Income Replacement Benefit FAQs

What is the Income Replacement Benefit?

If a Veteran experiences health problem(s) that are resulting primarily from their service, seeks rehabilitation and needs income support during that rehabilitation, the Income Replacement Benefit will provide financial support to them during that specific period of time.

For those who have an eligible permanent physical or mental health problem that results in a Diminished Earning Capacity, the Income Replacement Benefit will continue after the completion of the rehabilitation plan and will reduce at age 65 to 70% of the pre-age 65 amount of 90% (less offsets).

Calculation of benefit: The benefit will be determined based on the higher of 90% of a Veteran's salary at release, indexed forward to current day, OR based on a minimum amount($50,018.64 in 2021, indexed annually based on the Consumer Price Index. The minimum amount is comparable to the middle-class tax bracket. The benefit will be offset by other income sources, such as benefits payable under the Canadian Forces Superannuation Act, also known as the CAF military pension.

Long term and lost career progression: For those who have an eligible permanent physical or mental health concern that results in a Diminished Earning Capacity, their military salary at release will be adjusted annually by a career progression factor (CPF) of 1% until the earlier of what would have been 20 years of service had they not released or age 60. So, if you are a Veteran with five years of military service, you could qualify to receive career progression for 15 years if you will still be less than 60 years old at the end of that time.

What is the qualification criteria for the Income Replacement Benefit?

A Veteran may qualify if they are a Canadian Armed Forces (CAF) Veteran who has a barrier to re-establishment because of service-related physical or mental health problem(s), and they are taking part in VAC rehabilitation services.

A Veteran who is participating in the VAC rehabilitation program will be evaluated to see if their eligible permanent physical or mental health problem associated with their Income Replacement Benefit results in a permanent Diminished Earning Capacity (DEC). If it turns out that the Veteran does have a DEC, then the IRB may be extended for the Veteran's lifetime or until the Veteran no longer has a DEC.

For those who have an eligible permanent physical or mental health problem that results in a diminished earning capacity, the Income Replacement Benefit will be increased by 1% every year until the Veteran reaches what would have been 20 years of service or age 60. The benefit is also available to qualified survivors and dependent children after the death of the Veteran.

Why are Veterans who medically release from the military due to non-service related injuries or illness no longer eligible for vocational rehabilitation services or the IRB? Do they not deserve the same level of care?

Veterans who medically release from the military due to non-service-related illness or injury qualify for a separate insurance program through the Canadian Armed Forces.

What supports/options are available to medically released Veterans with disabilities that are caused by non-service related injuries and illnesses?

Veterans who medically release from the military are eligible for an insurance program through the Canadian Armed Forces (Canadian Armed Forces Long Term Disability Insurance). Medically released Veterans can also access vocational rehabilitation through this program. Veterans who medically release may qualify for VAC support including Career Transition Services, the Education and Training Benefit, as well as access to the Public Service Health Care Plan.

What financial support is available for Veterans who are mentally and physically able to work, but have not yet found employment or a source of income?

Veterans who are:

• able to work;
• participated in VAC Rehabilitation Program;
• qualify for the Income Replacement Benefit; but are unable to find employment or are underemployed, may be eligible for the Canadian Forces Income Support (CFIS).

The Canadian Forces Income Support (CFIS) is a non-taxable, monthly income support that provides financial assistance to help meet basic needs such as food and shelter.

You must submit your application for the CFIS within six months of the date that you no longer qualify for the IRB.

At age 65 how is the 70% IRB calculated? What offsets are considered?

If you have a Diminished Earning Capacity prior to age 65, the IRB may be payable for life. After you reach the age of 65, the benefit will be reduced to 70 percent of your previous IRB amount, less offsets. The benefit is offset by other income sources, like benefits payable under the Canadian Forces Superannuation Act (commonly known as the CAF military pension), the Canada Pension Plan or Quebec Pension Plan, and short or Long-term Disability Insurance Benefits or the Benefits payable under the Old Age Security Act.

If a Veteran receives IRB and dies before age 65 due to a service-related injury or illness, what do survivors and orphans qualify for?

Survivors of the members and Veterans who have died as a result of a service-related injury or illness may qualify for the IRB. The Veteran does not need to be in receipt of the IRB at the time of death. Survivors may receive the same amount of IRB before offsets the member or Veteran could have received prior to the member or Veteran's 65th birthday. The amount of the IRB before offsets is reduced when the member or Veteran would have reached the age of 65 to 70% of the member or Veteran's rate post age 65. Income amounts the survivor receives in respect of the Veteran are offset from the IRB amount.

An orphan's qualifications for the IRB are the same as that for survivors described above. In cases where there is a survivor and an orphan(s), the amount for which the survivor qualifies (before offsets) is split in two equal shares, with half going to the survivor and half going to the orphan(s). In the absence of a survivor, the orphan gets the full amount; or, if there are more than one orphans, they divide the full amount between themselves. There are no offsets to the amount of IRB for orphans.

