Veterans' Benefits
Improved Management Would Enhance VA's Pension Program Gao ID: GAO-08-112 February 14, 2008In 2006, the Department of Veterans Affairs (VA) paid about $3.5 billion in means-tested pension benefits to over 500,000 veterans and survivors. GAO was asked to review the management of VA pension program. This report assesses (1) the characteristics and trends in size of the current pensioner population, (2) the policies and procedures VA has in place to ensure that initial pension eligibility decisions are well managed, and (3) the procedures VA has in place to ensure that pensioners continue to receive the proper benefit payments on an ongoing basis. Our study included reviews of agency policies, procedures, and internal controls; site visits to 4 of VA's 57 regional offices and all three of its pension maintenance centers; and a selected file review of new claims at three locations.
In 2006, most of the over 500,000 VA pensioners had nonpension incomes well below the federal poverty level, were beyond retirement age, and had multiple impairments, and the population has been decreasing in number. The average annual reported income of these pensioners, excluding their VA pensions, was less than $5,000. The average age of VA pensioners was 70. More than 80 percent had no spouse or dependent children. Three-fourths of veteran pensioners had multiple impairments. After reaching a peak of almost 2 million in 1978, the overall size of the pensioner population has gradually decreased, although the number of pensioners from more recent service periods has been increasing. VA policies and procedures are not sufficient to ensure sound decisions on new pension claims. Unlike other federal agencies with similar income-based programs, VA largely does not independently verify the accuracy of financial information provided by claimants to support initial pension program eligibility. In addition, the guidance used by staff to make pension eligibility decisions is not always current or clear. Further, VA's quality assurance review process for initial claims does not select a sufficient number of pension cases to ensure the accuracy of pension claims decisions. Finally, VA does not adequately evaluate training for pension staff. VA procedures for assessing whether pensioners continue to receive the proper benefits have significant limitations. Although the agency requires pensioners to report changes that might affect their pensions, VA does not require documentation such as bank or asset statements when pensioners report financial changes. Also, a key data match operation with the Internal Revenue Service is not conducted in a timely or efficient manner. Finally, despite millions of dollars in improper pension payments made each year, VA lacks a system to monitor and analyze their causes.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-08-112, Veterans' Benefits: Improved Management Would Enhance VA's Pension Program
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
February 2008:
Veterans' Benefits:
Improved Management Would Enhance VA's Pension Program:
Veterans' Benefits:
GAO-08-112:
GAO Highlights:
Highlights of GAO-08-112, a report to congressional requesters
Why GAO Did This Study:
In 2006, the Department of Veterans Affairs (VA) paid about $3.5
billion in means-tested pension benefits to over 500,000 veterans and
survivors. GAO was asked to review the management of VA pension
program. This report assesses (1) the characteristics and trends in
size of the current pensioner population, (2) the policies and
procedures VA has in place to ensure that initial pension eligibility
decisions are well managed, and (3) the procedures VA has in place to
ensure that pensioners continue to receive the proper benefit payments
on an ongoing basis. Our study included reviews of agency policies,
procedures, and internal controls; site visits to 4 of VA‘s 57 regional
offices and all three of its pension maintenance centers; and a
selected file review of new claims at three locations.
What GAO Found:
In 2006, most of the over 500,000 VA pensioners had nonpension incomes
well below the federal poverty level, were beyond retirement age, and
had multiple impairments, and the population has been decreasing in
number. The average annual reported income of these pensioners,
excluding their VA pensions, was less than $5,000. The average age of
VA pensioners was 70. More than 80 percent had no spouse or dependent
children. Three-fourths of veteran pensioners had multiple impairments.
After reaching a peak of almost 2 million in 1978, the overall size of
the pensioner population has gradually decreased, although the number
of pensioners from more recent service periods has been increasing.
VA policies and procedures are not sufficient to ensure sound decisions
on new pension claims. Unlike other federal agencies with similar
income-based programs, VA largely does not independently verify the
accuracy of financial information provided by claimants to support
initial pension program eligiblity. In addition, the guidance used by
staff to make pension eligibility decisions is not always current or
clear. Further, VA‘s quality assurance review process for initial
claims does not select a sufficient number of pension cases to ensure
the accuracy of pension claims decisions. Finally, VA does not
adequately evaluate training for pension staff.
VA procedures for assessing whether pensioners continue to receive the
proper benefits have significant limitations. Although the agency
requires pensioners to report changes that might affect their pensions,
VA does not require documentation such as bank or asset statements when
pensioners report financial changes. Also, a key data match operation
with the Internal Revenue Service is not conducted in a timely or
efficient manner. Finally, despite millions of dollars in improper
pension payments made each year, VA lacks a system to monitor and
analyze their causes.
Figure: Age Groupings of VA Pensioner Population, 2006:
This figure is a combination bar chart showing age groupings of VA
pensioner population, 2006. The X axis represents the age, and the Y
axis represents the pensioners.
[See PDF for image]
Source: Fiscal year 2006-2008 budget submissions.
[End of figure]
What GAO Recommends:
This report contains six recommendations to improve VA‘s management of
the pension program. Specifically, VA should take steps to make more
accurate and timely pension eligibility and payment decisions, improve
its quality assurance of initial claims, incorporate feedback in its
training, improve the effectiveness of pension eligibility processes,
update its data match threshold, and evaluate the causes of improper
pension payments.
In its comments on a draft of this report, VA agreed in part or fully
with our recommendations, though raised concerns with some options to
help implement several of them.
To view the full product, including the scope
and methodology, click on [hyperlink, http://www.GAO-08-112].
For more information, contact Daniel Bertoni at (202) 512-7215 or
bertonid@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
The VA Pension Population Is Characterized by Low Income, Older Ages,
Multiple Impairments, and Decreasing Numbers:
For Initial Pension Claims, VA Policies and Procedures Do Not Always
Ensure Well-Supported Decisions:
For Ongoing Pension Cases, VA Procedures and Controls Do Not Adequately
Ensure That Benefits Are Proper:
Conclusions:
Recommendations for Executive Action:
Agency Comments and GAO Response:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Pension Eligibility Determination:
Appendix III: Comments from the Department of Veterans Affairs:
Appendix IV: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Estimated Amount of Annual Nonpension Income by Source and
Age:
Table 2: Decrease in Number of Veteran and Survivor Cases by Pension
Program, Fiscal Years 2000-2006:
Table 3: Percentage Change in the Number of Pensioners by Service
Period, Fiscal Years 2000-2006:
Table 4: VA Steps to Process Eligibility Verification Reports:
Table 5: VA Computer Matching Procedures:
Table 6: VA Estimates of Pension Improper Payments, Fiscal Years 2003-
2006:
Table 7: VA Regional Offices Visited and Disposition of Pension Case
Files Reviewed:
Figures:
Figure 1: Age Groupings of Veterans and Survivors in 2006:
Figure 2: Household Composition of VA Pensioners in Fiscal Year 2006:
Figure 3: Types of Impairments among Veteran Pensioners by Age:
Figure 4: Reasons for Program Termination, January 2007:
Figure 5: Pension Eligibility Criteria for Veterans and Survivors:
Abbreviations:
BDN: Benefit Delivery Network:
BOP: Bureau of Prisons:
C&P: Compensation and Pensions:
EVR: Eligibility Verification Report:
IG: Inspector General:
IRS: Internal Revenue Service:
IU: Individual Unemployability:
IVM: Income Verification Match:
NDNH: National Directory of New Hires:
PMC: pension maintenance center:
RR: Railroad Retirement:
RRB: Railroad Retirement Board:
SSA: Social Security Administration:
SSI: Supplemental Security Insurance:
SSN: Social Security number:
VA: Department of Veterans Affairs:
VBA: Veterans Benefit Administration:
United States Government Accountability Office:
Washington, DC 20548:
February 14, 2008:
The Honorable Richard Burr:
Ranking Member:
Committee on Veterans' Affairs:
United States Senate:
The Honorable Larry E. Craig:
United States Senate:
The Department of Veterans Affairs (VA) pension program is intended to
provide a minimum level of economic security for veterans with
financial need. It is available to those low-income veterans who are at
least 65 years old or have disabilities unrelated to their military
service, as well as to their surviving spouses and dependent children.
In fiscal year 2006, the program paid about $3.5 billion in benefits to
over 500,000 pensioners. In administering the program, VA is required
to assess the continued eligibility of pensioners to determine if
changes in family income and assets, or number of dependents, might
warrant payment adjustment or termination of the pension. Although the
VA Pension Benefit program is a relatively small program, it has a
critical role in supporting disabled and aging veterans and their
survivors who depend on the program to provide a minimum level of
economic security. Providing this benefit honors their service to their
country and provides some financial assurance to those in need.
The Senate Veterans' Affairs Committee asked GAO to (1) determine the
characteristics and trends in size of the pensioner population, (2)
assess the policies and procedures VA has in place to ensure that
initial pension eligibility decisions are well managed, and (3) assess
the procedures VA has in place to ensure that pensioners continue to
receive the proper benefit payments.
Pensions are one of the many benefits available to qualified veterans
through VA. Other VA benefits include medical care, educational
resources, and compensation for disabilities sustained or worsened as a
result of active duty military service. VA actually administers three
pension programs,[Footnote 1] and we included pensioners from all three
programs when analyzing trends in population size, as this allowed for
a more thorough understanding of changes within different war cohorts
over time. The remainder of the report, however, focuses on the
Improved Pension program, which is the largest and the only one still
open to new members. To determine the characteristics and size of the
pensioner population, we analyzed data from VA's Benefit Delivery
Network (BDN), VA budget reports, and other reports through fiscal year
2006. To address our remaining objectives, we reviewed relevant laws,
guidance, procedures, and internal controls that VA uses to ensure the
soundness of pension benefit decisions. We also analyzed VA's internal
control policies and performance reports. We visited 4 of VA's 57
regional offices, located in Boston, Milwaukee, Providence, and St.
