Lump Sum Alternatives to Current Veterans’ Disability Compensation

The Veterans’ Disability Benefits Commission (the Commission) has asked The CNA Corporation (CNAC) to provide a study of the issues involved in offering a one-time lump sum payment instead of the current lifetime monthly compensation payments to selected disabled veterans. This topic is of great interest because of the potential benefits both to veterans and to the Department of Veterans Affairs (VA).

In conducting this study, we explored the following questions:

• What are the advantages and disadvantages of a lump sum program to both disabled veterans and VA?
• What can we learn from other government lump sum programs?
• What are the key elements in the design of a lump sum program?
• Who would be eligible for a lump sum (i.e., which diagnoses and disability ratings)?
• What would be the cost and savings of a lump sum program?

Throughout this report, a repeated theme is the close connection between how the lump sum program would be designed and what its ultimate effects would be. For most elements in the design of a lump sum program, it is not clear which of several alternative approaches would best meet the dual goals of serving veterans better and reducing costs for VA.

Note that the Commission has also requested an assessment of the merits of modifying the structure of disability compensation to provide separate payments for loss in earnings and loss in quality of life. That assessment is a different effort from this study, and those results will be provided later in a separate report. This analysis considers a potential lump sum program only in the context of the current compensation structure.