Veterans' Benefits

The Department of Veterans Affairs (VA) administers $30 billion in benefits and health care programs for veterans and their dependents. Eligibility for benefits and the level of benefits paid are often income dependent. GAO estimates that in 1984 VA may have made overpayments exceeding $157 million because it lacked access to tax data that could have verified income reported by pension recipients. VA has been granted access--until September 1992--to Internal Revenue Service (IRS) and Social Security Administration (SSA) earnings records to verify the income reported by beneficiaries in the following four programs: (1) needs-based pension program, (2) parents' dependency and indemnity compensation program, (3) unemployability compensation program, and (4) medical care. VA's first computer match of reported income with IRS data on unearned income (such as dividends and interest) for tax year 1989 revealed that nearly $340 million more in unearned income was reported to IRS than to VA by the same beneficiaries that year. VA officials also expect additional savings to result from matches with SSA earnings data. But VA needs to verify the income of its health care recipients in order to receive the full benefit from the matching program. While VA has tried to safeguard IRS and SSA data and protect the due process rights of its beneficiaries, the effectiveness of these measures should be reviewed periodically.

GAO found that: (1) the first VA computer match of income reported under the needs-based pension and parents' dependency and indemnity compensation programs with IRS data on unearned income for tax year 1989 confirmed the potential for substantial savings; (2) initial results show that the same beneficiaries reported nearly $340 million more in unearned income to IRS than to VA for tax year 1989, and officials expect additional savings from matches with SSA earnings data; (3) VA is notifying beneficiaries of the discrepancies found in reported income and will take action to suspend or terminate benefits; (4) VA has safeguarded data received from IRS and SSA, and is following legal procedures to protect beneficiaries' rights; (5) initial results are promising, but one-third of the time the law allowed VA to use IRS and SSA data has been spent gaining access to the data; and (6) VA Health Administration officials have not notified beneficiaries of their intent to verify income, and are still considering how to implement the law most effectively.