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104th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 104-273
_______________________________________________________________________
VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 1995
_______________________________________________________________________
October 6, 1995.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Stump, from the Committee on Veterans' Affairs,
submitted the following
R E P O R T
[To accompany H.R. 2394]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs, to whom was referred
the bill (H.R. 2394) to amend title 38, United States Code, to
provide a cost-of-living adjustment in the rates of disability
compensation for veterans with service-connected disabilities
and the rates of dependency and indemnity compensation for
survivors of such veterans, having considered the same, reports
favorably thereon, without amendment, and recommends that the
bill do pass.(insert H.R. 2394 here) deg.
Introduction
On September 25, 1995, the Chairman of the Subcommittee on
Compensation, Pension, Insurance and Memorial Affairs, the
Honorable Terry Everett, along with the Chairman and Ranking
Member of the Veterans' Affairs Committee, the Honorable Bob
Stump and the Honorable G.V. (Sonny) Montgomery, introduced
H.R. 2394, which would provide a cost-of-living adjustment
(COLA) in the rates of service-connected disability
compensation and dependency and indemnity compensation (DIC),
effective December 1, 1995.
On September 28, 1995, the full Committee met and ordered
H.R. 2394 reported favorably to the House by unanimous voice
vote.
Summary of Reported Bill
H.R. 2394 would:
Increase, effective December 1, 1995, the rates of
compensation for service-connected disabilities and the rates
of dependency and indemnity compensation for surviving spouses
and children of veterans who die of service-connected causes,
the additional amounts for dependents and survivors, and the
clothing allowances for certain veterans. The amount of
increase would be the same as increases automatically provided
to Social Security beneficiaries.
Background of the Compensation and Dependency and Indemnity
Compensation Programs
There are approximately 2.23 million veterans receiving
disability compensation as of July 31, 1995. The Department of
Veterans Affairs expects expenditures for disability
compensation to be $11.43 billion for fiscal year 1996. The
basic purpose of the disability compensation program is to
provide a measure of relief from the impaired earning capacity
of veterans disabled as the result of their military service.
The amount of compensation payable varies according to the
degree of disability, which, in turn, is required by law to
represent, to the extent practicable, the average impairment in
earning capacity resulting from such disability or combination
of disabilities in civil occupations.
To be eligible to receive disability compensation, a
veteran must have contracted a disease, suffered an injury
which is not the result of willful misconduct, or aggravated an
existing disease or injury in the line of duty during active
duty service, and have been discharged under other than
dishonorable conditions.
The responsibility for determining a veteran's entitlement
to service connection for a disability rests solely with the
Department of Veterans Affairs.
DEPENDENCY AND INDEMNITY COMPENSATION FOR SURVIVORS OF VETERANS WHO
HAVE DIED OF SERVICE-CONNECTED CAUSES
As of July 31, 1995, there were approximately 313,000
surviving spouses and children receiving dependency and
indemnity compensation (DIC). The VA expects DIC expenditures
of $3.1 billion in fiscal year 1996. Widows and children of
veterans who died of causes determined to be service connected
are entitled to receive monthly DIC.
The purpose of this benefit under chapter 13 of title 38 is
to provide partial compensation to the appropriate survivors
for the loss in financial support due to the service-connected
death. Income and need are not factors in determining a
surviving spouse's or child's entitlement since the Nation
assumes, in part, the legal and moral obligation of the veteran
to support the spouse and children.
In 1992, Congress reformed the manner in which payments of
DIC are made. Under current law, for deaths occurring on and
after January 1, 1993, a base rate of $790 per month is payable
to a surviving spouse. Such amount is increased by $173 if the
veteran suffered from a service-connected disability which was
rated as totally disabling for a period of eight years
immediately preceding death and if the veteran and surviving
spouse were continuously married during that period. For
service-related deaths occurring prior to January 1, 1993,
payments of DIC are made on the basis of the veteran's military
pay grade if that would result in a higher benefit level than
under the new payment structure. Rates for these
``grandfathered'' surviving spouses range from $816 for the
surviving spouse of an E-7 to $1,681 for the surviving spouse
of an 0-10. Surviving spouses are currently entitled to an
additional $200 per month for each child.
