Evaluation of the Income Replacement Benefit and Rehabilitation Services

On this page

• Executive summary
• 1.0 Introduction
  • 1.1 Overview of the Rehabilitation Program
  • 1.2 Overview of the Income Replacement Benefit
• 2.0 Scope and methodology
  • 2.1 Evaluation objective and scope
  • 2.2 Evaluation questions
  • 2.3 Evaluation methodology
  • 2.4 Considerations and limitations
• 3.0 Relevance
  • 3.1 Need for the Rehabilitation Program
    • 3.1.1 Alignment of Rehabilitation Program recipients with program intent
  • 3.2 Need for the Income Replacement Benefit
  • 3.3 Alignment with government priorities and departmental roles and responsibilities
    • 3.3.1 Alignment with Government of Canada priorities
    • 3.3.2 Alignment with departmental roles and responsibilities
    • 3.3.3 Duplication and overlap with other Government of Canada programs
• 4.0 Performance
  • 4.1 Effectiveness of the Rehabilitation Program
    • 4.1.1 Barriers to successful rehabilitation
  • 4.2 Effectiveness of the Income Replacement Benefit
    • 4.2.1 Immediate outcome of the Income Replacement Benefit
    • 4.2.2 Intermediate outcome of the Income Replacement Benefit
    • 4.2.3 Effectiveness of the suitable and gainful employment provision during diminished earnings capacity assessment
    • 4.2.4 Effectiveness of the career progression factor
    • 4.2.5 Effectiveness of the $20,000 income exemption before IRB offset
  • 4.3 Economy
    • 4.3.1 Rehabilitation Program expenditures
    • 4.3.2 Income Replacement Benefit expenditures
• 5.0 Unintended Impact
• 6.0 Summary of findings and recommendations
• Appendices
  • Appendix A: Services provided through VAC’s Rehabilitation Program
  • Appendix B – Consolidation of financial benefit programs
  • Appendix C: Environmental scan
  • Appendix D: Most common medical conditions for which Veterans were approved for rehabilitation
  • Appendix E: GBA+ Analysis – Rehabilitation Program and Income Replacement Benefit
  • Appendix F: Rank at release of Veterans in the Rehabilitation Program
  • Appendix G: Diminished earnings capacity (DEC) client profile
  • Appendix H: Income Support Program logic model
  • Appendix I: Analysis of employment income of Veterans receiving Income Replacement Benefits

Executive summary

Program profile

Rehabilitation Program

Veterans Affairs Canada (VAC) defines rehabilitation as a process to restore a client’s physical, psychological, social and vocational abilities to an optimal level that will result in a Veteran’s ability to integrate and actively participate in their community.^{Footnote 1} It is intended to be an intense, time limited intervention as close to the injury or onset of symptoms as possible. The outcome of rehabilitation is an improvement, as opposed to the outcome of treatment which centers on stabilization.

The intent of the Rehabilitation Program is to focus on the reasonable restoration of functioning for eligible recipients in five major areas:

• mental and physical functioning;
• social adjustment;
• family relationships;
• financial security, employment, and personal productivity; and
• community participation.

VAC does not directly provide rehabilitation services to Veterans. VAC covers the cost for Veterans to receive medical or psycho-social rehabilitation from professional service providers in an inpatient or outpatient setting. Since program inception in 2006, vocational rehabilitation services have been provided to Veterans through a national service provider^{Footnote 2} contract.

In June 2021, VAC announced a new national contractor to deliver rehabilitation services to Veterans. The new contractor, Partners in Canadian Veterans Rehabilitation Services (PCVRS), began providing medical, psycho-social, and vocational assistance services to Veterans and their families in November 2022.^{Footnote 3}

Income Replacement Benefit

The Income Replacement Benefit (IRB) was introduced on April 1, 2019, when VAC’s programs were redesigned under the Veterans Well-being Act and VAC’s Pension for Life initiative. The IRB incorporates elements of several former programs including the Earnings Loss Benefit, the Retirement Income Security Benefit, the Supplementary Retirement Benefit, the Career Impact Allowance, and the Career Impact Allowance Supplement. The intent of the IRB is to:

…recognize and compensate veterans, and in some cases, survivors and orphans, for the economic impacts that health problem(s) resulting primarily from service have on a veteran’s ability to earn income and save for retirement. The objective is to provide the veteran with replacement income to relieve financial pressures and allow for the veteran to successfully complete rehabilitation and return to work.^{Footnote 4}

The IRB is a taxable monthly benefit designed to provide income support to Veterans who are experiencing barriers to re-establishment in post-service life due to a health problem resulting primarily from service. It is payable at 90% of the Veteran’s pre-release income while they are engaged in the Rehabilitation Program, or until the age of 65 if it is determined through a diminished earnings capacity (DEC) assessment that they cannot be gainfully employed.^{Footnote 5Footnote 6} An additional annual 1% Career Progression Factor may be added to the calculation of the IRB for Veterans who meet DEC criteria to recognize their loss of career progression.^{Footnote 7} Post-age 65, Veterans who have been found to have a DEC will continue to receive an IRB payment for life reduced to 70% of the pre-age 65 monthly amount.^{Footnote 8}

The IRB allows Veterans to earn up to $20,000 a year in employment or self-employment income without offset (deduction) to their IRB. Any employment or self-employment income above the $20,000 is offset dollar-for-dollar from their IRB.

Survivors and/or orphans may also be eligible for the IRB if they meet the eligibility criteria.

Evaluation purpose and background

The evaluation was conducted from September 2022 to September 2023 and covered the period from April 1, 2019 to September 1, 2022 (though more current information and statistics are presented in this report when possible). The evaluation was conducted in accordance with VAC’s 2022-23 to 2026-27 Departmental Evaluation Plan, which was developed to align with Treasury Board of Canada Secretariat’s (TBS’s) Policy on Results.

The Rehabilitation Program and the IRB were evaluated together as the two are closely linked. The evaluation focused on program intent, performance, relevance, effectiveness, and economy.

Evaluation findings

The evaluation finds there is a continued need and ongoing demand for the VAC Rehabilitation Program. However, there are Veterans that are being admitted to the program without a barrier to re-establishment or with conditions that cannot be improved through rehabilitation.

Both the Rehabilitation Program and the IRB align with the Government of Canada priorities and departmental roles and responsibilities. There is some overlap with benefits (vocational services) Veterans receive through the Canadian Armed Forces Long Term Disability Program, and in particular, the Canadian Armed Forces Vocational Rehabilitation Program.

In the 2022 National Client Satisfaction Survey, Veterans reported they were satisfied with the rehabilitation and vocational services they receive from VAC. Despite that, data shows that less than half of Veterans’ established goals are being met and that few Veterans report a positive change in their barriers to re-establishment. The data also reveals that few Veterans progress through the Rehabilitation Program and successfully complete the vocational component. A combination of Veterans’ severe disability, prolonged periods between injury and rehabilitation, and high IRB payments pose barriers to a successful program completion.

There is a need for some form of income replacement for Veterans participating in the Rehabilitation Program. Financial security is an important aspect in successfully transitioning from military to civilian life. VAC’s IRB is easily accessible and effective at ensuring Veterans have an annual income in excess of the median income for single Canadians under the age of 65.

Currently, when it is determined that a Veteran does not have the capacity to earn 66 2/3% of their pre-release income, they are said to have diminished earning capacity and will receive IRB benefits for life. The effectiveness of this calculation is impacted by military salaries being higher than civilian salaries. Further research and data collection is required to determine if alternative methods for measuring earnings capacity are a better fit for VAC’s rehabilitation and income support model.

The Career Progression factor (CPF) is working as designed and can provide significant financial benefit over a Veteran’s lifetime. The effectiveness of the CPF as a recognition benefit can be viewed differently by Veterans based on their individual circumstances.

The $20,000 IRB income exemption has had little impact on Veteran engagement in the workforce. However, it has provided Veterans who work with increased net income, especially for those that meet DEC criteria. Analysis shows that Veterans who receive IRB and work, report higher earnings than Veterans under the previous Earnings Loss benefit.

Rehabilitation Program and IRB expenditures are rising and will continue to rise into the foreseeable future. The length of time Veterans are spending in rehabilitation and high DEC rates are driving expenditures. IRB is now a $1 billion program and will soon be the largest VAC program by expenditure.

The design of the IRB leads to some Veterans receiving more benefits than others based on how their military pension is paid out. Veterans receiving a military pension as a stream of payments have their pension earnings deducted (offset) from their IRB payment while Veterans who have the option to receive their pension in a lump sum and choose to do so have no offset against future IRB. This may present an inequity.

The evaluation team makes the following recommendations based on the findings from the evaluation:

Recommendation #1a: That the Director General Policy and Research develop options for consideration and approval as required which will ensure Veterans entering the Rehabilitation Program have a requirement for rehabilitation interventions to overcome a barrier to participating in civilian life. This could include assessing Veterans before program eligibility is granted to determine rehabilitation need and whether barriers to transitioning to civilian life exist; and if the barrier could reasonably be expected to be addressed through active participation in the program.

Recommendation #1b: That the Director General Policy and Research develop policy options for consideration and approval as required to ensure the financial security of Veterans whose service-related health problems would prohibit return to work in any capacity and where rehabilitation is not a suitable intervention for the Veteran.

Recommendation #2: That the Director General, Service Delivery and Program Management, in collaboration with the Director General, Field Operations, review the recent increase in Category 5 DEC referrals and address as appropriate.

Recommendation #3: That the Director General Policy and Research develop evidence-based options for consideration and approval where necessary to more accurately assess Veteran earning capacity upon completion of the Rehabilitation Program. In doing so, the Director General should consider:

• alternative measures for determining Veteran earning capacity, the effectiveness of earning capacity assessments in other Canadian income replacement programs and the effectiveness of how Veteran earning capacity is measured in other allied countries;
• the potential impact that military salaries may have on a Veteran’s ability to meet the current 66 2/3% threshold of suitable gainful employment within the civilian workforce;
• working with other branches to identify and collect information on Veteran earning capacity to determine how close Veterans are currently coming to meeting the 66 2/3% threshold of suitable gainful employment within the civilian workforce;
• exploring options for incentivizing workforce participation and;
• whether the current single earnings capacity threshold is the most appropriate way to determine eligibility for long term income replacement or whether differences between military and civilian salaries and the Veteran’s residual earnings capacity should also be considered.

Recommendation #4a: It is recommended that the Director General, Policy and Research determine the full extent to which IRB recipients receive Canadian Armed Forces Superannuation benefits in the form of lump sum transfer values.

Recommendation #4b: That the Director General Policy and Research develop policy options for consideration and approval as required to ensure military superannuation benefits are fairly, consistently, and equitably offset from IRB payments.

1.0 Introduction

Veterans Affairs Canada's (VAC’s) mandate is to support the well-being of Veterans and their families, and to promote recognition and remembrance of the achievements and sacrifices of those who served Canada in times of war, military conflict, and peace.

In 2006, under the Canadian Force Member and Veteran Re-establishment and Compensation Act (CFMVRCA), VAC launched a suite of programs designed to assist modern day Veterans^{Footnote 9}. This legislation was commonly known as the New Veterans Charter (NVC). The newly designed programs were intended to provide both economic and non-economic assistance to Veterans to compensate for the impact of career ending illness or injury and to help Veterans overcome barriers to re-establishment into post-service life. The NVC model was intended to modernize VAC’s programming with a focus on return to wellness rather than disability as was the case in previous legislation (the Pension Act). The name of the legislation was subsequently changed in 2018 to the Veteran Well-being Act (VWA).

Rehabilitation Services (hereafter referred to as the Rehabilitation Program) were launched as part of the non-economic assistance provided to modern-day Veterans under the NVC. The services include medical, psycho-social, and vocational aid to help Veterans transition to civilian life. A complementary program, the Earnings Loss Benefit, was launched as part of the NVC to recognize the economic impact a career-ending or service-related disability may have on a Veteran's ability to earn income following release from the military. This program eventually evolved into what is known today as the Income Replacement Benefit.

1.1 Overview of the Rehabilitation Program

VAC defines rehabilitation as a process to restore a client’s physical, psychological, social and vocational abilities to an optimal level that will result in a Veteran’s ability to integrate and actively participate in their community.^{Footnote 10} It is intended to be a time limited intervention as close to the injury or onset of symptoms as possible. The outcome of rehabilitation is an improvement, as opposed to the outcome of treatment which focuses on stabilization.

The intent of the Rehabilitation Program, as laid out in the 2006 Regulatory Impact Analysis Statement (RIAS)^{Footnote 11}, is to focus on the reasonable restoration of functioning for eligible recipients in five major areas:

• mental and physical functioning;
• social adjustment;
• family relationships;
• financial security, employment, and personal productivity; and
• community participation.

The RIAS states the policy objective as the improvement of Veterans’ physical and/or psychological functioning, employability, and quality of life.

Four main applicant groups are eligible for VAC rehabilitation and vocational assistance services:

1. Veterans with a mental or physical health problem resulting primarily from service in the Canadian Armed Forces (CAF) that is creating a barrier to re-establishment^{Footnote 12} (rehabilitation need) in post-service life;
2. Veterans released on medical grounds (release category 3(a) or 3(b)) with a mental or physical health problem not resulting primarily from service in the CAF.^{Footnote 13}
3. Spouses or common-law partners of Veterans who will benefit from vocational assistance services due to the Veteran meeting Diminished Earnings Capacity criteria (i.e., it has been determined that the Veteran does not have the capacity to earn 66 2/3% of their pre-release imputed income); and
4. Survivors of members or Veterans who died on or after April 1, 2006, because of a service-related injury or disease, or a non-service-related injury or disease that was aggravated by service. The determination of a member or Veteran’s death being attributable to service must be documented in a VAC disability benefits entitlement decision.

Veterans that are approved for the Rehabilitation Program are assigned a case manager who will work with them (and their family) to identify goals and to develop a rehabilitation plan. In addition to goals, the plan will identify:

• the services and benefits needed to reach those goals;
• the service providers that will be needed to achieve the goals; and
• timeframes for successful completion of rehabilitation.

It should be noted that VAC does not directly provide rehabilitation services to Veterans. VAC covers the cost for Veterans to receive medical or psycho-social rehabilitation from professional service providers in an inpatient or outpatient setting. Since program inception in 2006, vocational rehabilitation services have been provided to Veterans through a contract VAC has with a national service provider^{Footnote 14}.

In June 2021, VAC announced a new national contractor to deliver rehabilitation services to Veterans. Under the new contract awarded to Partners in Canadian Veterans Rehabilitation Services (PCVRS), the national contractor will now be responsible for providing all types of rehabilitation. The contractor began providing medical, psycho-social, and vocational assistance services to Veterans and their families in November 2022.^{Footnote 15} VAC case managers work collaboratively with the contractor's rehabilitation service specialists to coordinate, oversee, and follow-up with Veterans’ rehabilitation services. For more information on the types of services provided through VAC’s Rehabilitation Program, see Appendix A: Services provided through VAC’s Rehabilitation Program.

Veterans medically releasing from the military also have access to the Canadian Armed Forces Vocational Rehabilitation Program (CAF VRP) and the Canadian Armed Forces Long Term Disability (CAF LTD) benefit. These benefits are provided under the Service Income Security Insurance Plan (SISIP), a group insurance plan for CAF members backed by Manulife Financial Corporation. Depending on the situation, Veterans may receive benefits through SISIP and VAC at the same time. The interaction between SISIP programs and VAC’s Rehabilitation Program and the Income Replacement Benefit (IRB) is discussed in Section 3.3.3: Duplication and overlap with other Government of Canada programs.

Overview of the Rehabilitation Program application submission and assessment process

Veterans can apply for the Rehabilitation Program through VAC’s online platform, My VAC Account (MVA), or by completing an application form and mailing it to VAC. The applicant is required to submit documentation to demonstrate how they meet the program eligibility criteria. The decision maker (a case manager) will use any existing information on file provided by the Veteran or as part of another application for a VAC benefit or service to support the application where applicable. CAF members may apply to the program prior to military release and have their application approved, however, VAC does not have the authority to assess Veterans for rehabilitation needs until after they release.

The department’s posted turn-around time for making a rehabilitation eligibility decision is 14 days from the point all information is submitted. Eligibility decisions must be rendered and recorded in respect of all health problems for which the Veteran has applied to the program. VAC has the authority to consider a waiver^{Footnote 16} of application where appropriate.

For each health problem determined eligible for the Rehabilitation Program under Section 8 of the Veterans Well-being Act, the associated barriers to re-establishment must be self-identified by the applicant. These must be clearly noted and documented, and an explanation be provided of how the health problem is preventing or limiting the Veteran’s ability to perform their role(s) at home, at work, or in their community. During the decision making process, the decision maker uses the Veteran’s statements, along with the supporting medical evidence provided with the application or on file, to confirm that the barriers exist.