Paul. We selected these sites based on variations in size and
geographic locations. We also visited VA's three pension maintenance
centers (PMC), located in Philadelphia, Milwaukee, and St. Paul, and
the Debt Management Center in St. Paul. We interviewed VA officials and
staff at these sites as well as officials at VA Central Office in
Washington, D.C. We also conducted case file reviews in three
locations--Milwaukee, Providence, and St. Paul--to verify the adequacy
of documentation in support of initial pension decisions. For more
details on our scope and methodology, see app. I. We conducted our
review from November 2006 to February 2008, in accordance with
generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
Results in Brief:
In 2006, most of the approximately 500,000 VA pensioners had nonpension
incomes well below the federal poverty level, were beyond retirement
age, and had multiple impairments, and the population has been
decreasing in number. The average annual income of these pensioners,
excluding their VA pension, was less than $5,000--an amount well below
the 2006 federal poverty level of $9,800 for an individual, and most
had few assets and limited education. Additionally, the average age of
VA pensioners was 70, with approximately 60 percent over age 65 and
less than 20 percent under age 55. More than 80 percent had no spouse
or dependent children, and approximately one-third were surviving
spouses who live alone. Three-fourths of veteran pensioners had
multiple impairments, and about a third were housebound or needed
assistance with dressing themselves or other activities of daily
living. After reaching a peak of almost 2 million in 1978, the overall
size of the pensioner population has gradually decreased to about
500,000 today, although the number of pensioners from more recent
service periods has been increasing.
VA policies and procedures are not sufficient to ensure sound decisions
on new pension claims. Unlike other federal agencies with similar
income-based programs, VA largely does not independently verify the
accuracy of financial information provided by claimants to support
initial pension program eligibility, a fact that makes the program
vulnerable to improper payments. In addition, the guidance used by
staff to make pension eligibility decisions, which is under revision
and dispersed across several sources, is not always current or clear.
Further, VA's quality assurance review process for initial claims does
not select a sufficient number of pension cases to ensure the accuracy
of pension claims decisions. Finally, VA does not adequately evaluate
the training for pension staff. For example, VA does not consistently
collect feedback from participants at the end of a training course.
VA procedures for assessing whether pensioners continue to receive the
proper benefits have significant limitations because VA does not
require pensioners to submit financial documentation, conducts untimely
and inefficient verification of pensioners' incomes and assets, and
lacks a system for identifying and reducing improper pension benefits.
Although the agency requires all pensioners to submit documentation for
nonfinancial changes, such as for marriages or deaths, it does not
require documentation such as bank or asset statements when pensioners
report financial changes. Also, while the agency does verify certain
pensioner information by comparing it with data from other federal
agencies, we found that a key procedure using Social Security
Administration (SSA) and Internal Revenue Service (IRS) data is not
conducted in a timely or efficient manner. Finally, despite millions of
dollars in improper payments made each year, VA does not collect
sufficient data on causes of improper payments that could be used to
help it better manage the pension program.
This report contains six recommendations to improve VA's management of
the pension program. Specifically, VA should take steps to make more
accurate and timely pension eligibility and payment decisions, improve
its quality assurance of initial claims, incorporate feedback in its
training, improve the effectiveness of pension eligibility review and
verification processes, update its data match threshold, and evaluate
the causes of improper pension payments. In its comments on a draft of
this report, VA agreed in part or fully with our recommendations,
though raised concern with some of the options we present to help
implement several of the recommendations.
Background:
VA's pension program is means-tested and provides a minimum level of
economic security for veterans with financial need. It is one of two
cash benefits programs administered by VA. The other is disability
compensation, which pays benefits to veterans who have disabilities
related to their military service--often referred to as "service-
connected" disabilities.[Footnote 2] The pension program, on the other
hand, which is the subject of this report, pays benefits to low-income
veterans who either are elderly or have disabilities unrelated to their
military service.[Footnote 3] Each program also provides benefits to
eligible survivors. A veteran who applies for and meets requirements
for both disability compensation and pension benefits will receive
benefits through whichever program provides higher benefits.
In 2006, VA paid over $34 billion in compensation and pension benefits
to about 3.5 million veterans and survivors.[Footnote 4] Of this
amount, $30.9 billion was paid in compensation benefits to 3,014,282
veterans and their survivors. The remaining $3.5 billion was paid in
means-tested pension benefits to 535,380 veterans and their survivors.
The amount of financial assistance provided by the pension program is
relatively modest and intended to raise pensioners' incomes to a level
set out in statute. Pensioners are awarded an amount equal to the
difference between their countable income, as determined by VA, and the
maximum pension amounts as updated annually by statute.[Footnote 5] The
maximum pension amount varies according to the pensioner's current
income and number of dependents. In 2006, veterans with no income and
no dependents could receive as much as $10,579 annually, while
survivors with no income and no dependents could receive a maximum of
$7,094 per year. Pensioners are required to report any changes in
income, dependency, or other relevant circumstances to VA so that
benefit levels can be adjusted accordingly.[Footnote 6] Generally, for
each dollar of income received from other sources, the VA pension is
reduced by the same amount.
Eligibility Determinations for VA's Improved Pension Program:
To determine a veteran's initial eligibility for the pension program,
VA's regional office staff employ several criteria, including the
veteran's military status, age or disability, and income. (App. II
provides a summary of this process.) Eligibility for pension benefits
is restricted to veterans who are at least 65 or have total and
permanent disabilities unrelated to their military service. Also, VA
considers the income of all family members, including spouses and
children, but excludes the income of other individuals residing in the
household. Various sources of income are considered when determining
income eligibility, including employment, interest and dividends,
retirement, annuities, workers' compensation, Social Security
retirement and Disability Insurance benefits. Unreimbursed medical
expenses that exceed 5 percent of the maximum pension amount may be
deducted from income in determining eligibility. Eligibility for the
surviving spouses and children of such veterans is based on similar
factors. Once pensioners have been awarded benefits, VA makes ongoing
eligibility determinations and adjusts benefit levels as needed.
Pensioners are required to inform VA of any changes in their
circumstances--such as hospitalization or incarceration, as well as
changes in income and assets--that could affect their eligibility or
benefit levels. To further assess ongoing eligibility and benefit
levels, VA also requires pensioners who have any income other than
Social Security to file an annual report with VA.[Footnote 7] Then, VA
evaluates the information in this report to determine if pensioners
continue to meet eligibility requirements.
The VA Pension Population Is Characterized by Low Income, Older Ages,
Multiple Impairments, and Decreasing Numbers:
In 2006, most VA pensioners had nonpension incomes well below the
federal poverty level, were beyond retirement age, and had multiple
impairments, and the population had been decreasing in number. In
addition to low incomes, the majority of VA pensioners had few assets
and limited education. Since 1978, the total pension population has
been decreasing, although there have been increases in numbers of
pensioners from more recent service periods, including the Vietnam era
and the Gulf War.
VA Pensioners Generally Have Nonpension Incomes Well Below the Poverty
Level, Few Assets, and Low Levels of Education:
Most pensioners have very low annual incomes outside of their pension
benefits. According to our analysis of VA data, veteran pensioners'
average annual nonpension income was $4,573 in 2006.[Footnote 8] This
was well below the 2006 federal poverty level of $9,800 for a single
adult. Survivors had a lower average annual nonpension income of
$3,046. Both veterans and survivors under 65 had lower average annual
nonpension incomes than those 65 and older. Social Security benefits
and non-Social Security retirement income accounted for much of the
difference, as shown in table 1. When VA pension benefits are included,
most veterans had annual incomes above the federal poverty level. This
is not true of survivors, who receive smaller pension awards than
veterans. Pension benefits in 2006 averaged $8,232 per year for
veterans and $4,260 per year for survivors, for an average total
income, respectively, of $12,805 and $7,306.
Table 1: Estimated Amount of Annual Nonpension Income by Source and
Age:
Pensioner age: Under 65;
Social Security benefits: Income: $2,432;
Social Security benefits: Percentage of total income: 91%;
Non-Social Security retirement income: Income: $146;
Non-Social Security retirement income: Percentage of total income: 5%;
Other income: Income: $107;
Other income: Percentage of total income: 4%;
Total income: $2,685.
Pensioner age: 65 and over;
Social Security benefits: Income: $8,194;
Social Security benefits: Percentage of total income: 87%;
Non-Social Security retirement income: Income: $1,152;
Non-Social Security retirement income: Percentage of total income: 12%;
Other income: Income: $88;
Other income: Percentage of total income: 1%;
Total income: $9,434.
Source: GAO analysis of VA Benefits Delivery Network, October 2006, 5
percent sample.
Note: All numerical estimates have margins of error of plus or minus
17.65 percent or less of the value of those numerical estimates. All
percentage estimates from the sample file have margins of error of plus
or minus 1 percentage point or less, unless otherwise noted. When GAO
analyzed these income amounts, we only included the improved pension
program pensioners and counted incomes for veterans and veteran spouses
when the payee was the veteran or surviving spouse. We did not analyze
children's income or cases for which children were the payee.
Approximately 5 percent of cases had children or listed children as
payee.
[End of table]
In a 2002 VA study, pensioners reported having few assets and low
levels of education.[Footnote 9] Less than half of pensioners reported
owning their own homes, with ownership rates for spouses being lower
than those for veterans. Even fewer pensioners owned vehicles. About
one-third of veterans reported owning a car, and only about one-fifth
of spouses reported owning a car. Moreover, pensioners generally
reported low levels of education, with those over age 65 reporting less
education than those under age 65. More than half of veterans and
spouses over age 65 reported not having a high school diploma, compared
with 22 percent of veterans under age 65 and 44 percent of spouses
under age 65. Over a third of pensioners under age 65 reported having a
high school diploma, and less than 7 percent reported completion of a
bachelor's or higher degree.
The Average VA Pensioner Is 70 Years of Age and Has No Spouse or
Dependents:
The average age of VA pensioners is approximately 70, with
approximately 60 percent over age 65 and less than 20 percent age 55 or
younger. Significant numbers are over age 75, as shown in figure 1. The
average age is highest for surviving spouses of deceased veterans, who
constitute approximately one-third of all pensioners. In 2006, their
average age was 72, while that of veterans was 69. About three-quarters
of all surviving spouses are over age 65, compared to just over half of
all veterans. Less than 2 percent of all pensioners are younger than
age 45.
Figure 1: Age Groupings of Veterans and Survivors in 2006:
This figure is a combination bar graph showing age groupings of
veterans and survivors in 2006. One bar represents veterans, and the
other represents survivors. The X axis represents the age, and the Y
axis represents pensioners.
[See PDF for image]
Source: Fiscal year 2006-2008 budget submissions.
[End of figure]
Most VA pensioners have no spouse or dependent children, according to
information the pensioners provided to VA in 2006. As shown in figure
2, about 82 percent of pensioners receive benefits for themselves
alone, and most of the remaining 18 percent are veterans living with
dependents. Proportionately few pensioners have dependent children
eligible for pension benefits: About 22,000 of the half-million
pensioners receive VA payments for support of their children, in most
cases for one or two children.
Figure 2: Household Composition of VA Pensioners in Fiscal Year 2006:
This figure is a pie chart showing household composition of VA
pensioners in fiscal year 2006.
