[Senate Report 112-44]
[From the U.S. Government Publishing Office]
Calendar No. 125
112th Congress Report
SENATE
1st Session 112-44
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VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 2011
_______
August 1, 2011.--Ordered to be printed
_______
Mrs. Murray, from the Committee on Veterans' Affairs,
submitted the following
R E P O R T
[To accompany S. 894]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs (hereinafter,
``Committee''), to which was referred the bill (S. 894) to
increase, effective as of December 1, 2011, 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, and for other purposes,
having considered the same, reports favorably thereon, and
recommends that the bill do pass.
INTRODUCTION
On May 5, 2011, Committee Chairman Patty Murray introduced
S. 894, a bill to increase, effective as of December 1, 2011,
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,
and for other purposes. Committee Ranking Member Richard Burr,
Members John D. Rockefeller IV, Daniel K. Akaka, Bernard
Sanders, Sherrod Brown, Jim Webb, Jon Tester, Mark Begich,
Johnny Isakson, Roger F. Wicker, Mike Johanns, Scott P. Brown,
Jerry Moran, and John Boozman are original cosponsors of the
bill, which was referred to the Committee upon introduction.
COMMITTEE HEARING
On June 8, 2011, the Committee held a hearing on
legislation pending before the Committee. Testimony on S. 894
was received from: Joseph Violante, National Legislative
Director, Disabled American Veterans; Raymond Kelley, Director,
National Legislative Service, Veterans of Foreign Wars of the
United States; Jeff Steele, Assistant Legislative Director, The
American Legion; and Robert L. Jesse, M.D., Ph.D., Principal
Deputy Under Secretary for Health, Veterans Health
Administration, Department of Veterans Affairs.
COMMITTEE MEETING
On June 29, 2011, the Committee met in open session to
consider legislation pending before the Committee. Among the
measures so considered was S. 894. The Committee voted by voice
vote, without objection, to report favorably S. 894 to the
Senate.
SUMMARY OF S. 894 AS REPORTED
The Committee bill contains freestanding provisions that
would require the Secretary of Veterans Affairs to increase,
effective December 1, 2011, the rates of certain benefits paid
by the Department of Veterans Affairs (hereinafter, ``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 18;
(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 (hereinafter, ``U.S.C.'');
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 2011 will be 1.1 percent.
BACKGROUND AND DISCUSSION
A. Disability compensation
The service-connected disability compensation program under
chapter 11 of title 38, U.S.C., 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. 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 disabled veterans with certain specific,
very severe disabilities or combinations of disabilities.
According to VA, as set forth in its fiscal year 2012
budget, the Department estimates that it will provide
disability compensation to 3,588,315 veterans with service-
connected disabilities in fiscal year 2012. Among the veterans
estimated to receive such compensation are 265,903 World War II
veterans; 184,818 Korean-conflict veterans; 1,499,132 Vietnam-
era veterans; 1,329,508 veterans of the Persian Gulf War era;
and 696,757 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, U.S.C., 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, U.S.C., 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 on or after January 1, 1957, but 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, DIC is paid at
a flat rate. Surviving spouses currently receive $1,154 per
month and, if the deceased veteran was totally disabled for
eight years prior to death, an additional $246 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, U.S.C. As previously noted,
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 2012 budget, VA estimates that it will
pay DIC benefits to 388,214 survivors, a total that includes
surviving spouses, children, and needy surviving parents.
Under section 1318 of title 38, U.S.C., 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 five
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.
Committee bill
The Committee bill would direct VA to compute and provide
increases in the monthly rates of compensation and DIC,
effective December 1, 2011. 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 would automatically result in
identical percentage increases in benefits paid at DIC rates
under section 1318 of title 38, U.S.C., 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) five
years from the date of discharge from active duty, or (3) one
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 one year preceding death.
Under section 156(e)(1)(A) of Public Law 97-377, the DIC
increases also would automatically result in the same
percentage increases in Social Security benefits that were
terminated by section 2205 of the Omnibus Budget Reconciliation
Act of 1981 (herein-after, ``OBRA 1981'') (Public Law 97-35).
Prior to OBRA 1981, those Social Security 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, the Further Continuing Appropriations Act
of 1993, to restore the benefits eliminated by OBRA 1981. The
DIC increase also would apply to these restored benefits,
effective December 1, 2011.
The CBO, in its most recent baseline, estimated that the
Social Security COLA affecting fiscal year 2012 payments, and
thus the COLA provided for by the Committee bill, will be 1.1
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.
COMMITTEE BILL COST ESTIMATE
In compliance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate, the Committee, based on
information supplied by the CBO, estimates that enactment of S.
894 would, relative to current law, increase spending by $475
million in fiscal year 2012 and by $630 million annually in
subsequent years, but that such increases in spending are
assumed in the budget resolution baseline and thus will have no
budgetary effect relative to the baseline. Enactment of the
Committee bill would not affect the budget of state, local, or
tribal governments.
