Veterans trying to navigate the VA disability process often encounter terms and phrases that they might not know. One that comes up frequently is "individual unemployability." What does that mean and how does it affect veterans disability benefits?
Individual employability ("IU") is this: The Department of Veterans Affairs (VA) pays certain vets at the 100 percent rate, even if the VA did not rate their service-connected disabilities at that rate. In order to be eligible for IU, vets must be unable to maintain substantially gainful employment as a result of their service-connected disabilities, and must have a single service-connected disability rated at 60 percent or more, or two or more service-connected disabilities, with one disability rated at 40 percent or more, with a combined rating of at least 70 percent. If a veteran fails to meet these percentage requirements, but remains unable to work due to a service-connected disability, a vet may still qualify for IU if there is evidence of exceptional or unusual circumstances affecting the vet's ability to work, such as frequent hospitalizations.
In 2012, more than 320,000 veterans received IU payments. These payments have come under scrutiny as Congress seeks to reduce the budget deficit. At present, veterans of retirement age may receive both Social Security and their VA benefits, including the IU benefit. In fact, 56 percent of veterans receiving the IU benefit are 65 or older, a rate that will certainly grow as baby boomers get older. According to the Congressional Budget Office, the VA could save $15 billion if payments to vets of retirement age (65-67) and greater were stopped.
The controversy about IU benefits has been around for at least 10 years. Critics say that when the benefit was created in 1934, Social Security Old Age benefits did not exist. Those questioning the value of IU payments say that the need for seniors to receive both benefits is long gone. Other problems are that the standards for classifying veterans as unemployable are vague. There are significant regional variations in the way IU benefits are awarded, according to an inspector general's report.
The reason this approach is attractive to budget-cutters is that many veterans over age 65 have already left the labor force and are receiving Social Security benefits. This means that not working is not a result of unemployability, at least in the opinion of those who hold this view. Supporting this is that only around a third of men age 65 to 69 were in the labor force in 2010. The vast majority of the rest received Social Security benefits, as would be the case for veterans, whether or not they were classified as unemployable.
Advocates note that disabled vets classified as unemployable are more likely to die at earlier ages than those whose ratings are less than 100 percent. Others say that reviewing or eliminating the benefit would further stigmatize those who currently receive payments under this program. Some have pointed out that disabled veterans who have been out of the work force for a long time may receive the minimum Social Security benefit because they had a limited earnings history, and would thus need the payments based on individual unemployability.
For now, veterans who cannot work because of their service-connected disability can continue to apply for individual unemployability benefits. However, this benefit may not be available forever because of its fiscal consequences.