The joint U.S. Department of Defense (DoD) — Department of Veterans Affairs Integrated Disability Evaluation System is the process by which DoD determines fitness for duty and separation or retirement because of disability. In this report, the authors evaluate four hypothetical alternative DoD disability compensation approaches that would support a simpler disability evaluation process by reducing reliance on disability ratings.

U.S. Department of Defense Disability Compensation Under a Fitness-for-Duty Evaluation Approach

Stephanie Rennane, Beth J. Asch, Michael G. Mattock, Heather Krull, Douglas C. Ligor, Michael Dworsky, Jonas Kempf

ResearchPublished Jan 28, 2022

The joint U.S. Department of Defense (DoD) — Department of Veterans Affairs (VA) Integrated Disability Evaluation System is the process by which DoD determines fitness for duty and separation or retirement of service members because of disability. Service members who are evaluated for disability undergo a comprehensive medical examination to document all medical conditions and receive a disability rating for every condition documented during the exam. DoD and the VA use these ratings to determine the amount of disability compensation service members receive if they are determined to be unfit to continue serving and consequently medically discharged.

Proposals for reforming the DoD compensation system have been considered in the past, but a rigorous evaluation of what those alternatives might look like and how they would affect service member benefits and costs to DoD has not been conducted. In this report, the authors describe their evaluation of four hypothetical alternative disability compensation approaches that would support a simpler disability evaluation process: compensating based on the current objectives of the DoD system (and using current benefit formulas), compensating on the basis of a military career, compensating on the basis of unfitting conditions, or compensating similar to U.S. allies.

Each alternative reduces reliance on disability ratings for determining DoD disability compensation and focuses primarily on a single decision about whether a service member is fit to perform his or her duties. The authors evaluate the potential effects of each alternative on service member compensation, processing times, end strength, lost skills and experience, and readiness.

Key Takeaways

  • With one exception, none of the alternatives would guarantee that all service members would see benefits at least as large as the benefits they would qualify for under the status quo.
  • Each alternative would reduce the length of the IDES process relative to a sequential process by an average of 29 days, or approximately 13 percent of the average duration in 2018. This estimate could be a lower bound if adopting a fitness-for-duty evaluation system leads to efficiencies in other steps in the process.
  • The estimated time savings associated with implementing an alternative system imply that active-duty end strength for the Army enlisted force would fall by at most 0.2 percent relative to the current system.
  • A model of one of the most common occupations evaluated for disability — Army enlisted infantry soldiers (11B) — suggests that bonuses are generally more cost effective than an across-the-board pay raise at restoring end strength.
  • Many policies and legislation underpinning the current disability evaluation system directly rely on, or reference, disability ratings. As a result, many aspects of Title 10, Chapter 61, would likely require repeal or amendment under a shift to an alternative system; and associated authorities would require rescissions, changes, or reissuances.
  • None of the alternatives would improve outcomes for everyone. However, any alternative system should be evaluated not only on the basis of its direct costs and benefits but also on whether it is consistent with the broader objective of disability compensation.

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Rennane, Stephanie, Beth J. Asch, Michael G. Mattock, Heather Krull, Douglas C. Ligor, Michael Dworsky, and Jonas Kempf, U.S. Department of Defense Disability Compensation Under a Fitness-for-Duty Evaluation Approach. Santa Monica, CA: RAND Corporation, 2022. https://www.rand.org/pubs/research_reports/RRA1154-1.html.
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This research was sponsored by the Office of the Deputy Assistant Secretary of Defense for Health Services Policy and Oversight and Deputy Assistant Secretary of Defense for Military Personnel Policy and conducted within the Forces and Resources Policy Center of the RAND National Security Research Division.

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