The cost estimate provided by CBO, setting forth a detailed
breakdown of costs, follows:
Congressional Budget Office,
Washington, DC, July 5, 2011.
Hon. Patty Murray,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
Dear Madam Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 894, the Veterans'
Compensation Cost-of-Living Adjustment Act of 2011.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Dwayne M.
Wright.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure.
S. 894--Veterans' Compensation Cost-of-Living Adjustment Act of 2011
S. 894 would increase the amounts paid to veterans for
disability compensation and to their survivors for dependency
and indemnity compensation by the same cost-of-living
adjustment (COLA) payable to Social Security recipients. The
increase would take effect on December 1, 2011, and the
resulting adjustment would be rounded to the next lower dollar.
The COLA that would be authorized by this bill is assumed
in CBO's baseline, consistent with section 257 of the Balanced
Budget and Emergency Deficit Control Act, and savings from
rounding it down were achieved by the Balanced Budget Act of
1997 (Public Law 105-33) as extended by the Veterans Benefits
Act of 2003 (Public Law 108-183).
Because the COLA is assumed in CBO's baseline, the COLA
provision would have no budgetary effect relative to the
baseline. Relative to current law, CBO estimates that enacting
this bill would increase spending for those programs by $475
million in fiscal year 2012. (The annualized cost would be
about $630 million in subsequent years.) This estimate assumes
that the COLA effective on December 1, 2011, would be 1.1
percent.
S. 894 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
Enacting S. 894 would not affect direct spending or
revenues relative to CBO's baseline projections; therefore,
pay-as-you-go procedures do not apply.
On May 16, 2011, CBO transmitted a cost estimate for H.R.
1407, the Veterans' Compensation Cost-of-Living Adjustment Act
of 2011, as ordered reported by the House Committee on
Veterans' Affairs on May 12, 2011. S. 894 contains language
similar to that in section 2 of H.R. 1407 and the estimated
costs are the same.
The CBO staff contact for this estimate is Dwayne M.
Wright. The estimate was approved by Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
REGULATORY IMPACT STATEMENT
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee has made an
evaluation of the regulatory impact that would be incurred in
carrying out S. 894. The Committee finds that S. 894 would not
entail any regulation of individuals or businesses or result in
any impact on the personal privacy of any individuals and that
the paperwork resulting from enactment would be minimal.
TABULATION OF VOTES CAST IN COMMITTEE
In compliance with paragraph 7(b) of rule XXVI of the
Standing Rules of the Senate, the following is a tabulation of
votes cast in person or by proxy by members of the Committee on
Veterans' Affairs at its June 29, 2011, meeting. On that date,
the Committee voted without dissent to order reported S. 894, a
bill to increase, effective as of December 1, 2011, 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,
and for other purposes.
AGENCY REPORT
On June 8, 2011, Robert L. Jesse, M.D., Ph.D., Principal
Deputy Under Secretary for Health, Veterans Health
Administration, Department of Veterans Affairs, appeared before
the Committee on Veterans' Affairs and submitted testimony on,
among other things, S. 894. Excerpts from this statement are
reprinted below:
STATEMENT OF ROBERT L. JESSE, M.D., PH.D., PRINCIPAL DEPUTY UNDER
SECRETARY FOR HEALTH, VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT
OF VETERANS AFFAIRS
Good Morning Chairman Murray, Ranking Member Burr and
Members of the Committee: Thank you for inviting me here today
to present the Administration's views on several bills that
would affect Department of Veterans Affairs (VA) benefits
programs and services.
* * * * * * *
s. 894, veterans' compensation cost-of-living adjustment act of 2011
S. 894, the ``Veterans' Compensation Cost-of-Living
Adjustment Act of 2011,'' would mandate a cost-of-living
adjustment (COLA) in the rates of disability compensation and
dependency indemnity compensation payable for periods beginning
on or after December 1, 2011. The COLA would be the same as the
COLA that will be provided under current law to Social Security
benefit recipients, which is currently estimated to be an
increase of 0.9 percent. This increase is identical to that
proposed in the President's fiscal year 2012 budget request to
protect the affected benefits from the eroding effects of
inflation. VA supports the bill and believes that our Veterans
and their dependents deserve no less. VA estimates that
enactment would result in benefit costs of $329 million for
fiscal year 2012, $2.1 billion over five years, and $4.6
billion over ten years. However, because COLA costs are assumed
in the baseline for Compensation and Pensions each year,
enactment of this bill does not result in PAYGO costs.
* * * * * * *
CHANGES IN EXISTING LAW
Because the Committee bill would not repeal or amend any
provisions of current law, this report does not contain the
material described in clauses (a) and (b) of paragraph 12 of
rule XXVI of the Standing Rules of the Senate.