the doubt where evidence weighs equally that an illness or injury is or is not service-related.

The VA has a "presumptive conditions" policy that entitles certain veterans, survivors, and dependents, to a presumption of service-connection for certain disease or conditions related to certain conflicts or military service. These include former POWs, Vietnam veterans exposed to Agent Orange, atomic veterans exposed to ionizing radiation, Gulf War veterans with undiagnosed illnesses, veterans diagnosed with certain chronic diseases within one year of release from active duty, and veterans with 90 days or more of contiguous service diagnosed with Lou Gehrig’s disease following discharge from active duty.

If an injury or illness is determined to be service-related, the condition(s) are evaluated on a scale from 0% to 100% to determine the degree of impairments. A claimant must receive a 10% rating in order to receive compensation. A veteran may receive a 100% disability rating either based solely on the severity of the service-related condition (or combination of conditions), or by qualifying for an Individual Unemployability (IU) determination. To qualify for this benefit, a veteran must be unable to work and have one service-connected disability rated at least 60% or have two or more disabilities with one disability rated at least 40% and a combined rating of at least 70%.

Program distinctions between SSDI and VDC

Distinctions between the SSDI and VDC programs make it possible for even a 100% disabled veteran to be denied SSDI coverage. VDC does not require total impairment before benefits can be awarded, nor does VDC require a claimant to be unable to work unless the claimant receives IU compensation. The average monthly VDC payment of $2,673 is more than twice that of the average $1,064 payment received by SSDI beneficiaries. Veterans who receive compensation under both programs, are not subject to any offset of one benefit against the other (CRS Order Code R41289, June 17, 2010).