Veterans Disability Benefits

Overview

ImpactMatters generates estimates of impact — estimates that quantify the causal effect nonprofits have on social outcomes relative to cost. For example: for $900, a nonprofit increases the disability benefits claimed by a veteran by $50,000. Our estimates incorporate best principles in social science, described in our Impact Methodology.


Description

Hundreds of thousands of veterans currently face delays of three to seven years in their appeals of disability benefits rulings.1 One in 14 veterans dies while waiting for a resolution on an appeal, according to a report by the inspector general of the Department of Veterans Affairs (V.A.).2 The V.A. also faces a backlog of tens of thousands more waiting over 125 days for initial decisions on claims of disability benefits.

Nonprofits can help veterans navigate the complex benefits claims system. Attorneys provided by nonprofits can help veterans file mandamus petitions based on unreasonable delays, potentially expediting the resolution of their cases. Nonprofits also assist veterans in filing the correct forms and gathering sufficient proof of a service-connected disability, helping veterans avoid benefits denial in the first place and the ensuing years-long appeals process.

In addition to the backlog at the V.A., the opacity of the disability claims system may be resulting in underuse by veterans. According to the most recent (2010) National Survey of Veterans, 17.1 percent of veterans who did not apply for disability benefits were not aware of the service-connected disability program, 14.2 percent did not know how to apply, 6.6 percent did not think their disability was severe enough and another 6.6 percent reported that “applying is too much trouble or red tape.”3 Nonprofits can help explain eligibility criteria and application processes to veterans, allowing them to access the benefits they are owed.

Veterans overwhelmingly report that their disability benefits are “extremely” or “very important” in helping them meet financial needs.4 Those not receiving due benefits, either because of V.A. processing delays or inaccessibility of the disability claims system, may face avoidable financial distress — in addition to physical, social and psychological distress resulting from their service to the country.


Outcome

Disability benefits claimed by a veteran

We measure the success of veterans disability benefits programs as the amount of disability benefits claimed by a veteran as a result of the nonprofit’s assistance. Disability benefits are tax-free monthly payments to compensate for disabilities incurred or aggravated during active military service. Surviving family members can also receive benefits to compensate for the loss of earnings caused by the service-connected death or disability of a veteran. The amount of monthly benefits varies based on the veteran’s degree of disability and number of dependents. On average, veterans receive about $1,300 a month.5 On top of regular disability benefits, veterans can receive additional payments called “special monthly compensation” in recognition of the loss of use of specific organs or extremities due to military service.

Receipt of disability benefits may lead to other, non-pecuniary outcomes. For instance, Murdoch et al. used a propensity score matching design to compare the health outcomes of veterans who were denied or awarded disability benefits for P.T.S.D., the most common mental disorder for which veterans seek benefits.6 After controlling for baseline differences between denied claimants and awardees, they found that awardees were more likely to have meaningful symptom reduction.

However, we do not attempt to estimate causal effects on health outcomes because the research literature on the non-pecuniary outcomes of disability benefits receipt is thin. Murdoch et al.’s study stands out as one of very few with an adequate sample and any attempt to control for differences between treatment and comparison groups. We instead focus on the amount of additional disability benefits claimed (i.e., additional income) as the outcome of interest.


Methodology for estimating attributable outcomes

In algebra, we calculate the outcomes attributable to a veterans disability benefits program (O) as follows:

O = B * (1 - C)
where:
B = Cumulative dollar value of disability benefits claimed for veterans by the nonprofit
C = Counterfactual percent of disability benefits that veterans would have claimed without the nonprofit. This is assumed constant at 25 percent (explained below).

