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Week Ending September 29, 2006
S.2562 A bill to increase, effective as of December 1, 2006, the rates of compensation for veterans with service-connected disabilities and the rates of dependency and indemnity compensation for the survivors of certain disabled veterans.
Under this bill the rates of veteran’s disability compensation would be increased. The increases would take affect December 1, 2006 and would equal the same increase given as a cost of living increase to Social Security recipients and VA pension beneficiaries.
Increased would be basic compensation rates for veterans with service-related disabilities and severe disabilities; the allowance for spouses, children and dependent parents for vets with service-related disabilities rated 30% or more disabled; the annual clothing allowance paid to veterans who require a prosthetic or orthopedic appliance, including a wheelchair, that tends to tear or wear out clothing or creates a skin condition if the medication to treat the condition damages outer garments; the compensation rates paid to surviving spouses and dependent children under 18, disabled surviving spouses and certain other surviving children not supported by a surviving spouse.
The current Social Security COLA increase is 2.2%
“According to VA, as set forth in its fiscal year 2007 budget, the department estimates that it will provide disability compensation to 2,867,013 veterans with service-connected disabilities in fiscal year 2007. Among the veterans estimated to receive such compensation are 2 Mexican Border Period veterans; 5 World War I veterans; 335,180 World War II veterans; 160,889 Korean-conflict veterans; 992,360 Vietnam-era veterans; 762,230 veterans of the Persian Gulf War era; and 616,346 veterans who served during peacetime.”
Sponsor: Senator Larry E Craig (ID)
Vote: Passed Senate by Unanimous Consent September 26, 2006
Cost to the taxpayers: “, CBO estimates that enacting this provision would increase spending for these programs by $530 million in 2007. (The annualized cost would be $710 million in subsequent years.) This estimate assumes that the COLA effective on December 1, 2006, would be 2.2 percent, based on the economic assumptions underlying CBO's baseline projections.”
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MORE INFORMATION
The Committee bill contains freestanding provisions that would require the Secretary of Veterans Affairs to increase, effective December 1, 2006, the rates of and limitations on certain benefits paid by VA by the same percentage as the cost-of-living adjustment (hereinafter, `COLA') provided to Social Security recipients and VA pension beneficiaries that become effective on the same date. The COLA would apply to:
1. basic compensation rates for veterans with service-connected disabilities and the rates payable for certain severe disabilities;
2. the allowance for spouses, children, and dependent parents paid to service-connected disabled veterans rated 30 percent or more disabled;
3. the annual clothing allowance paid to veterans whose compensable disability requires the use of a prosthetic or orthopedic appliance (including a wheelchair) that tends to tear or wear out clothing, or requires the use of a medication prescribed by a physician for a service-connected skin condition if the medication causes irreparable damage to the veteran's outer garments; and
4. the dependency and indemnity compensation (hereinafter, `DIC') rates paid to:
(a) surviving spouses of veterans whose deaths were service-connected;
(b) surviving spouses for dependent children below the age of eighteen;
(c) surviving spouses who are so disabled that they need aid and attendance or are permanently housebound;
(d) surviving spouses covered under section 1318 of title 38, United States Code; and
(e) the children of veterans whose deaths were service- connected if no surviving spouse is entitled to DIC, the child is age 18 through 22 and attending an approved educational institution, or the child is age 18 or over and became permanently incapable of self-support prior to reaching age 18.
The Congressional Budget Office (hereinafter, `CBO') currently estimates that the COLA to be provided to Social Security recipients in 2007 will be 2.2 percent.
Background
A. Disability compensation
The service-connected disability compensation program under
chapter 11 of title 38, United States Code, provides monthly cash benefits to veterans who have disabilities incurred or aggravated during active duty in the Armed Forces.
The amount of compensation paid depends on the nature and severity of the veteran's disability or combination of disabilities and the extent to which the disability impairs earning capacity. VA rates compensable disabilities according to its Schedule for Rating Disabilities on a graduated scale ranging from 10 to 100 percent, in 10 percent increments. VA pays higher monthly rates (known as `special monthly compensation') to totally disabled veterans with certain specific, very severe disabilities or combinations of disabilities.
According to VA, as set forth in its fiscal year 2007 budget, the department estimates that it will provide disability compensation to 2,867,013 veterans with service-connected disabilities in fiscal year 2007. Among the veterans estimated to receive such compensation are 2 Mexican Border Period veterans; 5 World War I veterans; 335,180 World War II veterans; 160,889 Korean-conflict veterans; 992,360 Vietnam-era veterans; 762,230 veterans of the Persian Gulf War era; and 616,346 veterans who served during peacetime.
A veteran with a disability rated at 30 percent or more may receive additional compensation on behalf of the veteran's spouse, children, and dependent parents. These dependents' allowances are prorated according to the percentage of disability.
B. Dependency and Indemnity Compensation
Under chapter 13 of title 38, United States Code, VA pays DIC to the survivors of servicemembers or veterans who died on or after January 1, 1957, from a disease or injury incurred or aggravated during military service. Survivors eligible for DIC include surviving spouses, unmarried children under the age of 18, children age 18 or older who are permanently incapable of self-support, children between the ages of 18 and 22 who are enrolled in school, and certain needy parents. Under section 5312 of title 38, parents' DIC rates are adjusted automatically at the same time and by the same percentage as Social Security and VA pension benefits. Surviving spouses, children, and parents who are receiving death compensation based on deaths before January 1, 1957, may elect to receive DIC instead of death compensation.
For deaths prior to January 1, 1993, surviving spouses received DIC at rates determined by the pay grade (service rank) of the deceased veteran. For deaths on or after January 1, 1993, surviving spouses currently receive $1,033 per month and, if the deceased veteran was totally disabled for 8 years prior to death, an additional $221 per month. Surviving spouses who had been receiving benefits under the prior DIC program are paid under whichever program will pay the higher benefit.