If a Veteran receives IRB and dies before age 65 due to a non-service related injury or illness, what do survivors and orphans qualify for?

Survivors of Veterans who die before age 65 and are in receipt of IRB at the time of their death may qualify to receive a lump sum amount equal to 24 months of the monthly amount of IRB the Veteran was eligible for at the time of death. No offsets are applied to the amount.

An orphan's qualifications for the Income Replacement Benefit are the same as that for survivors described above. In cases where there is a survivor and an orphan(s), the amount for which the survivor qualifies (before offsets) is split in two equal shares, with half going to the survivor and half going to the orphan(s). In the absence of a survivor, the orphan gets the full amount; or, if there are more than one orphan, they divide the full amount between themselves. There are no offsets to the IRB for orphans.

If a Veteran receives IRB and dies after age 65 what do survivors and orphans qualify for?

Survivor of Veterans who die after age 65 and are in receipt of IRB at the time of their death may qualify to receive 70% of the amount of IRB (before offsets) received by the Veteran at the time of death. Income amounts received by the survivor from the Veteran are offset (reduced) from the IRB amount.

An orphan's eligibility for the Income Replacement Benefit are the same as that for survivors described above, until the age of 18 where they must provide proof of enrollment in a course of instruction or be physically and/or mentally incapacitated.

In cases where there is a survivor and an orphan(s), the amount for which the survivor qualifies (before offsets) is split in two equal shares, with half going to the survivor and half going to the orphan(s). In the absence of a survivor, the orphan gets the entire amount; or, if there are more than one orphan, they divide the full amount between themselves. There are no offsets to the amount of the IRB for orphans.

What information is required to document the $20,000 income?

You are required to notify the Department of your employment earnings and provide annual statements. Proof of employment such as pay stubs, Records of Employment, T4s, etc. can be used to document income earnings. Annual income verification with Canada Revenue Agency will confirm amounts submitted to ensure that the Veteran is receiving the most advantageous amount.

How did Veterans Affairs Canada determine the career progression factor (CPF) of 1%?

If you have not yet served a full career in the military but now have a diminished earning capacity, the Income Replacement Benefit will be increased by 1% every year until the Veteran reaches what would have been 20 years of service or age 60.

The legislative criteria for the CPF was developed based on the analysis of a military career duration and progression in the Canadian Armed Forces. The CPF intent is to address the loss of career advancement opportunities due to the development of a health problem primarily related to service.

Why is my January IRB amount different from the December amount?

The monthly military salary used to calculate your IRB is indexed annually every January 1 in accordance with the increase to the Consumer Price Index. This increase is rounded up to the next 0.10% for the year, ending in the previous year on October 31. The Consumer Price Index is the annual average index for all consumer items and is published by Statistics Canada. As a result of this indexation, you should notice a change in your IRB payment starting in January every year.

The IRB allows recipients to earn up to $20,000 from employment per calendar year before the benefit is reduced. This $20,000 employment exemption resets in January for the new calendar year. As a result, this may cause an increase in your IRB payment starting in January; or, if you hadn't been receiving an IRB payment before January, you may begin to receive one.

What can survivors and surviving dependent children receive under the Income Replacement Benefit?

If a Veteran in receipt of the IRB dies before age 65 of non-service-related causes, the survivor and orphan(s) may qualify for a lump-sum payment equal to 24 months of the amount (before offset) that the Veteran would have been entitled to in the month they died.

If a CAF member or Veteran dies before age 65 of service-related causes, the survivor and orphan(s) may qualify for the same amount of IRB amount as the member or Veteran could have received (90% of salary at release or the minimum amount), before offsets, until age 65.

The month after the CAF member or Veteran turns 65, the benefit reduces to 70% of what the they would have received after age 65 (70% of the previous 90% pre-release military salary or the minimum amount). Any income sources the survivor receives in respect of the CAF member or Veteran is then deducted (or 'offset') from their IRB amount.

If a Veteran in receipt of the IRB dies after age 65 (regardless of the cause of death), the survivor and surviving orphans may qualify for 70% of what the Veteran's IRB would have been after the age of 65 (70% of the previous 90% pre-release military salary or the minimum amount) before offsets. Any income sources the survivor receives in respect of the Veteran will be deducted (or 'offset') from their IRB amount. There are no offsets for orphans.

Division of the Benefit

If an Income Replacement Benefit is payable to a survivor and/or orphans, the following rules apply to the division of the benefit:

If there is a survivor but no orphans the survivor will receive 100% of the Income Replacement Benefit.

If there is a survivor and one or more orphans, the survivor is entitled to 50% of the Income Replacement Benefit and the orphans, as a group, are entitled to 50% of the Income Replacement benefit divided equally between them.

If there are one or more orphans but no survivor, each orphan is entitled to the amount obtained by dividing the Income Replacement Benefit by the number of orphans.