In calculating variable B, we assume that the one-time claims assistance from a nonprofit enables a veteran to access monthly benefits for the rest of his or her life. The V.A. can end or reduce a veteran’s benefits for several reasons, such as an improvement in the veteran’s disability, death of a dependent or incarceration of the veteran. However, the V.A. can also increase a veteran’s benefits due to worsening disability or the addition of a previously unrecognized disability to the V.A. benefits system. We assume that, on average, the monthly amount that a new awardee receives remains stable for the rest of his or her life. Therefore, if the nonprofit reports only the monthly amount and not the cumulative lifetime amount of benefits, we multiply the monthly amount by the average life expectancy among veterans.7,8

In addition, nonprofits may help veterans claim retroactive benefits for the lag between the time of application and start of receipt. Retroactive benefits are paid as a lump sum, so no discount rate should be applied. If the nonprofit has not distinguished between retroactive and new benefits in its reporting of outcomes, we assume the average amount of retroactive benefits per veteran is equal to the monthly rate multiplied by 10 months, which is the weighted average of the wait times for those who were approved without appeal, those appealing through the Veterans Benefits Administration and those appealing through the Board of Veterans’ Appeals.9

Next, we estimate variable C, the counterfactual percent of disability benefits that veterans would have claimed without the nonprofit’s assistance. No quasi-experimental or experimental studies have been conducted on the effect of benefits claims assistance on the probability of receipt or size of disability compensation for veterans. One randomized controlled trial (R.C.T.) analyzed the effect of legal assistance on the outcomes of unemployment benefits appeals,10 but civil courts function very differently than the U.S. Court of Appeals for Veterans Claims (C.A.V.C.), which is a federal appellate court where proceedings are adversarial. As such, the R.C.T. — which found inconclusive effects of legal representation on case outcomes — is likely not applicable to the case of disability benefits for veterans. One 1977 observational study found a markedly higher win rate among veterans represented by counsel from American Legion or Veterans of Foreign Wars compared to veterans with no representative.11 However, we also do not rely on this study to estimate impact because its findings may no longer be relevant (the C.A.V.C. was established a decade after the study) and its observational design prohibits causal inference.

In the absence of relevant rigorous literature, we estimate the counterfactual based on educated assumptions.

Of all those applying for or appealing benefits claims through a nonprofit, (A) some would have successfully applied or appealed through another nonprofit; (B) some would have successfully applied or appealed on their own; and (C) some would not have applied or appealed at all.

Lacking empirical data on the proportion of beneficiaries that would have fallen into each category and their respective application/appeal success rates, we assume the following:

  1. Zero beneficiaries would have been able to turn to another nonprofit, based on the assumption that the claims assistants and attorneys at nonprofits are already operating at caseload capacity. For instance, in a 2018 survey of 44 organizations providing legal services to veterans in California, “V.A. benefits, including service connected benefits” were ranked 4.05 on a scale of 1 to 5, where 5 represents great unmet legal needs for veterans in the state.12

  2. Fifty percent of beneficiaries would have applied or appealed on their own, at half the success rate relative to the success rate of the nonprofit under analysis.

  3. Fifty percent of beneficiaries would not have applied or appealed at all.

Therefore, the counterfactual percentage of benefits that veterans would have received in the absence of the nonprofit under analysis = (0%*100%) + (50%*50%) + (50%*0%) = 25%. [Note that if category A veterans had been able to turn to another nonprofit, they would have had an application/appeals success rate of 100 percent relative to the success rate of the nonprofit under analysis.]

Our estimates of attributable outcomes may be too high if we have:

  • Underestimated the percent of beneficiaries who could have accessed claims assistance from another service provider;

  • Underestimated the success rate among beneficiaries who would have applied or appealed on their own;

  • Or overestimated the percent of beneficiaries who would not have applied or appealed at all.


Methodology for estimating cost

Below, we summarize the most important aspects of our methodology for estimating the costs of veterans disability benefits programs. For a detailed discussion of what sources of data we use, how we treat specific line items and accommodate variation in accounting practices, see Reference Manual on Data Analysis.

Costs we include

ImpactMatters estimates cost-effectiveness from the perspective of a socially minded donor. This means we count all important costs associated with a program regardless of who incurs them. Generally, the key cost-bearing parties are: the nonprofit itself; organizations with which it partners to run a program; the government (taxpayers); and the nonprofit’s beneficiaries.

Nonprofit costs

We count the total costs of the nonprofit’s benefits assistance program. Nonprofits that provide benefits assistance often also provide other services for veterans, such as community building events for veterans and their families and job search and application assistance. We exclude the costs of these programs from our calculations, isolating the costs related only to benefits assistance.

