VA Unemployability (IU) Guide

The Back Door to 100% VA Disability

100% disability. Speak to any veteran at the VA offices and you will quickly understand that a 100% rating is not as simple as you would think. However, there is a “backdoor” way that is often overlooked by veterans hoping to be compensated fairly for disabilities that keep them from working: Total Disability Rating Based on Individual Unemployability (TDIU or IU).

Currently, there are two ways for a veteran to receive 100% schedular rating compensation.

Service Connected Disabilities

You have a service-connected disability, or multiple disabilities, that led the VA to identify you as 100% disabled. This first way of obtaining a 100% rating can be difficult if you are trying to combine multiple disabilities in order to reach 100%.

Not able to work

You have a service-connected disability that is keeping you from being able to work, regardless of schedular rating.

The second (backdoor) way of obtaining a 100% disability rating level is to show that the service connected disabilities prevent the veteran from being able to get a job and keep it. In other words, the alternative IU route can make it easier to gain the same benefits. If you have disabilities related to service which prevent you from holding a job then you should be eligible for IU!

Not able to work because of your VA disability? You have a a 67% greater chance of success with an attorney.

VA unemployability is the VA’s way of admitting that some veterans are still unable to work due to their disabilities, despite their assigned combined ratings not reaching 100% disability.

In this short guide, we will discuss the following questions about IU so you know what the VA is looking for when it decides these claims:

And if you are wondering when you should get started and file your unemployability claim, you can check out our brief video.

How do I know if I’m eligible for IU?

Am I eligible for IU?

What constitutes eligibility for IU? VA regulations provide that if a veteran cannot work—cannot engage in substantially gainful employment—due to service connected conditions, he or she is unemployable. “Gainful employment” is defined as the ability to hold a job which pays more than or equal to the poverty level set by the federal government.

The primary consideration in determining whether or not a veteran is entitled to IU is whether his or her service connected disabilities prevent him or her from obtaining and maintaining substantially gainful employment. In other words, are you able to find a job that pays enough to put your earnings over the poverty level? And are you capable of keeping such a job if you are able to find one? If your service connected physical or mental disabilities impair your ability to find and keep a job, you may be entitled to IU.

What are the scheduler requirements for IU?

What are the scheduler requirements?

When the VA is evaluating a claim for IU, the first thing it will look at is whether the veteran meets the schedular requirements for IU. They are as follows:

  • Veterans with only one service connected condition must be rated greater than or equal to 60% for that condition;
  • Veterans with two or more service connected conditions must have at least one condition rated greater than or equal to 40% with a combined rating greater than or equal to 70%;
  • For the purposes of the IU regulation, the following combinations may be considered a “single disability”;
  • Disabilities of one or both upper extremities, or lower extremities, including the bilateral factor;
  • Disabilities resulting from a common etiology or single accident;
  • Disabilities affecting a single body system (i.e., orthopedic, respiratory);
  • Multiple injuries incurred in action; and/or
  • Multiple disabilities incurred as a POW.


  1. A veteran suffers from several service connected heart disabilities such as diabetes and diabetic retinopathy and neuropathy. These disabilities arise from a common etiology (the veteran’s diabetes mellitus). Therefore, according to regulations, the rating for these disabilities need only combine to a 60% evaluation in order for the veteran to qualify for TDIU under 4.16(a).
  2. A veteran has been service connected for his Lumbar Spine condition at 40%, his left knee at 30%, and his PTSD condition at 30%. Following the combined ratings math used by the VA, the veteran’s total percentage is 70%. Because the veteran has one service connected disability rated at 40%, and because his total rating is 70%, the veteran meets the schedular requirements for IU.

There are a few important things to remember about the schedular requirements for IU. First, when making a determination on IU, the VA can only consider disabilities that have already been service connected. If a veteran is service connected for his knees and his back, but in reality could not work due to his PTSD-related anger outbursts (which have not been service connected but are part of a pending claim), the VA will only consider the knees and the back when deciding if the veteran can work or not. Until service connection is granted for PTSD (if at all), the veteran must prove that he cannot work due to his knees and back condition alone, as opposed to the PTSD.

Second, and on a related note, the VA cannot consider non-service connected disabilities when making a determination on IU. For example, if a veteran has a 70% service connected rating for PTSD and a non-service connected back disability, the VA must review the veteran’s ability to work solely as it pertains to the service connected PTSD. Even if the veteran is receiving worker’s compensation or Social Security Disability for the back injury, which would indicate that another governmental organization recognized that the veteran could not work due to his back, the VA cannot use this information against the veteran. After all, the veteran may not be able to work for more than one reason.