Veterans living alone: 49.1%;
Spouse living alone: 31.9%;
Veterans living with dependents: 17.5%;
Adult children living alone: 1.0%;
Spouse living with dependents: 0.5%.
[See PDF for image]
Source: VA fiscal year 2008 budget submission.
[End of figure]
The Majority of Veteran Pensioners Have Multiple Impairments, and About
One-Third of All Pensioners Require Assistance to Perform Daily
Activities:
Most veteran pensioners have multiple disabling conditions, with
approximately 95 percent reporting at least one impairment and nearly
75 percent reporting two or more impairments. As shown in figure 3,
excluding those impairments classified as "other," musculoskeletal
conditions were the most common type of impairment among veteran
pensioners. For veterans under age 65, the next most common type of
impairment was mental, while for veterans age 65 and older it was
cardiovascular.
Figure 3: Types of Impairments among Veteran Pensioners by Age:
This figure is a combination of two pie chart showing types of
impairments among veteran pensioners by age.
Types of impairments among veteran pensioners under age 65:
Cardiovascular: 12%;
Musculoskeletal: 29%;
Mental: 15%;
Neurological: 9%;
Digestive: 8%;
Other: 27%.
Types of impairments among veteran pensioners age 65 and older;
Cardiovascular: 16%;
Musculoskeletal: 23%;
Mental: 9%;
Neurological: 7%;
Digestive: 7%;
Other: 38%.
[See PDF for image]
Source: GAO analysis of VA Benefits Delivery October 2006 Mini Master
file.
Note: VA's database lists multiple impairments for each beneficiary.
This figure reflects all impairments listed in the VA database for
pension beneficiaries. "Other" includes several categories of
impairments that are individually associated with less than 7 percent
of veteran pensioners.
[End of figure]
Many pensioners require aid and attendance in their activities of daily
living, such as dressing and feeding themselves. According to VA,
slightly less than one-third of pensioners are housebound or in need of
aid and attendance, and most of these pensioners are age 65 and
older.[Footnote 10] While more than 40 percent of pensioners age 65 and
over require aid and attendance, less than 15 percent of younger
pensioners do. Only a small number of pensioners reside in a nursing
home--less than one-half of 1 percent of pensioners under age 65 and 3
percent of pensioners age 65 and over.
In a 2002 VA study, about 95 percent of veterans and 87 percent of
surviving spouses reported having some form of health
insurance.[Footnote 11] Medicare was a source of coverage for 50
percent of veterans and 69 percent of surviving spouses. Over half of
veterans also reported health care coverage through VA or military
hospitals. Less than 15 percent of veterans relied on Medicaid for
their health insurance and less than 15 percent of veterans had private
health insurance. By contrast, 47 percent of surviving spouses relied
on Medicaid, making it the second most common source of coverage after
Medicare, while 18 percent reported having private insurance.
The Size of the Pensioner Population Has Decreased:
As shown in table 2, the total number of pensioners has been decreasing
in recent years, although the number of pensioners from more recent
service periods has been increasing. In 2006, the three pension
programs served about 535,000 veterans and survivors,[Footnote 12] a 75
percent decrease from 1978, when participation peaked at almost 2
million. VA attributes the overall reduction in numbers largely to the
death of World War II era pensioners and the greater availability of
Social Security retirement benefits, which often raise veterans'
incomes above the VA pension program's eligibility levels.
Table 2: Decrease in Number of Veteran and Survivor Cases by Pension
Program, Fiscal Years 2000-2006:
Veterans;
Program/year: Old Law;
2000: 304;
2001: 260;
2002: 231;
2003: 191;
2004: 160;
2005: 136;
2006: 110;
Percentage change 2000-2006: -64%.
Veterans;
Program/year: Prior Law;
2000: 23,604;
2001: 19,925;
2002: 16,856;
2003: 14,288;
2004: 1,1976;
2005: 10,100;
2006: 8,601;
Percentage change 2000-2006: -64%.
Veterans;
Program/year: Improved;
2000: 340,312;
2001: 327,867;
2002: 329,492;
2003: 332,077;
2004: 330,767;
2005: 325,551;
2006: 321,145;
Percentage change 2000-2006: -6%.
Survivors;
Program/year: Old Law;
2000: 1,384;
2001: 1,084;
2002: 841;
2003: 664;
2004: 520;
2005: 427;
2006: 345;
Percentage change 2000-2006: -75%.
Survivors;
Program/year: Prior Law;
2000: 76,112;
2001: 68,306;
2002: 60,884;
2003: 55,076;
2004: 49,024;
2005: 43,813;
2006: 39,341;
Percentage change 2000-2006: -48%.
Survivors;
Program/year: Improved;
2000: 180,282;
2001: 172,724;
2002: 169,151;
2003: 168,398;
2004: 166,288;
2005: 162,898;
2006: 161,470;
Percentage change 2000-2006: -10%.
Source: GAO analysis of VA 2007 and 2008 budget submissions.
[End of table]
While total program enrollment has declined, the Vietnam era and Gulf
War cohorts of pensioners have increased in number in recent years, as
shown in table 3. VA expects the Vietnam era cohort to continue to
increase in number as more Vietnam era veterans meet the 65-year age
requirement for pension eligibility. An estimated 5.2 million of these
veterans will be age 65 or older in the year 2015. However, VA has no
estimate of how many also will have qualifying wartime service, meet
income requirements, and submit pension claims. Further, the number of
Gulf War veterans receiving pensions increased by nearly 300 percent
between 2000 and 2006, although they are still less than 5,400 in
number. Even with increases in these two cohorts, VA estimates that the
total pensioner population will continue to decline in size through at
least 2017.
Table 3: Percentage Change in the Number of Pensioners by Service
Period, Fiscal Years 2000-2006:
[See PDF for image]
Source: GAO analysis of VA fiscal years 2002-2008 budget submissions.
[End of table]
The main reason for caseload termination is death, followed by
increased income, as shown in figure 4. In January 2007, about 70
percent of veteran pension cases and 50 percent of surviving spouse
cases were terminated as a result of the death of the pensioner.
Increased income was the reason for termination in about a fifth of
veteran cases and in about two-fifths of surviving spouse cases. For
surviving children, however, about two-thirds of the cases were
terminated due to the child's age, and one in five was because of a
death.
Figure 4: Reasons for Program Termination, January 2007:
This figure is a bar graph showing reasons for program termination,
January 2007. The bars represent other, age, income, and death.
[See PDF for image]
Source: VA data.
[End of figure]
For Initial Pension Claims, VA Policies and Procedures Do Not Always
Ensure Well-Supported Decisions:
VA policies and procedures are not sufficient to ensure sound decisions
on new pension claims. Unlike other federal agencies with similar
income-based programs, VA largely does not independently verify the
accuracy of financial information provided by claimants to support
initial pension program eligibility, a fact that makes the pension
program vulnerable to improper payments. In addition, the guidance used
by staff to make pension eligibility decisions, which is under revision
and dispersed across several sources, is not always current or clear.
Further, VA's quality assurance review process for initial claims does
not select a sufficient number of pension cases to examine to ensure
the accuracy of pension decisions. Finally, VA does not adequately
evaluate pension training. For example, VA does not systematically
collect feedback from participants at the end of a training course.
VA Does Not Verify All Financial Information Provided by Applicants:
VA does not require new pension applicants to submit documents that
would support their declarations of income and assets. While the agency
does corroborate their reported Social Security income with SSA
records, it does not require claimants to submit evidence for other
financial resources, such as by asking for copies of bank statements or
tax returns.[Footnote 13] Furthermore, until recently, there was no
legislative authority for VA to arrange for the cross-checking of
claimants' statements of non-Social Security income against the
Department of Health and Human Service's (HHS) National Directory of
New Hires (NDNH).[Footnote 14] The NDNH includes quarterly wage data
for up to eight quarters, which can be compiled into annual data for
matching purposes. HHS conducts matches using the NDNH for other
agencies--such as SSA, IRS, and the Department of Housing and Urban
Development to assist them in improving their enforcement efforts. The
Dr. James Allen Veteran Vision Equity Act of 2007, which became
effective December 26, 2007, requires VA to provide applicant
information to HHS and requires HHS to match it against the NDNH and
disclose to VA information for verifying applicant employment and
income.[Footnote 15]
Furthermore, while VA allows income deductions for certain unreimbursed
medical expenses, the agency does not always require documentation for
these expenses. For example, VA requires documentation for the costs of
nursing home care, but not for the cost of prescription drugs. In
contrast, VA does require applicants to verify some nonfinancial
information, such as by submitting an official notice of military
separation or marriage and divorce records.
Guidance Used by Staff Is Poorly Organized and Not Necessarily Current
or Clear:
We found that staff in the regional offices we visited used guidance
that was not compiled in a single source; not always current; and,
according to those we spoke with, unclear. This may be, in part,
because VA has been in the process, since 2001, of revising various
sections of its compensation and pension manual to help clarify complex
regulations. However, staff told us that while the revisions are taking
place, they must check a variety of sources for updates, including e-
mails and posted memos, to be certain they have the most current
version for a specific procedure. Staff also said the piecemeal and
dispersed nature of the guidance can lead to different interpretations
for pension eligibility decisions. VA expects to have most of the
revisions implemented by 2009. Finally, staff also expressed a concern
over the clarity of some pension guidance, which they said both leaves
too much room for interpretation and can result in inconsistent
decisions on eligibility. For example, some said they must interpret
ambiguous guidance when determining how to treat claimants in assisted
living centers versus nursing homes, and that it is possible for staff
to reach different conclusions about a claimant's eligibility or proper
benefit. They told us that when faced with unclear guidance, staff are
expected to use their own discretion in interpreting the guidance,
along with the advice of supervisory staff, which they believe can
vary.
VA Has a Limited Approach to Evaluating the Quality of Initial Pension
Decisions:
The internal controls VA employs to evaluate the quality of initial
pension decisions are insufficient because VA reviews only a very small
random sample of initial claims that are selected from compensation and
pension cases.[Footnote 16] Since pension claims constitute only about
11 percent of the combined compensation and pension caseload, few are
likely to be included in the quality assurance review sample. Although
VA reported about a 12 percent error rate for compensation and pension
claims combined, a recent VA Inspector General (IG) study found a
higher incidence of errors in some cases that subsequently required
pension payment adjustments. Specifically, the IG reported that VA
procedures did not ensure that the benefits of veterans hospitalized
for more than 90 days were appropriately adjusted.[Footnote 17]
VA Does Not Adequately Evaluate the Training for Pension Staff:
VA's training program does not include a comprehensive evaluation to
ensure its effectiveness. Although we have found that evaluation is
essential to performance,[Footnote 18] VA does not systematically
collect feedback from participants at the end of a training course. For
example, new staff receiving training at VA's training center in
Baltimore are required to submit their evaluation of the training. By
comparison, staff receiving training in the use of an electronic Web
tool are not required to evaluate the training.
