Economic Loss: Is it related to age or disability rating?

Abstract: The New Veterans Charter (NVC) was introduced in 2006. Previously, post-Korean War Veterans applied for compensation under the Pension Act introduced in 1919. The intent of the NVC was to offer, in lieu of a monthly disability pension cheque, a suite of benefits and services that encourages wellness and is consistent with the principles of modern disability management. Part of modernizing was to separate compensation for economic and non-economic loss. This dual award approach is similar to that used other countries providing Veteran compensation such as the United Kingdom (UK) and Australia who both adopted dual award approaches prior to Canada and by the vast majority of Workers Compensation Boards in Canada(see MacLean and Pound, 2014 for details). Several analyses have compared financial benefits provided under the Pension Act to those provided under the NVC. However, it is unknown to what extent compensation provided under the Pension Act compensates for actual economic losses incurred by Veterans. A previous study, using 2010 Life After Service Studies Income Study data, compared the income replacement rates of medically and non-medically released Veterans. However, the medically released are a diverse population, some with quite severe injuries and illnesses and others with minor conditions. Also, medically released Veterans are on average older than non-medically released Veterans and age is a particularly important factor determining the trajectory of earnings. This study compared income replacement rates, and in particular labour market earnings, to examine economic loss, of Veterans in receipt of VAC disability benefits by disability rating to those without disability benefits. Further, this study controlled for age differences and examined not only the average replacement rate but also the distribution of income replacement within each disability level.