Once eligibility for the program has been determined, an assessment(s) is performed to verify/determine the extent of the barrier(s) the Veteran is self-reporting. Participants are required to provide any necessary medical information relating to the rehabilitation need and information relating to employment, skills, education, experience, and training. Pending the results of the assessment, one of several things may happen:

• if the initial assessment shows a barrier(s) to re-establishment and that a Veteran has the potential for improvement, then a plan can be developed and the proper medical treatments, interventions, or training can be put in place;
• if the initial assessment shows a barrier(s) to re-establishment, but medical treatments or interventions are unlikely to resolve the barrier(s) or there is no chance for improvement, the Veteran’s capacity to work will be assessed, and a determination will be made as to whether the Veteran has a diminished earning capacity (DEC). Those that meet the DEC criteria may receive Income Replacement Benefits for life if they continue to meet IRB program requirements (see Section 4.1.1 Barriers to successful rehabilitation for more information on the DEC process); or
• if the initial assessment does not reveal a barrier to re-establishment, then a plan will not be developed, and the Veteran will exit the Rehabilitation Program^{Footnote 17}.

Spouses of Veterans that meet DEC criteria or survivors of Veterans who die because of their service-related injuries may apply for vocational assistance services and will be similarly assessed to determine their vocational needs.

While engaged in a rehabilitation or vocational assistance plan, the Veteran or spouse/survivor must actively participate, or the plan may be suspended or cancelled. Similarly, a plan may be cancelled if the participant knowingly provides false information or does not participate in such a way as to meet the goals of the plan.

After a Veteran completes all the medical, psycho/social, and/or vocational components of their rehabilitation plan, an assessment of the Veteran’s earnings capacity is performed and a DEC decision is made.^{Footnote 18} If a Veteran completes rehabilitation and it is determined they have the capacity to be suitably and gainfully employed^{Footnote 19}, the Veteran’s rehabilitation plan will be closed, Income Replacement Benefits will end, and the Veteran can begin searching for civilian employment. The Veteran may be eligible for other VAC supports while they search for employment.^{Footnote 20} If it is determined that a Veteran will never be suitably or gainfully employed, and the Veteran has met DEC criteria, the rehabilitation plan will be closed, and the Veteran may receive IRB for life if IRB program requirements continue to be met^{Footnote 21}.

1.2 Overview of the Income Replacement Benefit

The Income Replacement Benefit (IRB) was preceded by the Earnings Loss Benefit (ELB) which came into effect in 2006 with the NVC suite of programs. The policy objective of the ELB was to “relieve financial pressures upon those who are participating in a rehabilitation or vocational assistance plan, in order to increase the chances for success.”^{Footnote 22} The Earnings Loss Benefit provided Veterans with 75% of their pre-release imputed income while they were actively engaged in VAC rehabilitation, or until age 65 if it was determined that the Veteran could not reasonably be expected to return to gainful employment due to injury/illness. In 2016, the benefit was increased to 90% of a Veteran’s pre-release income: program applications doubled within 12 months from 2,848 in 2015-16 to 5,600 in 2016-17.

On April 1, 2019, VAC programs were once again redesigned under the Veterans Well-being Act and VAC’s Pension for Life initiative. Several VAC financial benefits were repealed, including the Earnings Loss Benefit, and a new Income Replacement Benefit (IRB) was introduced.^{Footnote 23} (See Appendix B: Consolidation of financial benefit programs for more information on the repealed programs). The IRB is intended to:

…recognize and compensate veterans, and in some cases, survivors and orphans, for the economic impacts that health problem(s) resulting primarily from service have on a veteran’s ability to earn income and save for retirement. The objective is to provide the veteran with replacement income to relieve financial pressures and allow for the veteran to successfully complete rehabilitation and return to work.^{Footnote 24}

The IRB came into effect on April 1, 2019. The taxable monthly benefit is designed to provide income replacement to Veterans who are experiencing barriers to re-establishment in post-service life due to a health problem resulting primarily from service. To become entitled to the IRB, a Veteran must apply for both the IRB and the rehabilitation program and be assessed as having barriers to re-establishment due to physical or mental health problem(s) resulting primarily from service. As of March 31, 2023, there were 28,715^{Footnote 25} Veterans or family members receiving IRB benefits.

The IRB is generally calculated at the higher of:

• Ninety (90) percent of a Veteran’s gross salary at release, indexed forward to current day (less offsets)^{Footnote 26}, or
• the minimum threshold, $54,812.92 (2023), indexed annually based on the Consumer Price Index. The minimum threshold^{Footnote 27} was implemented to ensure that Veterans on IRB will have an income from all sources comparable to a middle-class income.

The IRB calculation differs slightly for certain classes of military reservists. Additional information can be found in VAC’s Income Replacement Benefit Policy.

The IRB may be payable at 90% of pre-release income while a Veteran is engaged in the Rehabilitation Program, or for life if it is determined the Veteran has a diminished earnings capacity (DEC) and does not have the capacity to be gainfully employed.^{Footnote 28Footnote 29} An additional 1% adjustment, called a career progression factor (CPF), may also be added during the calculation of the amount of IRB payable for Veterans who meet DEC criteria to compensate for loss of career progression.^{Footnote 30} Post-age 65, Veterans who have diminished earning capacity will continue to receive monthly IRB payments for life at a reduced rate. Veterans will receive 70% of the IRB they would have been entitled to pre-age 65 before offsets were included minus their current offsets.^{Footnote 31}

Survivors and/or orphans^{Footnote 32} of a Veteran who dies before age 65 may be eligible for IRB if the Veteran’s death resulted from a service-related injury or illness or a non-service-related injury or disease that was aggravated by service. Survivors and/or orphans may receive IRB at a rate of 90% of the imputed military income for a month minus certain offsets – (i.e., amounts received in respect of the deceased Veteran) up until the date the Veteran would have turned age 65. After the date the Veteran would have turned age 65, the rate is recalculated as 70% of the amount that the Veteran would have received after age 65 minus offsets.

If a Veteran in receipt of IRB dies after age 65, survivors and/or orphans may be entitled to IRB calculated at the rate of 70% of the amount the Veteran was receiving after turning age 65 (before the Veteran’s offsets) minus any offsets the survivor/orphan may have.^{Footnote 33}

Finally, if a Veteran in receipt of IRB dies of a non-service-related illness or injury prior to age 65, survivors and/or orphans may be eligible for a lump sum payment equaling twenty-four (24) times the monthly IRB amount (before offsets) that the Veteran was entitled to at time of death.

Overview of the Income Replacement Benefit application submission and assessment process

Veterans must apply for the Income Replacement Benefit before age 65 and, if they have not already done so, must also apply for the Rehabilitation Program under Section 8 of the Veterans Well-being Act. Applications for the IRB may be submitted in writing to the department or electronically through My VAC Account. The following information must accompany the application:

• Information regarding the Veteran’s eligibility for the IRB:
  • medical reports or other records that document the Veteran’s physical or mental health problem;
  • information or documents that indicate the nature of the Veteran’s service in the Canadian Armed Forces (CAF); and
  • any other information or documentation that indicates the circumstances of the Veteran’s physical or mental health problem that the Veteran considers relevant in support of the application.
• Information for the purposes of the calculation of the monthly IRB amount:
  • information that is necessary to determine the Veteran’s imputed income, such as military rank, class, pay level and category, and dates of release; and
  • information regarding the amounts payable to the Veteran from other sources, such as employment income, long-term disability, or retirement amounts.

A member of the CAF may apply for the IRB prior to release and the Department may consider the application and render a decision regarding whether the member will be eligible when they become a Veteran. However, the IRB will not be payable until after the Veteran formally releases.

VAC will inform a Veteran of their entitlement to IRB in writing or electronically through My VAC Account. A Veteran who is informed of their entitlement to IRB is required to participate in the assessment of their rehabilitation needs, and in the development and implementation of their VAC rehabilitation plan (i.e., the Veteran must complete the required assessments or examinations necessary to develop a plan and then must actively work towards meeting the plan’s goals). Failure to participate in the rehabilitation process may result in the suspension and/or cancellation of the IRB.

It should be noted that VAC is not alone in offering income replacement benefits and rehabilitation services as part of its suite of services for Veterans. Several allied countries offer similar programs including Australia, New Zealand, and the United States. For further information, see Appendix C: Environmental Scan.

2.0 Scope and methodology

2.1 Evaluation objective and scope

This evaluation was conducted in accordance with VAC’s 2022-23 to 2026-27 Departmental Evaluation Plan, which was developed to align with Treasury Board of Canada Secretariat’s (TBS’s) Policy on Results. The policy stipulates that evaluations of all ongoing programs funded under a grant and contribution vote that have a five-year average expenditure of $5 million per year must be evaluated every five years. The policy also indicates that all organizational spending and all programs in the Department’s Program Inventory must be considered within departmental evaluation planning based on risk and need.

The IRB and the Rehabilitation Program were evaluated together as the two programs are intricately linked, with IRB being dependent on the Veteran meeting Rehabilitation Program eligibility criteria. Evaluation of the IRB is mandatory as annual expenditures average more than $5 million per year (exceeded $1 billion in 2022-23) while the Rehabilitation Program is being evaluated based on risk and need.^{Footnote 34} This is the first evaluation of the IRB program^{Footnote 35}; the Rehabilitation Program was last evaluated in 2014.

Evaluation coverage and criteria under the Policy on Results requires that the past performance and current activities of the IRB program be reviewed to determine program relevance, effectiveness, and economy. However, early in the evaluation planning process, it was identified that program intent must be a primary evaluation focus for both programs.

Concurrent with the planning phase of this evaluation, VAC’s Audit and Evaluation Division (AED) completed an audit of the Income Replacement Benefit. The audit primarily focused on the internal controls for calculating IRB monthly payments, as well as the risk management of the income offset (deduction) piece of the IRB calculation. This evaluation did not delve into risk management or the calculation of IRB offsets, though employment and superannuation offsets were analyzed through the lens of program intent.

Analysis conducted while planning the scope for the Rehabilitation Program evaluation indicated that the greatest area of risk and need lie in whether the program is meeting its original intent. The delivery of the program was not included within scope as a new delivery model was being implemented during the period of the evaluation.

The evaluation began in September 2022 and was substantially completed by September 2023. The evaluation covers the period from April 1, 2019 to September 1, 2022. When available and applicable, more up-to-date statistics and information was incorporated into this evaluation report (e.g., observations of the DEC decision making processes, updated expenditure forecasts, program statistics, etc.).

2.2 Evaluation questions

Upon completion of an initial review (interviews, document review, and data analysis), evaluation questions were developed under the themes of relevance and performance to help assess each program. A list of evaluation questions, highlighting the key lines of inquiry, can be found in Table 1 below.

Table 1: Evaluation questions

2.3 Evaluation methodology

The Evaluation was summative^{Footnote 36} in nature and relied on a mix of qualitative and quantitative data sources. The methodology incorporated multiple lines of evidence to ensure reliability of collected information and reported results. This information is further outlined in Table 2 below.

Table 2: List of evaluation methodologies and sources

2.4 Considerations and limitations

The evaluation identified the following considerations and limitations:

• The evaluation team consulted with various areas across the department to gain an in-depth understanding of the IRB and Rehabilitation programs, the original intent of the programs, how they operate, what is working well, and where there may be areas for improvement.
• The evaluation team was able to visit select offices in Halifax, Kingston, Winnipeg, and Edmonton. Regional differences in program utilization discovered during interviews affected conclusions about the effectiveness of the program across Canada.
• Gender based analysis (GBA+) was incorporated into the evaluation where possible. Limitations in the data that the department collects prevents a fulsome analysis based on gender and ethnicity.
• The introduction of the IRB program in 2019 coincided with the release of a new GCcase benefit processing system used to store client and program information and process benefits. This made data retrieval and detailed analysis from this period unreliable. To mitigate, data from the 2021-22 fiscal year was used for analysis as it was more fulsome and reliable.
• Relying on 2021-22 rehabilitation data is challenging as well in that case managers were instructed to close out rehabilitation plans where possible in anticipation of the transfer to the new service provider. This resulted in slightly inflated numbers of closed case plans and DEC determinations rendered for that period. However, there was little impact on the percentage of Veterans meeting DEC criteria.
• The determination of whether Veterans are meeting rehabilitation goals is a best estimate based on incomplete data that is impacted by system workarounds and subjective categorization as to why rehabilitation plans get closed. For example:
  • 370 rehabilitation plans were identified as being closed due to the Veteran having “no rehabilitation need”. In reviewing these files, there were instances where Veterans “fully or partially” completed rehabilitation goals. In other instances, Veterans met DEC criteria and did not meet any goals. These Veterans do not get captured statistically when trying to determine whether Veteran goals are met although, on average, they spend 3.2 years in the Rehabilitation Program.^{Footnote 37}
  • Interviews with VAC employees indicate that Veterans who accept employment before completing their rehabilitation plan (i.e., before a final vocational assessment is completed and a DEC determination is made) have their rehabilitation plan “cancelled” as per policy. Plans cannot be marked “completed” and the system will not show that any goals were met or partially met unless the Veteran undergoes final assessments. Thus, there are instances where Veterans with relatively good outcomes are lumped into the “cancelled” category normally reserved for Veterans who were removed from the program for failure to participate or non-compliance with the program terms, etc. A portion of the 1,193 rehabilitation plans that were cancelled between 2019 and August 2022 fall into this category. Quantifying the exact number of instances this happens would require an extensive file review.
• During the examination stage of the evaluation, inconsistencies between information housed in GCcase vs CSDN were noted. For example, in some instances clients were shown as “exiting” the Rehabilitation Program in CSDN, however, they did not exit the program, they were transferred to the GCcase system. In other instances, documentation was expected to be found in one system but was posted to the other system. Modifications to the GCcase system were recently made (post-evaluation).
• During the file review, instances were observed where information on the CSDN system was identified as having been transferred to GCcase, however, the information could not be found on either system.
• During the conduct of the evaluation, delivery of the Rehabilitation Program changed. VAC now contracts all elements of program delivery (medical, psycho-social, and vocational) to a single contractor. The migration/transfer of files to the new contractor began in November 2022 and was completed in October 2023. It is pre-mature to evaluate or make comment on the degree of success the initiative is having. A future evaluation of Rehabilitation Services will determine whether this change improves program effectiveness and efficiency.
• The Performance Information Profile for the Rehabilitation Program was changed during the conduct of the evaluation. As a result, it was too early to evaluate whether the new performance standards are being met.
• The evaluation team did not consult with recipients or providers directly. Past client surveys were reviewed for relevant material including iterations of the VAC National Client Survey and the Client Experiences with Veterans Affairs Canada Rehabilitation Program and Case Management Services survey.
• The evaluation team was unable to estimate with an acceptable level of confidence program resource utilization costs for the period under review as the current methodology used by the department has not been recently updated.

The above noted information should be taken into consideration when reading this evaluation report. Additional limitations may be identified where applicable.

3.0 Relevance

Veterans Affairs Canada (VAC) has a mandate to support the well-being of Veterans and their families. The Rehabilitation Program is intended to help those Veterans who require medical, psycho-social, or vocational rehabilitation to transition from military to civilian life. The IRB program is intended to provide the veteran with replacement income to relieve financial pressures and allow for the veteran to successfully complete rehabilitation and return to work.^{Footnote 38}

3.1 Need for the Rehabilitation Program

Prior to the introduction of the Rehabilitation Program in 2006, the only rehabilitation program available to Veterans was through the Service Income Security Insurance Plan (SISIP), a long-term disability plan for members of the Canadian Armed Forces. SISIP covers both service and non-service-related injuries for Veterans who medically release from the military. Currently through SISIP, Veterans receive vocational rehabilitation, but not medical or psycho-social rehabilitation.^{Footnote 39} (See Section 3.3.3 Duplication and overlap with other Government of Canada programs for more information on the SISIP program).

VAC’s Rehabilitation Program was developed as part of the New Veteran Charter wellness model and addresses several areas where SISIP does not provide coverage including:

• for those Veterans who released voluntarily and, sometime after release, developed a rehabilitation need related to service;
• for Veterans who needed medical or psycho-social rehabilitation before participating in a vocational rehabilitation component; and
• for spouses/common-law partners or survivors of Veterans when the Veteran’s injuries/illness are such that they cannot participate in rehabilitation.

Between 2018-19^{Footnote 40} and 2022-23, approximately 29,635^{Footnote 41} unique clients participated in the Rehabilitation Program. The threshold for entry into the program is low relative to other VAC programs. Any applicant who has received a disability benefit through VAC and who self declares a barrier to re-establishment, in practice, gains almost automatic entry. Application approval rates show that on average approximately 97% of applications are approved each year (see Table 3).

Table 3: Annual Rehabilitation Program applications received and adjudicated

Source: AED analysis of CSDN data.

The number of Veterans or spouses/survivors engaged in the program at any given time is always changing as there are clients entering and leaving the program each day. Annual snapshots show that the program has grown substantially since the last evaluation in 2014 (see Table 4), but participation has remained relatively consistent since 2017-18. Over the past five years, there were on average approximately 13,670 Veterans or family members on the Rehabilitation Program at any given time.^{Footnote 44}

Table 4: Rehabilitation program eligible recipients^{Footnote 45} (as of March 31 each year)

Source: VAC Finance Division

Participation in the program is forecasted to remain steady. See Section 4.3.1 Rehabilitation Program expenditures for more information.

Interviews with VAC employees confirm that there is a need for the program and that Veterans do benefit in certain circumstances from rehabilitation. A file review of Veterans who exited the Rehabilitation Program in 2021-22 shows that rehabilitation need, in most cases, is being linked to conditions for which a disability benefit has been granted. It also showed that Veterans often suffer from multiple complex injuries and illnesses. Approximately 96% of Veterans in rehabilitation had at least one medical condition for which VAC had granted a disability benefit, with an average of 3.6 rehabilitation conditions per Veteran.