When we discussed VA's limited evaluation of training with headquarters
officials, they noted that the agency has made assessments of new
training materials before they are put into place. However, VA has not
consistently evaluated all training courses offered at the regional
offices. Many staffers told us that some of their training is
repetitive or does not include updates and revisions in procedures.
For Ongoing Pension Cases, VA Procedures and Controls Do Not Adequately
Ensure That Benefits Are Proper:
VA procedures for assessing whether pensioners continue to receive the
proper benefits have significant limitations because VA does not
require pensioners to submit financial documentation, conducts untimely
and inefficient verification of pensioners' incomes and assets, and
lacks a system for identifying and reducing improper pension benefits.
Although the agency requires all pensioners to submit documentation for
nonfinancial changes, such as for marriages or deaths, it does not
require documentation such as bank or asset statements when pensioners
report financial changes. Also, while the agency does verify certain
pensioner information by comparing it with data from other federal
agencies, we found that a key procedure using SSA and IRS data is not
conducted in a timely or efficient manner. Finally, despite millions of
dollars in improper payments made each year, VA does not collect
sufficient data on causes of improper payments that could be used to
help it better manage the pension program.
VA Has a Limited Approach to Verifying Financial Information Reported
by Pensioners:
Although VA requires all pensioners to report changes that might affect
their payments or eligibility, it does not require them to submit
documentation to corroborate changes in financial circumstances.
Whereas VA does require pensioners to submit documents for such changes
in circumstances as marriage or spousal deaths, it does not do so for
reported changes in income or assets. This leaves the agency heavily
dependent on the pensioner for self-reporting financial updates. The
exception is Social Security income, which VA staff verify using a
direct computer link to SSA benefit data. Pensioner reports of other
financial changes, however, need not be accompanied by such documents
as pay stubs, bank statements, or tax returns. This is in contrast to
other income-based federal programs that typically ask for verification
of key financial information. For example, SSA requires Supplemental
Security Insurance (SSI) recipients to document their earnings on a
regular basis.[Footnote 19]
Similarly, VA does not ask pensioners for financial documentation when
completing the annual Eligibility Verification Report (EVR), the
requested update that the agency sends out annually to those who have
previously reported having income and assets other than their pensions
and Social Security benefits. VA uses information collected from the
EVR responses to adjust or, if necessary, terminate VA pension
benefits. (See table 4 for an overview of the EVR steps.) VA has
indicated that the pension program is prone to overpayments caused by
pensioners failing to report income changes as they occur. One agency
official responsible for the management of the EVR process told us that
the EVR process provides the agency an opportunity to adjust the
pension benefits as pensioner status changes, thus preventing higher
overpayments.
Table 4: VA Steps to Process Eligibility Verification Reports:
Step: 1;
Description: The Hines Information Technology Center prints
EVR forms and letters to beneficiaries in December;
Approximately 70,000 EVRs are sent to pensioners annually;
These EVR forms contain preprinted information regarding Social
Security and VA benefits based on current VA data.
Step: 2;
Description: Pensioners are instructed to verify or correct
the preprinted information and return the report to VA within 60 days.
Step: 3;
Description: The PMC staff conduct an initial review of EVRs
to;
* identify incomplete EVRs and return to pensioners for additional
information (which must be returned within 60 days),;
* approve and process completed EVRs, and;
* refer EVRs needing award adjustment for further action.
Step: 4;
Description: PMC staff process all completed EVRs.
Step: 5;
Description: PMC staff adjust pension payment, create a retroactive
payment, or terminate from the program, as necessary.
Source: GAO analysis of VA documents.
[End of table]
In addition to VA not asking respondents to submit financial
documentation, we found a number of other deficiencies in the EVR
process that may likely limit VA's ability to make timely and accurate
adjustments to benefits. First, the EVR process only queries pensioners
who have previously reported income to VA, so the agency fails to reach
pensioners who may acquire new sources of income, such as earnings from
new employment.[Footnote 20] Second, during the annual review of EVRs,
VA does not attempt to corroborate via independent third-party sources
any information that pensioners report on the EVR beyond SSA benefits.
Third, the EVR asks pensioners to estimate their income for the year,
and the agency adjusts their pensions based on these estimates. Yet
pensioner estimates could prove to be incorrect. For example, income
estimates for the coming year could change due to the death of a
spouse. Fourth, the narrow seasonal window within which pension
maintenance center (PMC) staff attempt to review and process the EVRs-
-the first 3 months of the year--postpones other pension-related
activities, including data comparisons with other federal agencies that
could provide third-party verification. This limited approach to
verification of pensioner-provided updates puts the program at risk of
issuing improper payments based on pensioners' reports.
VA's Key Data Match Procedure Is Not Timely or Efficient in Detecting
Improper Payments:
In addition to deficiencies in the EVR process, VA's ability to detect
improper payments is hindered by untimely processing of a key data
match. Through formal agreements, VA compares its electronic data on
pensioners' reported income, and other eligibility information, to
similar information from a number of federal agencies, as shown in
table 5. VA identifies discrepancies and, after due process, uses this
information to adjust or terminate pension benefits. VA projects that
its data-matching activities save the pension program millions of
dollars annually.
Table 5: VA Computer Matching Procedures:
Match: Income Verification Match;
Frequency: Annual;
Approximate volume: 36,000-46,000;
Agency: SSA and IRS;
Procedure: Compensation and pension records are matched with the SSA
database for earned income. Then, SSA transmits the file to IRS to
obtain data on unearned income for the specific year. SSA matches
against IRS data and sends the combined results back to VA. When VA
identifies unreported income, it sends letters to employers and
pensioners to verify the income. No further action is taken until the
recipients respond, or until 60 days, whichever comes first. After that
time, VA adjusts the pension based on corrected income data.
Match: Social Security Verification Match;
Frequency: Annual;
Approximate volume: 23,000-28,000;
Agency: SSA;
Procedure: VA sends an extract of its pension files to SSA, which then
runs this extract against the master beneficiary record and inserts SSA
payment information. The extract tape is then returned and VA master
records are updated. VA then processes the cases, calculating the
revised income for VA's purposes, taking into account the SSA cost-of-
living adjustment and Medicare deduction, and adjusts the pension
accordingly.
Match: Social Security Death Match;
Frequency: Monthly;
Approximate volume: 4,000;
Agency: SSA;
Procedure: Compensation and pension records are matched with the SSA
death records, which include only those deaths reported to SSA since
the last SSA/VA match. When a match is made between the SSA death
records and VA records, the individual (payee or spouse) is identified
as possibly deceased. After 60 days, VA may terminate the award if the
pensioner is deceased.
Match: Social Security Prison Match;
Frequency: Periodically;
Approximate volume: 900;
Agency: SSA;
Procedure: Compensation
and pension records are matched with the SSA inmate database. VA
generates a worksheet containing information on the matches. VA staff
verify the status for each case and terminate pensions as appropriate.
Match: Bureau of Prisons Match;
Frequency: Monthly;
Approximate volume: 30;
Agency: Department. of Justice, Bureau of Prisons (BOP);
Procedure: VA master records are matched with the BOP database,
containing data on incarcerated individuals or fugitive felons. The
match generates a worksheet if the Social Security number (SSN) in the
BOP records matches one in the compensation and pension master record.
VA staff must work each case to suspend or reduce the pension.
Match: Civil Service Verification Match;
Frequency: Annual;
Approximate volume: 5,500;
Agency: Office of Personnel Management (OPM);
Procedure: VA master records are matched with OPM records of persons
receiving Civil Service Annuity (CSA) and Federal Employees Retirement
System benefits. When the SSN and surname are the same in both records,
the VA beneficiary is identified as a CSA recipient.
Match: Railroad Retirement Verification Match;
Frequency: Annual;
Approximate volume: 1,200;
Agency: Railroad Retirement Board (RRB);
Procedure: VA's master records are matched with RRB records of
people receiving Railroad Retirement (RR) benefits. If the SSN is the
same in both records, the VA beneficiary is identified as a recipient
of RR.
Source: GAO analysis of VA documents.
[End of table]
Nevertheless, VA's key data match, the Income Verification Match
program (IVM), which uses SSA and IRS data to detect pensioners who
have failed to report earned or unearned income, is running far behind
schedule. This match is scheduled to occur on an annual basis. However,
since 2006, VA has attempted to become current by conducting 2 years'
worth of IVM data matches simultaneously. Yet combining data match
records for multiple years has added to the complexity and the length
of case evaluations, according to officials we interviewed.
VA estimates that the IVM data match has the potential of saving the
program over $10 million each year, which suggests that a delay of 2
years could delay saving as much as $25 million dollars in payment
errors.[Footnote 21] Such errors include both underpayments, which
require VA staff to make retroactive payments or benefit adjustments,
and overpayments, which can be burdensome for VA to recover from such a
low-income population of pensioners and which threaten the financial
stability of pensioners. While VA officials told us they plan to have
all IVM data match cases entered into their system by the end of
2007,[Footnote 22] they could not provide assurance that these cases
will be completed in the same year.
The effectiveness of the IVM is also undermined by the fact that the
data used are not current. VA uses income data that are about 2 years
old, despite the fact that the SSA data are available earlier and that
more recent earned income data are available from another federal
database, the NDNH.[Footnote 23] Moreover, while VA could make use of
SSA earned income data as early as September following the end of the
tax year, it postpones the match of pension benefits and waits for
unearned income from IRS so that it can simultaneously evaluate
eligibility for pension and Individual Unemployability (IU)
benefits.[Footnote 24] We determined that the combination of old earned
income data, along with the delays noted above, means that individuals
with unreported earned income could continue to receive benefits for at
least 2 years before VA can determine that their pension benefits
should be adjusted or terminated.
We also found that VA's handling of the IVM data match results is
inefficient because the dollar threshold used to select pensioners for
review of ongoing pension eligibility has not kept pace over nearly two
decades with wages necessary for a person to sustain a living.
Specifically, the IVM data match threshold in use until December 2006-
-which VA told us was meant to represent wages for marginal employment-
-was set in 1988 (when VA's maximum annual pension rate for a veteran
with no dependents was $6,463). Yet between 1988 and 2006, the U.S.
