Mandatory Spending

Function 700 - Veterans' Benefits and Services

Narrow Eligibility for VA’s Disability Compensation by Excluding Veterans With Low Disability Ratings

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of Dollars 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021–
Change in Outlays  
  Require disability ratings of 30 percent or higher for disability compensation for all veterans 0 -2.6 -3.6 -3.9 -4.1 -4.4 -4.6 -4.8 -5.0 -5.2 -14.4 -38.2
  Require disability ratings of 30 percent or higher for disability compensation for new applicants 0 * -0.3 -0.4 -0.6 -0.7 -0.9 -1.0 -1.1 -1.3 -1.3 -6.3

This option would take effect in January 2022.
* = between -$50 million and zero.

Veterans with medical conditions or injuries that occurred or worsened during active-duty service receive disability compensation from the Department of Veterans Affairs (VA). The base amount of compensation veterans receive depends on the severity of their disabilities, which are rated between zero (least severe) and 100 percent (most severe) in increments of 10; the most common rating is 10 percent. The amount of compensation is intended to offset the average amount of earnings that veterans would be expected to lose given the severity of their service-­connected medical conditions or injuries, whether or not a particular veteran’s condition actually reduced his or her earnings.

Under this option’s first alternative, VA would narrow eligibility for disability compensation by requiring a disability rating of 30 percent or higher for all veterans; as a result, some current recipients would no longer receive benefits. The second alternative would require a 30 percent or higher disability rating only for new disability compensation applicants. (Current recipients would not be affected.)