A closer look at rehabilitation conditions through a file review of 351 Veterans who completed rehabilitation found that the number of rehabilitation conditions per Veteran ranged between 1 and 17 (see Figure 1).

Figure 1 – Number of rehabilitation conditions per Veteran

Source: AED analysis of CSDN data

Analysis of data gathered through file review reveals that 78% of Veterans in rehabilitation have at least one mental health condition listed as a rehabilitation condition. As Figure 2 shows, mental health conditions are often accompanied by physical ailments. This adds to the complexity of need and may impact program success (see Section 4.2 Effectiveness of the Rehabilitation Program for more information on program success).

Figure 2 – Breakdown of physical and mental health conditions

Source: AED analysis of GCcase data.

Post traumatic stress disorder is the most common disability experienced by Veterans in the program (47%), with depressive disorders second at 14%. The leading physical condition experienced by Veterans in rehabilitation is tinnitus (11%). For a list of the most common rehabilitation conditions Veterans experience, see Appendix D: Most common medical conditions for which Veterans were approved for rehabilitation.

Interviews with VAC employees noted that while Veterans are generally approved for rehabilitation with conditions for which they have a disability benefit, sometimes these conditions cannot be rehabilitated. For example, conditions like hearing loss and tinnitus often have few or no rehabilitation options, yet many Veterans have these conditions approved as a rehabilitation condition.^{Footnote 46} In other cases, Veterans have serious disabilities, such as certain types of cancer which may be totally disabling and which no rehabilitation is possible, yet the Veteran must apply to the Rehabilitation Program in order to fulfill their need for financial benefits (i.e., the Income Replacement Benefit).

Approving conditions that cannot benefit from rehabilitation is not consistent with the intent of the Rehabilitation Program as laid out in the RIAS. Conditions that have stabilized or for which the only intervention is a medical device (e.g., a hearing aid or masking device) are more appropriately dealt with through VAC’s Treatment Benefit program.

Placing a Veteran with a degenerative/terminal condition into the Rehabilitation Program when the only need is access to income replacement benefits is also incongruent with program intent. There is an administrative cost to placing Veterans in the program and subsequently making a diminished earnings capacity decision. While the need for income replacement benefits is undeniable, changes to the Rehabilitation Program gateway to the Income Replacement Benefit should be considered.

Interviews with employees point to the inability to assess Veterans before eligibility as a factor allowing Veterans to enter the program when:

• they do not have an actual barrier to re-establishment;
• they apply for medical or psychosocial rehabilitation, but their condition is stable (i.e., the condition is in a maintenance or treatment phase beyond the point of rehabilitation); or
• their motivation or need is access to the Income Replacement Benefit rather than the receipt of rehabilitation services.

To ensure only those with a rehabilitation need are accepted into the program the evaluation recommends:hearing loss.

Recommendation #1a

That the Director General Policy and Research develop options for consideration and approval as required which will ensure Veterans entering the Rehabilitation Program have a requirement for rehabilitation interventions to overcome a barrier to participating in civilian life. This could include assessing Veterans before program eligibility is granted to determine rehabilitation need and whether barriers to transitioning to civilian life exist; and if the barrier could reasonably be expected to be addressed through active participation in the program.

Management Response: Management agrees with this recommendation. Further information is contained in Table 5.

Table 5: Management response to recommendation #1a

Recommendation #1b

That the Director General Policy and Research develop policy options for consideration and approval as required to ensure the financial security of Veterans whose service-related health problems would prohibit return to work in any capacity and where rehabilitation is not a suitable intervention for the Veteran.

Management Response: Management agrees with this recommendation. See Table 6.

Table 6 – Management Response to recommendation #1b

3.1.1 Alignment of Rehabilitation Program recipients with program intent

When developing the scope for the evaluation and looking at ways to add value for VAC employees administrating the rehabilitation policies, it was established that a closer look at who is receiving benefits through the program was necessary. The goal of defining the program population is to determine whether participants are aligned with program intent and whether program recipients are representative of the Veteran population.

The evaluation team used data from VAC’s CSDN and GCcase databases to determine the characteristics of Veterans receiving rehabilitation services. The team extracted and analysed data on more than 4400 rehabilitation recipients whose rehabilitation plan was closed in fiscal year 2021-22. A file review of 351 of these individuals was conducted to supplement and verify the system data^{Footnote 47}.

General client demographics

The analysis of Rehabilitation Program participants reveals that the majority of Veterans who access rehabilitation services enter the program at age 40 or older with half entering the program at age 50 or older. (The average age of entry was approximately 48 years old while the median age was 50. See Figure 3.)

Figure 3: Age Rehabilitation applicants entered the program

Source: AED analysis of CSDN data

Clients participating in the Rehabilitation Program are more likely to be male (82%) than female (18%), closely resembling the male/female breakdown for the CAF as a whole where women make up approximately 16.5% of the population. Rehabilitation participants are distributed across the country as expected with 46% of rehabilitation clients in Central Canada, 28% in Atlantic Canada, and 24% in Western Canada.^{Footnote 48}

Approximately 81% of rehabilitation clients list English as their written language preference while almost 19% list French. Nationally, 76% of Canadians list English as their first language while 21% list French. It should be noted that VAC does not track client’s first language or language of choice, only which of the two official languages Veterans wish to be contacted in. See Appendix E: GBA+ Analysis – Rehabilitation Program and Income Replacement Benefit for a further breakdown of client demographics along gender lines.

Military service profile

Rehabilitation participants typically release with regular force service or a combination of regular force and reserve force services^{Footnote 49}. Only 5% of program participants served exclusively in the reserves (see Figure 4).

Figure 4: Military service of rehabilitation participants

Source: AED file review

The file review showed 60% of rehabilitation participants released from the Army and more than 70% had ten plus years of CAF service (see Figures 5 and 6).

Figure 5: Military branch of service at release

Source: AED file review

The breakdown of Rehabilitation participants closely resembles the CAF population (Regular Force plus Reserves): Army 46,500 (62%), Airforce 15,400 (20%), Navy 13,500 (18%).

Figure 6: Years of service at release from the Canadian Armed Forces

Source: AED file review

More than 40% of Veterans accessing the program served at least 20 years in the military, indicating that the program is attracting Veterans who are already in line to receive CAF pension benefits under the Canadian Forces Superannuation Act.

The file review showed that 55% of rehabilitation clients leave the military at a junior rank versus leaving at a higher officer rank (45%).^{Footnote 50} The proportion of officers in the Rehabilitation Program is higher than the proportion of officers within the CAF regular force (which is currently approximately 27%. See Appendix F: Rank at release of Veterans in the Rehabilitation Program for a list of program participants by rank.)

Approximately 44% of all Rehabilitation Program clients reviewed released at the junior rank of Corporal or Master Corporal (or the naval equivalent of Master Seaman or Leading Seaman). At the officer level, 16% of all rehabilitation clients released at the non-commissioned officer rank of Sergeant or the Naval equivalent Petty Officer 2^nd Class.^{Footnote 51}

Veterans reviewed were spread out over nearly eighty different military occupations (as at the time of their release). Those who identified themselves as Infantry, Supply Technicians, Armored Crewman, Mobile Support Equipment Operators, and Combat Engineers were more likely to be in rehabilitation than other occupations.

The file review shows that more than 60% of Rehabilitation participants release from the military with a medical discharge (category 3A or 3B). However, a significant percentage (approximately 35%) release for reasons other than medical, which indicates that the program is capturing Veterans (as intended) who do not qualify for rehabilitation through the Canadian Armed Forces Vocational Rehabilitation Plan (CAF-VRP) (Table 7).

Table 7: Military release category of rehabilitation participants

Source: AED file review of GCcase and CSDN data

It is especially important that the program continue to catch Veterans who release for non-medical reasons. Interviews with employees and CAF personnel indicate longer than usual wait times to receive a medical release may be leading CAF members to retire under other categories before their medical release can be completed.

Profile of Veterans meeting diminished earnings capacity criteria

Data analysis, corroborated through file review, shows approximately 79% of Veterans whose rehabilitation plan was closed in 2021-22 met DEC criteria.^{Footnote 52} A sample of these Veterans shows they typically spend less than two years in rehabilitation before their file is forwarded for a DEC decision (see Table 8).

Table 8 – Turnaround time between Rehabilitation Program application and referral to DEC Unit

Source: AED analysis of CSDN and GCcase data.

Veteran age is one of the most significant factors in program outcomes identified through gender-based analysis of the program. Older Veterans are significantly more likely to be deemed to have diminished earnings capacity at the conclusion of their rehabilitation than younger Veterans (see Table 9).

Table 9 – Rehabilitation Program Completions by age 2019-20 to 2022-23^{Footnote 54}

Source: AED analysis of CSDN data. DEC rate is for all years combined. Rehab exits include those who completed the program or were cancelled from the program (without a DEC decision).

Approximately 70% of Veterans engaged in the Rehabilitation Program are currently age 40 or older. Older Veterans typically release at higher rank and higher military salaries. The file review revealed that 84% of Veterans at the officer level (commissioned and non-commissioned officers) met DEC criteria upon closure of their rehabilitation plan in 2021-22 versus 76% for non-commissioned members. The current criteria for determining whether a Veteran has a diminished earnings capacity (i.e., whether they can earn 66 2/3% of pre-release income in the civilian workforce) favours older Veterans at higher wage levels as they are less likely to match with suitable and gainful employment in the civilian workforce, regardless of their barriers to reestablishment. (See Section 4.2.3 Effectiveness of the suitable and gainful employment provision during diminished earnings capacity assessment for further analysis of the 66 2/3% of pre-release earnings threshold.)

Veterans with multiple health conditions are more likely to meet DEC criteria, especially if they have both mental and physical ailments. A file review revealed that approximately 88% of Veterans who receive rehabilitation for both physical and mental health conditions eventually meet DEC criteria. This compares to 74% for those with mental health conditions only and 61% for those with physical ailments only. It should be noted that the average Rehabilitation plan contained 2.6 physical health conditions and 1 mental health condition. The file review showed that 95% of officers (including commissioned and non-commissioned officers) who had both a mental and physical condition met DEC criteria upon closure of their rehabilitation plan in 2021-22 versus 80% of junior members with a mental and physical condition.

The file review also revealed that Veterans who enter the Rehabilitation Program with employment as the primary goal are less likely to meet DEC criteria. It should be noted, however, that of the 351 files reviewed, only 46 (13%) listed employment as the primary goal, with 21 of those eventually meeting DEC criteria.

A review of data from 2019-20 to 2021-22 indicates that Veterans from the Atlantic Region are more likely to meet DEC criteria than other regions in Canada. For example, 84% of Veterans from the Atlantic Region who exited the Rehabilitation Program in 2021-22 met DEC criteria, while the DEC rate for the Central Region was 70% and the Western Region was 67%. The high number of Veterans in the Atlantic region is unusual given all DEC decisions are made in a centralized unit under the same criteria. Interviews with employees did not offer any definitive reasons why Veterans in Atlantic Canada were more likely to meet DEC criteria. Further investigation is required.

Further information on DEC clients can be found in Appendix G, Diminished earnings capacity (DEC) client profile.

3.2 Need for the Income Replacement Benefit

Research indicates there is a connection between financial security and better health outcomes. It also shows that financial security is an important aspect in successful Veteran transition from military to civilian life. VAC includes financial security as part of its well-being model for Veterans (Figure 7).

Figure 7 – CAF/VAC Well-being Model describing the seven domains of well-being required for a successful transition to civil life

Source: adapted from Veterans Affairs Canada info brief.^{Footnote 56}

The IRB, like its predecessor the ELB, is intended to promote financial security for Veterans engaged in the Rehabilitation Program. This aligns with VAC’s well-being model and, in theory, should allow for better health outcomes. As Table 10 shows, approval rates for both the EL benefit (2014-15 to 2018-19) and the IRB (2019-20 to 2022-23) have been high.

Table 10: Annual Earnings Loss Benefit and Income Replacement Benefit applications received and adjudicated^{Footnote 57}

Source: AED analysis of CSDN data

Interviews with VAC employees indicate there is a need for some type of income replacement benefit so Veterans can dedicate their time to rehabilitation/getting well without the stress of financial pressures. Interviewees pointed out that the IRB provides considerable economic benefit to Veterans while they are engaged in the Rehabilitation Program. Data as of March 2022, shows that Veterans under age 65 were eligible for between $51,000^{Footnote 58} and $300,000 (gross) in IRB benefits per year, depending on their pre-release income (see Table 11 and Table 12 for breakdown of IRB eligibility amounts by gross and net payable).

Table 11 – Annual gross IRB amount payable to Veterans as of March 31, 2022

Source: AED analysis of CSDN data. Excludes Veterans who are CIAS Protected only.

Table 12: Annual net IRB payable to Veterans after offsets are deducted (as of March 31, 2022)

Source: AED analysis of CSDN data. Excludes Veterans who are CIAS Protected only.

Approximately 1/3 of Veterans under age 65 who were in receipt of IRB on March 31, 2022 received at least $50,000 (net). Further, it should be noted that the above table does not include Veteran income from other non-deductible sources such as investments. It should also be noted that 1,302 Veterans under age 65 did not receive any IRB payment, indicating that they had income offsets in excess of 90% of their pre-release income (and thus their financial needs are being met through other income streams). As explained further in section 4.2.2 Intermediate outcome of the Income Replacement Benefit, Veterans receiving IRB are assured net earnings in excess of the median earnings for single Canadians under age 65. An overall summary of gross and net IRB payable is shown in Tables 13 and 14.

Table 13 - General Summary of the IRB gross annual amount payable to Veterans

Source: AED analysis of CSDN data. Excludes Veterans who are CIAS Protected only.

Table 14 – General Summary of the IRB net annual amount payable to Veterans

Source: AED analysis of CSDN data. Excludes Veterans who are CIAS Protected only.

Providing income support during rehabilitation is consistent with programming offered by international departments of Veterans Affairs and workers compensation boards in Canada (see Appendix C: Environmental scan for more information.) However, as will be shown in section 4.1.1 Barriers to successful rehabilitation, the current program may be impeding rehabilitation in certain circumstances and creating a financial dependency rather than a support.

3.3 Alignment with government priorities and departmental roles and responsibilities

3.3.1 Alignment with Government of Canada priorities

VAC’s mandate to deliver the Income Replacement Benefit and the Rehabilitation Program is derived from ss.8 and 18 of the Veterans Well-being Act and s.4(a)(i and ii) of the Department of Veterans Affairs Act which assigns the Minister of Veterans Affairs the powers, duties, and functions to administer such acts of Parliament, and such orders of the Governor in Council, as are not by law assigned to any other department of the Government of Canada or any Minister thereof, relating to:

1. …the care, treatment or re-establishment in civil life of any person who served in the Canadian Forces or merchant navy or in the naval, army or air forces or merchant navies of Her Majesty, of any person who has otherwise engaged in pursuits relating to war, and of any other person designated by the Governor in Council and
2. the care of the dependants or survivors of any person referred to in subparagraph (i)…

The evaluation finds that the intent of IRB and the Rehabilitation Program is to provide aid to Veterans and their family members who require support due to barriers caused by physical or mental health issues. The Rehabilitation Program does this by addressing medical, psycho-social and/or vocational rehabilitation barriers while IRB provides income support when the Veteran is engaged in the rehabilitation program. This aligns with the 2019 Federal Budget which states “It is our responsibility (Government of Canada) to ensure that all veterans and their families receive the support and services they need, when they need it.”

The 2019 Speech from the Throne states that “the Government will continue to recognize its solemn duty to those who choose to serve in the Canadian Armed Forces…” The evaluation finds that the IRB and the Rehabilitation Program align with this goal as they are assisting Veterans overcome barriers caused by injury or illness resulting primarily through service.

While not exclusive to Veterans or the evaluated programs, Budget 2022 included a focus on housing/homelessness and mental health. The budget lays out government priorities and states that “Everyone should have a safe and affordable place to call home...” and “…continuing to fight homelessness and support housing affordability, particularly for the most vulnerable….” It also states that “…the government will invest in identifying and expanding effective mental health interventions. …” Interviewees provided examples to the evaluation team of instances where the IRB and the Rehabilitation Program helped homeless/near homeless Veterans and Veterans with mental illness.

3.3.2 Alignment with departmental roles and responsibilities

The IRB and the Rehabilitation Program both support departmental responsibilities as set out in the Minster’s mandate. The December 2019 mandate letter to the Minister of Veterans Affairs and Associate Minister of National Defence stated that the Minister:

…will continue to ensure that the Government lives up to its sacred obligation to our Veterans and their families. You will continue to ensure that Veterans receive the respect, support, care and economic opportunities that they deserve. This includes working with the Minister of National Defence to ensure a seamless transition for Canadian Armed Forces members to Veterans Affairs Canada programs and services.

The December 2021 mandate letter to the Minister of Veterans Affairs and Associate Minister of National Defence stated that the Minister must:

…ensure that the Government fulfills its obligation to support our Veterans and their families. Your top priority is to ensure that services and benefits necessary for the physical, mental and economic wellbeing of Veterans and their families are easily accessible, responsive, and available in a timely manner...To achieve these objectives, I ask that you achieve results for Canadians by delivering the following commitments:

… ensure CAF members and Veterans have access to adequate mental health resources, services and training programs tailored to their specific needs.

