Vol. 149, No. 7 — April 8, 2015
Registration
SOR/2015-69 March 27, 2015
CANADIAN FORCES MEMBERS AND VETERANS RE-ESTABLISHMENT AND COMPENSATION ACT
Regulations Amending the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations
P.C. 2015-340 March 26, 2015
His Excellency the Governor General in Council, on the recommendation of the Minister of Veterans Affairs, pursuant to subsections 19(2) and 23(4) and sections 41 and 94 (see footnote a) of the Canadian Forces Members and Veterans Re-establishment and Compensation Act (see footnote b), makes the annexed Regulations Amending the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations.
REGULATIONS AMENDING THE CANADIAN FORCES MEMBERS AND VETERANS RE-ESTABLISHMENT AND COMPENSATION REGULATIONS
AMENDMENTS
1. Section 8 of the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations (see footnote 1) is amended by striking out “and” at the end of paragraph (c), adding “and” to the end of paragraph (d) and by adding the following after paragraph (d):
- (e) that the services provided not be focused solely on the applicant’s military occupation.
2. Paragraph 9(e) of the Regulations is replaced by the following:
- (e) the cost effectiveness of the plan; and
3. Paragraph 18(b) of the Regulations is amended by adding “and” at the end of subparagraph (ii) and replacing subparagraphs (iii) and (iv) by the following:
- (iii) at any time during Class A or B Reserve Service, the greater of the veteran’s monthly military salary, adjusted from the date of completion of the Class A or B Reserve Service until the benefit is payable, and the monthly military salary for a basic corporal in the standard pay group at the time the benefit is payable.
4. Paragraph 19(b) of the Regulations is amended by adding “and” at the end of subparagraph (ii) and replacing subparagraphs (iii) and (iv) by the following:
- (iii) at any time during Class A or B Reserve Service, the greater of the veteran’s monthly military salary, adjusted from the date of completion of the Class A or B Reserve Service until the benefit is payable, and the monthly military salary for a basic corporal in the standard pay group at the time the benefit is payable.
5. (1) Paragraph 20(b) of the Regulations is amended by adding “and” at the end of subparagraph (ii) and replacing subparagraphs (iii) and (iv) by the following:
- (iii) at any time during Class A or B Reserve Service, the greater of the monthly military salary of the member, adjusted from the earlier of the date of completion of the Class A or B Reserve Service and the date of the member’s death until the benefit is payable, and the monthly military salary for a basic corporal in the standard pay group at the time the benefit is payable;
(2) Paragraph 20(d) of the Regulations is amended by adding “and” at the end of subparagraph (ii) and replacing subparagraphs (iii) and (iv) by the following:
- (iii) at any time during Class A or B Reserve Service, the greater of the veteran’s monthly military salary, adjusted from the date of completion of the Class A or B Reserve Service until the benefit is payable, and the monthly military salary for a basic corporal in the standard pay group at the time the benefit is payable.
6. Paragraph 40(f) of the Regulations is replaced by the following:
- (f) a severe and permanent limitation in mobility or self-care; or
COMING INTO FORCE
7. These Regulations come into force on April 1, 2015.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Executive summary
Issues: Veterans Affairs Canada identified gaps in three of its benefits and services (specifically the permanent impairment allowance, the earnings loss benefit, and vocational rehabilitation services), which limited its capacity to meet the needs of veterans.
Description: To address these gaps, Veterans Affairs Canada has amended the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations to
- expand the permanent impairment allowance eligibility criteria so that more veterans with severe and permanent limitations in mobility or self-care will qualify for the benefit;
- ensure that veterans who become ill or injured as a result of their part-time reserve force service are eligible for a similar amount of earnings loss benefit as other eligible veterans, and that survivors and orphans of Canadian Armed Forces members and veterans whose deaths were related to part-time reserve force service are eligible for a similar amount of earnings loss benefit as other eligible survivors and orphans; and
- provide more clarity and flexibility in the development of rehabilitation plans to support veterans in pursuing occupational goals related to either their non-military or their military skills, education, training and experiences.
Cost-benefit statement: Over the first 10 years of implementation, these regulatory changes are expected to benefit annually 321 permanent impairment allowance recipients; 303 part-time reserve force veterans and others receiving the earnings loss benefit; and 91 vocational rehabilitation clients. This results in a net present value cost of $85.6 million to Veterans Affairs Canada. All costs related to these amendments will be incurred by the Department, and all benefits related to these amendments will be received by certain Canadian Armed Forces veterans and other eligible individuals. It is expected that these regulatory changes will generally be well-received by stakeholders and Canadians, knowing that the Government of Canada is providing improved benefits and services to Canadian Armed Forces veterans and their families; thereby assisting them with their successful transition to civilian life.
