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

The joint U.S. Department of Defense (DoD) - Department of Veterans Affairs (VA) Integrated Disability Evaluation System is the process by which DoD determines fitness for duty and separation or retirement of service members because of disability. Service members who are evaluated for disability undergo a comprehensive medical examination to document all medical conditions and receive a disability rating for every condition documented during the exam. DoD and the VA use these ratings to determine the amount of disability compensation service members receive if they are determined to be unfit to continue serving and consequently medically discharged. Proposals for reforming the DoD compensation system have been considered in the past, but a rigorous evaluation of what those alternatives might look like and how they would affect service member benefits and costs to DoD has not been conducted. In this article, the authors describe their evaluation of four hypothetical alternative disability compensation approaches that would support a simpler disability evaluation process: compensating based on the current objectives of the DoD system (and using current benefit formulas), compensating on the basis of a military career, compensating on the basis of unfitting conditions, or compensating similar to U.S. allies. Each alternative reduces reliance on disability ratings for determining DoD disability compensation and focuses primarily on a single decision about whether a service member is fit to perform his or her duties. The authors evaluate the potential effects of each alternative on service member compensation, processing times, end strength, lost skills and experience, and readiness.