Accrual Accounting for Veterans' Benefits: Working Paper 2026-07
Working Paper
CBO explains how it estimated that VA benefits would cost about $90,000 annually per active-duty service member if accrual accounting methods were used to fund future disability and health benefits that many veterans will receive.
CBO estimates that under current policies, benefits provided by the Department of Veterans Affairs (VA) would cost about $90,000 annually per active-duty service member if accrual accounting methods were used to fund future disability and health benefits that many veterans will receive from VA.
This paper describes how CBO arrived at that cost. The results of the analysis are reflected in CBO's infographic, "Atlas of Military Compensation."
Because VA benefits are directly related to military service, the cost of VA programs constitutes an often-overlooked component of the military compensation package. Those costs are typically not considered in assessing the total cost of military personnel or of national security. Using accrual accounting to treat the cost of future VA benefits as an element of deferred compensation allows them to be included in the current cost of military personnel. (The Department of Defense [DoD] already uses that approach for the cost of military retirement benefits.) Linking future VA spending to the cost of military personnel in this way has three benefits. First, it better captures the full cost of military forces. Second, it can inform certain decisions about the size of the military and the relative cost of military personnel, federal civilians, and service contractors in DoD's workforce. Third, it makes the future costs of different benefit or policy changes being considered by VA or Congress easier to compare.