The evaluation finds that the intent of the IRB and the Rehabilitation Program serve to further the Minister’s mandate. IRB provides income support to Veterans while the Rehabilitation Program is intended to address individual needs by helping eligible participants cope with and improve, to the extent possible, any barriers:

1. to function, social adjustment, or employability due to mental or physical health problems resulting primarily from service; or
2. to function or social adjustment due to mental or physical health problems that led to their medical release - for rehabilitation plans developed prior to April 1, 2024.

The Programs also align with VAC’s raison d'être (reason for existence) which is derived from the Department of Veterans Affairs Act and is paraphrased as “…the care, treatment and re-establishment in civil life of Veterans and the care of their dependents and survivors, and such other matters as the Governor in Council may assign.”^{Footnote 61}

The 2023-2024 Departmental Plan states:

Our country owes a debt of gratitude to all Canadian Veterans. Our focus is on continuing to support their well-being and recognizing the sacrifices both they and their families have made. A Veteran experiencing well-being is a Veteran with purpose, financial security, safe housing, good physical and mental health, the ability to adapt to change, a sense of belonging to their community, pride and awareness of their legacy, and is also valued and celebrated.

The IRB and the Rehabilitation Program support the 2023-2024 Departmental Plan as they assist with the financial, physical, and mental well-being of Veterans and their families.

3.3.3 Duplication and overlap with other Government of Canada programs

As mentioned earlier, through the Service Income Security Insurance Plan (SISIP), medically releasing Veterans can receive vocational services through the Canadian Armed Forces Vocational Rehabilitation Program (CAF-VRP), a component of the Canadian Armed Forces Long Term Disability Program (CAF-LTD).

The objective of the CAF-VRP is to provide training and education that focuses on enhancing Veterans’ education, skills, past training, and experience to obtain gainful employment in the civilian workforce. The goal is to build on Veterans’ transferable skills, taking into account the Veterans medical limitations. The objective is not to provide training or education in a new career field. Any training provided is for the acquisition of a license, certification, or diploma from a recognized educational institution.

CAF-VRP is available to members who medically release for both service-related and non-service-related conditions.^{Footnote 62} Vocational services are available for members up to 6 months prior to their medical release and for 24 months after their release. Veterans who are approved for CAF-VRP receive 75% of their pre-release income (minus offsets) through the CAF-LTD benefit for the full 24-month period.

Like VAC’s Income Replacement Benefit, CAF-LTD benefits may be extended in cases where a Veteran is determined to be totally disabled (IRB may continue for life, however, CAF-LTD benefits cease once the Veteran reaches age 65). Veterans receiving CAF-LTD are assessed at the 12- and 18-month mark of their program to determine their level of disability. To be deemed totally disabled, there must be:

clear and objective medical evidence, which confirms that you are incapacitated by a medically determinable physical or mental impairment, which is preventing you from performing any and every duty of any substantially gainful occupation or employment for which you are reasonably qualified by education, training or experience.^{Footnote 63}

VAC’s vocational rehabilitation services, which were designed to assist participants in identifying and achieving appropriate vocational goals, overlap with CAF-VRP in that similar training can be accessed through both programs. The difference, however, is that CAF-VRP training is centered on existing education and experience while VAC’s vocational rehabilitation services concentrate on providing training for a skill that is both appropriate for the participant’s health and that will ensure gainful employment at the level of 66 2/3% of pre-release income.^{Footnote 64}

CAF-VRP does not currently provide medical and psycho-social rehabilitation services.^{Footnote 65} Veterans may apply for VAC’s Rehabilitation Program while engaged in the CAF-VRP and, if eligible, receive medical and psycho-social rehabilitation services to help support their vocational rehabilitation. However, interviewees indicated that while it appears the two rehabilitation programs are complementary, often Veterans require medical or psycho-social rehabilitation before they engage in vocational rehabilitation.

Veterans cannot access vocational rehabilitation through the VAC Rehabilitation program while receiving CAF-VRP nor do Veterans who medically release have the option of “skipping” CAF-VRP to go straight to VAC rehabilitation.^{Footnote 66} However, upon completion of CAF-VRP, VAC can assess the Veteran for admission into VAC’s vocational rehabilitation.

Veterans participating in both the CAF-VRP and the medical or psycho-social component of VAC’s Rehabilitation Program may receive both CAF-LTD benefits and IRB benefits at the same time. Any payments received through CAF-LTD are deducted from the IRB payment. Since IRB pays 90% of pre-release imputed military income versus 75% under CAF-LTD, eligible Veterans may receive additional benefits through IRB depending on their offsets.

It was noted in interviews and confirmed through file review that CAF-LTD decision letters advise Veterans to “go to VAC for the 15% ‘top up’”. Employees indicated that this sometimes creates false expectations as the criteria for receiving IRB is different from CAF-LTD. For example, Veterans are expected to actively participate in the VAC Rehabilitation Program in order to receive IRB while the evaluation team was advised that there is no such expectation for CAF-LTD.

Observation: Impact of SISIP programs on the VAC Rehabilitation Program

During interviews with VAC employees, the evaluation team was informed that some Veterans do not fully participate in their CAF-VRP. When Veterans come to VAC after two years of non-participation with SISIP, VAC employees sometimes find it difficult to encourage participation in VAC’s rehabilitation plan. In other instances, Veterans fully participate in CAF-VRP for two years, however, their training is in an area that does not meet VAC’s definition of being suitable or gainful (i.e., the Veteran has trained for a job that does not pay 66 2/3% of their pre-release income), or they have trained in a profession that is not appropriate for their medical condition.

The relationship between VAC, SISIP, and the Department of National Defense (DND) for the purpose of Veteran rehabilitation is documented in Program Arrangement (PA) TD 2012-03. The goal of the program arrangement is to harmonize services to mutually identified clients where the needs exist. The agreement states that “the participants will work collaboratively to ensure a comparable level of benefits and, where a need exists, will exchange written information and results to ensure successful transition client outcomes.” It also states “SISIP will work in collaboration with VAC, when required, to identify any medical and psycho-social considerations and supports needed to enable the client to successfully participate in a SISIP vocational rehabilitation plan.”

Based on the agreement noted above, communication is a key part of the arrangement between participants and plays a key role in the success of the rehabilitation of Veterans. When interviewing VAC employees, the evaluation team learned that communication between SISIP and VAC is perceived as a barrier. Interviews with VAC employees indicate that improved communication and information sharing would reduce instances where Veterans are requested to undergo duplicate assessments.

In February 2023, during the conduct of the evaluation, a working group was established with participants from VAC, DND, and SISIP. Efforts are being made to improve communications and collaboration between parties and tools are being developed to share with case managers. Despite the efforts of the working group and collaborative intentions outlined in PA TD 2012-03, one of the main communication barriers is the legal challenge to the sharing of personal information between VAC and Manulife, the entity that administers SISIP on behalf of DND. The nature of the agreement between DND and Manulife requires that additional consents/processes^{Footnote 67} be employed in order to legally share personal Veteran information with VAC. This adds complexity to collaborative communication.^{Footnote 68}

4.0 Performance

The Rehabilitation Program and the Income Replacement Benefit were designed as complementary programs to improve Veteran transition to the civilian world, including the civilian workforce. The evaluation looked at how effective the programs are and how well they work together.

4.1 Effectiveness of the Rehabilitation Program

Veterans applying to the Rehabilitation Program self-declare their barriers to re-establishment in the following five categories:

• role as a spouse/parent/partner;
• personal care (e.g., washing, dressing, eating, toileting, taking medication);
• participation in hobbies, leisure or community activities;
• employment; and
• activities around the house and living independently in the community (e.g., preparing meals, housekeeping, shopping, banking, driving, or using public transportation).

As Figure 8 shows, Veterans most often indicate they have barriers to employment and barriers to participating in leisure or community activities. Most Veterans report more than one barrier to re-establishment.

Figure 8 – Self-reported barriers to re-establishment

Source: AED analysis of GCcase data.^{Footnote 69}

The 2022 VAC National Client Survey indicated that 68% of Veterans are satisfied with the rehabilitation services and vocational assistance they received from VAC. A majority (64%) say it helped improve their quality of life and benefited themselves and their supporters. However, only 24% agree that the program helped them enter the workforce or return to their main activity and only 29% agreed that their barriers decreased after participating in the program.^{Footnote 70}

Through data analysis and a file review, the evaluation team attempted to corroborate the National Client Survey results. An analysis of 4,399 Veterans exiting the Rehabilitation Program in 2021-22 and a subsequent file review showed there are gaps in the data that prevent a full analysis of the impact the program has on Veterans’ barriers to re-establishment. In more than 50% of the cases, the data was not collected as there were no fields within the CSDN system for that information. With the introduction of the GCcase system, the fields now exist to capture the data, however, the historical data from CSDN does not exist. As a result, the evaluation team could not determine the impact of the Rehabilitation Program on the stated barriers.

To determine if individual plan goals were being met, the evaluation team reviewed data from rehabilitation plans that were closed in 2021-22.^{Footnote 71} The review revealed that less than half of stated goals are being reached (see Figure 9). Note that Veterans often have more than one goal indicated in their rehabilitation plan.

Figure 9 – Achievement of Rehabilitation Program goals

Source: AED analysis of GCcase data.

The data showed nearly identical rates of goal achievement between male and female program participants, and married versus single Veterans. However, regional variations in goal achievement were identified between Western and Atlantic regions (see Table 15).

Table 15 – Rehabilitation goals reached by region

Source: AED analysis of CSDN and GCcase data.

More Veterans meeting their goals in Atlantic Canada is surprising given that Veterans in the Rehabilitation Program are more likely to meet DEC criteria in the Atlantic region versus the Western Region. See Appendix G: Diminished earnings capacity (DEC) client profile for more information on DEC rates across the country.

The achievement of goals appears to be related to the type and complexity of disabilities Veterans have. Figure 10 shows that Veterans with physical disabilities are more likely to achieve their rehabilitation goals than Veterans with mental heath issues or a combination of physical and mental health ailments.

Figure 10 – Achievement of rehabilitation goals by health needs

Source: AED file review of CSDN and GCcase data.

As Figure 2 showed previously, a majority of Rehabilitation Program clients (57%) have both physical and mental health injuries/illness which makes rehabilitation more complex and can limit the success rehabilitation can have. Interviews with case managers confirm that many clients have complex needs arising from service-related injuries and illness plus other conditions that may be unrelated to service including drug and alcohol addiction, childhood trauma, and homelessness. Before Veterans can successfully rehabilitate their service-related injuries and illnesses, the unrelated barriers must also be addressed.

4.1.1 Barriers to successful rehabilitation

As shown previously in Figure 8, Veterans self-reported employment as the most common rehabilitation barrier they are facing. However, when rehabilitation plan goals were analyzed, only 24% of Veterans had goals relating to employment.^{Footnote 72}

Interviews with employees indicate most Veterans do not progress through medical and psychosocial rehabilitation to the point where they are well enough to participate in the vocational rehabilitation component. Statistics confirm that few Veterans engage in the vocational component of the program and that vocational goals are often not met. Program data from 2021-22 rehabilitation plan closures shows that 64% of Veterans received an initial vocational assessment, but only 18% progressed to the point where a vocational plan was developed. Out of those with a vocational plan, only 52% met or substantially met the plan goals (see Table 16).

Table 16 – Veterans with vocational rehabilitation goals

Source: AED analysis and file review of CSDN and GCcase data

While statistics show only 10% of Veterans who enter the Rehabilitation Program complete the vocational component, case managers who work with Veterans did indicate there are successes and there are Veterans who complete the program and join the civilian workforce. Successes were reported more often in the Western region.

VAC field employees clearly stated in interviews that some Veterans engaged in the Rehabilitation Program will never attain vocational goals due to the seriousness of their injuries. For those Veterans, the goal of rehabilitation is something short of returning to work; the goal is to return to the best state possible. Often, that means incremental improvement focused on health and well-being, independent living, and community engagement. The completion rate of the vocational component of the program is not an accurate measurement of the program’s overall success.

Employees indicated that Veteran outcomes and progression through the rehabilitation components can be affected by many factors including:

• the length of time between injury and the start of rehabilitation;
• the diminished earnings capacity determination process; and
• dependence on the Income Replacement Benefit.

Time between injury and rehabilitation

As mentioned earlier, interviewees indicated that Veterans often enter the Rehabilitation Program years from the point of injury and past the point where medical or psychosocial rehabilitation can be effective (i.e., they are already in the maintenance phase of recovery).^{Footnote 73} The evaluation team examined client data to determine when Veterans first apply to VAC for rehabilitation benefits and what the gap is between injury and the point where rehabilitation services are administered.

A file review confirmed that almost half (47%) of Veterans apply for the program before they leave the military (though they cannot receive services through the program until after release). Data on Veterans completing the Rehabilitation Program in 2021-22 (Figure 11) indicates that on average Veterans receive Rehabilitation Program eligibility more than 5 years after military release.

Figure 11 – Time from military release to date of initial rehabilitation eligibility^{Footnote 74}

Source: AED analysis of CSDN data.

As indicated, research shows that rehabilitation is most effective when it is received close to the time of injury or illness. It would therefore be expected that Veterans who receive eligibility close to release would have better outcomes than those who apply years after release. However, an analysis of program closure data does not show significantly better outcomes for those entering the program closer to the time of military release (see Figure 12).

Figure 12 – Goal attainment by time between release date and Rehabilitation Program eligibility

Source: AED analysis of CSDN data.

DEC rates remained relatively high no matter when the Veteran received program eligibility. For example, Veterans or CAF members who received eligibility before release or within the first three years of release met DEC criteria 79% of the time while Veterans who received program eligibility 9 years or more after release met DEC criteria 87% of the time.

The evaluation team learned through interviews that although many Veterans apply for the Rehabilitation Program within proximity of their release date and have vocational goals, often years have passed since their injury/illness occurred. Case managers working with Veterans indicated that the time between injury/illness is often a barrier to successful rehabilitation, especially in cases where the Veteran has long-term mental health needs that must be addressed before beginning vocational rehabilitation.

As part of the file review conducted for the evaluation, the evaluation team reviewed the Service Health Records of 351 Veterans who participated in the Rehabilitation Program to determine the time between their injury and the point they received rehabilitation or had an injury treated. The review found that physical injuries were more likely to receive early intervention or rehabilitation than mental health injuries (see Figure 13).

Figure 13 – Length of time between injury or onset of injury and medical intervention

Source: AED analysis of VAC CSDN and GCcase data.

The review showed that treatment and rehabilitation for physical injuries often begins pre-release near the time of injury or near the time the Veteran identified the injury to military medical staff. Initial treatment for mental health conditions, however, may not begin until years after the triggering event occurred or years into the progression of the disease (often post-release). This inhibits the effect rehabilitation can have and the likelihood that the Veteran will complete rehabilitation through the vocational stage.

The time between injury and rehabilitation is also impacted by delays in receiving rehabilitation due to the time it takes to arrange assessments and to receive appointments for rehabilitation. The file review found, on average, that it takes 284 days to begin receiving rehabilitation services after a Veteran is approved for the program. Much of the delay between application and the start of rehabilitation is out of VAC’s control. In some instances, CAF members apply before they leave the military, are approved for the program, but, VAC does not have the authority to proceed with a rehabilitation assessment until after the release date. In addition, assessments are usually completed by public or private rehabilitation specialists. Often, there are wait times for these assessments to be completed due to backlogs in the Canadian health care system. The same holds true after the assessment is completed as there can then be wait times to receive medical procedures or to begin other rehabilitation interventions.

Research commissioned in 2004 by the Corporate Medical Group, Department for Work and Pensions, United Kingdom concludes that “the more distant a claimant is from the labour market, the more difficult it is to obtain and enter work, and the lower the chance of coming off benefits.”^{Footnote 75} With every delay between injury and rehabilitation, Veterans are less likely to complete the vocational component of the program. Also, the longer the delay between injury and rehabilitation, the more likely it is that interventions become maintenance in nature rather than rehabilitative.

Diminished earnings capacity determination

On completion of the Rehabilitation Program, Veterans who do not have the capacity to earn 66 2/3% of their pre-release imputed income are determined to have met diminished earnings capacity criteria and are eligible for IRB benefits for life (if the continue to meet IRB program requirements). A Veterans’ file can be referred for diminished earnings capacity determination at any point during the rehabilitation process when a case manager believes evidence supports that further efforts at rehabilitation will not lead to improvement. The case manager refers the file to VAC’s Diminished Earnings Capacity (DEC) unit to render a DEC decision.

Files are referred to the DEC unit along with supporting evidence under one of eight DEC referral categories:

1. the Veteran has no vocational needs and is suitably, gainfully employed or may be suitably, gainfully employed;
2. the Veteran has an approved Individual Vocational Rehabilitation Plan targeted at suitable, gainful employment;
3. the Veteran has chosen, despite having capacity for suitable gainful employment, an occupational goal which, although suitable, will not remunerate at the gainful level;
4. the Veteran’s vocational assessment provides evidence the Veteran will not have the capacity for suitable, gainful employment, even with vocational rehabilitation services;
5. assessments/evidence from treating clinicians show Veteran’s eligible health problem(s), even if all reasonable medical and psychosocial rehabilitation efforts are exhausted, the Veteran will not be able to participate in vocational rehabilitation;
6. the Veteran has been determined ‘Totally Disabled’ with CAF LTD and/or in receipt of the Canadian Pension Plan disability benefit;
7. the Veteran eligible for IRB is approaching their 65th birthday; and
8. evidence confirms the Veteran’s ineligible, or other, health problem(s) are preventing the Veteran from participating in vocational rehabilitation services or participating to the extent to achieve suitable gainful employment.