There is an additional allowance of $200 monthly which is
payable to eligible surviving spouses who are patients in a
nursing home or who are in need of the regular aid and
attendance of another person.
If there is no surviving spouse receiving dependency and
indemnity compensation benefits but there is a surviving child,
the child is entitled to $336 monthly with additional benefits
for other children with certain limits due to age, disability,
and status as a student.
HISTORY OF COST-OF-LIVING INCREASES
The Committee annually reviews the service-connected
disability compensation and DIC programs to ensure that the
benefits provide reasonable and adequate compensation for
disabled veterans and their families. Based on this review, the
Congress acts annually to provide a cost-of-living adjustment
(COLA) in compensation and DIC benefits. The Congress has
provided annual increases in these rates for every fiscal year
since 1976.
Discussion of the Reported Bill
COST-OF-LIVING ADJUSTMENT IN RATES OF COMPENSATION AND DEPENDENCY AND
INDEMNITY COMPENSATION
H.R. 2394 would direct the VA to compute and provide
increases in the monthly rates of compensation and DIC,
effective December 1, 1995. The rates would be increased by the
same percentage as the Social Security COLA that will take
effect on that date. If the increase does not result in a whole
dollar amount, it shall be rounded down to the next lower whole
dollar amount.
The bill will provide a full COLA for both old- and new-law
DIC recipients, by the flat rate amount determined applicable
for new-law survivors.
The Administration's proposed fiscal year 1996 budget
request, submitted on February 6, 1995, recommended that a 3.1
percent rate increase be given to all compensation
beneficiaries, including reform DIC spouses and children,
effective December 1, 1995. In addition, the Administration
requested old-law DIC recipients to receive one-half of the
increase in the base rate provided to new-law DIC recipients.
All benefits would be rounded down to the nearest dollar. The
estimated cost of a 3.1 percent COLA in 1996 is $340 million.
The Administration's current estimate is a 3.0 percent
increase, for a total cost of $311.5 million. This is the
expected increase in the Consumer Price Index and is the same
increase estimated for Social Security benefits.
The Committee is following its recent practice of setting
the COLA by reference to the yet to be determined Social
Security increase.
Section-by-Section Analysis
Section 1 would be cited as the ``Veterans' Compensation
Cost-of-Living Adjustment Act of 1995''.
Section 2(a) would authorize the Secretary of Veterans
Affairs to increase, effective December 1, 1995, the dollar
amounts in effect for the payment of disability compensation
and dependency and indemnity compensation.
Section 2(b) would specify the programs to receive
increased dollar amounts: compensation, additional compensation
for dependents, clothing allowance, new DIC rates, old DIC
rates, additional DIC for disability, DIC for dependent
children.
Section 2(c)(1) would increase the dollar amounts for those
specified in subsection (b) based on the amount in effect on
November 1, 1995.
Section 2(c)(2) would specify that each amount should be
increased by the same percentage by which benefits are paid
under title II of the Social Security Act (42 U.S.C.).
Section 2(c)(3) would round down to the next lower dollar
amount all compensation and DIC benefits, when the amount is
not a whole dollar amount.
Section 2(c)(4)(A) would specify that the old-law DIC rates
shall be increased by the amount by which the new-law DIC rate
is increased.
Section 2(c)(4)(B)(i) and (ii) would define old- and new-
law DIC rates by section number within title 38, U.S.C.
Section 2(d) would provide a special rule authorizing the
Secretary of Veterans Affairs to adjust administratively,
consistent with the increases made under subsection (a), the
rates of disability compensation payable to persons within the
purview of section 10 of Public Law 85-857, who are not in
receipt of compensation payable pursuant to chapter 11 to title
38, U.S.C.
Section 2(e) would require the Secretary of Veterans
Affairs to publish in the Federal Register the amounts
specified in subsection (b), as increased pursuant to
subsection (a).
Oversight Findings
No oversight findings have been submitted to the Committee
by the Committee on Government Reform and Oversight.