Third, the age of the veteran is not a factor when qualifying for IU. This means the VA cannot say that because the veteran is a certain age he or she would not be able to work due to the veteran’s age alone.

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What if I don’t meet the scheduler requirements for IU?

What if I don't meet the scheduler requirements?

If you do not meet the 60%/single disability or 70% combined/40% single disability requirement, it still may be possible for you to be awarded IU. VA regulation 38 C.F.R. § 4.16(b) recognizes that some veterans will be unable to work because of their service connected disabilities, but may not meet the schedular requirements. In such cases, the claim is submitted to the Director of the Compensation and Pension Service for extraschedular consideration. The regional office is required to prepare a “full statement as to the veteran’s service connected disabilities, employment history, educational and vocational attainment and all other factors bearing on the issue.” As you can imagine, this is not a quick process, and receiving an award of IU based on extraschedular consideration can take a long time. Also, note that it is very rare for the Regional Office to refer a claim for IU for extraschedular consideration without a specific request from the veteran for consideration under 38 C.F.R. § 4.16(b), so if you believe your claim warrants such consideration, it is best to make the request sooner rather than later.

The standard for awarding IU on an extraschedular basis is that the case must present an exceptional or unusual disability picture with factors such as marked interference with employment or frequent periods of hospitalization as to render impractical the application of the regular schedular standards. Because these cases are granted on an individual basis, it is a good idea to present evidence that shows why the veteran’s particular circumstances render him or her unable to work, such as work background, education background, and periods of hospitalization. Again, note that these are very difficult cases to win, but not impossible. The best thing you can do is gather as much evidence as possible, including an independent medical opinion, which shows that your unique circumstances render you unable to work due to marked interference with employment or frequent periods of hospitalization.

How do I apply for IU?

How do I apply for IU?

Interestingly enough, you may have already applied for IU without knowing it. A claim for entitlement to IU is not always a separate, free-standing claim. A veteran can file VA Form 21-8940, Application for Increased Compensation Based on Unemployability, at any time to establish a claim for IU. However, if the issue of unemployability is properly raised by the record in conjunction with a claim for service connection or a claim for increased rating, then the VA should consider the issue as part and parcel of the underlying claim, whether or not the veteran has specifically requested IU. But note, it is very rare for the VA to adjudicate the issue of IU without the veteran raising the claim first, and the VA Regional Office will not grant IU without the veteran submitting VA Form 8940, so if you think you are eligible for IU, it is better to initiate the claim yourself by submitting the required form.

VA Form 8940 is a rather complex and confusing form.

Section I

Section I of the form deals with Disability and Medical Treatment. In this section, the veteran is asked to answer what disability keeps him or her from working. Remember, the veteran’s service connected disabilities must be the primary reason he or she is unable to work. If there are any non-service connected disabilities involved, then the veteran should get a statement from a doctor as to why the non-service connected disabilities are not a factor in the veteran being unable to work. There is also a place on the form for the veteran to provide the name and address of the physician or hospital that is treating him or her for the service connected disabilities. It is very important to state the frequency (monthly, weekly, every other week, etc.) rather than specific dates for the medical provider to whom the veteran goes for treatment relating to his or her particular disabilities.

Section II

Section II of the form asks for all employment history for the five-year period preceding the date on which the veteran claims to have become too disabled to work. So, for example, if a veteran stopped working in 2010, work history from 2005-2010 would need to be provided, along with the names and addresses of the employers, what type of work was performed, how many hours per week, and the dates of employment.

Section III

Section III addresses schooling and other training. In this section the veteran is asked whether he or she acquired any other education or training before becoming too disabled to work, or had any education or training since becoming too disabled to work, and specifically what kind of education or training it was. In this, and every section of the form, accurate and specific information supplied by the veteran goes a long way in helping the VA make a timely decision for IU.

It is important to understand that IU is not a freestanding claim, but is part of the rating process. For example, the VA grants a veteran a 70% rating for PTSD, but does not decide the issue of IU. The veteran may think, “Okay, now I have a 70% rating so I can apply for IU,” when it fact what he should do is file a Notice of Disagreement to the decision granting the 70% rating for failure to adjudicate the issue of IU. This is important because of the way the VA determines the effective date for IU.