Increasingly, Veterans are being referred for a DEC decision through referral category 5 which is used when a treating clinician provides evidence that a Veteran is too unwell to participate in assessments. This trend impacts the number of Veterans who are referred for assessment, including an initial vocational assessment (as seen previously, only 64% of Veterans with a plan closure in 2021-22 received an initial vocational assessment). Category 5 referrals have increased from 5% in 2019 to 35% in 2023 (see Figure 14).

Figure 14 – Increasing use of category 5 for DEC referrals

Source: AED analysis of GCcase data. Data for 2023-24 is year-to-date as of October 18, 2023.

When category 5 was originally introduced under the predecessor Earnings Loss benefit, it was reserved for Veterans with the most critical injuries whose physical limitations prevented them from completing typical rehabilitation assessments. For example, some Veterans enter the Rehabilitation Program with illnesses for which rehabilitation will have little or no effect (such as certain cancers or amyotrophic lateral sclerosis). For these Veterans, acceptance into the Rehabilitation Program is part of the formal exercise required to apply for the Income Replacement Benefit; there are no rehabilitation interventions to pursue and the Veterans are physically unable to participate in the program. Category five allowed these Veterans to be referred directly for DEC determination.

In 2019, the category was expanded to include Veterans with severe mental health illnesses as well. However, the evaluation team learned that it was stressed by program management that only the most ill or injured Veterans should be put through this path. The sudden rise in use of this gateway which bypasses assessments and stalls progression through the Rehabilitation Program is concerning and could mean one of two things:

1. 35% of the Veterans who were referred for a DEC decision thus far in 2023 are too ill or injured to participate in the Rehabilitation Program and, in this case, granting them initial eligibility did not align with the program intent; or
2. Veterans are being referred through this gateway as a work-around to expedite a DEC decision or for some unknown logistical reason.

The evaluation team did not have enough information to determine why the DEC category 5 DEC referrals are spiking, but further review is required. Therefore, it is recommended:

Recommendation #2

That the Director General, Service Delivery and Program Management, in collaboration with the Director General, Field Operations, review the recent increase in Category 5 DEC referrals and address as appropriate.

Management Response: Management agrees with this recommendation (Table 17).

Table 17 – Management response to recommendation #2

Dependence on the Income Replacement Benefit

The connection between rehabilitation and financial security has been recognized by the department since VAC implemented the Rehabilitation Program and the Earnings Loss benefit in 2006. The Earnings Loss benefit originally provided Veterans with 75% of their pre-release imputed income (minus offsets) while the Veteran was engaged in the Rehabilitation Program. The intent was to relieve Veterans of financial stress so they could focus on making progress with their Rehabilitation plan. When initially introduced in 2006, the structure of the Earnings Loss benefit amount closely resembled the financial benefits provided under CAF LTD at the time.

Over time, the Earnings Loss benefit evolved to provide enhanced economic benefits to Veterans, including:

• an increase in the minimum benefit amount from the equivalent of a senior Private to the equivalent of a basic Corporal (2011);
• the removal of the Disability Pension as an offset (2012);
• an increase to the minimum payable to part-time reservists to match regular force members (2015); and
• an increase in the benefit from 75% of pre-release imputed income to 90% under Bill C-15 (2016).

Research shows, however, that increasing monetary benefits attached to rehabilitation can have a detrimental effect on program completion rates and outcomes. MacLean and Campbell (2014) states “... the generosity of benefits can be a financial disincentive undermining employment goals ...”^{Footnote 76}

In 2014, while the Earnings Loss benefit was still at 75%, the Evaluation of Rehabilitation Services raised questions about whether the financial benefits available to Veterans engaged in the Rehabilitation Program created an unintended outcome by acting as a deterrent to active participation. The report found that financial benefits may be a reason for Veterans to remain in the Rehabilitation Program for a longer period and may affect a participant’s motivation to actively engage in the labour market. Despite the findings of that evaluation and the 2014 report, the department introduced higher Earnings Loss benefits (guaranteeing 90% of pre-release income) to address a platform promise made during the 2015 federal election. As a result of this increase, the financial incentive to enter and remain on the Rehabilitation Program became higher than ever. Between 2015-16 and 2017-18, participation in the program rose 54% from 8,478 to 13,058. When the IRB was introduced in 2019, it retained the pre-release income guarantee at 90%.

The adoption of IRB at 90% of pre-release income conflicts with research into best practices conducted by the department. Maclean and Campbell (2014) states:

While income adequacy is a goal of many disability compensation schemes, the generosity of benefits can be a financial disincentive undermining employment goals, ultimately impacting the effectiveness and affordability of the program as well as client well-being. A number of studies – national and international, Veteran and general population – have shown a negative connection between more generous benefits and employment outcomes. However, successful employment strategies improve program affordability, income adequacy and, ultimately, well-being. In response, over the last decade, most Organization for Economic Co-operation and Development (OECD) countries have tightened access to benefits while improving employment integration.^{Footnote 77}

The connection between rehabilitation, financial security, and prolonging rehabilitation was noted in a 2019 survey report commissioned by VAC and undertaken by Corporate Research Associates Inc. The report, titled “Client Experiences with Veterans Affairs Canada Rehabilitation Program and Case Management Services – Final Report” noted that “Veteran’s fear of the future and want of a safety net, combined with what is perceived as a lack of accountability may account for Veterans remaining in the Rehabilitation Program even when they are determined to be well.”^{Footnote 78} As one Veteran put it, “It's very easy to get stuck [in the system] and say, ‘screw it’ and take the cash. You don't have to prove that you are doing anything [towards rehabilitation]. All you have to do is say you're not getting better and the money is there.”^{Footnote 79}

Interviews with VAC employees generally support the notion that high IRB rates can be a barrier to successful rehabilitation. This trend was identified more often in eastern areas of the country where the IRB payment compares favourably against wages for civilian jobs. While almost all employees interviewed believe an income support program is necessary during rehabilitation, the need for support varies between Veterans. The current IRB model can provide an economic disincentive for some to complete rehabilitation or act as an incentive to remain on the program longer than necessary.

The evaluation team learned through interviews that it is sometimes difficult for case managers to disengage Veterans from the Rehabilitation Program due to their financial dependency on the IRB and their fear of losing that support. Data confirms that there are Veterans who remain on the Rehabilitation Program for many years, though their reason for remaining would require direct consultation with Veterans. As Figure 15 shows, the average program participant spends 4.1 years in rehabilitation.

Figure 15 – Average years Veterans spend in the Rehabilitation Program

Source: AED analysis of CSDN and GCcase data.

The evaluation team learned through interviews that there are Veterans who apply to the Rehabilitation Program for financial reasons (i.e., to access IRB) rather than because of a true rehabilitation need (which is not the intent of the program). Some are cancelled for non-participation^{Footnote 80} or cannot demonstrate a need for the program after being assessed. However, it is easy to re-apply, be approved again for a new health condition, and begin receiving IRB again as there is no assessment performed before program eligibility is granted. While it is difficult to quantify how often this happens, program statistics (confirmed through file review) indicate that approximately 27% of participants who closed out a rehabilitation plan in 2021-22 were accepted into the Rehabilitation Program more than once (see Table 18).

Table 18 – Number and times clients accessed the Rehabilitation Program

Source: AED analysis of clients exiting the Rehabilitation Program in 2021-22.

Further evidence that the current IRB rate can be a barrier to Veterans completing the Rehabilitation Program and rejoining the workforce was presented to the House of Commons Standing Committee on Veterans Affairs (ACVA) in February 2022. While conducting hearings on a National Strategy for Veterans Employment After Service, the committee heard from a service agency working with Veterans that:

…in the [Veteran] community, people think that working is going to limit veterans and cause them to lose money. Some veterans have told us that they quit their jobs because they were afraid that Veterans Affairs Canada would see their T4 slip and reduce the amount of their compensation.^{Footnote 82}

An example was provided of a Veteran the agency worked with who turned down full-time employment because anything over $20,000 would be deducted from his benefits (IRB).^{Footnote 83}

4.2 Effectiveness of the Income Replacement Benefit

The key determinates of whether the IRB program is working effectively are outlined in the program’s logic model^{Footnote 84} (see Appendix H: Income Support Program logic model). The immediate outcome for the program is that eligible Veterans and other clients have access to income replacement while their rehabilitation and vocational assistance needs are being assessed. The intermediate outcome is that Veterans’ and other clients’ financial needs are met while receiving the Income Replacement Benefit. Both these outcomes roll up to an overarching outcome that Veterans and their families are financially secure.

4.2.1 Immediate outcome of the Income Replacement Benefit

The evaluation finds that clients have access to the IRB while actively engaged in rehabilitation. As of March 31, 2022, 96% of Veterans receiving rehabilitation were also receiving IRB payments. Information provided through the department’s Performance Outcomes and Indicators System (POIS) shows that as of March 31, 2023, IRB decisions are being made within the established service standard of four weeks 97% of the time (target 80%). However, the department is missing the target for issuing the first IRB payment within seven days of making the decision 33% of the time. The department is currently studying the timing of IRB payments to determine where improvements can be made.

4.2.2 Intermediate outcome of the Income Replacement Benefit

When considering effectiveness of the program, intermediate outcomes based on whether the IRB is effectively meeting client needs are difficult to measure given the lack of direct public opinion research with Veterans. The program’s performance information profile indicates that the 2022 VAC National Client Survey is used to measure IRB effectiveness (see Table 19). The question “How satisfied are you with your … ‘financial situation?’” is used as a proxy to determine how satisfied Veterans are with the IRB.

Table 19 – Income Replacement Benefit intermediate outcomes

Source: VAC Performance Outcomes and Indicators System (POIS).

Since the question is not specific to the Income Replacement Benefit, it is difficult to determine if it is the IRB that is leading 71% of Veterans to indicate satisfaction with their financial situation as seen in Table 19 or whether other streams of income are contributing to this feeling (including other VAC programs). Similarly, the low satisfaction indicated in the survey results for other classes of clients may not be attributable to the IRB rate, but rather to other external financial pressures.

As mentioned in Section 4.1.1 Barriers to successful rehabilitation, the high monetary value of IRB has an impact on some Veteran’s participation in their rehabilitation plans. However, for participants truly engaged in their rehabilitation, VAC employees pointed to the guarantee of 90% of pre-release imputed income offered by IRB as beneficial as it relieves Veteran’s financial worries and allows them to focus on wellness. The evaluation team was provided with numerous examples of how effective an income benefit can be at allowing Veterans the freedom and flexibility to prioritize wellness rather than focusing on their finances. It should be pointed out that, unlike regular military employment earnings, IRB is not subject to deductions such as Canada Pension Plan (CPP) contributions, military pension contributions, insurance, or Employment Insurance (EI) premiums.^{Footnote 85} The monthly net IRB benefit that Veterans are guaranteed can be higher than their pre-release monthly net military salary^{Footnote 86}.

The evaluation looked at the IRB payable to Veterans under age 65 in 2021 and determined the median Veteran was assured gross pre-tax earnings (before offsets) of $69,023.^{Footnote 87} While there are unique tax factors for each Veteran, using the median benefit for a basic tax calculation shows that IRB guarantees an after-tax income between $51,752 and $56,870 depending on the province or territory a Veteran lives in. This compares favourably against the Canadian median after-tax income for a single person under age 65 in 2021 which was $39,600 (31% - 46% higher).

The minimum gross (before offset) IRB payable to Veterans under the age of 65 in 2021 was $50,019. When taxes are factored in, the benefit guarantees an after-tax minimum of between $39,755 and $43,092 depending on the province or territory. It is important to note that an IRB minimum was implemented to ensure that Veterans on the benefit will have an income from all sources comparable to a middle-class income. The evaluation finds the benefit is effective at ensuring Veterans receive net earnings from all sources at or in excess of the median income for a single person in Canada ($39,600 in 2021), meeting its intent.

4.2.3 Effectiveness of the suitable and gainful employment provision during diminished earnings capacity assessment

Background

As mentioned earlier suitable and gainful employment is defined as employment for which a Veteran is reasonably qualified by reason of education, training, and experience and that provides a monthly rate of pay equal to at least 66 2/3% of the Veterans pre-release income. Veterans engaged in the Rehabilitation Program who are assessed below the 66 2/3% threshold upon completion of the program are said to have met DEC criteria and are eligible to receive IRB benefits for life.

Veterans capable of earning 66 2/3% of their pre-release income upon completion of the Rehabilitation Program are no longer entitled to IRB benefits. They may, however, be eligible for other VAC programs including the Canadian Forces Income Support (CFIS) benefit, Career Transition Services (CTS), or the Education and Training Benefit (ETB).^{Footnote 88}

Suitable gainful employment defined in other disability programs

Disability Insurance (DI) Plan for the Federal Public Service

While VAC modeled its suitable and gainful employment threshold of 66 2/3% on the CAF Long Term Disability Program (CAF LTD), other disability insurance programs in Canada have used the threshold as far back as the 1950s. One program using the threshold is the Disability Insurance (DI) Plan for the Federal Public Service. The DI Plan provides employees in the Public Service who are included in collective bargaining, and who are members of the plan, with benefits to replace a substantial portion of earnings lost as a result of extended periods of disability.^{Footnote 89} For the purposes of the plan, a gainful occupation is one that provides earnings equal to at least two-thirds of the current rate of earnings for the employee’s own regular occupation.

Canadian Armed Forces Long Term Disability Program (CAF LTD)

The CAF LTD program offered by SISIP provides similar benefits to VAC. Under this program, a Veteran will be deemed totally disabled if their injuries/illness prevents them from obtaining a “substantially gainful occupation or employment for which you [the Veteran] are reasonably qualified by education, training or experience.”^{Footnote 90} In evidence presented by SISIP to the Senate Subcommittee on Veterans Affairs in October of 2009, it was revealed a 66 2/3% threshold is applied to determine a Veteran’s suitable earnings capacity:

When we assess whether someone is totally disabled, the income that person can earn is also weighed in the final decision. If it is determined that that person cannot earn at least 66 2/3% of his or her salary at the time of release, that person will meet the definition of totally disabled and will continue with SISIP up to age 65. We have different markers. If someone has the skill sets to return to gainful employment and it is determined that this person is not totally disabled, then that person could be transferred over to VAC and they would be entitled to some of the benefits under the suite from VAC.^{Footnote 91}

As per VAC policy, Veterans who meet total disabled criteria under CAF LTD are not automatically deemed to have met DEC criteria. However, evidence used in making the CAF LTD decision (medical reports, assessments, etc.) may be used when a DEC decision is being made.

Canada Pension Plan Disability (CPPD) and the Royal Canadian Mounted Police Long Term Disability Program

A wider scan of other Canadian long term disability programs shows the definition of suitable and gainful employment differs from program to program. For example, Canada Pension Plan Disability (CPPD) defines “substantially gainful work” as a job that pays wages equal to or greater than the maximum annual amount a person could receive as a disability pension. In 2023, this equated to $18,508. Therefore, a recipient who is regularly capable of earning this amount will likely no longer qualify for disability benefits. The RCMP Long Term Disability program considers suitable gainful employment as any employment that provides income of at least 50% of the employee’s former gross earnings.

Workers Compensation Long Term Disability

Definitions of suitable and gainful employment vary amongst workers compensation boards across Canada. However, they typically do not use an earnings threshold to determine whether income (wage) replacement benefits will continue long-term. For example, in Prince Edward Island, the Workers Compensation Board defines suitable work as “work that a worker has the necessary skills to perform and is medically able to perform, and that does not pose health or safety hazards to the worker or co‐workers, as determined by the Workers Compensation Board”^{Footnote 92}. The worker will receive extended wage loss benefits based on an estimate of the worker’s earning capacity, taking into consideration:

• the worker’s functional ability to work.
• whether it is realistic given the worker’s work history, education, and analysis of transferable skills, and;
• whether the type of work generally exists in Prince Edward Island or the province or territory where the worker usually lives, as supported by local labour market information.^{Footnote 93}

There is no “threshold” set (e.g., 66 2/3%) to determine whether the work is suitable and gainful.

A summary of income replacement benefits for workers compensation, foreign departments of Veterans affairs, and federal disability plans is found in Appendix C: Environmental scan.

Earnings threshold as a measure of capacity

VAC employees have expressed concerns that the current 66 2/3% earnings threshold applied when determining a Veteran's diminished earnings capacity does not take into consideration the disparity between military and civilian pay scales. Evidence shows that Canadian Armed Forces members typically earn higher annual incomes than their civilian counterparts. Several factors contribute to the calculation of military salaries that elevates pay rates beyond civilian pay:

1. Comparability –The Department of National Defence and the Treasury Board Secretariat use the principle of comparability between the Canadian Armed Forces and the Public Service so that Canadian Armed Forces members benefit from the results of collective bargaining. Comparability ensures the dollar per hour worked for the Canadian Armed Forces is equal to the dollar per hour worked for the Public Service.
2. Team concept – The Canadian Armed Forces uses a rank-based team concept or institutional approach to determine pay. In this method, pay is calculated based on the average value of the work performed by all members of a specific rank level. This is different from the more common Public Service method where an individual is paid based on the worth of their position.
3. Total compensation analysis – Total compensation analysis ensures that the full value of compensation and benefits made available by the employer to federal public servants is considered, including benefits such as pension, severance pay, acting pay, overtime, sick leave, and medical/dental benefits. The analysis culminates in yearly pay changes.
4. Military factor – The military factor puts a compensation value on several aspects of military service:
   1. Personal limitation and liability: compensation for giving up certain personal freedoms that civilian Canadians enjoy.
   2. Imposed separation: compensation for the separation forced upon members by operational requirements such as deployments.
   3. Posting turbulence: compensation for the turbulence that comes from uprooting family and regularly moving as part of employment in the Canadian Armed Forces.
   4. Acting pay: compensation for times when members are required to perform the role of a superior while under ranked. Regular and Reserve Force members below the rank of Colonel receive acting pay. Members at the rank of Colonel or above are benchmarked off the Public Service Executive and do not receive acting pay.
   5. Overtime: compensation for times when members are required to work extra hours due to operational requirements.