Congressional Budget Office Cost Estimate
The following letter was received from the Congressional
Budget Office concerning the cost of the reported bill:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 29, 1995.
Hon. Bob Stump,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate of H.R. 2394, the Veterans'
Compensation Cost-of-Living Adjustment Act of 1995, as ordered
reported by the House Committee on Veterans' Affairs on
September 28, 1995.
The bill would affect direct spending and thus would be
subject to pay-as-you-go procedures under section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985.
If you wish further details on this estimate, we will be
pleased to provide them.
Sincerely,
June E. O'Neill,
Director.
Enclosure:
1. Bill number: H.R. 2394.
2. Bill title: Veterans' Compensation Cost-of-Living
Adjustment Act of 1995.
3. Bill status: As ordered reported by the House Committee
on Veterans' Affairs on September 28, 1995.
4. Bill purpose: The bill would round down 1996 cost-of-
living adjustments (COLAs) for veterans with service-connected
disabilities and for survivors of certain disabled veterans.
5. Estimated cost to the federal government:
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
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DIRECT SPENDING
Spending Under Current Law:
Estimated Budget Authority.............................. 14,176 14,835 15,395 15,976 16,594 17,018
Estimated Outlays....................................... 14,422 13,675 15,312 15,928 16,543 18,241
Proposed Changes:
Estimated Budget Authority.............................. 0 -19 -24 -24 -25 -26
Estimated Outlays....................................... 0 -17 -23 -24 -25 -28
Spending Under Proposals:
Estimated Budget Authority.............................. 14,176 14,816 15,371 15,952 16,569 16,992
Estimated Outlays....................................... 14,222 13,658 15,289 15,904 16,518 18,213
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6. Basis of estimate: As specified in the Balanced Budget
Act, CBO's baseline assumes that monthly rates of disability
compensation paid to veterans and of dependency and indemnity
compensation (DIC) paid to their survivors are increased by the
same cost-of-living allowance (COLA) payable to Social Security
recipients, and the results of the adjustments are rounded to
the nearest dollar.
This provision would change current law in two ways. First,
it would round down to the next lower dollar adjustments to
disability compensation in 1996. Second, the provision would
change the 1996 COLA provided to DIC recipients. The Dependency
and Indemnity Compensation Reform Act of 1992 redefined the DIC
benefit to be a constant amount in contrast to previous law
that varied the benefit based on the military rank of the
recipient's spouse. Beneficiaries at the time of the act could
continue to receive their existing payment if it was higher
than the new benefit. Under CBO baseline assumptions,
grandfathered beneficiaries receive COLAs that are computed as
a percentage of their benefit. This bill, however, would make
the COLA a flat amount equal to the adjustment in the flat DIC
benefit under the 1992 act and this bill.
CBO estimated the savings from this provision using the
current table of monthly benefits, the number of beneficiaries
assumed in the CBO baseline, and the inflation assumptions of
the budget resolution. The COLA assumed to take effect on
December 1, 1995, is 3.1 percent.
7. Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act of 1985 sets up pay-as-you-go
procedures for legislation affecting direct spending or
receipts through 1998. The bill would have the following pay-
as-you-go impact:
[By fiscal years, in millions of dollars]
------------------------------------------------------------------------
1995 1996 1997 1998
------------------------------------------------------------------------
Change in outlays................... 0 -17 -23 -24
Change in receipts ................. Not applicable
8. Estimated cost to state and local governments: None.
9. Estimate comparison: None.
10. Previous CBO estimate: None.
11. Estimate prepared by: Mary Helen Petrus.
12. Estimate approved by: Paul N. Van de Water, Assistant
Director for Budget Analysis.
Inflationary Impact Statement
The enactment of the reported bill would have no
inflationary impact.
Applicability to Legislative Branch
The reported bill would not be applicable to the
legislative branch under the Congressional Accountability Act,
Public Law 104-1, because the bill would only affect certain
Department of Veterans Affairs benefits recipients.
Statement of Federal Mandates
The reported bill would not establish a federal mandate
under the Unfunded Mandates Reform Act, Public Law 104-4.
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