Veterans’ Guide to VA Unemployability

What happens if you don’t meet the rating requirements for IU? Can you still get IU? Yes, you can.

If you do not meet the 60%/single disability or 70% combined disabilities VA still allows for IU. VA recognizes some veterans can’t work because of their service connected disabilities, but they don’t meet the schedular requirements. In such cases, the regional office (RO) submits the claim to the Director of the Compensation and Pension Service. The Director reviews the claim for extraschedular consideration. The RO must prepare a statement regarding the veteran’s disabilities, work and educational all other factors bearing on the issue. As you can imagine, this is not a quick process. Receiving IU through extraschedular consideration can take a long time. Also, it is very rare for the RO to refer a claim for IU for extraschedular consideration. If you believe your claim warrants such consideration, you should make the request for extraschedular IU. Typically, you have to fight all the way to the BVA before you even get the referral to the Director.

Hill and Ponton has a success rate of 96% with the VA cases we have accepted.

Show Exceptional or Unusual Circumstances

The standard for awarding IU on an extraschedular basis is that the case must present an exceptional or unusual disability picture. This would include factors such as marked interference with employment or frequent periods of hospitalization. Factors such as these that would make it impractical to apply the regular schedular standards. These extraschedular cases are granted on an individual basis. Therefore, it is a good idea to present evidence that shows why the veteran’s particular circumstances render him or her unable to work. This evidence could include work background, education background, and periods of hospitalization. Again, note that these are very difficult cases to win, but not impossible. The best thing you can do is gather as much evidence as possible. We recommend an an independent medical opinion, which shows your unique circumstances render you unable to work.

Interestingly enough, you may have already applied for IU without knowing it. A claim for IU is not always a separate, free-standing claim. You ‘officially’ can file an IU claim on a VA Form 21-8940, Application for Increased Compensation Based on Unemployability. However, the evidence in an underlying claim can raise IU too. Two places where this could happen are during a service connection claim or a claim for increased rating. If during one of these claims there is evidence of IU then there is a claim for IU. VA should consider the issue as part of the underlying claim, even if the veteran has not specifically requested IU.

Rarely, does the VA decide IU without the veteran raising the claim first. Further the RO will not grant IU without the veteran submitting VA Form 8940. So if you think you are eligible for IU, submit the 8940.

VA Form 8940 is a rather complex and confusing form. Here’s how to fill it.

Section 1

Section I of the form deals with Disability and Medical Treatment. In this section, the veteran must state what disability keeps her from working. Remember, the veteran’s service connected disabilities alone must keep the veteran from work. If there are any non-service connected disabilities involved VA is not supposed to consider these. That said, the veteran should be proactive. She should get a doctor’s statement showing the service connected disabilities alone keep her from working. There is also a place on the form for medical treatment. The veteran should provide the name and address of where she is treating for the service connected disabilities. It is very important to state the frequency (monthly, weekly, every other week, etc.) of treatment. This is a better practice than giving specific dates of treatment relating to his or her particular disabilities.

Section 2

Section II of the form asks for all employment history. This goes back for a five-year period preceding the date on which the veteran claims to have become too disabled to work. So, for example, if a veteran stopped working in 2010, work history from 2005-2010 would need to be provided. Additionally, the veteran must provide the names and addresses of the employers. Finally, he must state what type of work was performed, how many hours per week, and the dates of employment.

Section 3

Section III addresses schooling and other training. In this section, the veteran must state whether she acquired any other training before becoming too disabled to work. Then she must put down if she had any training since becoming too disabled to work. If she had any training, she must specify what kind of training it was. In this the veteran giving accurate and specific information goes a long way to help VA make a timely decision.

It is important to understand that IU is not a freestanding claim, but is part of the rating process. For example, the VA grants a veteran a 70% rating for PTSD, but does not decide the issue of IU. The veteran may think, “Okay, now I have a 70% rating so I can apply for IU.” In truth, what he should do is appeal the decision granting the 70% rating for failure to consider IU. This is important because of the way the VA determines the effective date for IU.

The effective date for IU is often something that the VA gets wrong. The effective date for IU should be the date when VA first received evidence indicating the veteran was unemployable. This could be a doctor’s letter or a note in a medical record. Either of these would need to state that the veteran’s disability interfere with her work. Second, you must determine the status of the veteran’s claims, if any, at the time the VA received this evidence.

There are three main ways to answer the second question:

• VA first received evidence of the veteran’s unemployability when she filed a claim for service connection. Similarly when VA was considering whether to grant service connection. If VA eventually grants service connection for the veteran’s disability and awards IU, the effective date would be either:
  
  the date VA received the claim for service connection, or
  the date the veteran first became unemployable due to his or her service connected disabilities, whichever is later.
• If VA first received evidence of the veteran’s unemployability after VA granted service connection, but before the VA made a final decision on the rating for the disability, the effective date for an award of IU would be:
• the date the VA received the claim for service connection, or
• the date the veteran first became unemployable due to his or her service connected disabilities, whichever is later.
• Finally, if the VA first received evidence of the veteran’s unemployability when she filed a claim for an increased disability rating or while a claim for an increased disability rating is pending, the effective date for an award of IU would be:
• the date VA received the claim for an increase in disability rating, or
• the date the veteran first became unemployable due to his or her service connected disability ratings, whichever is later.

No. VA unemployability does not always mean that a veteran is not working – the key, however, is where the income comes from. On one hand, all income earned from employment must be at or below the poverty level. On the other hand, the income can be from a job that is considered to be “sheltered”.

Regarding income that is below the poverty level, marginal income, it is not substantially gainful occupation. Marginal employment is considered as “earned annual income that does not exceed the poverty threshold for one person. VA uses income statistics from the US Department of Commerce, Bureau of the Census.” For 2024, the poverty level for which a veteran must be working under is around $15,000.