Nonprofits that provide free legal help to veterans in applying for and appealing claims may report the value of donated legal services on their audited financial statements. We subtract this from program costs because we believe volunteers benefit in important non-monetary ways — fulfillment, for instance, in supporting a cause they are passionate about, or compliance with pro bono requirements for lawyers.13

Government costs

We do not count the amount of disability benefits transferred to veterans as a cost to the government. In our analysis, we consider disability benefits as a “right” owed to veterans for their service to society. To borrow accounting terms, disability benefits are like expenses already accrued on the government’s balance sheet and are now simply part of accounts payable, waiting to be paid. Thus, we do not consider disability benefits as a cost brought on by a nonprofit’s benefits assistance program; rather, they are just a debt being paid.

Beneficiary costs

We assume beneficiary costs are $0 unless they are reported.


Methodology for calculating impact

To calculate the cost-effectiveness of a veterans disability benefits program, we divide aggregate attributable outcomes(sum of disability benefits claimed by all veterans served by the program) by the aggregate program-related cost incurred by all cost-bearing parties. Crucially, the numerator and denominator must match logically: The denominator reflects the costs incurred in generating the attributable outcomes reflected by the numerator.


Cost-effectiveness benchmarks

To rate the cost-effectiveness of veterans disability benefits programs, we apply our standard benchmarks for programs that aim to boost the income of beneficiaries. We use the same set of benchmarks whether programs aim to boost income immediately via a transfer of resources (as in the case of disability benefits) or in the future by, for instance, raising beneficiaries’ earning potential, or both. The benchmarks are as follows:

  • 4 stars: Programs that boost income by 85 percent as much as total program cost

  • 5 stars: Programs that boost income by 150 percent as much as total program cost


Nonprofit checklist of data needed to calculate impact

The following data is necessary to estimate the impact of disability benefits programs for veterans.

Table 1

Checklist item

Required from nonprofit?

Details

Program activities

Yes

A program is a set of goods or services provided by the nonprofit to a population of beneficiaries with the goal of improving one or more outcomes. Generally, a program consists of the same components delivered to each beneficiary, with only minor deviations across different settings.

Geography

Yes

We recommend nonprofits report the city and state where they operate.

Timeframe

Yes

We recommend nonprofits report annual figures that align with their fiscal year.

Number of veterans receiving assistance with disability benefits

Yes

We recommend nonprofits report the number of veterans receiving assistance applying for or appealing disability benefits claims. This is distinct from the total number of claims, as each veteran may file more than one claim.

Disability benefits claimed

Yes

We recommend reporting the total dollar amount of disability benefits successfully claimed among all veterans assisted. We highly recommend specifying whether the total dollar amount includes retroactive benefits, cumulative benefits or monthly benefits — and if cumulative benefits are reported, specify how many years of monthly benefits were forecasted and at what discount rate, if any.

Counterfactual percent of disability benefits claimed

No

If not reported by the nonprofit, this is set to our default assumption of 25 percent.

Program cost

Yes

We recommend reporting total costs, including costs paid out of pocket by volunteers.

Beneficiary cost

No

We recommend reporting participant costs if they are substantial. They can be estimated at $0 if they are not substantial.

Partner cost

No

We recommend reporting partner costs if they are substantial. They can be estimated at $0 if they are not substantial.

Limitations of our analysis

Oversimplification of the outcome

Using “dollars of disability benefits claimed” as our metric of analysis does not intuitively convey the potential downstream effects of disability benefits. For instance, receipt of disability benefits may reduce financial stress. The additional income may also afford veterans better health care and material improvements like home renovation and mobility aids to help with physical impairments. We do not attempt to quantify these downstream effects because we lack solid evidence from the research literature on the causal link between the receipt of disability benefits and the improved health and wellbeing of veterans.

In helping return to veterans that which they are owed, nonprofits may also be performing an act of social justice. To the extent that this social justice scales with the dollar amount of disability benefits claimed, our chosen outcome serves as a fair proxy.

