Proposed Unemployability Cuts

President Trump presented his 2017 budget to Congress back in May. This budget calls for significant increases in spending, but also contains some troubling cuts. One of the more significant proposed cuts would have resulted in the loss of more than $3 billion to veterans suffering from service connected disabilities that are so severe they are unable to maintain employment. Following substantial pressure for veterans groups, Secretary of the VA David Shulkin — originally a proponent of the measure — reversed course on the proposal late last month.

Currently veterans who are unable to work due to service-connected disabilities can be paid at the 100-percent rate even if their disabilities do not add up to 100-percent under VA’s Rating Schedule.  This program is called Individual Unemployability (IU).  The proposed budget would eliminate this benefit once the veteran reaches the age at which he could receive Social Security retirement.  Veterans currently receiving both Social Security retirement and IU would see their IU benefits terminated.

Secretary Shulkin originally defended these cuts, stating “I don’t think we can continue to only expand services and not look at the ones we are delivering … I think people can understand paying veterans who are above age 80 unemployment benefits isn’t what makes sense to the average American.”

While it’s true that VA’s budget draws from a finite pool of resources, VA’s proposal to end IU payments for elderly veterans should give pause for concern. The suggested rationale provided by the agency that people over the retirement age should not be receiving government unemployment benefits seems sensible on the surface. However, Secretary Shulkin overlooks the fact that the struggle that many of these vets have endured to get these benefits — and that many of them are receiving such benefits at a time in life when they are most needed. It is a rare case that a veteran loses a job due to a service-connected disability and then soon after begins receiving IU. More commonly, the veteran has suffered through years — or in some cases decades — of unemployment or underemployment as a result of his or her service connected disabilities before receiving these benefits. In many cases the reason for this delay is that VA denies benefits for years before finally granting them. The personal and financial losses suffered prior to receiving unemployment benefits can be devastating.

Secretary Shulkin’s reasoning also glosses over the fact that veterans who have a history of underemployment due to service connected disabilities receive a lower Social Security retirement benefit because of lower lifetime earnings. This point is emphasized by the fact that VA acknowledges that veterans with service connected disabilities are likely to suffer reduced earning capacity before reaching the point of becoming unemployable. When denying claims for entitlement to IU benefits, VA regularly cites the case of Van Hoose v. Brown, 4 Vet. App. 361 (1993) for the proposition that assignment of a compensable disability rating, in and of itself, acknowledges and compensates for vocational impairment. Similarly, 38 Code of Federal Regulations 4.1 states “…Generally, the degrees of disability specified are considered adequate to compensate for considerable loss of working time from exacerbations or illnesses proportionate to the severity of the several grades of disability.” The loss of working time results in lower wages, which result in lower Social Security retirement benefits.

VA’s motto is proudly adopted from President Lincoln’s second inaugural address, when he addressed the importance of the nation’s responsibility “to care for him who shall have borne the battle and for his widow, and his orphan.”  The administration’s recent budget proposal was antithetical to that goal, and VA’s approach has thankfully, albeit belatedly, been modified.  There is much room for cost savings in VA’s bloated and inefficient bureaucracy.  VA must zealously examine administrative waste, fraud, abuse, inefficiency and mismanagement before balancing the budget on the backs of those the administration was created to serve.