Do you know what IU (also called TDIU) is? IU is a VA acronym for Total Disability rating based on Individual Unemployability. IU allows a veteran to receive compensation at a 100% disability rate from the VA when their service connected disabilities do not total 100%.
One way to think of IU is to think of it like “gap” insurance for your car. If your car is totaled out when there is still a loan on it, and the totaled value of the car does not cover the loan, gap insurance will bridge the difference. In the realm of the VA, when your disability rating does not equal 100%, but you are completely unable to maintain “substantially gainful employment” because of your disability, IU bridges the difference between your actual disability rating and 100%.
There are two ways in which a veteran can be granted IU: schedular and extra-schedular. Of these two, schedular is the more common and often times the easier to have granted. There are two prongs for a schedular rating and two ways to meet the first prong.
The first prong is that the veteran must qualify for IU based on the VA’s rating chart. There are two ways for a veteran to do this. The first is that he has a single service connected disability with a rating 60% or higher. The second way for a veteran to qualify is to have a service connected rating of 70% with at least one of the underlying disabilities rated at 40%.
Once a veteran meets the rating requirement, he must then meet the second prong for IU. He must show that he is unable to maintain “substantially gainful employment as a result of his service connected disability or disabilities.” It is important to remember the second part of the last sentence. Just because a veteran has a qualifying rating and is not working does not automatically qualify him for IU. The reason for not working must be those service connected disabilities.
Please note, unable to maintain “substantially gainful employment” does not mean the veteran is completely incapable of working. Substantially gainful can be defined as a job that pays a wage greater than the poverty level. A job paying less than the poverty threshold is not “substantially gainful,” and is known as “marginal employment.” For 2016, the poverty threshold defined by the U.S. Census Bureau is $12,486 for a single person. If a veteran’s earnings do not exceed this threshold, even while working, he is not considered to be gainfully employed.
In addition to marginal employment, a veteran may participate in “sheltered employment.” Sheltered employment is a job in a protected or sheltered environment. For example, a veteran is given special accommodations relating to his disability or is given lighter duty than a similarly situated individual in the same position. A veteran working in a sheltered environment who earns more than the poverty threshold can still be eligible for IU.
Once both prongs of IU requirements have been met, what is the next step? To receive a grant of IU, a veteran must file a VA Form 21-8940, Veteran’s Application for Increased Compensation Based on Unemployability. This form needs to be filed with the closest Regional Office to the veteran.
When filling out the 8940, the veteran will reach Section 17. Section 17 of the form asks the veteran to “list all employment including self-employment for the last five years.” This section sounds like it is asking about the work the veteran has done in the last five years, starting with the time period immediately preceding the filling out of the form (i.e. if the 8940 were filled out today, using this example, it seems that the form is asking the veteran to list his work history starting from 2012 through 2017), but it is not that simple. The 8940 form is actually referring to the last five years the veteran last physically worked. For example, if the veteran last worked in 1998 as a mechanic, even though the veteran is filling out the form today (in 2017), the veteran would need to list his job(s) as a mechanic from 1993 through 1998 only.
IU is often difficult to get the VA to grant. The best evidence that a veteran can submit is an expert opinion from his treating physician stating that he cannot work based on his service connected disabilities only. If the doctor also considers non-service connected disabilities in this determination, the VA will more than likely deny the claim.
The second way in which a veteran can obtain IU is extra-schedular. This is a significantly more difficult route to IU. When a veteran does not meet the schedular requirements of the first prong but is nonetheless unable to maintain substantially gainful employment due to his service connected disability, the VA should send the veteran’s claim to the director of compensation in Washington D.C. for extra-schedular consideration. More information on the process can be found here. In most cases, the VA is highly likely to deny these claims.