Census Bureau's poverty threshold had increased over 70
percent.[Footnote 25] As a result of VA's continued reliance upon the
1988 threshold, PMC staff told us that they manually reviewed many more
cases than necessary in order to find and delete those cases that did
not warrant a review. In fact, staff typically eliminated about one-
third of the initial matches because their combined countable income
and pension did not exceed their maximum allowable pension benefit. VA
increased the $6,000 threshold to $9,383 in December 2006, but has not
decided whether it would make such changes to update the threshold on a
regular basis in the future.
The timeliness of the IVM process is also hampered by the fact that
VA's match records are paper based and lack the organizing and
transmission efficiencies of an electronic database. Therefore, VA's
follow-up work is slowed by the need to ship boxes of uncollated paper
records--worksheets, correspondence with pensioners and employers, and
related documents--from the Hines center to the PMCs for manual
assembly and analysis. Although software exists to transfer the
confidential information electronically, VA officials said the need to
comply with IRS's specific security measures for income-related data
has precluded VA's use of it. However, we have noted in prior work that
electronic software exists to transfer confidential information
securely.[Footnote 26]
VA Conducts No Analysis of the Causes of Improper Pension Payments:
Many millions of dollars in improper payments accrue each year before
they are discovered and corrected, but VA has not taken steps to
identify the causes of these improper payments. According to VA
estimates, about 8.4 to 11 percent of pension program payments were
made in error each year between 2003 and 2006, with most of these being
overpayments, as shown in table 6. Specifically, VA estimated a total
of almost $1.2 billion in overpayments and about $44 million in
underpayments during this period. Such payment errors, particularly
underpayments, can have a negative impact on pensioners living on very
low incomes. By contrast, the agency has estimated that only about 1
percent of disability compensation program payments were made in error,
with about $730 million in overpayments and $375 million in
underpayments for the same period.
Table 6: VA Estimates of Pension Improper Payments, Fiscal Years 2003-
2006:
Fiscal years: 2003;
Total outlays: 3,219;
Overpayments: 269;
Underpayments: 15;
Improper payments (percentage of total pension outlays): 8.8%.
Fiscal years: 2004;
Total outlays: 3,326;
Overpayments: 265;
Underpayments: 15;
Improper payments (percentage of total pension outlays): 8.4%.
Fiscal years: 2005;
Total outlays: 3,383;
Overpayments: 361;
Underpayments: 10;
Improper payments (percentage of total pension outlays): 11%.
Fiscal years: 2006;
Total outlays: 3,525;
Overpayments: 300;
Underpayments: 4;
Improper payments (percentage of total pension outlays): 8.6%.
Source: GAO analysis of VA documents and VA Performance and
Accountability Report, 2006.
Note: Overpayment and underpayments rounded to the nearest million.
[End of table]
Furthermore, according to VA officials, less than 30 percent of the
overpayments for compensation and pension are recovered. We found that
VA has not been successful in collecting overpayments. In fact, a
significant portion of overpayments are written off because of
pensioners' death or bankruptcy, or because the overpayment is
considered uncollectible. For example, in cases where VA's Committee on
Waivers concludes that repayment of the overpayment debt would cause
undue financial hardship for the pensioner, the debt may be
waived.[Footnote 27] Most of the remaining overpayments remain on VA's
financial account for up to 10 years, at which time VA discontinues its
collection efforts.
Despite VA's estimates of relatively high amounts in improper payments
for the pension program, the agency lacks a process for determining the
nature and actual extent of payment errors. For example, VA currently
does not have the ability to identify the dollar amount of overpayments
generated because of a failure to report income, gambling winnings, or
death of a spouse. Likewise, VA cannot identify the amount of improper
payments caused by administrative factors, such as those associated
with VA delays in conducting the IVM data matches. Although the agency
has identified several causes for improper payments, such as inaccurate
reporting of Social Security benefits, remarriage of surviving spouse,
or change in dependents, it has not developed a system to assess the
degree to which they occur, and therefore cannot develop strategies to
target problems and take steps to correct them.
Conclusions:
VA's pension eligibility operations currently provide a limited return
on investment when it comes to making appropriate payments. The
agency's financial verification processes are heavily weighted toward
detection of payment errors late in the process rather than up-front
prevention of errors. By not requiring supporting financial
documentation from individuals at the time of application, and relying
much later in the process on untimely data matching for this
information, VA increases the likelihood of making improper payments.
Additionally, VA concentrates staff resources in the first 3 months of
each year on a process for updating eligibility that is time-consuming
and still lacks for financial documentation or independent
verifications. Meanwhile, the data-matching operations that do offer
third-party verifications on financial status are delayed until after
the EVR process is completed. A key data match procedure, the IVM, has
been delayed in the past, and the agency continues to be at risk of
making improper payments as it tries to rectify the situation. Even
when the IVM data match becomes current, VA's ability to use it in a
timely way will be limited if processing of the information remains
grounded in a manual handling of paper documents. Moreover, if VA does
not regularly update its IVM data match threshold in its incoming
financial information system, the agency will continue to have an
inefficient procedure for selecting cases for IVM review.
In view of the fact that the program incurs a proportionately high
level of improper payments--about 8.4 to 11 percent of annual program
benefits--VA's investment in the prevention of errors seems too modest.
VA could readily justify increasing its investment in the error
prevention process. The agency does not have a quality assurance
process robust enough to ensure with a high degree of confidence the
accuracy of decisions made in initial pension cases, it has not
developed a consistently rigorous approach to the evaluation of
training, and it does little to identify and analyze the causes of
improper payments.
Taken together, VA forfeits the opportunity to address administrative
weaknesses and prevent payment errors. Unless these weaknesses are
addressed, VA pension benefit payments will remain vulnerable to a
relatively high rate of errors. Reconciling improper payments draws
resources from the agency that could be better utilized elsewhere, and
to the extent overpayments are never collected, they undermine the
agency's financial stewardship over public funds. Moreover,
underpayments can lead to hardships among this low-income segment of
the veteran population. Certainly, the program is not too small to
ensure that appropriate levels of assistance are provided to a
vulnerable and deserving population. This can and should be done with a
level of efficiency that minimally burdens all concerned.
Recommendations for Executive Action:
In order to enhance VA's management of the pension eligibility process,
we recommend that the Secretary of Veterans Affairs direct the Under
Secretary for Benefits take the following actions.
1. Take steps to make more accurate and timely decisions about initial
and ongoing pension eligibility and payment levels. Such actions might
include requiring pensioners to submit supporting documentation of
their income and assets, conducting a more robust independent
verification with third parties, or maximizing process automation.
2. Take steps to improve its quality assurance review of initial
claims, which could include reviewing a larger sample of pension
claims.
3. Incorporate evaluative feedback more consistently into the planning,
design, and implementation of its training efforts.
4. Evaluate options for improving the effectiveness of its annual
eligibility verification review. This effort could involve
reformulating the EVR process by (a) surveying every pensioner rather
than a selected subset; (b) performing reviews on a rolling basis, such
as on an individual's anniversary date, rather than diverting staff for
this activity for a 3-month period; (c) reviewing pensioners'
eligibility once every few years rather than every year; or (d)
focusing on verifying pensioners' income and assets.
5. Update the IVM data match threshold level to be in line with the
U.S. Census Bureau poverty threshold or a comparable measure.
6. Evaluate the causes of improper payments and use the results to
develop and implement an action plan to prevent them from occurring.
Agency Comments and GAO Response:
We provided a draft of this report to the Secretary of Veterans Affairs
for review and comment. In its written comments on a draft of this
report (see app. III), VA agreed in part or fully with our
recommendations. Although VA raised concern with some of the options we
present to help implement several of the recommendations, the agency's
comments indicate it will take steps to implement these
recommendations.
Regarding our recommendation that VA should take steps to make more
accurate and timely pension eligibility and payment decisions, the
agency agreed in part but took exception with several of the actions we
suggested. VA noted that requiring pensioners to provide documentation
of income and net worth could be onerous to individuals and possibly
diminish the timeliness of initial pension eligibility decisions.
However, VA also stated elsewhere in its comments that pensioners use
the end-of-year tax statements (Form 1099) to accurately report income
from all sources. This indicates that it may not be an added burden to
pensioners to include a Form 1099 in their initial claim. But to the
extent that burden is added to preparing the initial application, the
possible gains in accuracy and avoidance of corrective actions later
taken to address improper payments need to be considered. Additionally,
VA cited its data-matching process with SSA as an existing mechanism to
independently verify income. However, as we point out in this report,
other federal agencies with similar income-based programs independently
verify self-reported information to support initial eligibility
decisions. By verifying claims up front, rather than years after the
claim is established, the agency can effectively save the program
millions of dollars that it might never recover otherwise. Moreover, VA
does not always require documentation of unreimbursed medical expenses,
which can be deducted from income for pension eligibility. It is
important for VA to gather supporting documentation in this area as
well. The agency may consider piloting the feasibility of requiring
additional documentation of key financial information.
Regarding our recommendation that VA take steps to improve its quality
assurance review of initial claims, which could include reviewing a
larger sample of pension claims, the agency agreed with this
recommendation and indicated it will double the entire rating sample
size in 2008. While we commend VA's effort to increase the overall
number of claims reviewed in its quality assurance review of rating-
related decisions, we remain concerned that this approach will not
ensure that enough initial pension claims are reviewed for quality
assurance. As we point out in this report, VA samples 10 claims from
most regional offices' caseload of compensation and initial pension
claims. Given that initial pension claims constitute about 11 percent
of the caseload, a regional office, on average, would likely have only
1 pension claim selected for review. Doubling the sample size would
increase the expected number of claims to 2, which we believe is too
few. Alternatively, VA might consider increasing the number of pension
claims in the overall sample, such as weighing the sample size to
include more pension claims or conducting stand-alone reviews of
pension claims.
The agency agreed with our recommendation to incorporate evaluative
feedback more consistently into the planning, design, and
implementation of its training efforts.
The agency agreed with our recommendation that VA evaluate options for
improving the effectiveness of its annual eligibility verification
review. The agency stated there are inconsistencies between the
possibilities we present, though it did not elaborate. Our intent in
presenting these options is to stimulate actions that VA may take to
improve the effectiveness of the EVR process. The agency discussed
issues--such as veterans' ease in providing corroborating information-
-that need to be considered as it moves forward.
The agency agreed with our recommendation that it update the IVM data
match threshold level to be in line with the U. S. Census Bureau
poverty threshold or a comparable measure.