Cost of reaching special populations

Some nonprofits may have to incur additional costs to reach particularly disadvantaged veterans. For instance, a nonprofit may incur higher costs to search for and help homeless veterans. If a nonprofit targets especially disadvantaged beneficiaries, we highlight this effort to donors by adding special descriptors to the nonprofit’s impact report, such as ”people experiencing homelessness” or “people living in poverty.”

Specific counterfactuals

To understand the impact of a program, we ask the counterfactual question: What would have happened to beneficiaries if the program had not, counter to fact, been there to serve them? Because the vast majority of nonprofits have not conducted impact evaluations, we need to construct our own counterfactuals based on public data sources and the research literature. For instance, we apply a uniform counterfactual assumption to all veterans disability benefits programs: Without the nonprofit’s assistance, 25 percent of benefits would otherwise have been claimed by veterans. In doing so, we risk masking variation in nonprofits’ abilities to successfully reach out to veterans, gather sufficient evidence of disabilities, submit and appeal claims, and communicate the V.A.’s decisions to veterans. And if some nonprofits specifically focus on easier-to-win cases, our estimate of the counterfactual should be higher; conversely, a nonprofit seeking out difficult cases would take a lower counterfactual.

Data quality

Our estimates rely on data made public by nonprofits on their websites, annual reports, financial statements and Form 990s. There are, of course, ambiguities in the data and our interpretation of the data may not always match the nonprofit’s intention. For instance, nonprofits may describe the total disability benefits it helped to claim in a year as simply “benefits won.” Without further information from the nonprofit, we assume, based on the most common reporting format we have observed, that this refers to the sum of retroactive and cumulative benefits. For more detail on our sources of data and how we interpret them, please see Reference Manual on Data Analysis.

Representativeness of (analyzed) programs

We only issue ratings for nonprofits if we can perform analysis on 15 percent or more of the nonprofit’s total program budget. This approach means some nonprofits are rated on only some of their programs. The remaining programs, which we could not analyze, could be more or less cost-effective than the programs we analyzed.




Footnotes

1

U.S Department of Veterans Affairs: Comprehensive Plan for Processing Legacy Appeals and Implementing the Modernized Appeals System - Public Law 115-55, Section 3, 2018                                                                                                                                                                                                

2

Office of Inspector General: Veterans Benefits Administration - Review of Timeliness of the Appeals Process, 2018                                                                                                                                                                                                

3

National Survey of Veterans, 2010                                                                                                                                                                                                

4

National Survey of Veterans, 2010                                                                                                                                                                                                

5

U.S. Department of Veterans Affairs: Annual Benefits Report FY 2018, Compensation                                                                                                                                                                                                

6

Murdoch et al. (2011) Long-term Outcomes of Disability Benefits in US Veterans with Posttraumatic Stress Disorder                                                                                                                                                                                                

7

In 2018, the average age of new awardees was 69. At about age 69, the average life expectancy of male veterans is another 13 years and, for female veterans, another 14.9 years. Per ImpactMatters protocol, we apply a 5 percent social discount rate to benefits received in the future.                                                                                                                                                                                                

8

Some nonprofits already report cumulative benefits over a lifetime. To standardize analyses across nonprofits, we first estimate monthly benefits from cumulative benefits, then re-calculate cumulative benefits to incorporate our social discount rate.                                                                                                                                                                                                

9

Calculation based on data from the U.S. Department of Veterans Affairs: 2010 National Survey of Veterans; The VA Claim Process After You File Your Claim; File A VA Disability Appeal.                                                                                                                                                                                                

10

Greiner and Pattanayak (2012) Randomized Evaluation in Legal Assistance: What Difference Does Representation (Offer and Actual Use) Make?                                                                                                                                                                                                

11

Popkin (1977) Effect of Representation in Nonadversarial Proceedings - A Study of Three Disability Programs                                                                                                                                                                                                

12

The State Bar of California (2018) Veterans Legal Services in California: A Study of Needs and Opportunities                                                                                                                                                                                                

13

Note that this subtraction should not be necessary if the Form 990 is used as the basis of our analysis (by contrast to audited financial statements) because the 990 already excludes donated services from revenue and expense totals.