A surviving spouse who is so disabled as to be housebound or in need of regular aid and attendance is eligible to receive an additional amount. A surviving spouse also may receive additional allowances on behalf of the veteran's surviving children.
Children are entitled to DIC if there is no surviving spouse, if they are 18 years of age or older and became permanently incapable of self-support before reaching age 18, or if they are 18 to 22 years old and pursuing an approved course of education.
Parents of deceased veterans whose incomes are below statutorily prescribed income thresholds are eligible for DIC under section 1315 of title 38. As previously mentioned, parents' DIC rates are adjusted automatically at the same time and by the same percentage as Social Security and VA pension benefits.
In its fiscal year 2007 budget, VA estimates that it will pay DIC benefits to 348,479 survivors, a sum that includes surviving spouses, children, and needy surviving parents.
Under section 1318 of title 38, VA pays benefits at DIC rates to the surviving spouses and children of veterans whose deaths are not service-connected if the veteran, immediately prior to his or her death, had been receiving (or had been entitled to receive) compensation at the 100 percent rate continuously for 10 or more years or for at least 5 years from the date of discharge or release from active duty. VA also pays DIC benefits to the surviving spouses and children of veterans who were former prisoners of war who die after September 30, 1999, and whose deaths were not service-connected if the veterans had been receiving (or had been entitled to receive) compensation at the 100 percent rate continuously for not less than one year preceding death.
C. History of cost-of-living increases
The Committee periodically reviews the service-connected disability compensation and DIC programs to ensure that the benefits provide reasonable and adequate compensation for disabled veterans and their families. Based on this review, the Congress acts periodically to provide a cost-of-living adjustment in compensation and DIC benefits. In fact, the Congress has provided annual increases in these rates for every fiscal year since 1976. The following table shows the percentage increases since 1975.
HISTORY OF SERVICE-CONNECTED DISABILITY COMPENSATION INCREASES, 1975 TO PRESENT
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Fiscal year Effective date Increase (percent) Cumulative (1969=$100)
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1976 August 1975 11.8 158.55
1977 October 1976 8.0 171.23
1978 October 1977 6.6 182.53
1979 October 1978 7.3 195.86
1980 October 1979 9.9 215.25
1981 October 1980 14.3 246.03
1982 October 1981 11.2 273.58
1983 October 1982 7.4 293.82
1984 April 1983 3.5 304.11
1985 December 1984 3.2 313.84
1986 December 1985 3.1 323.57
1987 December 1986 1.5 328.42
1988 December 1987 4.2 342.22
1989 December 1988 4.1 356.25
1990 December 1989 4.7 372.99
1991 December 1990 1 5.4 393.13
1992 December 1991 3.7 407.68
1993 December 1992 3.0 419.91
1994 December 1993 2.6 430.83
1995 December 1994 2 2.8 442.89
1996 December 1995 2 2.6 454.41
1997 December 1996 2.9 467.59
1998 December 1997 2 2.1 477.41
1999 December 1998 2 1.3 483.62
2000 December 1999 2 2.4 495.23
2001 December 2000 2 3.5 512.56
2002 December 2001 2 2.6 525.89
2003 December 2002 2 1.4 535.88
2004 December 2003 2 2.1 547.13
2005 December 2004 2 2.7 561.90
2006 December 2005 2 4.1 584.94
2007 December 2006 2 3 2.2 3 597.82
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Committee bill
The Committee bill would direct VA to compute and provide increases in the monthly rates of compensation and DIC, effective December 1, 2006. The rates would be increased by the same percentage as the Social Security and Va pension COLA that will take effect on that date. In accordance with section 8031 of the Balanced Budget Act of 1997 (Public Law 105-33), amounts of compensation so computed that are not even multiples of $1 will be rounded down to the next lower whole dollar amount. In 2003, this provision was extended until 2013 by section 706 of Public Law 108-183.
The increases in DIC automatically would result in identical percentage increases in benefits paid at DIC rates under section 1318 of title 38, United States Code, to the surviving spouses and children of veterans who had a service-connected disability at the time of death for which they continuously were rated totally disabled for at least (1) 10 years, (2) 5 years from the date of discharge from active duty, or (3) 1 year if the veteran was a former prisoner of war who died after September 30, 1999, and whose death was not service-connected if the veteran had been receiving (or had been entitled to receive) compensation at the 100 percent rate continuously for not less than 1 year preceding death.
Under section 156(e)(1)(A) of Public Law 97-377, the DIC increases also automatically would result in the same percentage increases in Social Security benefits that were terminated by section 2205 of the Omnibus Budget Reconciliation Act of 1981 (hereinafter, `OBRA 1981') (Public Law 97-35). Prior to OBRA 1981, those benefits had been paid to certain surviving spouses of those who died on active duty or from a service-connected disability on behalf of their children under 18 and children over age 19 who were secondary-school students; OBRA 1981 reduced the eligibility cutoff age from 18 to 16 years old.
Section 314 of Public Law 100-322 amended section 156(a)(1) of Public Law 97-377 to restore the benefits eliminated by OBRA 1981. The DIC increase also would apply to these restored benefits, effective December 1, 2000.
The Congressional Budget Office (hereinafter, `CBO'), in its most recent baseline, estimated that the Social Security COLA affecting fiscal year 2007 payments, and thus the COLA provided for by the Committee bill, will be 2.2 percent. The actual Social Security COLA could differ from this estimate. Rather than selecting any particular percentage adjustment at the time the Committee ordered the bill reported, the Committee followed its prior practice of setting the COLA by reference to the Social Security increase. The Committee believes this is the most equitable means of providing increases in these important service-connected benefits.
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