The agency agreed with our recommendation that it evaluate the causes
of improper payments and use the results to develop and implement an
action plan to prevent them from occurring.
In the version of the draft report sent to VA for review, we
recommended that VA seek legislative authority to use the NDNH in its
enforcement efforts. However, we have withdrawn this draft
recommendation because VA has been mandated to use this database
effective December 2007. In its comments on this draft recommendation,
VA indicated that it has initiated the process necessary to gain access
to the NDNH earnings database. Given this development, we encourage VA
to act swiftly to position itself to fully utilize the NDNH in a timely
manner.
We will send copies of this report to the Secretary of Veterans
Affairs, appropriate congressional committees, and other interested
parties. The report will also be available at no charge on GAO's Web
site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-7215 or bertonid@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Other contacts and staff
acknowledgments are listed in appendix IV.
Signed by:
Daniel Bertoni:
Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
The Senate Veterans' Affairs Committee asked GAO to (1) determine the
characteristics and trends in size of the pensioner population, (2)
assess the policies and procedures the Department of Veterans Affairs
(VA) has in place to ensure that initial pension eligibility decisions
are well managed, and (3) assess the procedures VA has in place to
ensure that pensioners continue to receive the proper benefit payments.
To determine the characteristics and size of the pensioner population,
we analyzed data from VA's Benefit Delivery Network (BDN), VA budget
reports, and other reports through fiscal year 2006. To address our
remaining objectives, we reviewed relevant laws, guidance, procedures,
and internal controls that VA uses to ensure the soundness of pension
benefit decisions. We also analyzed VA's internal control policies and
performance reports. We visited 4 of VA's 57 regional offices, located
in Boston, Milwaukee, Providence, and St. Paul. We selected these sites
based on variations in size and geographic locations. We also visited
VA's three pension maintenance centers (PMC), located in Philadelphia,
Milwaukee, and St. Paul, and the Debt Management Center in St. Paul. We
interviewed VA officials and staff at these sites as well as officials
at VA Central Office in Washington, D.C. We also conducted case file
reviews in three locations--Milwaukee, Providence, and St. Paul--to
verify the adequacy of documentation in support of initial pension
decisions. We conducted our review from November 2006 to February 2008,
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Analysis of Pensioners' Characteristics:
To analyze the characteristics of pensioners, we extracted data on
basic characteristics and enrollment trends from VA's Benefit Delivery
Network and routine annual VA budget submissions. We supplemented our
analysis with additional data from a study contracted by VA and
conducted by ORC Macro.
BDN:
VA maintains data on pensioners in its Benefits Delivery Network at the
Hines Information Technology Center in Illinois. Hines issues routine
reports to various units in VA, including budget and policy, for use in
program management. Most of these reports provide characteristics for
two or three factors, for example, for veterans by age grouping and by
state of residence. We based our analysis on year-end reports through
fiscal year 2006.
To obtain data not available from published VA reports, we analyzed
additional BDN data as of September 2006. VA regularly provides GAO
with two sources of BDN data. The first provides data on a few
characteristics of the entire universe of pensioners. The other
provides data on a broader range of characteristics for a random sample
of 5 percent of all pensioners. We used data from the entire universe
of cases when they were available and supplemented our analysis with
additional data from the random sample. When reporting data from the 5
percent sample, we report confidence intervals around point estimates.
Budget Data:
We also analyzed data extracted from tables in the fiscal year 2002
through 2008 budget submissions.
ORC Macro Study Data:
In 2002, VA contracted with ORC Macro to survey a sample of pensioners
that included veterans and surviving spouses. For more detailed data
not available from VA's BDN, we used data reported in the ORC Macro
report. However, data are not generalizable to current pensioners
because of the time frame when the survey was conducted. The ORC Macro
study was a telephone-administered survey. The survey sample generally
mirrored the pensioner population at the time. However, for the sample
of veterans, nursing home residents were underrepresented. In addition,
the spouse sample and spouse recently enrolling sample underrepresented
spouses receiving aid or attendance services. In all three cases, ORC
Macro conducted a sensitivity analysis to find out whether these
underrepresented groups would have changed key question response
frequencies if they were correctly represented. In each of the three
cases, ORC found they would not significantly change response
frequencies.
GAO's applied research and methods group evaluated the BDN and ORC
Macro survey data and found the information to be sufficiently reliable
for our purposes.
Case File Review:
To verify the adequacy of documentation in support of initial pension
decisions, we reviewed case files on a random sample of Improved
Pension claims and Death Pension claims that had been completed by
three VA regional offices, in Milwaukee, St. Paul, and Providence. We
chose Milwaukee and St. Paul because they were associated with a PMC.
Because the Milwaukee site processes new claims in both the regional
office and the PMC, we included files that originated at both locations
in our review. Additionally, because the St. Paul office completed
pension cases that had been transferred from another regional office,
we included those cases in our review. We chose the Providence regional
office because it was not associated with a PMC and because of its
geographic location.
At the three sites we reviewed a total of 72 case files for completed
initial pension claims. In order to select case files to review, VA
provided a list of all initial (or original) claims for Improved
Pension (for veterans) and Death Pension (for survivors) considered and
determined between February 1, 2007, and February 28, 2007.[Footnote
28] To select from this list, which included both approved and denied
cases, we used random number assignment procedures to help ensure a
broad range of these types of cases were included in our sample.
Specifically, at St. Paul, we used a randomized ordering process to
select and review 32 case files. On subsequent site visits, we
randomized all EP 180 and EP 190 claims and reviewed the first
available 14 EP 180 and 6 EP 190 case files. In some instances, case
files we selected were unavailable because they were being reviewed at
the regional office or were categorized as pension claims but over the
course of VA developing the claim no longer met our selection criteria
of initial pension claims. We attempted to review a 2-to-1 ratio of EP
180 to EP 190 cases, which is approximately the ratio that exists in
the pension claims population. The number of case files we reviewed at
each site is given in table 7.
Table 7: VA Regional Offices Visited and Disposition of Pension Case
Files Reviewed:
Regional office: Milwaukee;
Pension awards: 14;
Pension denials: 6;
EP 180 (Veterans' claims): 14;
EP 190 (Survivors' claims): 6.
Regional office: St. Paul;
Pension awards: 24;
Pension denials: 8;
EP 180 (Veterans' claims): 23;
EP 190 (Survivors' claims): 9.
Regional office: Providence;
Pension awards: 15;
Pension denials: 5;
EP 180 (Veterans' claims): 14;
EP 190 (Survivors' claims): 6.
Regional office: Total;
Pension awards: 53;
Pension denials: 19;
EP 180 (Veterans' claims): 51;
EP 190 (Survivors' claims): 21.
Source: GAO.
[End of table]
To ensure consistency, we used a standardized checklist to examine case
files at each location, and the same individuals conducted the reviews
at all three sites. The checklist, which was developed by examining the
procedural guidance and case files at a regional office, included
information about each of the major eligibility criteria: military
service, disability, net worth, and income. In addition, we reviewed
demographic information about the claimants. We also looked for
evidence that VA had followed guidance on procedures, for example,
whether letters were sent to the claimant appropriately. At each of the
sites we communicated with VA office management when questions about
the files we were reviewing arose. In some cases these conversations
helped us better understand why a case had been handled in a particular
way, while in other cases management acknowledged that errors had been
made.
The results of visits to the sample of regional offices are not
generalizable to all 57 regional offices; similarly, results of case
file reviews are not generalizable to all pension files. The
testimonial evidence, such as that gathered during interviews with
staff, also is not generalizable.
[End of section]
Appendix II: Pension Eligibility Determination:
Administrative Structure:
VA's Compensation and Pensions (C&P) Service administers the pension
program and oversees the operation of 57 regional offices and three
pension maintenance centers (PMC). The C&P central office has
responsibility for managing policy and procedures, guidance, quality
assurance, and general operations. The regional offices process initial
pension applications and determine eligibility. The offices have
jurisdiction in the geographic area where a veteran or survivor lives.
At least one regional office is located in every state except Wyoming,
as well as the District of Columbia, Puerto Rico, and the Philippines.
The PMCs are responsible for conducting annual reviews of eligibility
and adjusting benefit levels when a pensioner's circumstances change.
As part of the annual review, staff at the PMCs examine annual reports
from pensioners, which contain information on, for example, income and
medical expenses. Staff also examine the results of a variety of
computerized data matches with other government agencies to determine
whether adjustments are warranted. Additionally, VA's Hines Information
Technology Center handles all computer transactions that affect benefit
payment levels, and VA's Debt Management Center is responsible for
collecting overpayments that occur.
Initial Eligibility Determinations for VA's Improved Pension Program:
To determine a veteran's initial eligibility for the pension program,
VA's regional office staff review several eligibility criteria,
including the veteran's military status, age or disability, and income.
For the surviving spouses and children of such veterans, VA uses
similar factors to determine eligibility, as shown in figure 5. All
survivors are subject to income and asset limits, but only surviving
children must meet disability or age requirements.
Figure 5: Pension Eligibility Criteria for Veterans and Survivors:
This figure is a flowchart showing pension eligibility criteria for
veterans survivors.
[See PDF for image]
Source: Title 38, U.S. Code.
[End of figure]
Military Service Requirement:
To qualify for the pension program, veterans must meet one of four
military service criteria set out in statute, but in practice they have
been collapsed into a single requirement.[Footnote 29] The VA
characterizes these criteria as generally requiring that veterans have
served on active duty in the military, naval, or air forces for 90 days
or more, with at least one of those days being during a period of
war,[Footnote 30] and been discharged under conditions other than
dishonorable.[Footnote 31] In addition, veterans who enlisted after
September 7, 1980, generally must have served at least 24 months or the
full period for which called or ordered to active duty to
qualify.[Footnote 32]
Disability or Age Requirement:
Eligibility for pension benefits is restricted to veterans who are
either totally and permanently disabled due to circumstances unrelated
to their military service or to willful misconduct, or who are at least
age 65. Veterans under age 65 must be considered totally and
permanently disabled, which means that the veteran is unable to pursue
substantially gainful employment due to a disabling condition and that
the condition is reasonably certain to continue throughout the
veteran's life.[Footnote 33] Veterans who receive Social Security
disability benefits or long-term care in nursing homes are presumed to
be totally and permanently disabled.