The effective date for IU is often something that the VA gets wrong. In simplest terms, to determine the effective date for IU you must first figure out the date on which the VA first received evidence from some source which indicates that the veteran was unemployable. This could be a letter from a doctor or a notation in medical records which states that the veteran is unable to work due to his or her service connected disability. Second, you must determine the status of the veteran’s claims, if any, at the time the VA received this evidence.

There are three main ways to answer the second question:

  • The VA first received evidence of the veteran’s unemployability when he or she filed a claim for service connection or when the VA was considering whether to grant service connection. If the VA eventually grants service connection for the veteran’s disability and awards IU, the effective date would be either:
    • the date the VA received the claim for service connection, or
    • the date the veteran first became unemployable due to his or her service connected disabilities, whichever is later.
  • The VA first received evidence of the veteran’s unemployability after the VA granted service connection, but before the VA made a final decision on the rating for the disability, the effective date for an award of IU would be:
    • the date the VA received the claim for service connection, or
    • the date the veteran first became unemployable due to his or her service connected disabilities, whichever is later.
  • And finally, if the VA first received evidence of the veteran’s unemployability when he or she filed a claim for an increased disability rating or while a claim for an increased disability rating is pending, the effective date for an award of IU would be:
    • the date the VA received the claim for an increase in disability rating, or
    • the date the veteran first became unemployable due to his or her service connected disability ratings, whichever is later.

Am I automatically disqualified from consideration for IU because I have a job?

Am I disqualified because I have a job?

No. In fact, VA unemployability does not always mean that a veteran is not working. The key, however, is that all income earned from employment must be at or below the poverty level, or from a job that is considered to be “sheltered”. These types of marginal employment are not considered as substantially gainful occupation. Marginal employment is considered as “earned annual income that does not exceed the poverty threshold for one person as established by the US Department of Commerce, Bureau of the Census.” For 2016, the poverty level for which a veteran must be working under was $11,880.

IU Poverty Levels

Alternatively, a job in a “sheltered environment” (such as a family business, sheltered workshop, or a position tailored to the specific needs of the veteran) is considered to be marginal employment, even if that job earns an income over the current poverty threshold. Sheltered employment means that you are given concessions due to your service connected disabilities that would not normally be given to other employees. For example: a veteran with PTSD works for a family friend’s business. The family friend provides the veteran with an office and duties that afford limited interaction with other people. The veteran’s salary pays his bills, and is over the current poverty threshold. Because the veteran’s job has been tailored to his individual needs (limited interaction with other people), his job is considered to be sheltered, and therefore falls under “marginal employment.” The VA cannot consider this job as being substantially gainful employment, and must not use it against him in determining IU.

One thing that the VA often overlooks is the requirement that a veteran be able to maintain substantially gainful employment. For instance, a veteran may be able to hold a job for a few months, but then loses the job due to his service connected disabilities. He then may be able to get another job for a few months, before losing that one, and the cycle repeats. In such a case, the veteran is able to get jobs, but he is not maintaining employment, and is eligible for IU.

So, what does this mean on a practical level? First, it means that VA law does allow for some veterans who work to also receive IU benefits at the same time, depending on the circumstances. Second, it means that disabled veterans who are working should not automatically assume that they are not eligible for IU simply because they work.

What evidence do I need to support my claim for IU?

To establish entitlement for IU benefits, both evidence of unemployment due to a service connected condition and support documentation from a medical professional must be obtained. Evidence which may assist you in proving your case could be letters from former co-workers or employers, medical evidence, or evidence from a vocational expert.

The VA also has to consider a veteran’s educational and work history when determining if the veteran is entitled to IU. The VA must look at the veteran’s prior education and training, and how his current disabilities prevent the Veteran from working in the field in which he has been trained. If the veteran has participated in a VA vocational rehabilitation program, and still cannot work due to the service connected disabilities, the VA must also consider this as positive evidence that the veteran cannot maintain substantially gainful employment.

It is also important for earnings to be examined in order to assess if the veteran is above or below the poverty threshold. A veteran can produce substantive proof of earnings through pay stubs, tax returns, employer letters, or a Social Security Earnings Record. If the earnings are above the poverty threshold, an evaluation needs to take place to determine if the veteran is working in a “sheltered” environment as discussed above. The veteran will need corroborating evidence to prove that the workplace is sheltered, for example, an employer letter verifying the excessive accommodations.

