Can a 100 percent Disabled Veteran Work and Earn an Income?

You’ve just been rated 100% disabled by the VA. After the excitement of finally having the rating you deserve wears off, you start asking questions. One of the first questions you might ask is this: It’s a legitimate question – rare is the Veteran that finds themselves sitting on the couch eating bon-bons after being rated 100% disabled.

Some Veterans like to work to have something to do. Other Veterans like to work for non-profits or other organizations that provide a public service …. after all, Veterans as a community are more heavily oriented to public service than many other groups of people. Yet other Veterans still like to keep doing their job, as they find that the income from even a 100% VA disability rating is not enough to cover all their expenses.

Whether the family’s bills, funding college educations for kids and grand-kids, medical bills for spouses and children, or paying off the mountains of debt that have likely built up in the 5-10 years, you have probably been waiting for the Veterans Affairs to get off its arse and make the right decision….100% disability rating is barely enough money to live off.

So, here’s the answer…and it’s a lawyer’s FAVORITE answer…It Depends. Whether a 100 percent Disabled Veteran can work turns on the answer to this question: Are you getting a 100% schedular rating or 100% unemployability (aka, TDIU or IUIU)?

Veterans that Receive 100% Schedular Ratings have NO Limitations on Their Ability to Work.

Veterans are rated for their Veterans Affairs Disability based on a set of tables known as the VA Impairment Rating Tables. These are also known as the “Schedule of Ratings.” So, suppose your 100% VA Disability Rating comes because you qualify for the 100% rating specified for a single (or combination of multiple) service-connected conditions using the Schedule of Ratings. In that case, you have NO limitations on your ability to work.

Some Veterans think that this doesn’t make sense: after all, if you are 100% disabled, that means you can’t do anything, right? This is one of the problems with the VA Disability Compensation system – for years, we have been led to believe that the percentage of rating equates to a percentage of how much our body is disabled.

In reality, the percentage of your disability rating means that you have had that percentage of interference with your ability to earn an income.

So a Veteran whose service-connected condition equates to a 100% disability rating is not – in the eyes of the law – 100% disabled. Instead, in the eyes of the law, the Veteran’s ability to earn an income has been 100% interfered with.

Bottom line, if you are rated 100% using the Schedule of Ratings or the Impairment Rating Table
 – whether for one condition or multiple conditions – you can work as much or as little as you want.

Theoretically, you could make $1,000,000 a minute and still collect a 100% VA Disability Schedular Rating. Of course, to make that kind of money, you’d probably have to become a Congressional representative and put your hand into the pocket of some pretty unseemly political and lobbying organizations.

But the point is the same: Veterans that Receive 100% Schedular Ratings have NO Limitations on Their Ability to Work or earn an income.

Can a Veteran Earn an Income while Receiving VA TDIU Benefits?

To answer this question, we need only look to the law.

38 CFRCFR §4.16(a) – the section of the Code of Federal Regulations that states the requirements for eligibility for TDIU Benefits says the following:
Total disability ratings for compensation may be assigned, where the schedular rating is less than total, when the disabled person is, in the rating agency’s judgment, unable to secure or follow a substantially gainful occupation as a result of service-connected disabilities.

As I’ve discussed before on the Veterans Law Blog, the law does not clearly define what substantially gainful occupation is. But the law DOES define what Substantially Gainful employment IS NOT.

Read the rest of 38 CFRCFR §4.16(a):
38 CFRCFR §4.16(a) – Marginal employment shall NOT be considered substantially gainful employment. For purposes of this section, marginal employment generally shall be deemed to exist when a veteran’s earned annual income does not exceed the amount established by the US Department of Commerce, Bureau of the Census, as the poverty threshold for one person. Marginal employment may also be held to exist on facts found basis (includes but is not limited to employment in a protected environment such as a family business or sheltered workshop) when earned annual income exceeds the poverty threshold. (emphasis is mine).

So there you have it – the two ways veterans can earn an income while receiving VA TDIU benefits: when the employment is “marginal” and when the employment is “sheltered.”

We’ll look at them in more detail below.

You might ask “Why” a Veteran is allowed to earn an income in these two scenarios while receiving TDIU Benefits.

Truth be told, I have no clue why Congress wrote the laws this way when they wrote them – someday, I’ll dig into the legislative history to understand it.

But since Congress allowed it, there is NOTHING wrong with Veterans getting Marginal or Sheltered Employment income while receiving TDIU Benefits.

#1: Marginal Employment and TDIU Benefits.

Many Veterans know that they can receive this type of income even after being granted TDIU Benefits.

Go to the US Bureau of Census website, and look up the “poverty threshold for one person.” (Click here to see the historical poverty rating tables from 1959 – 2015).

You will see that, for 2014, the poverty threshold for one person is $12,316 per year (if you are under 65) or $11,354 (if you are over 65). 