Income and Asset Limits:
In determining eligibility, VA considers the income of all family
members, including spouses and children, but excludes other individuals
residing in the household. Pensioners meet income eligibility
requirements if their family incomes are less than the maximum annual
pension amounts established annually by Congress. Various sources of
income are considered when determining eligibility, including
employment, interest and dividends, retirement, annuities, workers'
compensation, and Social Security Disability Insurance benefits. Income
from other federal or state means-tested programs--such as Temporary
Assistance to Needy Families, food stamps, housing assistance, or
Supplemental Security Income--is not counted toward family income.
Pensioners may deduct unreimbursed medical expenses that exceed 5
percent of the maximum annual pension amount from their income for the
purposes of determining eligibility.
VA does not apply specific limits on the net worth of assets when
determining eligibility for pensions. However, veterans will not be
awarded a pension if VA determines that they have sufficient assets to
live on for a reasonable period of time. To make this determination, VA
guidance calls for net worth in excess of $80,000 to be reviewed during
the initial eligibility determination process, taking into
consideration such factors as the veteran's life expectancy and the
convertibility of the assets into cash.
Net worth includes all personal property and real estate owned by
veterans and their families, excluding the value of their home and the
land on which their homes are located.
Survivor Eligibility:
When a veteran with qualifying wartime service dies, his survivors may
be entitled to a pension. The veteran does not have to be receiving a
pension at the time of his death in order for his survivors to be
eligible for benefits. Survivors are not required to have a disability
in order to qualify, but they must meet income and asset requirements.
For spouses, there is no age requirement, but they lose eligibility if
they remarry. Generally children under age 18 are eligible, as are
those under 23 who are in school. Older unmarried children may also be
eligible, but only if they are incapable of self-support and if this
incapacity occurred prior to their reaching age 18.
Ongoing Eligibility Determinations for VA's Improved Pension Program:
Once pensioners have been awarded benefits, VA makes ongoing
eligibility determinations and adjusts benefit levels as needed.
Pensioners are required to inform VA of any changes in entitlement
factors that could affect their eligibility or benefit levels as soon
as they occur. Hospitalization or incarceration, as well as changes in
income, assets, or marital status, can affect the continued eligibility
of pensioners or result in adjustments to the amount of payments that
they receive. Any changes in circumstances must be reported to VA in
writing as soon as they occur, and VA is required to make any necessary
adjustments. To further assess ongoing eligibility and benefit levels,
VA also requires pensioners who have any income other than Social
Security to file an annual report with VA.[Footnote 34] Then, VA
evaluates the information in this report to determine if pensioners
continue to meet income eligibility requirements.
[End of section]
Appendix III: Comments from the Department of Veterans Affairs:
The Secretary Of Veterans Affairs:
Washington:
January 31, 2008:
Mr. Daniel Bertoni:
Director, Education, Workforce, and Income Security Issues:
U. S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Bertoni:
The Department of Veterans Affairs (VA) has reviewed the Government
Accountability Office's (GAO) draft report, Veterans Benefits: Improved
Management Would Enhance VA's Pension Program (GAO-08-112) and
partially agrees with GAO's conclusions and concurs with GAO's
recommendations.
The Department of Veterans Affairs (VA) concurs in part with GAO's
recommendation that VA should take steps to make more accurate and
timely pension eligibility and payment decisions. VA also concurs with
recommendations to improve its quality assurance of initial claims;
incorporate feedback in its training; improve the effectiveness of
pension eligibility review and verification process; and evaluate the
causes of improper pension payments.
The enclosure addresses each of GAO's recommendation and provides
additional discussion and comments to the draft report. VA appreciates
the opportunity to comment on your draft report.
Sincerely,
Signed by:
James B. Peake, M.D.:
Enclosure:
Department of Veterans Affairs (VA) Comments to Government
Accountability Office (GAO) Draft Report Veterans' Benefits: Improved
Management Would Enhance VA's Pension Program (GAO-08-112):
In order to enhance VA's management of the pension eligibility process,
we recommend that the Secretary of Veterans Affairs direct the Under
Secretary for benefits to take the following actions:
* Take steps to make more accurate and timely decisions about
initial and ongoing pension eligibility and payment levels. Such
actions might include requiring pensioners to submit supporting
documentation of their income and assets, conducting a more
robust independent verification with third parties, or maximizing
process automation.
Concur in part: VA agrees that additional steps are appropriate to
improve the timeliness of pension claims processing and has already
taken the following actions:
* VBA increased the number of resources dedicated to claims processing
in 2007 and further increases are expected in 2008.
* VBA will complete the consolidation of all pension claims processing
to the Pension Maintenance Centers (PMC) in 2008.
* VA exceeded the FY 2007 goal of 45 days to complete eligibility
verification reports. Actual performance was 34 days.
VA does not agree that new, regular, and perhaps onerous submissions of
income and net worth documents by pension beneficiaries, the average
age of whom is 70 years, would yield substantive improvements in the
pension program. GAO submitted no evidence to support the need for the
suggested actions. Further, requesting and evaluating such documents
from claimants and/or beneficiaries may diminish timeliness.
VA already has many means in place to independently verify the income
of pension beneficiaries. An original pension decision is based on
estimated income that the claimant reports he or she expects to receive
during the first year of eligibility. When VA needs information about
the Social Security Administration (SSA) benefits, VA can obtain the
information directly from SSA through an interface with our VETSNET
system's Share application. Decision-makers have this interface at
their disposal, as well as the output of matching agreements with SSA
when making subsequent income adjustments. The matching programs act in
two ways to ensure accuracy: first, the SSA verified rate is inserted
in the VA master record; and second, information is sent to the PMCs
when verified Social Security income differs from that upon which
benefits are being paid. Additionally, VA obtains civil service and
railroad retirement annuity information through inter-agency matching
agreements. These matches are effective in obtaining accurate income
data. On page 7 of the draft report, table 1 shows that pensioners
under age 65 receive 91 percent of their total income from SSA, and
those age 65 and older receive 87 percent of total income from SSA,
which, as stated above, is a verifiable source.
We agree that maximizing the use of automation is essential to
achieving additional process improvements. In August 2008, VBA will
release VETSNET enhancements that will make this system considerably
easier to use. Enhancements include capturing income data and
displaying it from year to year. When entitlement to both has been
established, automatically change payment to the veteran to either
service-connected disability compensation or nonservice-connected
pension whichever is greater.
* Take steps to improve its quality assurance review of initial
claims, which could include reviewing a larger sample of pension
claims.
Concur – VBA's quality assurance program will double the case review
for the entire rating sample during FY 2008, including initial pension
claims.
* Incorporate evaluative feedback more consistently into the
planning, design, and implementation of its training efforts.
Concur–VA has developed standardized pension training based on M21-1 MR
materials posted on the Compensation and Pension Service (C&P) training
Web site and locally developed training aids. PMC review exercises also
measure the success of the training. To ensure a consistent means of
providing evaluative feedback to local training, VA will post the
general evaluation forms for C&P training to the Web site by the end of
June 2008.
Additionally, all field personnel have standardized Training and
Performance Support System (TPSS) modules with pension segments. The
TPSS training system allows local training coordinators to measure the
quality of training and success of each veterans service representative
enrolled in the system.
* Evaluate options for improving the effectiveness of its annual
eligibility verification review. This effort could involve
reformulating the EVR process by (a) surveying every pensioner
rather than a selected subset; (b) performing reviews on a rolling
basis, such as on an individuals' anniversary date, rather than
diverting staff for this activity for a 3-month period; (c) reviewing
pensioners' eligibility once every few years rather than every
year; and (d) focusing on verifying pensioners' income and
assets.
Concur – Although there are inconsistencies between the options
presented, VBA will consider ways to improve the effectiveness of the
eligibility verification review. Originally, VBA issued EVRs throughout
the year, or whenever income information was needed from a beneficiary.
Public Law 103-271 gave the Secretary discretion in requiring annual
EVRs. As a result of that legislation, VA eliminated annual EVRs for
most beneficiaries who have no income or only Social Security income.
This reduced the EVR workload to a level that allows staff to issue and
work them all seasonally.
At the end of 1995, VA converted the staggered (rolling) reporting
period to a calendar year reporting period for all beneficiaries
required to file an EVR. Before then, VBA based staggered reporting
period on the anniversary date of when entitlement to pension was first
established. One important reason for this change was to make it easier
for veterans, whose income information (e.g., Form 1099) was sent to
them at the end of the calendar year for tax purposes, to accurately
report income from all sources. Most beneficiaries also have official
unreimbursed medical expense reports provided to them on a calendar
year basis. Unreimbursed medical expenses are used to reduce countable
income and increase pension payments. Staggering reporting periods
would result in a substantial increase in workload because most
beneficiaries would still file their medical expenses at the end of the
year.
* Seek legislative authority to facilitate use of NDNH earnings data
for pension eligibility purposes.
Concur - The draft GAO report misstates VA's position about accessing
the National Directory of New Hires (NDNH) database. VBA has initiated
the process necessary to gain access to the NDNH earnings database.
Proposed legislation was submitted in both the 109th and 110th Congress
to obtain access to the NDNH database, and Congress recently authorized
access to the database in Public Law 110-157. VA is initiating contact
with the Department of Health and Human Services (HHS) to gain access.
Before VA can begin using the system, the following two key steps must
be completed.
* VBA will enter into a memorandum of understanding (MOU) with the HHS,
Office of Child Support Enforcement (OCSE), which maintains the NDNH
database. The MOU will describe the purpose, legal authority,
justification, and expected results of the data matches and the records
to be matched. In addition, retention and disposition of data, as well
as reporting requirements, will be addressed. VBA will meet with OCSE
on January 31, 2008, to discuss the MOU.
* Because the enabling legislation contains a provision that requires
VBA to obtain the consent of the individual pension applicant prior to
using the NDNH database, it will be necessary to modify language in the
pension applications and other forms to implement this requirement.
VA anticipates completing these steps during FY 2009.
* Update the IVM data match threshold level to be in line with the
U.S. Census Bureau poverty threshold or a comparable measure.
Concur ” VBA will adjust the IVM data match threshold level to conform
to the updated setting of the U.S. Census Bureau poverty threshold
level. We will submit the project initiation request to adjust the
threshold by April 2008.
* Evaluate the causes of improper payments and use the results to
develop and implement an action plan to prevent them from
occurring.
Concur - VBA will review and analyze all available information,
including Systematic Technical Accuracy Review (STAR) error reports and
debt management information, concerning the causes of improper pension
payments. Based on the outcome of that analysis, VBA will identify and
implement feasible system and/or process interventions to minimize the
occurrence of improper payments. We anticipate completion of an action
plan to implement the interventions by the end of June 2008.