When it comes to proving to the VA that a veteran is eligible for IU, the best evidence is a professional opinion from a vocational expert or competent medical doctor concerning the veteran’s ability to secure or follow a substantially gainful occupation. The opinion should say it is “more likely than not” that you are unable to work due to your service connected disabilities. Again, the key here is “service connected.”

The VA often will schedule a veteran for a Compensation & Pension (C&P) exam to get an opinion on IU. The exam report must include a rationale as to whether it is as likely as not that the service connected disability or combined disabilities render the veteran unable to secure and maintain substantially gainful employment. Additionally, the exam report must also include and describe the functional impairment caused by the veteran’s disabilities and how that impairment impacts physical and sedentary employment.

One thing to keep in mind is that if a veteran has multiple service connected disabilities that contribute to unemployability, the VA will likely send the veteran to separate exams for each condition. Each exam will discuss the veteran’s single disability and the functional impairment that the veteran has due to that single disability. For example, a back examiner may say, “The veteran can’t stand at all or can’t walk, but he could do sedentary work.” A migraine examiner may say, “He has to lie down at least once a week for several hours. As long as an employer will give that benefit, then he could work.” And then a PTSD examiner may say, “He doesn’t get along with people too well, so as long as he’s working by himself off somewhere, he’s fine.”

The problem is that the VA will usually look at these three opinions separately, rather than look at them together in order to create a complete picture of the veteran’s disabilities. If that is the case, the best thing to do is get an independent medical opinion that either looks at all the service connected disabilities together, or shows that one service connected disability in particular is the one that renders the veteran unable to work.

One option for an independent medical opinion is a vocational expert, but getting a vocational expert for your case might not be easy for many veterans. If so, another option is going to a VA vocational rehabilitation center and asking for an assessment. Again, it is important that any medical opinion you are able to get regarding your inability to work be limited to only your service connected disabilities.

Not able to work because of your VA disability? We win 96% of the cases we have decided to pursue.

Is my IU rating permanent?

Is my IU rating permanent?

IU is not always permanent, and you may have to undergo periodic medical exams to substantiate the continuation of the award, once granted. But, there are safeguards in place that make it more difficult for the VA to take away an award of IU.

If the VA does not follow its own rules and regulations when proposing a reduction, the reduction is considered void and unlawful. If the VA has determined that your current disability rating warrants reduction, it must first issue a notice of proposed reduction. This first notice gives you sixty days to submit evidence to show that your condition has not improved. You also have an option to request a pre-determination hearing within thirty days of the notice. Requesting a hearing may buy you additional time to submit evidence.

Furthermore, there are several protections set forth in the regulations against a proposed reduction. One of those protections is for 100% ratings when based on unemployability (IU or IU). The VA has the burden to demonstrate that actual employability has been established by clear and convincing evidence in order to reduce or sever IU. This is a very high burden to meet. Even if you are working, you are allowed to keep your IU for a full year. However, in cases where the veteran has not returned to work, then the VA has to have really good evidence to discontinue IU.

Under the regulations, if the VA determines that the veteran has sustained improvement and that such improvement warrants reduction of an IU rating, but the record reflects that the veteran is unable to engage in substantial gainful employment, then IU must be preserved. In other words, in cases where your disability has materially improved, your IU rating can still be protected from reduction if the evidence continues to show that you are unable to work due to your service connected disability.

If you submit evidence prior to the expiration of the first sixty day notice, there is a possibility that the VA will find reasonable basis to send you for a re-examination. If it decides to do so, the final rating action is deferred pending the outcome of the new examination. A very important point is that an examination that is the basis for reduction must be as thorough as the examination that established the current rating. Attending the examination is very important. If you do not show up, your benefits can be automatically reduced or terminated. If you are unable to attend on the date scheduled, you must call and reschedule, or have a very good reason explaining your absence.

The VA must review all of the new evidence, including the report of re-examination, in the context of the entire record. The VA will then issue a final rating decision. The second rating decision starts a new sixty-day period. The implementation of the reduction goes into effect on the last day of the month of the second decision.

This means that even if the VA reduces a disability rating, it can’t take away IU unless it has evidence of marked improvement that is clear and convincing, unequivocally demonstrating that you have regained the physical or mental capacity to return to the workforce on a sustained basis.

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