VA Disability Compensation

Federal and state workers' compensation programs provide economic support for persons with work-related illnesses or injuries, while the Department of Veterans Affairs' (VA) disability compensation program provides economic support for some veterans with service-connected conditions. In fiscal year 1995, VA paid $11.5 billion to the 2.2 million veterans on its disability rolls. State workers' compensation programs annually paid workers' compensation indemnity benefits ranging from $14.2 million for claims filed in Rhode Island to $4.6 billion for claims filed in California. Between July 1995 and June 1996, the Labor Department paid $1.29 billion for claims filed under the Federal Employees' Compensation Act, one of three workers' compensation programs it administers. This report compares (1) the criteria used by the VA disability compensation program and federal and state workers' compensation programs to determine compensation and (2) the compensation that individuals with selected work-related injuries and diseases would receive under VA's disability program and what they would receive for the same impairments under the Federal Employees' Compensation Act.

GAO found that: (1) the VA disability compensation program and workers' compensation programs, including FECA, differ with respect to program goals, types of benefits provided, and eligibility requirements for benefits; (2) most workers' compensation programs provide separate cash payments for wages lost and permanent impairment, while VA provides compensation only for service-connected conditions, which need not be permanent; (3) unlike the VA program, workers' compensation programs emphasize returning employees to work while limiting employers' liability, and the vast majority who receive workers' compensation receive only medical benefits, not cash awards; (4) to be eligible for wage loss benefits under workers' compensation programs, workers must actually lose all or a portion of their wages for a specified minimum period of time, then they receive a portion, usually 66 and two-thirds percent, of their actual lost wages for the duration of the period that wages are lost; (5) to collect compensation for permanent impairments, workers must sustain permanent loss or loss of use of a body part or function, but they need not lose wages to receive compensation for their permanent impairments; (6) unlike workers' compensation programs, the amount of basic compensation veterans may receive is established by statute and is not based on their individual wage loss or usual wages, but it is based on the rating VA's Schedule for Rating Disabilities assigns to that veteran's specific condition; (7) all veterans whose conditions are assigned the same rating receive the same basic benefits amount; (8) unlike workers' compensation for permanent impairments, there is no limit on the length of time veterans can receive benefits or the total amount they can receive for permanent conditions; (9) the monthly cash benefits for permanent impairments under FECA for employees at the GS-12, step 1, salary level tend to be higher than the benefits under VA's disability program for the same types of conditions; (10) this is likely to be the case for those at higher, but not lower, salary levels under FECA because workers' compensation is based on workers' usual wages, whereas veterans' benefits are not; and (11) unless workers' compensation continues under the wage loss provision after the cash awards for permanent impairment and, the amount and present value of VA compensation could be higher than FECA's over the long term.