The military factor has been added to CAF salaries since 1974. In some cases, the military factor adds more than 15% to CAF salaries after comparison to public service compensation is taken into consideration (see Table 20).

Table 20 – Effect of military factor on regular force military salaries^{Footnote 94}

Source: Understanding Military Pay - Canada.ca as of March 12, 2024.

The addition of the military factor to pay rates that are already comparable to unionized public service wages pushes military salaries higher than similar positions in the civilian workforce. This disparity adds to the difficulty of matching Veterans in occupations that they are suitable for and that pay 66 2/3% of their pre-release imputed income, regardless of whether there is a loss of capacity due to injury or illness. This increases the likelihood that a Veteran will meet DEC criteria.

As seen previously in Section 3.1.1, older Veterans with presumably longer periods of employment in the CAF and therefore higher pre-release earnings are more likely to meet DEC criteria upon completion of the Rehabilitation Program (59% for Veterans aged 30-39 versus 80% for Veterans aged 50-59). A file review of Veterans releasing from the Rehabilitation program showed that commissioned and non-commissioned officers (who earn more than junior members^{Footnote 96}) were more likely to meet DEC criteria (see Table 21).

Table 21 – Officer versus junior member DEC criteria

Source: AED analysis of GCcase data.

This may be an indication that the 66 2/3% threshold is not working effectively or as intended as a true measure of Veteran earning capacity.

Criticism of the 66 2/3% formula was also expressed in a 2016 study commissioned by VAC when the criteria was being applied as part of the Earnings Loss Benefit. In the report titled “Analysis of Pre- & Post-Injury Earning Capacity Models”, the authors state that:

The current formula based definition of suitable gainful employment that VAC uses in determining a Veteran’s post-injury earning potential does not reflect the concept of earning capacity. Rather, it reflects a long-term disability principle that estimates a Veteran’s post-injury employability status based upon the framework of a pre-determined formula (i.e., 66 2/3% of pre-injury earnings), which is misrepresentative of a Veteran’s actual earning capacity and the benefits to reintegrating into the workforce in a meaningful capacity.^{Footnote 97}

The report goes on to say that the approach favours disability over capacity and that the:

…66 2/3% formula based definition of suitable gainful employment acts as a disincentive by preventing a Veteran, at least on paper, from having a residual human capital and in turn an earning capacity. This definition of suitable gainful employment is a significant deterrent for Veterans in utilizing their transferable skills within the world of work as it would, in many cases, dramatically restrict or limit the various types of employment Veterans would be able to do (on paper), by following this definition.^{Footnote 98}

While attempting to dig deeper into Veteran capacity to learn whether the 66 2/3% threshold was an effective measurement of capacity, the evaluation team learned that VAC employees do not officially record a quantitative scoring of Veterans earnings capacity. The evaluation team expected to see documentation on the GCcase system or CSDN indicating the percentage Veterans were capable of earning, however, interviews with VAC employees revealed that type of information is not available for a deeper analysis. Veterans are essentially assigned a yes/no grade as to whether they meet the 66 2/3% threshold. It is therefore difficult to evaluate the level of untapped capacity Veterans may have upon completion of the Rehabilitation Program, including how many are “close” to meeting the 66 2/3% earnings threshold and how large a role civilian pay scales play in DEC determination.

The current formula for determining earnings capacity is resulting in 74% of all Veterans exiting the Rehabilitation Program (2019-20 to 2022-23) meeting DEC criteria (and thereby receiving IRB benefits for life).This was not anticipated when the formula was originally introduced for the NVC’s Earnings Loss Benefit. Given the disparity between military and civilian salaries, a lack of documentation clarifying how much residual capacity exists within Veterans meeting DEC criteria, and research/expert opinion regarding alternative methods for assessing capacity, the evaluation recommends:

Recommendation #3

That the Director General Policy and Research develop evidence-based options for consideration and approval where necessary to more accurately assess Veteran earning capacity upon completion of the Rehabilitation Program. In doing so, the Director General should consider:

• alternative measures for determining Veteran earning capacity, the effectiveness of earning capacity assessments in other Canadian income replacement programs and the effectiveness of how Veteran earning capacity is measured in other allied countries;
• the potential impact that military salaries may have on a Veteran’s ability to meet the current 66 2/3% threshold of suitable gainful employment within the civilian workforce;
• working with other branches to identify and collect information on Veteran earning capacity to determine how close Veterans are currently coming to meeting the 66 2/3% threshold of suitable gainful employment within the civilian workforce;
• exploring options for incentivizing workforce participation; and
• whether the current single earnings capacity threshold is the most appropriate way to determine eligibility for long term income replacement or whether differences between military and civilian salaries and the Veteran’s residual earnings capacity should also be considered.

Management Response: Management agrees with this recommendation (Table 22).

Table 22 – Management response to recommendation #3

4.2.4 Effectiveness of the career progression factor

For Veterans who meet Diminished Earnings Capacity (DEC) criteria and where the Veteran was either younger than age 60 at time of release from the CAF or served less than 20 years, VAC applies a career progression factor (CPF) as part of the IRB calculation. The intent of the CPF is to recognize that Veterans who have service-related injuries may release from the military earlier than intended and potentially miss out on career advancement opportunities. The CPF is not intended to compensate for actual lost career progression since actual progression for each Veteran would differ and cannot be guaranteed.

The CPF is a 1% annual adjustment applied to a Veteran’s monthly military salary used in the calculation of the IRB (the IRB is recalculated each year). The 1% is in addition to yearly increases to the IRB resulting from inflation (IRB is adjusted each year in accordance with the Consumer Price Index).^{Footnote 99} Each Veteran receives the same 1% increase to their monthly military salary, regardless of their current benefit amount or the extent of their actual career progression loss.

The evaluation team developed several scenarios to determine whether the CPF is acting as an effective form of recognition. The scenarios compared IRB benefits for Veterans who meet diminished earning capacity criteria and received the CPF against what their earnings would have been had they served a full career in the military.

Analysis of the scenarios shows that applying the CPF to the IRB increased lifetime IRB amounts substantially, and in some circumstances resulted in the IRB providing economic benefits in excess of what a Veteran would have earned had they worked a full career in the military. In other cases, the CPF did not increase IRB to the level of what the Veteran would have made had they completed a full military career (i.e., does not compensate dollar-for-dollar). However, in these instances, the effect of the CPF on lifetime IRB payments is still significant in financial terms as shown in Table 23. It should be noted that the CPF is just one of several recognition benefits Veterans may be entitled to including Pain and Suffering Compensation and Additional Pain and Suffering Compensation.

Table 23: Synopsis of career progression scenarios

Source: AED analysis

A research brief developed by VAC’s Research Directorate in 2014 (prior to the implementation of the career progression factor) points out that predicting career progression is difficult. Canadian worker’s compensation boards and allied departments of Veterans Affairs with similar programs use different methods to account for career progression. For example, the paper outlined how, in 2014, benefits for United Kingdom Veterans were factored on a sliding scale depending on the Veteran’s age (age was determined to be an indicator of future earnings). The adjustment factor used resulted in Veterans below age 37 receiving a positive career progression factor resulting in higher payments, while those above age 37 received a negative career progression factor and less benefits.^{Footnote 101}

VAC’s implementation of a flat percentage rather than a sliding scale model generally maintains a sense of equality and fairness. It ensures that all Veterans, regardless of their personal circumstances, rank, or the severity of their career progression loss, receive a proportionally equal increase. It is a simpler and more transparent method than giving increases based on individual assessments or other criteria, however it does not reflect the individual impacts or career progression losses of individual Veterans. While the evaluation finds that the CPF is working as designed, its effectiveness as a recognition benefit may be viewed differently by each Veteran due to their individual circumstances. Direct engagement with Veterans is needed to more accurately gauge whether the additional financial impact of the 1% CPF makes Veterans feel more recognized.

4.2.5 Effectiveness of the $20,000 income exemption before IRB offset

Intention of the earnings exemption

The Income Replacement Benefit allows Veterans to earn up to up to $20,000 in employment or self-employment income per year without offset (deduction) to their IRB benefit^{Footnote 102}. Any employment or self-employment income above $20,000 is offset dollar-for-dollar from the IRB amount payable (if any) by the department. The $20,000 threshold is based on the approximate maximum amount an individual could earn before provincial taxes were applied (i.e., the basic personal amount) in the most generous jurisdiction in Canada in 2018 (Alberta)^{Footnote 103}.

The employment earnings exemption was implemented to encourage employment activities that are beneficial and meaningful. Research supports the therapeutic nature of work and its place in personal well-being. In Concepts of Rehabilitation for The Management of Common Health Problems (Waddell Burton, 2004) evidence is presented that “on balance, work is good for physical and mental health while long-term worklessness is detrimental”^{Footnote 104}. The paper continues:

…modern approaches to clinical management stress the importance of continuing ordinary activities and early return to work (Waddell & Burton 2000; DWP 2002). Finally, there is the belief that it is not possible or advisable to return to work until symptoms are completely ‘cured’ – but modern clinical and occupational health management stress that return to work as early as possible is an essential part of treatment and that work is itself the best form of rehabilitation.^{Footnote 105}

Further, the 2006 research study Is Work Good for Your Health and Well-being? concluded that:

There is a strong evidence base showing that work is generally good for physical and mental health and well-being. Worklessness is associated with poorer physical and mental health and well-being. Work can be therapeutic and can reverse the adverse health effects of unemployment. That is true for healthy people of working age, for many disabled people, for most people with common health problems and for social security beneficiaries…Overall, the beneficial effects of work outweigh the risks of work and are greater than the harmful effects of long-term unemployment or prolonged sickness absence. Work is generally good for health and well-being.^{Footnote 106}

The introduction of the $20,000 employment earnings exemption was seen as an improvement over the previous Earnings Loss (EL) benefit which saw:

• 50% of all employment income deducted from the benefit while the Veteran was engaged in rehabilitation
  • up to the point where the total employment earnings and Earnings Loss equaled the amount the Veteran made while still serving, and
  • 100% past the point where the total employment earnings and Earnings Loss equaled the amount the Veteran made while still serving.
• 100% of employment income deducted from the benefit after a Veteran was deemed TPI or met DEC criteria.^{Footnote 107}

The IRB employment earnings offset calculation is simpler and attempts to incentivize Veterans to tap into their latent capacity to work even after they have met DEC criteria.

Employment Statistics

Data from 2021-2022, shows that approximately 2,961 Veterans reported employment income out of the 25,780 who were receiving IRB (11.5%)^{Footnote 108}. Almost half of those working (1,380) showed income in excess of $20,000 (these Veterans averaged $40,830 in earnings). Veterans earning more than $20,000 represent 5% of all Veterans receiving IRB. It should be noted that Veterans self-report earnings to the department and that income verification was identified as an issue in the recent Audit of the Income Replacement Benefit.^{Footnote 109} Work is underway within the department to implement corrective actions in response to the audit.

Earnings data shows approximately one third of Veterans reporting employment worked for federal, provincial, or municipal government departments. As Table 24 shows, the Government of Canada and the Department of National Defence employ the most Veterans who receive IRB.^{Footnote 110}

Table 24 – Top 10 employers of Veterans receiving IRB

Source: AED analysis of CSDN data.

A change made in 2016 to the Rehabilitation Program eligibility policy clarifies that Veterans may re-enroll in the CAF as a Class A reservist and still participate in the Rehabilitation Program (and continue to receive IRB). As the table shows, uptake from this policy change has had little effect on overall Veteran employment numbers as only 35 out of 25,700 Veterans on IRB worked for the CAF in 2021 and took advantage of the $20,000 IRB earnings exemption.

Across Canada, Veterans who worked while receiving IRB reported average yearly salaries between $22,013 in the Atlantic region to a high of $25,839 in the Western region. As shown in Table 25, Veterans in the Western region were approximately 10% more likely to report earnings above $20,000 than Veterans in the Atlantic region. This is expected as wages are typically higher in Western Canada for similar jobs.

Table 25 - Employment income by region

Source: AED analysis of CSDN data.

For a further GBA+ breakdown of Veteran employment earnings, see Appendix I: Analysis of employment income of Veterans receiving Income Replacement Benefits

Analysis of the $20,000 IRB earnings exemption before offset

During interviews with VAC employees, views differed on whether the IRB’s $20,000 earnings offset exemption was an incentive to get Veterans engaged in the civilian workforce. Case managers pointed out that whether a Veteran should work was dependent on their injuries and where they are in their rehabilitation process. The evaluation team was provided with examples of Veterans who benefitted from working while receiving IRB benefits because it gave them a sense of purpose and confidence. In other examples, case managers pointed to Veterans returning to work prematurely which set back rehabilitation attempts.

Frontline employees were split on whether $20,000 was an appropriate sum to incentivize work. Some stated they had few Veterans in their case load capable of work and that the amount was irrelevant. The evaluation team did not hear that the amount should be raised. However, the team did hear that, in some cases, Veterans with capacity to earn more than $20,000 stop working when they approach the limit as they do not want their earnings to become an offset to their IRB. This echoes testimony heard before ACVA in February 2022. The evaluation team was not able to corroborate or quantify how often this happens, however, several instances were observed during the file review.

Despite the Pension for Life Regulatory Impact Assessment Statement (RIAS)^{Footnote 111} emphasizing return to work, no performance indicators have been established to measure the impact the IRB’s $20,000 exemption has had on workforce participation. In an attempt to quantify the impact of the exemption, the evaluation team examined data from the Earnings Loss (EL) program in 2018 before the IRB was introduced. Veterans receiving EL in 2018 had employment earnings offset at 50% while the Veteran was in rehabilitation and 100% if they were deemed Totally and Permanently Incapacitated (TPI)^{Footnote 112}. Data from 2018 shows approximately 11.6% of Veterans receiving EL worked at some capacity. Similar analysis of IRB data from 2021 shows 11.5%^{Footnote 113} of Veterans on the program worked at some capacity during the year. Based on this analysis, the $20,000 exemption to IRB offset has had little impact on the percentage of program participants who participate in the workforce.

While the $20,000 offset may not be leading to a larger percentage of program recipients engaging in the workforce, it has had the effect of putting more dollars in Veterans pockets. Analysis shows that Veterans who receive IRB and work report higher earnings than Veterans in the previous EL program. Table 26 shows Veteran employment earnings in 2021 for those on the IRB program while Table 27 shows Veteran employment earnings for 2018 under the EL program.

Table 26 – 2021 Veterans earning income while receiving Income Replacement Benefit

Source: AED analysis of CSDN data.

Table 27 – 2018 Veterans earning income while receiving Earnings Loss benefit

Source: AED analysis of CSDN data.

On average, per capita employment earnings for Veterans receiving IRB in 2021 were $24,040. The average EL recipient in 2018 earned $13,541.^{Footnote 114}

Higher Veteran earnings may, in part, be attributable to the changes in offsets when the EL program was rolled into the IRB. For example, whereas Veterans in the EL program had 100% of their earnings offset once they received the TPI designation, Veterans in the IRB program who meet DEC criteria can make up to $20,000 before offset. The evaluation compared the subset of Veterans who were receiving EL in 2018 and were deemed TPI to those that were receiving IRB in 2021 and who met DEC criteria. As Table 28 shows, although the percentage of Veterans who meet DEC criteria and work is not much higher than those who received TPI and worked, the reported earnings for the two groups differ significantly.

Table 28 – Analysis of Veterans with employment earnings in 2018 who were deemed TPI versus those with employment earnings that met DEC criteria in 2021

Source: AED analysis of CSDN data

Higher earnings for Veterans who meet DEC criteria versus those deemed TPI may be an indicator that the $20,000 exemption better taps into Veterans latent capacity to work. However, given that the average employment earnings for Veterans who meet DEC criteria is so close to the $20,000 offset exemption, there may be additional capacity to work that has not been maximized.

Observation

The $20,000 IRB earnings exemption has not increased since it was implemented in 2019. The exemption is not indexed to account for inflation, unlike the IRB program itself which is recalculated each year based on the Consumer Price Index (CPI). Since the IRB was implemented, the value of the $20,000 income offset exemption has eroded by 17.7%^{Footnote 115}, based on annual changes to CPI shown in Table 29.

Table 29 - Annual average change in the Consumer Price Index (CPI) 2019-2023

Source: Statistics Canada^{Footnote 116}

Over time, the exemption will continue to decrease in real value, and will cease to act as an incentive for any Veterans to participate in the civilian workforce.