Each year, the VA will ask you to verify your employment (or lack thereof) to determine whether you are eligible to continue to receive TDIU Benefits. They typically require that you use VA Form 21-4140 or 21-4140-1 to do this report.

The VA does cross-check two databases that I know of Social Security databases that record your work/income history and IRSIRS databases that record your family income on your annual tax returns. Word to the wise: if you are telling different income stories to different federal agencies, you are playing with fire and may even be committing fraud.

If you indicate in this form that your income is higher than the poverty threshold, a proposal to reduce your TDIU benefits will be forthcoming.

It’s one of the few times the VA acts with a sense of purpose – when they want to STOP paying you.

#2: Sheltered Employment & TDIU Benefits

Another way veterans can earn an income while receiving TDIU Benefits is by participating in “sheltered employment.”

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There are many ways that your income can be considered “sheltered,” but two that are clearly identified in the regulation itself:

  1. Family business
  2. Sheltered workshops (these are supervised workplaces for adults with a physical and/or mental handicap)

Now, just because you are working for a family business doesn’t mean your job is considered “sheltered employment.” It has to be what the regulation refers to as a “protected environment.”

A protected environment occurs when the employer makes special accommodations to employ and provide an income for a family member or a disabled worker. This happens quite a lot – a family business, to reduce its tax burden or simply to help another family member, pays a disabled Veteran family member an income they would not otherwise be able to receive.

How can you tell if there is a protected work environment?

What kind of questions would you ask, and what type of evidence would you need?

If you can get answers to these kinds of questions – typically in an affidavit by the business owner or the executive in charge of hiring/staffing – you will have a much stronger proof of entitlement to TDIU benefits even while earning an income well above the poverty threshold in a sheltered employment situation.

  1. Did the employer provide any special accommodations (especially if the Americans With Disabilities Act does not require them) to accommodate the employee with disabilities? These accommodations are most commonly adjustments to the work schedule, the work environment, or the work duties. I have not handled a case yet where a major employer, covered by the Americans With Disabilities Act, provides an accommodation to a 100% disabled Veteran as required by law. This is an interesting question as to whether or not the employment could be considered sheltered when the company has a legal obligation to enact accommodations. I am not aware of any VA precedent on this topic – if you know of a precedential case on this topic, don’t hesitate to let me know!
  2. If the employee leaves the company, will the business hire a “similarly situated” person to fill the position (i.e., another worker with a disability)?
    1. There are three scenarios here:
      • Scenario #1:  If the business plans to modify the Veteran’s position after they leave so that there are no longer accommodations to the work duties, environment or schedule, then you can make a pretty good argument that the employment is sheltered. Why? Because it appears that the position may have been created or modified just for the disabled Veteran.
      • Scenario #2: If the business plans on continuing the accommodation, then it’s a pretty good argument that the position itself – and anyone that holds it – is sheltered employment. (Many employers do this for the tax advantages available to certain types of “sheltered workshops”).
      • Scenario #3: If the business plans to eliminate the position after the disabled Veteran leaves the job, then it is most likely “sheltered employment.”
    1. None of the above scenarios are absolute: the more evidence you can show that an employer created a job for a 100% disabled Veteran – whether for “feel-good” reasons, tax incentives, or any other reason other than common business reasons, the stronger your case of showing that your position is “sheltered employment.”

Is there evidence that another business in the same industry would NOT hire a similarly situated employee and pay them a similar income for the same type of work?

What do I mean here?

If your family business pays you $50,000 a year while allowing you to come into the job “only on the days you feel up to it,” look to other businesses in the same industry to see if they would pay that same salary to an employee that comes and goes at will.

Where do you get evidence of this sort of thing?

Honestly, you would hire an economist to prepare an expert report on the nature of the employment and whether or not it is sheltered, based on a survey of the particular industry.

This type of expert report can get really expensive, so I would not typically do this unless it was really questionable whether the employment was sheltered or not, and there was a lot riding on the outcome.

Frankly, providing evidence that answers Question #3 is probably a bit “over the top” in most Sheltered Employment claims.

Legal Advice in Sheltered Employment situations.

Be very careful with the Sheltered Employment rules.

They are not frequently applied, many in the VA do NOT know about them (or don’t understand them when they do know about them), and the Sheltered Employment Rules can lead to severe consequences if applied incorrectly.

I’m not telling you any details here, but I know of a couple of Veterans who have been charged with criminal fraud for collecting TDIU benefits while getting an income and doing nominal work for a family member’s business.

These charges usually will not stick – the US Attorneys that prosecute these crimes have far less understanding of VA regulations than most VA raters or Board Hearing Officials.

But you’ll have to pay a criminal defense attorney to make it disappear, and the VA isn’t repaying your attorney’s fees.

That said, it is ALWAYS BEST to get legal advice – call a VA Accredited attorney and ask for a consultation – if you are considering earning income above the poverty threshold and want to know if it is or is not; considered “sheltered employment.A