4

The needs of the disabled have been regularly recognized in the face of changing economic conditions. Since July 1952, there have been eleven compensation rate increases with the latest having become effective August 1, 1975. The surviving spouses and children of veterans who die of service-connected causes have not been neglected either. The rates of DIC payable to them have also been regularly increased with the latest increase having become effective August 1, 1975.

It has been the policy of the Administration to recommend Veterans' Administration benefit increases for disability compensation and DIC programs when needed in order to insure that our programs remain responsive to changing economic conditions. In 1975, the benefits paid under these programs were increased at a rate comparable to the increase in the cost of living since the prior rates were increased. Accordingly, we would support a rate increase (other than the special rate provided by 38 U.S.C. 314(k) for certain anatomical and other losses or losses of use) commensurate with the actual change in the cost of living from August 1, 1975, the date benefits were last increased, to September 30, 1976.

We particularly oppose paragraph (11) of subsection (a) of section 101 of S. 3596 which would increase from $52 to $56 the special rate provided by 38 U.S.C. 314(k) for certain anatomical and other losses and losses of use. That rate is payable in addition to basic rates of disability compensation and any higher statutory rates of compensation. Accordingly, it is felt that rates paid under general compensation increases are generally adequate for the pertinent veterans.

As already indicated, section 302 of the bill would amend subsection 806(c) of title 38, United States Code, to provide that the maximum individual coverage for mortgage protection life insurance would be $40,000, instead of the present $30,000 limit. This program, instituted in August 1971, provides decreasing life insurance covering mortgages of veterans who receive grants (under chapter 21, title 38) for specially adapted housing necessitated by certain service-connected disability conditions.

Individual coverage under the group policy of insurance is automatic for eligible veterans with such mortgages, unless declined by the veteran, and continues until the veteran reaches age 70 or until earlier termination of the mortgage. Amount of coverage, subject to the general ceiling, is limited to that of the outstanding mortgage loan, with interest, and is reduced as the loan is amortized. It is understood that for the first half of 1976, the average new loan for purchases of existing or new housing was $30,365.09. The increased maximum coverage of $40,000 seems reasonable and the Veterans' Administration favors such proposal.

We assume that the proposed increase would be only prospectivethat is, for application to cases of specially adapted housing grants approved after the effective date of the amending Act. Section 302 of the bill does not make that clear, and a clarifying amendment to clearly state such prospective applicability should be made.

S. 3596, in section 303, proposes an equalization of treatment in eligibility for an automobile allowance and adaptive equipment by eliminating the restriction relating to the period of service. This would be accomplished by deleting, in section 1901 of title 38, the phrase "during World War II or thereafter."

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The automobile allowance was established as a rehabilitative benefit, principally as a means of assisting certain disabled veterans in their employment endeavors. While originally limited to wartime-service veterans, entitlement to this benefit has been extended a number of times, most recently to post-World War II peacetime veterans under Public Law 93-538. The extensions to date have been to veteran groups of working age and thus could be viewed as consistent with the program's primary purpose of enhancing employability.

We believe that an extension of eligibility for the automobile allowance to veterans who served prior to World War II is inconsistent with the purpose of the program. The majority of veterans who would gain eligibility, principally veterans of service in 1917-1918, are well beyond normal working age and thus are highly unlikely to benefit from the allowance in terms of rehabilitation, readjustment, or employability.

Section 304 provides that the Administrator may pay for transporting to a national cemetery the body of a veteran who dies as a result of a service-connected disability or who is entitled to disability compensation at the time of his death.

The Veterans' Administration recognizes that there is a need for improvement in the present structure of veterans burial benefits, and has proposed legislation to accomplish that objective. We believe that the change proposed in section 304 should be considered in the context of other needed revisions to the cemetery and burial program as a whole. Thus, we would urge the committee to delete this provision of S. 3596 and consider it instead as a part of the Administration bill (S. 1361) which provides for the establishment of a grant program which will greatly expand the number and geographical distribution of veterans burial sites.

Section 402 would amend 38 U.S.C. 3012 (b) (2) by providing that reductions or discontinuances of compensation, dependency and indemnity compensation or pension by reason of annulment of a marriage of a dependent of a payee shall be the last day of the year in which such annulment occurs-just as in the case of divorce or death under current law. The Veterans' Administration favors this proposal inasmuch as an annulment terminates the marital relationship as effectively as would death or divorce.

Except as noted below, it is estimated that the proposal, if enacted, would cost $404.5 million in fiscal year 1977, declining slightly each year to $398.3 million in fiscal year 1981. Additionally, the special study proposed bears a 1-year administrative cost estimate of $.2 million. The cost of extending the "end of year rule" to cases involving annulment is considered to be minimal. The estimated cost of the provision to increase the maximum mortgage protection life insurance for fiscal years 1977 through 1981 would be $67,500, $200,500, $329.500, $454,600 and $575,900 respectively.

In view of the foregoing, the Veterans' Administration cannot favor enactment of S. 3596. However, it favors general rate increases of disability compensation for veterans and DIC for surviving spouses and dependent children commensurate with the actual increase in the cost of living since the last rate increases to the effective date of the new rates. It also favors increasing the limit of mortgage protection life

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6

insurance to $40,000 and extension of the "end of the year rule" to annulment situations. However, it opposes extending eligibility for the automobile allowance and adaptive equipment to include service before World War II and urges enactment of S. 1361 in lieu of the provision for transportation of the remains of certain veterans to a national cemetery.

Advice has been received from the Office of Management and Budget that there is no objection to the presentation of this report from the standpoint of the administration's program.

Sincerely,

O'DELL W. VAUGHN,

Deputy Administrator
(In the absence of

Richard L. Roudebush, Administrator).

Vet. Letter No. 124

94TH CONGRESS 1ST SESSION

S. 2331

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 10, 1975

Mr. WILLIAMS introduced the following bill; which was read twice and referred to the Committee on Veterans' Affairs

A BILL

To amend section 362 of title 38, United States Code, to authorize clothing allowance in the case of certain veterans with non-service-connected disabilities who wear prosthetic or orthopedic appliances which tend to wear out or tear the clothing of such veterans.

1

Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 That section 362 of title 38 United States Code, is amended 4 to read as follows:

5 "§ 362. Clothing allowance

6

"The Administrator under regulations which he shall

7 prescribe, shall pay a clothing allowance of $175 per year

8 to each veteran who

5

2

"(1) because of a disability compensable under the

provisions of this chapter, or

"(2) is 80 percent disabled or more as the result of

one or more service-connected disabilities, but because

of a non-service-connected disability,

6 wears or uses a prosthetic or orthopedic appliance or appli7 ances (including a wheelchair) which the Administrator

8 determines tends to wear out or tear the clothing of such 9 veteran.".