Audit and Evaluation Division – Veterans Affairs Canada – April 2024
Evaluation results
Relevance and need
The evaluation finds there is continued need and ongoing demand for Veterans Affairs Canada’s (VAC’s) 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. Rehabilitation program participation has remained relatively consistent over the past five years.
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 (IRB) ensures 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 (DEC) does not take into consideration Veterans’ residual earning capacity. The number of Veterans receiving IRB is growing and is forecasted to grow in the future.
The intent of the IRB and the Rehabilitation Program aligns with Government of Canada priorities and departmental roles and responsibilities. However, the programs overlap with benefits Veterans receive through the Service Income Security Insurance Plan (SISIP).
Performance
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 reliance on IRB 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 component of the IRB 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 those that meet DEC criteria. Analysis shows that Veterans who receive IRB and work report higher earnings than Veterans under the previous Earnings Loss program.
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 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.
| Recommendation | Management response and action plan |
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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. |
The Policy and Research Division will undertake research and analysis to: Review current program eligibility, eligible and ineligible groups, application requirements, and other “reasonable” considerations;
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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. |
The Policy and Research Division will undertake research and analysis to determine the circumstances and needs of Veterans who may have degenerative and/or terminal service-related health problems which would prohibit a return to work in any capacity and, depending upon the outcome of this work, develop options for future consideration. The work will involve the conduct of a research and needs assessments of Veterans, consultation with stakeholders, financial and legal analysis. |
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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. |
Service Delivery Program Management (SDPM), in collaboration with Field Operations, will review the recent increase in Category 5 DEC referrals. This will involve reviewing referrals for DEC under Category 5 from April 2019 (when the criteria expanded to include severe mental health illnesses) to March 31, 2024. The findings of this file review will be shared with program policy and program management to assess if revisions to referral reason 5 are required to better align with the veterans it aims to support. Based on the review’s outcomes, SDPM and Field Operations (FO) will take actions to address it as appropriate. The outcome of the review may result in an update of all DEC-related training materials, business processes, and functional guidance available to DEC referral agents. |
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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:
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The Policy and Research Division will undertake research and analysis in relation to assessment of earnings capacity and, depending upon the outcome of this work, develop options for future consideration. The work will involve the conduct of a research and needs assessment of Veterans, consultation with stakeholders, financial and legal analysis. As part to this work, consideration will be given to evidenced based measures of earnings capacity used in other jurisdictions, research and best practices in measurement of earnings capacity, and the interplay between salary and earnings thresholds in the determination of earnings capacity in similar programs. |
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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. |
The Policy and Research Division will undertake work to determine the extent to which Veterans entitled to IRB receive Canadian Armed Forces Superannuation benefits on an “other than monthly basis” and determine related impacts on IRB calculations. |
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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. |
The Policy and Research Division will undertake research and analysis in relation to superannuation benefits and the calculation of the IRB and depending upon the outcome of this work, develop options for future consideration. |
Program description
- The Rehabilitation Program provides injured and ill Veterans that have barriers to re-establishment with access to medical, psycho-social, and vocational rehabilitation.
- The program focuses 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 contract.
- 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 Veterans with replacement income to relieve financial pressures and allow for the veteran to successfully complete rehabilitation and return to work.
- The IRB is a taxable monthly benefit 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 DEC assessment that they cannot be gainfully employed. 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.
- 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.
About the evaluation
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Scope and methodology
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Constraints and limitations
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