UmarMoulta-Ali
Analyst in Disability Policy
SocialSecurity Disability Insurance (SSDI) and Veterans Disability Compensation (VDC)— administeredby the Social Security Administration (SSA) and the Department of VeteransAffairs (VA) respectively—are two of the largest federal disabilityprograms, but strongly differ along several dimensions, including thepopulations served, how each program defines a “disability,” as well asvarying eligibility requirements.
First, SSDI is an insurance program that replaces a portion of earnings for aneligible worker whose illness or injury—while not necessarily caused by awork-related incident—results in an inability to work. SSDI is one ofseveral federal programs funded through the Federal Insurance ContributionsAct (FICA) payroll tax and the Self-Employment Contributions Act (SECA) tax to whichall workers and employers in covered occupations (including military personnel)and selfemployed individuals make contributions. On the other hand, VDC isnot insurance, but is a compensation program in that payments are made toveterans who develop medical conditions that are related to their servicein the military. VDC is non-contributory and neither veterans nor activemilitary personnel pay into the program, which is funded through a mandatory appropriationas part of the VA annual budget.
Second, while the purpose of both SSDI and VDC is to provide income security,SSDI provides a financial “safety-net” to eligible civilian and militaryworkers due to their inability to work as a result of long-term orterminal injury or illness. Conversely, VDC provides veterans with tax-free, cashbenefits specifically for service-connected illnesses or injuries. The abilityto work is not factored into VDC disability determinations, althoughadditional compensation is available for veterans who are unemployable asthe result of a service-connected condition(s).
Third, SSDI only compensates workers that are fully disabled, whereas VDCcompensates veterans for both partial and fully disabling injuries andillnesses. The VA is further guided by a principle that views disabilitycompensation as an obligation, owed to veterans, for injuries impactingemployment that were incurred or aggravated by their service to the country.SSDI benefits are granted solely on medical and economic grounds and othernoneconomic factors are not considered. Eligibility requirements generallytend to be more stringent for SSDI than VDC, and most veterans will notlikely meet the criteria for both programs.
Both SSA and the VA have faced challenges in the administration of benefits andhave been criticized for a lack of interagency coordination, processesthat are “out-of-sync” with modern conceptions of disability, andextensive processing delays for claims and appeals. These are a few issueswhich led, in part, to a Government Accountability Office (GAO) investigationand determination of federal disability programs as “high risk.” Bothagencies have made efforts to address issues surrounding pending claimsand appeals, but differ in their responses to other recommendations.
This report provides a description and comparative analysis of the SSDI and VDCprograms. These issues will be of particular interest to Congress becauseof the expected increase in the numbers of SSDI and VDC claims. The recenteconomic decline and aging baby-boomers have continued to place a strainon SSA’s resources. The aging of the veteran population and expansion of presumptiveconditions policies have contributed to the increase in VDC claims.
Date of Report: September 12, 2012
Number of Pages: 23
Order Number: R41289
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