In addition, VA would like to note that we have been reporting on
improper payments as required annually in the Annual Performance and
Accountability Report (PAR). For FY 2008, OMB requires all agencies to
report causes of improper payments. On page 4, GAO states "VA does not
collect sufficient data on causes of improper payments that could be
used to help it better manage the pension program." VA's Office of
Finance has drafted a report format with instructions for the Veterans
Health Administration and the Veterans Benefits Administration to
report the causes of errors, dollar amounts, and percentages to
the Office of Financial Policy, which compiles data for reporting in
the PAR and routine reporting under the Improper Payments Information
Act of 2002.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Daniel Bertoni, Director (202) 512-7215 or bertonid@gao.gov:
Staff Acknowledgments:
The following individuals made important contributions to the report:
Brett Fallavollita, Assistant Director; Anna Kelley; Scott Purdy;
Shannon Diamant; as well as Susan Bernstein; Pat Elston; Lara Laufer;
Wayne Turowski; Walter Vance; Joan Vogel; and Craig Winslow.
[End of section]
Related GAO Products:
Veterans Affairs: Continued Focus on Critical Success Factors Is
Essential to Achieving Information Technology Realignment. GAO-07-844.
Washington, D.C.: June 15, 2007.
Veterans Benefits Administration: Progress Made in Long-Term Effort to
Replace Benefits Payment System, but Challenges Persist. GAO-07-614.
Washington, D.C.: April 27, 2007.
Veterans' Disability Benefits: Processing of Claims Continues to
Present Challenges. GAO-07-562T. Washington, D.C.: March 13, 2007.
Veterans' Disability Benefits: VA Can Improve Its Procedures for
Obtaining Military Service Records. GAO-07-98. Washington, D.C.:
December 12, 2006.
Veterans' Disability Benefits: VA Should Improve Its Management of
Individual Unemployability Benefits by Strengthening Criteria,
Guidance, and Procedures. GAO-06-309. Washington, D.C.: May 30, 2006.
Veterans' Benefits: Further Changes in VBA's Field Office Structure
Could Help Improve Disability Claims Processing. GAO-06-149.
Washington, D.C.: December 9, 2005.
Veterans' Benefits: VA Needs Plan for Assessing Consistency of
Decisions. GAO-05-99. Washington, D.C.: November 19, 2004.
Veterans' Benefits: More Transparency Needed to Improve Oversight of
VBA's Compensation and Pension Staffing Levels. GAO-05-47. Washington,
D.C.: November 15, 2004.
Veterans' Benefits: Improvements Needed in the Reporting and Use of
Data on the Accuracy of Disability Claims Decisions. GAO-03-1045.
Washington, D.C.: September 30, 2003.
Veterans Benefits Administration: Process for Preventing Improper
Payments to Deceased Veterans Can Be Improved. GAO-03-906. Washington,
D.C.: July 24, 2003.
Major Management Challenges and Program Risks: Department of Veterans
Affairs. GAO-03-110. Washington, D.C.: January 1, 2003.
Veterans' Benefits: Claims Processing Timeliness Performance Measures
Could Be Improved. GAO-03-282. Washington, D.C.: December 19, 2002.
Veterans' Benefits: Quality Assurance for Disability Claims and Appeals
Processing Can Be Further Improved. GAO-02-806. Washington, D.C.:
August 16, 2002.
Veterans' Benefits: Despite Recent Improvements, Meeting Claims
Processing Goals Will Be Challenging. GAO-02-645T. Washington, D.C.:
April 26, 2002.
[End of section]
Footnotes:
[1] Pension benefits are administered through three programs commonly
referred to as the Old Law (Act of Mar. 20, 1933, ch. 3, 48 Stat. 8),
Prior Law (Veterans' Pension Act of 1959, Pub. L. No. 86211, 73 Stat.
432), and Improved Pension (Veterans' and Survivors' Pension
Improvement Act of 1978, Pub. L. No. 95-588, 93 Stat. 2497) programs.
The Improved Pension program is the largest of VA's three current
pension programs. We focus on the Improved Pension program in this
report. Since it was established, it is also the only pension program
that has remained open to new claimants. In fiscal year 2006, the
Improved Pension program represented over 90 percent of the $3.5
billion in pension benefits administered by VA.
[2] 38 U.S.C. § 1110.
[3] 38 U.S.C. §§ 1513 and 1521.
[4] VA uses pension cases as its unit of analysis in all budget data. A
small percentage of cases include a pensioner's dependents. However, VA
generally discusses data on pension cases in terms of "veterans" and
"survivors." Since a case may include dependents in addition to a
qualifying veteran or surviving spouse, more individuals are served by
the program than the number of cases shown here.
[5] 38 U.S.C. § 5312(a).
[6] 38 U.S.C. § 1506(3).
[7] 38 C.F.R. § 3.256(b) (2006). The required report is termed the
Eligibility Verification Report (EVR).
[8] Income information is estimated from GAO's analysis of the VA
Benefits Delivery Network October 2006 5 percent sample, which provides
income amounts as calculated by VA for pension eligibility purposes.
All numerical estimates other than percentages have margins of error of
plus or minus 17.65 percent or less of the value of those numerical
estimates, unless otherwise noted.
[9] ORC Macro, Economic Systems Inc., and Hay Group, Evaluation of VA
Pension and Parents' DIC Programs: VA Pension Program Final Report
(Washington, D.C.: Dec. 22, 2004).
[10] Aid and attendance data does not include adult children receiving
pension benefits.
[11] ORC Macro, Economic Systems Inc., and Hay Group, Evaluation of VA
Pension and Parents' DIC Programs: VA Pension Program Final Report,
(Washington, D.C.: Dec. 22, 2004). pp. 46-47.
[12] The numbers served represent the average number of cases during
the year. Since a case may include dependents in addition to a
qualifying veteran or surviving spouse, more individuals are served by
the program than the number of cases shown here.
[13] By comparison, SSA requires applicants for Disability Insurance or
Supplemental Security Income benefits to submit supporting evidence of
their income and assets, such as pay stubs, W2 forms, tax returns, bank
statements, and other documents verifying the income numbers provided.
[14] In 2006, while examining VA's Individual Unemployability benefits,
GAO recommended that VA "seek legislative authority to use earnings
data from the National Directory of New Hires." See GAO, Veterans'
Disability Benefits: VA Should Improve Its Management of Individual
Unemployability Benefits by Strengthening Criteria, Guidance, and
Procedures, GAO-06-309 (Washington, D.C.: May 2006).
[15] Pub. L. No. 110-157, § 301,121 Stat 1831.
[16] VA reviews a total of 10 "rating-related" claims from each of its
57 regional offices, doubling this amount for the largest and poorly
performing offices. These cases include compensation, pension, appeals,
and other types of cases.
[17] VA Office of Inspector General, Audit of Adjustments of
Hospitalized Veterans' Compensation and Pension Benefits, Adjustments
of Compensation and Pension Awards for Hospitalized Veterans Needed to
be Improved, 05-01143-71, Feb. 1, 2007.
[18] GAO, Human Capital: A Guide for Assessing Strategic Training and
Development Efforts in the Federal Government, GAO-04-546G (Washington,
D.C.: Mar. 1, 2004).
[19] According to Social Security Administration Publication No. 05-
11011, March 2006, ICN 480265, SSI beneficiaries are required to report
and document their earnings on a regular basis.
[20] EVRs are only sent to pensioners who previously reported some
source of household income beyond their SSA or VA benefit levels.
[21] VA identified a savings of $11,611,609 from the IVM matches with
SSA and IRS during fiscal year 2004 and a savings of $13,499,698 during
fiscal year 2005.
[22] In 2006, VA began processing 2 tax years' worth of information.
However, because IRS data is 2 years behind, this means that it
processed information for the tax years 2002 and 2003 during that year.
In 2007, VA began to process tax years 2004 and 2005 while it was still
working on some of the earlier cases.
[23] NDNH can provide more current earnings data than SSA, but, until
December 2007, VA did not have the statutory authority to access this
database.
[24] The IU program provides disability compensation benefits to
certain veterans whose service-connected disabilities have caused them
to be unemployable. VA places an earnings limit on the continued
receipt of IU benefits, and uses the IVM to ensure this requirement is
met.
[25] VA's IVM data match threshold was set at $6,000 in 1988. VA told
us that the $6,000 threshold reflected at the time a cutoff for
marginal employment, which the agency partially defined as employment
insufficient to sustain a living. VA told us poverty-level wages were
also used in its calculation. The U.S. Census Bureau's poverty
threshold for one individual increased from $6,022 in 1988 to $10,294
in 2006.
[26] GAO-06-309.
[27] 38 U.S.C. § 5302.
[28] For productivity purposes, VA refers to these claims as End
Product Code (EP) 180 and 190, respectively.
[29] 38 U.S.C. § 1521(j). Veterans with active service generally have
significantly more than 90 days of such service, and all six periods of
war applicable under the statute to the pension program, 38 U.S.C. §
1501(4), exceed 90 days, 38 U.S.C. § 101(7), (8), (9), (29), (30), and
(33).
[30] Under the statute, the period of the Persian Gulf War began August
2, 1990, and will end "on the date thereafter prescribed by
presidential proclamation or by law." 38 U.S.C. § 101(33). Since no
such proclamation has been issued or law enacted, this period of war
has never ended. The statute also provides for additional periods of
war commencing with the declaration of war by Congress and terminating
by presidential proclamation or concurrent resolution of Congress. 38
U.S.C. § 101(11).
[31] Veterans with dishonorable discharges may obtain an upgrade to
their discharge status in certain cases, however, and thus become
eligible for the pension program. 38 U.S.C. § 5303(e).
[32] 38 U.S.C. § 5303A. The requirement applies to officers only if
they entered (or enter) active duty after October 16, 1981.
[33] VA defines "substantially gainful employment" for both pensions
and disability compensation as employment that is "ordinarily followed
by [individuals without disabilities] to earn their livelihood with
earnings common to the particular occupation in the community where the
veteran resides." Web Automated Reference Materials System M21-1MR, pt.
V, subpt. II, ch. 1, § B. In a 2002 survey, 1 percent of veterans and
survivors under age 65 said they were working, while 4 percent of
veterans and 10 percent of survivors said they were seeking work. Most
of the remaining pensioners under of the age of 65 said they were not
working or seeking work because of health problems or disabilities.
(ORC Macro, Economic Systems Inc., and Hay Group, Evaluation of VA
Pension and Parents' DIC Programs: VA Pension Program Final Report
[Washington, D.C.: Dec. 22, 2004]).
[34] The required report is termed the Eligibility Verification Report
(EVR).
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