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1 1 (September 12, 2017)

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Executive Branch Legislative Proposals

Affecting Veterans Benefits in the FY2018

Budget



September 12, 2017
The FY2018 Budget for the Departinent of Veterans Affairs (VA) contains two legislative proposals
which, if enacted, would affect disability and other types of cash benefits payable by the VA to certain
veterans. These proposals would affect both current and future beneficiaries. The proposal to restrict
eligibility for Individual Unemployability (IU) would reduce the monthly benefits of affected veterans
and the proposed changed to the calculation of the Cost of Living Adjustment (COLA) would reduce the
annual growth in benefits. Savings from both proposals would be used to partially offset costs associated
with the Veterans Choice Program.


Individual Unemployability

For the purposes of veterans Disability Compensation, veterans with service-connected disabilities are
rated by the VA from 0% to 100%, in 10% increments, based on their level of impairment. Benefits
increase with increased ratings.
Under current regulations at 38 C.LR. §4.16, a veteran with one disability rated at least 60%, or with two
or more disabilities with at least one disability rated at least 40% and a combined rating of at least 70%,
may have his or her disability rating increased to 100% if it is determined that the veteran is unable to
maintain substantially gainful employment because of his or her disabilities (referred to as Individual
Unemployability, or IU).
A legislative proposal in the FY2018 budget, as described on page 151 of the document Major Savings
and Rejbrins: Budget of the Uinited States Government, FY2018, would reduce the monthly benefit of a
veteran who is receiving disability compensation at the 100% disability rate due to IU to the veteran's
original disability rating, when the veteran reaches the minimum Social Security retirement age and is
first eligible for Social Security retirement benefits (age 62). Current veterans would be affected if they
are receiving Social Security retirement benefits.
The justification for this change, as provided in the budget, is that when a veteran reaches retirement age,
he or she is no longer in the labor market and thus, the veteran's unemployment is based on his or her age
rather than his or her disability. Opponents of the proposal have argued that, because many of these
veterans have been out of the workforce due to their disabilities, they may only be eligible for small
Social Security benefits at retirement age and may not have other sources of retirement income such as
pensions, savings, or 401 (k) investment plans.

CRS INSIGHT
Prepared for Membes and
Committees of Congress

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