To get IU benefits, the evidence must show you cannot work due to a service connected disability. Evidence supporting your claim could be letters from former co-workers or employers. A professional’s opinion would be more impactful evidence. If the veteran has participated in a VA vocational rehabilitation program VA must also consider this evidence.

VA must consider your educational and work history when determining if you are entitled to IU. VA must look at your education and training, and how your current disabilities. Then VA must see how those disabilities could prevent you from working in the jobs you had been trained for.

VA has to review your earnings in order to assess if your income is above or below the poverty threshold. A veteran can produce proof of earnings through pay stubs, tax returns, or a Social Security Earnings Record. If the earnings are above the poverty threshold, VA must consider if your worked is in a “sheltered” environment. You will need supporting evidence to prove that the workplace is sheltered. For example, an employer letter verifying the excessive accommodations.

When it comes to proving to the VA that a veteran is eligible for IU, the best evidence is a professional opinion from a vocational expert or competent medical doctor concerning the veteran’s ability to secure or follow a substantially gainful occupation. The opinion should say it is “more likely than not” that you are unable to work due to your service connected disabilities. Again, the key here is “service connected.”

VA often will schedule a veteran for a Compensation & Pension (C&P) exam to get an opinion on IU. The exam report must include a rationale as to whether it is as likely as not that the service connected disabilities render the veteran unable to work. Additionally, the report must describe the functional impairment caused by your disabilities and how that impairment impacts all employment.

If you have multiple service connected disabilities contributing to IU, VA will likely send you to separate exams for each. Every exam will discuss your single disability and the functional impairment that you have due to that disability. For example, a back examiner may say, “The veteran can’t stand or can’t walk, but he could do sedentary work.” A neurologist may say, “He has to lie down at least once a week for several hours due to your migraines. As long as an employer will give that benefit, then he could work.” A PTSD examiner may say, “He doesn’t get along with people, so as long as he’s by himself, he’s fine.”

The problem is that the VA will usually look at these three opinions separately. When it should look at them together in order to create a complete picture of the veteran’s disabilities. If that is the case, the best thing to do is get an independent medical opinion. This exam should look at the disabilities together or shows one service-connected disability renders the veteran unable to work.

IU is not always rated a permanent condition.  VA may send you to periodic medical exams to evaluate whether IU is still warranted.  VA cannot just take IU away from you.  There are safeguards in place in place to prevent that.

VA must follow its own regulations when trying to take away a your IU. If VA fails to do so the reduction is considered void and unlawful. If the VA determines you no longer are unemployable, it must first issue a notice of proposed reduction. This first notice gives you sixty days to submit evidence to show that your condition has not improved. You also have an option to request a pre-determination hearing within thirty days of the notice. Requesting a hearing may buy you additional time to submit evidence.

Furthermore, there are several protections set forth in the regulations against a proposed reduction. One of those protections is for 100% ratings when based on unemployability (IU or IU). VA has the burden to show t actual employability has been established by clear and convincing evidence.  If VA cannot do so then it cannot reduce or sever IU. This is a very high burden to meet. Even if you are working, you are allowed to keep your IU for a full year. However, where you have not returned to work then VA must have strong evidence to discontinue IU.

Even if VA determines you have sustained improvement that would warrant reduction of IU the analysis does not end there. The record must reflect the veteran is able to engage in substantial gainful employment.  If it doesn’t then IU must be preserved. In other words, in cases where your disability has improved, your IU rating can still be protected from reduction. If the evidence continues to show that you can’t work due to your service connected disability.

If you submit evidence within the first sixty day notice timeframe, VA may send you for a re-examination. If it decides to do so, VA will not decide whether to reduce until outcome of the new examination. The examination  for reduction must be as thorough as the examination that established the current rating. Attending the examination is very important. If you do not show up, your benefits can be automatically reduced or terminated. If you are cannot attend on the date scheduled, you must reschedule, or have a good reason explaining your absence.

VA must review all of the new evidence, including the re-examination, in the context of the entire record. VA will then issue a final rating decision. The second rating decision starts a new sixty-day period. The reduction will go into effect on the last day of the month of the second decision.

A veteran who is rated 100% by means of TDIU is entitled to the same benefits as a veteran who receives a schedular 100% rating.  The primary difference is that a veteran who receives a schedular 100% rating can receive his benefits and continue working while a veteran who receives TDIU cannot return to work and continue to receive benefits.

Obtaining a 100% schedular rating can be difficult if you are trying to combine multiple disabilities in order to reach a total rating.  The alternative TDIU route can make it easier to gain those same benefits.  If you have disabilities related to service which impair your ability to work, get help finding out more about TDIU and whether you qualify.

Even if a veteran cannot meet those ratings requirements established by the regulations, he or she still may be entitled to TDIU. In that case, the veteran should request extra-schedular consideration for TDIU. This is a more difficult case to win, but not impossible.

Even if a veteran cannot meet those ratings requirements established by the regulations, he or she still may be entitled to TDIU. In that case, the veteran should request extra-schedular consideration for TDIU. This is a more difficult case to win, but not impossible.

VA is supposed to automatically consider the veteran’s entitlement to TDIU at any time that the evidence shows that his or her service-connected disabilities prevent him from obtaining and maintaining substantially gainful employment, so long as the veteran’s disability ratings satisfy the requirements of the VA regulations.  Evidence which may assist you in proving your case could be letters from former co-workers or employers, medical evidence, and/or evidence from a vocational expert.  In order to satisfy the requirements of the VA regulations, the veteran must either have one disability which is rated 60% or higher or a combination of disabilities rated 70% or higher (with at least one of those multiple disabilities being rated 40% or higher).