Opportunity for improvement

The evaluation team identified inconsistencies in the data related to employment on VAC’s CSDN system. Employers are entered manually with different spellings and there is confusion as to when VAC employees should enter CAF or DND as the employer. In addition, earnings from retro pay and earnings from when a Veteran was still serving are not distinguished from actual employment earnings when the Veteran is in the IRB program. Both issues cause difficulties when trying to retrieve and analyse data.

4.3 Economy

The evaluation team reviewed program expenditures for the Rehabilitation Program and the Income Replacement Benefit through the lens of program intent. The objective was to determine how program design is driving expenditures and what economic impacts changes from the Earnings Loss benefit to the IRB had on departmental expenditures.

4.3.1 Rehabilitation Program expenditures

Since the last evaluation in 2014, Rehabilitation Program expenditures have generally trended upwards apart from a dip in 2022-23 during the roll-out of the new rehabilitation model. While the number of clients participating in the Rehabilitation Program at any given time almost doubled between 2014-15 and 2022-23 (see previous Table 4), annual program expenditures increased by more than 230% over the same period from approximately $19.0 million to $63.3 million ($44.3 million increase). See Table 30 for annual expenditures.

Table 30 – Rehabilitation program annual expenditures

Source: VAC Finance Division

As shown in Table 30, Rehabilitation Program healthcare expenditures spiked in 2019-20 after the introduction of the IRB program, before dipping during the roll-out of the new rehabilitation model. Vocational expenditures continue to increase. On a per-client basis, program expenditures have risen since IRB was introduced, but leveled out in 2022-23 during the roll-out of the new rehabilitation model (see Table 31).

Table 31 – Per-client rehabilitation expenditures^{Footnote 117}

Source: AED analysis of VAC Finance Division data

Total Rehabilitation Program expenditures are expected to increase into the foreseeable future. Annual expenditures related to rehabilitation are projected to increase by approximately $22 million (32%) between 2021-22^{Footnote 118} and 2027-28 to nearly $92 million. Annual rehabilitation health care costs are estimated at approximately $35 million for 2027-28 while the vocational rehabilitation estimate for the same year is approximately $56 million (see Figure 16 for total actual expenditures and forecasts and Table 32 for forecasted expenditures by program component).

Figure 16 – Total actual and forecast Rehabilitation Program clients and Expenditures 2019-20 to 2027-28

Source: AED analysis of VAC Finance Division data

Table 32 – Forecasted Rehabilitation Program expenditures by type

Source: VAC Finance Division

One of the drivers of increasing program expenditures is the length of time Veterans are spending on the Rehabilitation Program. The evaluation team examined program closure data from fiscal year 2021-22 and found that participants, on average, spent 4.1 years on the program, with 80 percent exiting the program within 5.4 years^{Footnote 119}.

Interviews with case managers indicated that there are Veterans who remain on the program longer than necessary, however, there are also Veterans who are actively engaged in their rehabilitation program that require a significant period of rehabilitation due to their complex injuries/illnesses. The difficulty lies, as heard through interviews, in determining when the Veteran has reached the point where their rehabilitation has effectively ended and they have entered a maintenance or treatment phase. At this point, their needs (and associated costs) might be more appropriately directed towards the Treatment Benefits Program.

4.3.2 Income Replacement Benefit expenditures

IRB expenditures are rising and are expected to rise for the foreseeable future. The length of time Veterans spend in rehabilitation, the high number of Veterans meeting DEC criteria, and an average age of fifty-one for Veteran IRB recipients means program numbers will not plateau in the near future. As Figure 17 shows, expenditures are expected to increase from approximately $1 billion in 2022-23 to nearly 1.7 billion over the next five years.

Figure 17 – Income Replacement Program Expenditures and Estimates 2019-20 to 2027-28

Source: AED calculation of actual and forecast data provided by VAC Finance Division. Does not include Career Impact Allowance Supplement (CIAS) protected Veterans.

IRB expenditures are forecasted to exceed Pain and Suffering Compensation (PSC) expenditures in 2025-26, making the IRB VAC’s biggest program dollarwise. IRB will exceed all disability benefits combined by the end of the decade at the current rate of expenditure increase. The rate of increase is exceeding forecasts made prior to program implementation.

5.0 Unintended Impact

When the Earnings Loss (EL) benefit was introduced in 2006 under the New Veterans Charter Act, the intent was to ensure Veterans received 75% of their pre-release income from all sources. Thus, provisions were included to offset (reduce) EL payments by the amount of earnings a Veteran may have from other sources (i.e., EL was designed to “top up” all other sources of income until reaching 75% of pre-released income). Offsets included earnings such as Canada Pension Plan benefits, Employment Insurance benefits, and amounts paid under the Canadian Forces Superannuation Act (CFSA) (military pension). Investment earnings were not included as offsets. When the Income Replacement Benefit (IRB) was created in 2019, offset provisions mirroring those under the Earnings Loss Benefit were adopted.

During the evaluation, an inequity was identified between Veterans who receive a military pension (as a monthly payment) and those who opt to receive their pension as a lump sum. Essentially, Veterans receiving a military pension as a stream of payments have their pension earnings deducted (offset) from their IRB payment while Veterans who receive a lump sum benefit under the CFSA do not have these amounts offset against future IRB payments.

CAF pension types

To better understand this issue, it is necessary to understand the difference between CFSA benefits presented to Veterans following release from the military.^{Footnote 120}

The most common benefit is an immediate annuity, which provides a monthly pension that is automatically payable immediately upon release from service. Veterans will receive an immediate annuity if:

• they have 25 years of service;
• they have two years of service and have reached age 60;
• they have reached age 55 with not less than 30 years of service; or
• they are medically released and have at least 10 years of service.

A second benefit type is a Deferred Annuity which offers an unreduced monthly pension that becomes payable once a Veteran reaches the age of 60 (to simplify, a Veteran who retires before the years of service required for an immediate annuity can choose to wait until age 60 to draw a pension without penalty).

The third relevant benefit type is known as a Transfer Value which is essentially a lump sum payment equal to the present value of a Veteran’s future pension benefit.^{Footnote 121} This option is only available to Veterans who are under the age of fifty and must be chosen within one year after release. The option to select a transfer value was introduced in 2007, after offsets were determined for the Earning Loss benefit.^{Footnote 122}

Annuities versus transfer values with regard to IRB offset

The stream of payments resulting from an immediate or deferred annuity is considered an offset for the purposes of the IRB calculation. Veterans who receive an immediate annuity upon release from the military will see the annuity amount deducted dollar-for-dollar from any IRB payable. The same holds true for those with a deferred annuity when payments begin (typically at age 60). Offsetting an annuity from the IRB payable is in line with program intent (i.e., the IRB replaces lost income only).

Veterans who opt for a Transfer Value receive a lump sum amount that partly transfers directly into a retirement saving plan (typically a Locked-In Retirement Account (LIRA)) and part of which may be paid out directly to a Veteran and taxed accordingly. The amount transferred into a LIRA retains its tax-deferral status similar to a registered retirement savings plan (RRSP).^{Footnote 123} Funds remain locked within a LIRA until retirement age (though in exceptional circumstances they may be accessed earlier). At retirement age, cash and investments from a LIRA are typically transferred to a life income fund (LIF) or a prescribed retirement income fund (PRIF) from which a Veteran can make withdrawals.^{Footnote 124}

When a Veteran withdraws funds from their LIF they are taxed, however, unlike a pension annuity, the funds are considered investment income and, therefore, not offset from IRB payable. Thus, Veterans who have the option of taking their pension as a transfer value can convert their pension, set aside a lump sum in a LIRA, and ultimately avoid an offset to IRB. Meanwhile, Veterans who are forced to take an immediate annuity or who opt for a deferred annuity, will incur a dollar-for-dollar deduction from their IRB payment.

The evaluation team learned through interviews and feedback received that VAC's non-offsetting of superannuation paid out as a lump sum is a function of policy direction and may not be supported by authorities (which make no distinction between monthly and non-monthly superannuation benefits from prescribed sources for the purpose of calculating monthly IRB). The unintended impact of this policy direction is some Veterans have their IRB benefits offset by their pension earnings while others do not. This may be perceived as unfair and not in keeping with program intent.

The evaluation was unable to determine how many Veterans on the IRB program have opted for a transfer value as VAC does not own the pension data that is needed for this analysis. The evaluation, therefore, makes the following recommendation:

Recommendation #4a

It is recommended that the Director General, Policy and Research determine the full extent to which IRB recipients receive Canadian Armed Forces Superannuation benefits in the form of lump sum transfer values.

Management Response: Management agrees with this recommendation (see Table 33).

Table 33 – Management response to recommendation #4a

Recommendation #4b

That the Director General Policy and Research develop policy options for consideration and approval as required to ensure military superannuation benefits are fairly, consistently, and equitably offset from IRB payments.

Management Response: Management agrees with this recommendation (see Table 34).

Table 34 – Management response to recommendation #4b

6.0 Summary of findings and recommendations

The evaluation finds there is continued need and ongoing demand for the VAC Rehabilitation Program. However, Veterans are being admitted to the program without a barrier to re-establishment or with conditions that cannot be improved through rehabilitation. Unlike most VAC programs, Veterans receive program eligibility before they are assessed.

There is a need for some form of income replacement for Veterans while participating in the Rehabilitation program. The evaluation finds that VAC’s Income Replacement Benefit assures Veterans have an annual income comparable to a middle class Canadian as intended. However, the IRB can act as a disincentive to complete the Rehabilitation Program and the current method of calculating diminished earnings capacity does not take into consideration Veterans’ residual earning capacity.

The intent of the Income Replacement Benefit and the Rehabilitation Program both align with Government of Canada priorities and departmental roles and responsibilities. However, the programs overlap with benefits Veterans receive through SISIP’s Canadian Armed Forces Long Term Disability Program and the Canadian Armed Forces Vocational Rehabilitation Program.

Veterans report satisfaction with the rehabilitation and vocational services they receive from VAC. However, data shows that less than half of established goals are being met and that few Veterans report a positive change in their barriers to re-establishment. The data also reveals that few Veterans progress through the Rehabilitation program and successfully complete the vocational component. A combination of Veterans’ severe disability, lengthy periods between injury and rehabilitation, and dependence on Income Replacement Benefits poses barriers to successful program completion.

The current measure of Veteran earning capacity used during the DEC decision is impacted by military salaries that are higher than civilian salaries. Further research and data collection is required to determine if alternative methods for measuring earnings capacity are a better fit for VAC’s rehabilitation and income support model.

The Career Progression factor is working as designed and can provide significant financial benefit over a Veteran’s lifetime in some cases. However, the effectiveness of the career progression factor as a recognition benefit can be viewed differently by Veterans based on their individual circumstances.

The $20,000 IRB income exemption has had little impact on Veteran engagement in the workforce. However, it has provided Veterans who work with increased net income, especially for those that meet DEC criteria. Analysis shows that Veterans who receive IRB and work report higher earnings than Veterans under the previous EL program.

Rehabilitation Program and Income Replacement Benefit expenditures are rising and will continue to rise into the foreseeable future. The length of time Veterans are spending in rehabilitation and high DEC rates are driving expenditures. IRB is now a $1 billion program and will soon be the largest VAC program by expenditure.

The design of the IRB may lead to some Veterans receiving benefits at a higher rate than others depending on how their military pension is paid out. Veterans receiving a military pension as a stream of payments have their pension earnings deducted (offset) from their IRB payment while Veterans who have the option to receive their pension in a lump sum and choose to do so have no offset against future IRB. This points to a possible inequity caused by the program design.

The evaluation team makes the following recommendations based on the findings from the evaluation:

Recommendation #1a

That the Director General Policy and Research develop options for consideration and approval as required which will ensure Veterans entering the Rehabilitation Program have a requirement for rehabilitation interventions to overcome a barrier to participating in civilian life. This could include assessing Veterans before program eligibility is granted to determine rehabilitation need and whether barriers to transitioning to civilian life exist; and if the barrier could reasonably be expected to be addressed through active participation in the program.

Recommendation #1b

That the Director General Policy and Research develop policy options for consideration and approval as required to ensure the financial security of Veterans whose service-related health problems would prohibit return to work in any capacity and where rehabilitation is not a suitable intervention for the Veteran.

Recommendation #2

That the Director General, Service Delivery and Program Management, in collaboration with the Director General, Field Operations, review the recent increase in Category 5 DEC referrals and address as appropriate.

Recommendation #3

That the Director General Policy and Research develop evidence-based options for consideration and approval where necessary to more accurately assess Veteran earning capacity upon completion of the Rehabilitation Program. In doing so, the Director General should consider:

• alternative measures for determining Veteran earning capacity, the effectiveness of earning capacity assessments in other Canadian income replacement programs and the effectiveness of how Veteran earning capacity is measured in other allied countries;
• the potential impact that military salaries may have on a Veteran’s ability to meet the current 66 2/3% threshold of suitable gainful employment within the civilian workforce;
• working with other branches to identify and collect information on Veteran earning capacity to determine how close Veterans are currently coming to meeting the 66 2/3% threshold of suitable gainful employment within the civilian workforce;
• exploring options for incentivizing workforce participation; and
• whether the current single earnings capacity threshold is the most appropriate way to determine eligibility for long term income replacement or whether differences between military and civilian salaries and the Veteran’s residual earnings capacity should also be considered.

Recommendation #4a

It is recommended that the Director General, Policy and Research determine the full extent to which IRB recipients receive Canadian Armed Forces Superannuation benefits in the form of lump sum transfer values.

Recommendation #4b

That the Director General Policy and Research develop policy options for consideration and approval as required to ensure military superannuation benefits are fairly, consistently, and equitably offset from IRB payments.

Appendices

Appendix A: Services provided through VAC’s Rehabilitation Program

The following services outlined in Table 25 are available to Veterans and/or their spouses or survivors engaged in VAC’s Rehabilitation Program. It should be noted that additional educational and vocational benefits are offered to Veterans through VAC’s Education and Training Benefit and through Career Transition Services.

Table 35 - Rehabilitation Services

Appendix B – Consolidation of financial benefit programs

On April 1, 2019, the Income Replacement Benefit (IRB) was introduced to simplify and consolidate the following financial benefits:

• the Earnings Loss Benefit,
• the Career Impact Allowance,
• the Career Impact Allowance Supplement,
• the Retirement Income Security Benefit, and
• the Supplementary Retirement Benefit.

A general overview of the repealed benefits and programs follows. More detailed information about the transition to the IRB can be found in the IRB Transition Policy.

Earnings Loss Benefit

The Earnings Loss Benefit (ELB) was a taxable, monthly benefit that assured a Veteran’s total income would be at least 90% of their gross pre-release military salary. The benefit was increased from 75% to 90% on October 1, 2016.

A Veteran may have qualified for the ELB if they were a Canadian Armed Forces (CAF) Veteran taking part in VAC’s rehabilitation services. The benefit was also available to qualified survivors and dependents.

The ELB was paid until a Veteran had completed their rehabilitation plan or reached the age of 65.

Career Impact Allowance

The Career Impact Allowance (CIA) was a taxable, monthly benefit, payable for life. The allowance was provided to Veteran’s whose career options were limited because of a service-related illness or injury.

A Veteran may have qualified if they had:

• a severe and permanent impairment for which they had received a disability benefit, and
• a VAC-approved application for rehabilitation services.

The CIA payable was commensurable with the Veteran’s assessed grade level. The minimum payable was $6,000 per year with a maximum of $18,000 per year depending on the grade level. Rates were indexed annually.

CIA payments ceased the first day of the month following the date of the Veteran’s death.

Career Impact Allowance Supplement

Veterans who received the CIA, and who were deemed to have diminished earnings capacity, were also eligible for the monthly Career Impact Allowance Supplement (CIAS). The maximum amount of the CIAS was $12,000 per year. The supplement was a flat rate irrespective of grade level.

The supplement continued to be paid, until such time as the Veteran was either:

• no longer eligible for the CIA; or
• no longer determined to have a DEC.

If the Veteran died, the CIAS payments ceased the first day of the month following the date of the Veteran’s death.

Retirement Income Security Benefit

The Retirement Income Security Benefit (RISB) was a monthly taxable benefit available to eligible Veterans post age 65. This benefit topped up a Veteran’s total annual income to at least 70% of what they received in financial benefits from VAC before age 65. Survivors were also eligible for this benefit in some instances.

RISB Eligibility

Veterans of the Canadian Armed Forces who:

• reached age 65, and;
• were eligible for a disability benefit, and;
• were eligible for the ELB at the age of 65 as a result of being totally and permanently incapacitated, or;
• were eligible for Service Income Security Insurance Plan Long Term Disability (SISIP LTD) on or after April 1, 2006.

Survivors:

• of Veterans who were eligible for the RISB; or
• who were no longer eligible for Earnings Loss.

Survivors were generally eligible for 50% of the RISB to which the Veteran was entitled, or would have been entitled had the Veteran applied, for the month in which they died; or 70% of the Earnings Loss benefit that would have been payable for the month in which the member or Veteran, if alive, would have attained the age of 65.

RISB ceased the last day of the month in which the Veteran or Survivor died.

Supplementary Retirement Benefit

The Supplementary Retirement Benefit (SRB) was a taxable, lump-sum benefit provided to individuals at age 65 who were in receipt of ELB on a long term basis. It was provided in recognition of the lower pension plan contributions a Veteran may have made. The SRB was equal to 2% of the sum total of all the ELB payable to an eligible Veteran or survivor before any applicable income offsets.

