Veterans' Benefits:

Improved Management Would Enhance VA's Pension Program

GAO-08-112: Published: Feb 14, 2008. Publicly Released: Feb 14, 2008.

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In 2006, the Department of Veterans Affairs (VA) paid about $3.5 billion in means-tested pension benefits to over 500,000 veterans and survivors. GAO was asked to review the management of VA pension program. This report assesses (1) the characteristics and trends in size of the current pensioner population, (2) the policies and procedures VA has in place to ensure that initial pension eligibility decisions are well managed, and (3) the procedures VA has in place to ensure that pensioners continue to receive the proper benefit payments on an ongoing basis. Our study included reviews of agency policies, procedures, and internal controls; site visits to 4 of VA's 57 regional offices and all three of its pension maintenance centers; and a selected file review of new claims at three locations.

In 2006, most of the over 500,000 VA pensioners had nonpension incomes well below the federal poverty level, were beyond retirement age, and had multiple impairments, and the population has been decreasing in number. The average annual reported income of these pensioners, excluding their VA pensions, was less than $5,000. The average age of VA pensioners was 70. More than 80 percent had no spouse or dependent children. Three-fourths of veteran pensioners had multiple impairments. After reaching a peak of almost 2 million in 1978, the overall size of the pensioner population has gradually decreased, although the number of pensioners from more recent service periods has been increasing. VA policies and procedures are not sufficient to ensure sound decisions on new pension claims. Unlike other federal agencies with similar income-based programs, VA largely does not independently verify the accuracy of financial information provided by claimants to support initial pension program eligibility. In addition, the guidance used by staff to make pension eligibility decisions is not always current or clear. Further, VA's quality assurance review process for initial claims does not select a sufficient number of pension cases to ensure the accuracy of pension claims decisions. Finally, VA does not adequately evaluate training for pension staff. VA procedures for assessing whether pensioners continue to receive the proper benefits have significant limitations. Although the agency requires pensioners to report changes that might affect their pensions, VA does not require documentation such as bank or asset statements when pensioners report financial changes. Also, a key data match operation with the Internal Revenue Service is not conducted in a timely or efficient manner. Finally, despite millions of dollars in improper pension payments made each year, VA lacks a system to monitor and analyze their causes.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: In order to enhance VA's management of the pension eligibility process, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to update the Income Verification Match data match threshold level to be in line with the U.S. Census Bureau poverty threshold or a comparable measure.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA implemented an adjustment to the Income Verification Match (IVM) data match threshold level to conform to the updated setting of the U.S. Census Bureau poverty threshold level. VA management approved a request to increase the IVM Individual Unemployability data match threshold level to $10,294 based on the poverty level of 2006 for a single person. This threshold will be used in the 2009 match with IRS and SSA.

    Recommendation: In order to enhance VA's management of the pension eligibility process, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to evaluate options for improving the effectiveness of its annual eligibility verification review. This effort could involve reformulating the Eligibility Verification Report process by (a) surveying every pensioner rather than a selected subset; (b) performing reviews on a rolling basis, such as on an individual's anniversary date, rather than diverting staff for this activity for a 3-month period; (c) reviewing pensioners' eligibility once every few years rather than every year; or (d) focusing on verifying pensioners' income and assets.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: In January 2011, VA reported that the outstanding pension claims were converted from BDN to VETSNET in April 2011. Additionally, Eligibility Verification Report (EVR) forms for beneficiaries who are not exempt from reporting their income under P.L. 103-271 were released on 12/21/10. The previously exempt beneficiaries, who have no income or only Social Security income, will not receive an EVR for the 2010 calendar year. HHS and its Office of General Counsel completed their review of the draft matching agreement and prepared responses. Authority for VA to obtain data from the HHS National Directory of New Hires databases expired on 9/30/11 and VA did not anticipate completing the exchange of actual data before that time. The matching was also delayed to accommodate other VBA information technology priorities. In April 2011, VBA established the Pension and Fiduciary (P&F) Service to improve administration of the pension program. In FY12, P&F Service evaluated options for improving the effectiveness of EVR processing. Based on an analysis of EVR information from FY 2011 indicating, among other things, that annual EVR processing identified approximately $120 million in necessary benefit adjustments, P&F Service concluded that EVR processing should remain unchanged in the near term since EVR submissions produce a significant number of benefit adjustments. They will continue monitoring the EVR process in the PMCs and adjust VBA policy as necessary to improve efficiency.

    Recommendation: In order to enhance VA's management of the pension eligibility process, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to incorporate evaluative feedback more consistently into the planning, design, and implementation of its training efforts.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA has implemented its plans to include an evaluation component to its training for Veterans Service Representatives and Rating Veterans Service Representatives. The agency posted the general evaluation forms for its Compensation and Pension training to its Web site in June 2008.

    Recommendation: In order to enhance VA's management of the pension eligibility process, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to take steps to improve its quality assurance review of initial claims, which could include reviewing a larger sample of pension claims.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA increased the number of reviews from 492 (out of 379,354 pension cases) in FY 2008 to 686 (out of 372,981 pension cases) in FY 2009. Although the relative percent of cases reviewed is low, VA has made progress in increasing the total number of cases reviewed.

    Recommendation: In order to enhance VA's management of the pension eligibility process, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to take steps to make more accurate and timely decisions about initial and ongoing pension eligibility and payment levels. Such actions might include requiring pensioners to submit supporting documentation of their income and assets, conducting a more robust independent verification with third parties, or maximizing process automation.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA took steps to implement this recommendation, particularly regarding more accurate decisions about eligibility and payment levels. The agency reported that matching income from the HHS National Directory of New Hires database would begin in August 2010. In January 2011, HHS and its Office of General Counsel reviewed the draft matching agreement and prepared responses. Authority under P.L. 110-157 for VA to obtain data from the HHS National Directory of New Hires databases was to expire on September 30, 2011 and VA did not anticipate completing the exchange of actual data before then. The matching was also delayed to accommodate other VBA information technology priorities. In May 2011, VA proposed legislation to Congress to extend through September 30, 2021, VA's authority to verify the eligibility of recipients of, or applicants for, VA needs-based benefits and services using income data from HHS. To help implement this matching agreement, VA and HHS entered into a Memorandum of Understanding regarding a pilot project to evaluate the results of a test match. VA supplied HHS with information regarding 8,500 beneficiaries receiving either pension or total disability compensation based upon individual unemployability and evaluated the results of this data match with HHS. The results indicated that the pilot did not yield significant matches or meaningful results in the context of the pension program. Congress did not extend VA's statutory authority regarding the new hires database. Although VA took action to begin addressing this recommendation, more needs to be done. GAO is conducting work on related topics and will continue to bring attention to these issues.

    Recommendation: In order to enhance VA's management of the pension eligibility process, the Secretary of Veterans Affairs should direct the Under Secretary for Benefits to evaluate the causes of improper payments and use the results to develop and implement an action plan to prevent them from occurring.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA indicated that it has taken steps to evaluate the causes of improper payments and implemented steps to prevent them. According to the provided documentation, VA has used its STAR quality assurance system to identify specific causes of improper pension payments. Although the data used for this analysis was limited, VA concluded that there was a downward trend in improper payments overall in FY 2009 when compared with FY 2008. VA expects that changes in its training program, increases in the number of quality assurance reviews, and increased oversight will drive further improvement.

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