SRB Eligibility

Veterans may have qualified if they were in receipt of the ELB and that benefit ended.

Survivors may have qualified if they were in receipt of the ELB for survivors and that benefit ended.

Appendix C: Environmental scan

To help put VAC’s Rehabilitation Program and its Income Replacement Benefit into context, the evaluation team examined similar programs offered by other departments of Veterans affairs, provincial workers compensation boards, and the Canadian Federal Government.

International departments of Veterans affairs

The evaluation team examined Veteran rehabilitation programs in Australia, New Zealand, and the United States of America, as their programs have comparative elements to VAC’s rehabilitation program. Each of these countries provides various levels of support for rehabilitation services and benefits. The team also researched economic support benefits similar to VAC’s Income Replacement Benefit (IRB) for comparison.

Based on the analysis of the three countries, it has been noted that the Australian Program most closely resembles VAC's.

Australia        

The Australian Department of Veterans’ Affairs’ (DVA) offers rehabilitation services to Veterans if their injury or condition is related to service. A disability entitlement is also required for eligibility.

DVA’s rehabilitation services and supports include medical management, social support, and vocational rehabilitation. To take part in the Rehabilitation services, the Veteran must first be assessed and, if approved for a rehabilitation plan, their doctor must complete a medical certificate to confirm medical capacity before a plan is created.

The above is comparable to VAC’s rehabilitation program where the Veteran’s injury or condition must be related to service. The program includes vocational, psychosocial, and medical services.

Australia DVA does provide compensation for economic loss due to the inability (or reduced ability) to work because of an injury or disease that has been accepted as service related under the Military Rehabilitation and Compensation Act 2004 (MRCA) or the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA). This form of compensation is known as Incapacity Benefits (Payments). The incapacity payments are based on the difference between the Veterans normal earning (what they were earning prior to injury or incapacity) and their actual earnings or ability to earn at the time they are incapacitated for service or work. The payments are initially payable at a rate equal to 100% of their normal earnings, less any amount of actual earnings at the time they are incapacitated for service or work and any Commonwealth superannuation payments (pension and/or lump sum) they receive. If they are in payment longer than 45 weeks, the payments will be based on a percentage of their normal earnings (between 75% and 100%, depending on the number of hours they are able to work each week), less their actual earnings (and any Commonwealth superannuation payments). This has the effect of reducing the amount they will receive if they are not working full-time. If they are not working, the rate will reduce to 75% of their normal earnings.

If a Veteran is receiving incapacity payments, they may be expected to participate in a rehabilitation program initiated by DVA to increase their capacity for suitable employment (a paid job that is suitable to the Veteran’s skills and level of incapacity).

The incapacity benefit is comparable to VAC’s IRB benefit and is also determined using earnings loss calculations.

Australia DVA has a separate Veterans’ Vocational Rehabilitation Scheme (VVRS) that aids eligible Veterans in accessing work-related supports that help them find or stay in suitable paid work. Some of these services include vocational assessments, career advice and help with a résumé. The VVRS is a voluntary program; there is no obligation for a Veteran to participate in a rehabilitation program, and there is no suspension of benefits due to non-compliance.

VAC’s vocational rehabilitation services are similar in nature to DVA’s VVRS as it assists Veterans or eligible spouse/common-law partner or survivor to focus on options for a return to work. Examples of these services include career finding and education or training. The vocational assistance plan can include career counselling, employability assessments, training, and job-search assistance.

New Zealand

The New Zealand (NZ) Department of Veterans’ Affairs has a Rehabilitation Services program that includes both social and vocational rehabilitation. The social aspect of the program aims at restoring a Veterans’ independence to the maximum extent practicable. The vocational component is to help a Veteran, as appropriate, to maintain employment, obtain employment, or to regain or acquire vocational independence. The eligibility requirements differ for social and vocational rehabilitation.

For social rehabilitation:

• the requirement is that it must be for an injury or illness as a direct consequence of an injury or illness for which a Veteran is eligible for an entitlement or service under sections 40 and/or 85 of the Act.

For vocational rehabilitation:

• Veterans must be eligible for an entitlement or service as listed in sections 40 and/or 85 of the Act for an injury or illness; and
• be entitled to receive Weekly Income Compensation or Weekly Compensation; or
• be likely to be entitled to Weekly Income Compensation or Weekly Compensation unless he or she receives vocational rehabilitation; or
• be on parental leave.

New Zealand does provide income support payments via a Weekly Income Compensation or a Weekly Compensation. The Weekly Income Compensation is for Veterans who are unable to work full-time due to any injury or illness while the Weekly Compensation is for Veterans who are unable to work full-time due to a service-related injury or illness. Weekly Income Compensation and Weekly Compensation are paid at 80% of the average wage, however, the amount will depend on whether the Veteran has any earnings that need to be considered.

New Zealand’s noted programs are also comparable to VAC’s Rehabilitation program and Income Replacement Benefit. The Veteran’s injury or condition must be related to service for the Rehabilitation program which includes vocational, psychosocial, and medical services. VAC’s IRB provides economic support to Veterans who have a barrier to re-establish in civilian life. It is equal to 90% of the Veteran’s pre-release monthly income which is more generous than NZ compensation support payments.

United States of America

The United States Department of Veterans Affairs (VA) offers a vocational program called the Vocational Readiness and Employment program (formerly called the Vocational Rehabilitation and Employment program). Rehabilitation services are accessible through this program. Eligibility requires an honorable discharge and a service-connected disability approved by the VA with a disability rating of at least 10%.

If the Veteran was discharged from active duty before January 1, 2013, the basic period of eligibility ends 12 years from one of these dates, whichever comes later:

• the date Veteran received notice of their date of separation from active duty, or
• the date Veteran received their first VA service-connected disability rating.

The basic period of eligibility may be extended if a VRC finds that the Veteran has a serious employment handicap (SEH). Having an SEH means the service-connected disability significantly limits the ability to prepare for, obtain, and maintain suitable employment (a job that does not make the disability worse; is stable; and matches the Veterans’ abilities, aptitudes, and interests).

If the Veteran was discharged from active duty on or after January 1, 2013, the 12-year basic period of eligibility does not apply to them. There is no limit on their eligibility.

For still serving members, they may be eligible if they meet at least one of these requirements:

• Have a 20% or higher pre-discharge disability rating (memorandum rating) and will soon leave the military, or
• Waiting to be discharged because of a severe illness or injury that occurred while the member was on active duty.

Depending on the Veteran’s needs and goals, some of the services may include professional or vocational counselling, job training, resume development, job search, on the job training, post-secondary education and training, supportive rehabilitation services and independent living services.

There is no financial benefit comparable to VAC’s IRB, however, US VA does provide financial allowance known as the Subsistence Allowance under Post-9/11 GI Bill to pursue an educational or training program. This allowance is paid each month and is based on attendance, number of dependents, and the type of training. Effective October 1, 2023, the maximum monthly amount is $3,251.38.

Provincial workers compensation

Workers Compensation Boards across Canada exist to help workers recover from work-related injury and illness by providing benefits and services. The most common benefits provided are wage loss benefits, permanent disability benefits, medical and rehabilitation costs, and dependency benefits if a worker dies as a result of their injuries.

Employers fund the provincial workers compensation programs based on several factors; their payroll, their industry class, the level of risk in the particular industry, and their individual experience rating. Experience rating allows for variable assessment of individual employers based on increases or decreases in the number of accidents in their work place.

As shown in Table 36, more than half of Canadian provinces and territories provide 90% net tax free wage loss replacement payments to eligible workers.

Table 36 – Percentage of Earnings Loss Replacement and Maximum Insurable Earnings by province/territory (as of 2023)

Federal Government Plans

Several disability plans are in place for employees of the Canadian Government. Two of the larger plans are the Disability Insurance Plan for the Public Service and the Royal Canadian Mounted Police (RCMP) Disability Insurance Plan.

Disability Insurance (DI) Plan for the Public Service

The DI Plan provides a monthly income benefit for employees who are unable to work for a lengthy period of time due to a totally disabling illness or injury which is non-work related. Benefits are paid subject to a 13 week elimination period or the exhaustion of sick leave, whichever is later.

Employees are eligible to receive benefits for up to 24 months if they become totally disabled (i.e., in a continuous state of incapacity due to illness or injury and are prevented from performing the duties of their regular occupation). If, at the end of this 24-month period, they are unable to perform any commensurate occupation for which they are reasonably qualified by training or experience, their benefits would be continued. For the purposes of the DI Plan, commensurate occupation means one for which the rate of pay is at least 66 2/3% of the current rate for the employees’ regular position. If the employees’ disability prevents them from doing their job, and later a commensurate one, the benefits continue for as long as they remain disabled, but not beyond their 65th birthday.

The gross annual benefit is 70% of the employees insured annual salary on the date of completion of the elimination period. The benefits are subject to offsets such as CPP-D/QPP-D disability benefits.

RCMP Disability Insurance Plan (RCMP DI Plan)

The RCMP DI Plan is intended to fill a financial void by providing partial income replacement following discharge if a member is totally disabled and unable to work.

If a member becomes totally disabled, they may receive a Disability benefit to top-up their income from other sources, including pensions, to ensure they receive at least 75% of their gross salary at discharge.

To be eligible, a member will be considered “totally disabled” if:

• In the initial assessment period (from disability date to 24 months after discharge) they are continuously physically or mentally unable due to illness or bodily injury to perform the essential duties of their regular occupation.
• After the initial assessment period (24 months after discharge), they will be considered totally disabled if the disease or injury prevents them from being gainfully employed in any occupation.

Gainful employment means medically able to perform work that provides income of at least 50% of their monthly earnings.

The benefit is a maximum 75% of gross monthly salary at discharge, reduced by other income a member may be receiving. (i.e., CPP, employment income, etc.)

A summary of income and wage benefit programs review during the course of the evaluation can be found in Table 37.

Table 37 - Summary of income and wage replacement benefit programs reviewed

Appendix D: Most common medical conditions for which Veterans were approved for rehabilitation

Table 38 shows the most common conditions among 4399 Rehabilitation Program participants who closed a rehabilitation plan in 2021-22. Veterans may have more than one condition. An additional 3,170 conditions were approved for rehabilitation with a frequency of less than 2% or which could not be categorized due to input error.

Table 38 – Conditions for which Veterans were approved for rehabilitation

Source: AED analysis of GCcase and CSDN data.

Appendix E: GBA+ Analysis – Rehabilitation Program and Income Replacement Benefit

Overview

This appendix contains a snapshot of clients who were accessing either the Income Replacement Benefit (IRB) or Rehabilitation Program as of March 31, 2022. This analysis is intended to add a GBA+ lens to the clients accessing these programs. Clients are broken out by program and the type of client since that affects eligibility requirements. GBA+ analysis of these clients looks at their age, sex, marital status, region, written language preference in addition to community type. All information included in this appendix was compiled by AED through analysis of CSDN data.

Methodology

• IRB clients include those eligible or in-pay as of March 31, 2022. Excludes CIAS clients who transitioned to IRB who either were not in receipt of ELB/RISB or have offsets from other income sources that offset their remaining IRB portion to $0 (210 in total).
• Rehabilitation Clients include those identified as participating in the rehabilitation program as of March 31, 2022.
• All percentages are rounded to the nearest one percent.

Rehabilitation Program GBA+ Summary

Table 39 – General Summary

Table 40 – Age Summary

Table 41 – Sex Summary

Table 42 – Language Summary

Table 43 – Marital Status Summary

Table 44 – Region Summary

Table 45 – Community Type Summary

Income Replacement Benefit GBA+ Summary

Table 46 – General Summary

Table 47 – Age Summary

Table 48 – Average Age Summary

Table 49 – Sex Summary

Table 50 – Language Summary

Table 51 – Marital Status Summary

Table 52 – Region Summary

Table 53 – Community Type Summary

Appendix F: Rank at release of Veterans in the Rehabilitation Program

The file review conducted as part of the evaluation showed that approximately 55% of Rehabilitation Program participants leave the military at a junior non-commissioned rank versus leaving at an officer (commissioned or non-commissioned) rank (45%). Military ranks (from highest to lowest) and the file review findings are shown below in Table 54.^{Footnote 140}

Table 54 – Rehabilitation Program participants’ rank at release (from file review)

Appendix G: Diminished earnings capacity (DEC) client profile

Introduction

This appendix contains an overview through a gender-based analysis plus lens of clients participating in the Rehabilitation Program who met diminished earnings capacity criteria (DEC) since the Income Replacement Benefit was established in 2019. Data from both GCcase and CSDN are combined to create a clean data set. Data is as of August 30th, 2022.

Notes and assumptions

• Clients are counted uniquely where possible.
• Statistics presented may count clients’ multiple times based on the unique information measured by each rehabilitation exit (ex. Completion vs Cancellation, Fiscal Year, etc.).
• Contains clients who completed or were cancelled from the rehabilitation program.
• Dependents exiting the rehabilitation program were excluded.
• The most recent favourable DEC decision was identified for each client.
• It is assumed Veterans were transferred from CSDN to GCcase before November 1, 2020. Consequently, only exits from the rehabilitation program will be included in GCcase from that period going forward.

Table 55 – Veterans exiting Rehab Program (April 1, 2019 – August 22, 2022)

Table 56 – Veterans exiting Rehab Program by Closure Reason

*Death is a closure option exclusive to GC Case. Note: there are 10,786 unique clients. Clients may have exited at multiple points during the period measured (April 1, 2019 – August 22, 2022).

Table 57 – Veterans exiting Rehab Program by Sex and DEC rate

Table 58 – Veterans exiting Rehab Program by Age and DEC rate

Note: there are 10,786 unique clients. Clients may have exited at multiple points during the period measured (April 1, 2019 – August 22, 2022).

Table 59 – Veterans exiting Rehab Program by Written Language Preference

Table 60 – Veterans exiting Rehab Program by Marital Status

Table 61 – Veterans exiting Rehab Program by Region

Table 62 – Veterans exiting Rehab Program by Region & Fiscal Year
(Atlantic, Central & Western regions only)

Table 63 – Veterans exiting Rehab Program by Fiscal Year

Note: there are 10,786 unique clients. Clients may have exited at multiple points during the period measured (April 1, 2019 – August 22, 2022).

Table 64 – Clients who met DEC criteria after age 65

Table 65 – DEC clients by region and age (completed Rehabilitation Program between April 1, 2019 and August 22, 2022)

Table 66 – DEC clients by region and in receipt of a disability benefit for a psych condition

Appendix H: Income Support Program logic model

The following logic model in Figure 18 was in place during the period the evaluation was conducted. It should be noted that the logic model is currently under review and being revised.

Figure 18 – Income Replacement Benefit logic model

Appendix I: Analysis of employment income of Veterans receiving Income Replacement Benefits

Methodology

• Employment Income data originates from CSDN and was collected as of November 3, 2023. Records were excluded that are marked as “Monthly Forecasted” as those do not represent actual employment earnings. Records with dates beginning in 2021 were included.
• “Actual” employment records beginning in December 2020 were also included with end dates in 2021. In this scenario, income amounts were adjusted by the proportion of days in 2021 compared to the total working days in the income period.
• In total, 358 Veterans were found receiving income classified as profit sharing, bonuses, retro payments, etc.
• Veterans who only received profit sharing, bonuses, retro payments, etc. in the calendar year were excluded as they did not work during the year.
• It is assumed the number of days worked cannot exceed 365 days during the year. It is assumed profit sharing, bonuses, retro payments, etc. will count as having worked 0 days.
• A predictive model was developed to estimate the number of days worked beyond 1 month in duration (32+ days.) due to the presence of data entry errors involving the start date and end date. Records with less than 1 month in duration were used to train the model and estimates were produced. Estimates were considered more accurate than the raw data if the difference between the estimate and actual days exceeded 50% (details below).
• Employer Names were entered as text and required classification into groups to analyze. Names were organized into groups utilizing a manual identification process to determine the top 10 employers for Veterans in receipt of IRB.
• Income Records for a particular client-employer were excluded if the number of days between release and the last day worked was less than 30.
• Veterans were considered to have met DEC criteria if they received a “criteria met” DEC Decision prior to the beginning of any income period.
• Poisson regression^{Footnote 143} was used to estimate the number of days worked for a client’s income record based on their median daily pay rate (records one month or less in duration) in addition to their earnings for the period. These factors were found to be statistically significant with 95% confidence.

Employers of Veterans receiving IRB

It is estimated Veterans receiving IRB worked for 2344 unique employers during the 2021 calendar year. Given that employers are typed in as text, this estimate may be high as input errors were observed during the analysis. All employers with 10 or more Veterans receiving IRB are listed below in Table 67. Note that the employer was listed as “unknown” 21 times in the data the evaluation team reviewed.

Table 67 – Employers with 10 or more Veterans receiving IRB

Veterans with Employment Income

According to the employment income data, there were 1,380 Veterans found with employment income that exceeded $20,000 in annual income.

Table 68 – Employment Income

Table 69 – Employment Income by CAF Service

Table 70 – Employment Income by Marital Status

Table 71 – Employment Income by Community Type

Table 72 – Employment Income by Written Language Preference

Table 73 – Employment Income by Sex

Table 74 – Employment Income by Age

Table 75 – Employment Income by Duration

Table 76 – Employment Income by DEC Indicator