“One-for-One” Rule and small business lens: The “One-for-One” Rule does not apply to these amendments, as there is no change in administrative costs to business. These amendments do not increase or decrease administrative burden or compliance costs on small business.
Background
Veterans Affairs Canada (VAC) implemented the Canadian Forces Members and Veterans Re-establishment and Compensation Act, commonly referred to as the New Veterans Charter (NVC) in 2006. The NVC was designed to meet the evolving needs of Canadian Armed Forces (CAF) members, veterans and their families, and offers a wide range of financial benefits (including the permanent impairment allowance and the earnings loss benefit) and services (including vocational rehabilitation services) to ensure that these men and women receive the care and support that they need and deserve. The Canadian Forces Members and Veterans Re-establishment and Compensation Regulations (the Regulations) were also implemented in 2006 to support the NVC.
Since the NVC’s implementation, findings from parliamentary committees, advisory groups, veterans’ organizations, the Veterans Ombudsman, as well as VAC’s own research and evaluations, have identified gaps in benefits and services, and areas for improvement or clarification to better meet the needs of CAF members and veterans, and their families. Some of the gaps and areas for clarification that have been identified by these stakeholders deal with the following three benefits and services offered under the NVC.
Permanent impairment allowance
The permanent impairment allowance is a monthly, taxable benefit payable to veterans under the following conditions:
- the veteran has one or more physical or mental health problems that are creating a “permanent and severe impairment,” as defined in section 40 in the Regulations; and
- the veteran has, in respect of each of these health problems,
- an application for rehabilitation services approved; and
- received a disability award/pension, or would have received an award/ pension but has not, for reasons defined in the Canadian Forces Members and Veterans Re-establishment and Compensation Act.
The permanent impairment allowance recognizes that a “permanent and severe impairment” generally causes an economic disadvantage with respect to employment potential and career advancement opportunities, and compensates the veteran for this disadvantage. The allowance is payable at three grade levels, depending on the severity of impairment. The monthly rates for 2015 are $584.66 for grade 3, $1,169.33 for grade 2, and $1,753.97 for grade 1.
The Veterans Ombudsman’s June 2014 report, Supporting Severely Injured Veterans — A Report of the New Veterans Charter Permanent Impairment Allowance and Permanent Impairment Allowance Supplement, expressed that the definition of “permanent and severe impairment” is too restrictive and does not provide flexibility to consider other permanent and severe impairments that could have a significant impact on a veteran’s employment and career progression opportunities.
Earnings loss benefit
The earnings loss benefit is a taxable, monthly benefit payable to
- a CAF veteran eligible for rehabilitation services with a physical or mental health problem primarily resulting from service that is creating a barrier to re-establishment in civilian life or a CAF veteran released on medical grounds who applies within 120 days of release; or
- survivors and orphans of a member or veteran who dies as a result of a service-related injury/disease or a non-service related injury/disease aggravated by service.
The earnings loss benefit is provided in recognition of the economic impacts of a career ending and/or service-related health problem on a veteran’s ability to earn income following release from the military. For a veteran who, despite all efforts at rehabilitation, is unable to pursue suitable gainful employment due to his/her eligible health problem, the earnings loss benefit may be payable until age 65 (when they may qualify for VAC, or other, retirement benefits). The amount of earnings loss benefit is calculated using 75% of the veteran’s monthly “imputed income,” as defined in the Regulations, minus certain income offsets (e.g. employment earnings, retirement income and other income). This amount is also used in determining the earnings loss benefit paid to eligible survivors and orphans.
There is a difference between the earnings loss benefit calculation for full-time reserve force veterans and part-time reserve force veterans, as a different definition is used for determining the imputed income. This differentiation has been noted by the Veterans Ombudsman. In his October 2013 report, Improving the New Veterans Charter, the Ombudsman recommended that veterans who suffer a service-related injury or illness while on part-time reserve force service be treated fairly by receiving the same income support as that received by veterans who served on full-time reserve force service. A similar sentiment was echoed by the Standing Committee on Veterans Affairs in its June 2014 report, The New Veterans Charter: Moving Forward.
Vocational rehabilitation services (a component of the Rehabilitation Services and Vocational Assistance Program)
Vocational rehabilitation is available to
- veterans who medically release from the CAF and apply within 120 days of release;
- veterans with a health problem arising primarily from service in the CAF that is creating a barrier to re-establishment in civilian life;
- spouses/common-law partners of veterans who are totally and permanently incapacitated; and
- survivors of members or veterans who die of a service-related injury or disease, or an injury or disease that was aggravated by service.
Vocational professionals work directly with the veteran (or other eligible individual) to develop an individualized vocational rehabilitation plan. These plans outline the strategies, including additional education and training, required for the veteran to be able to enter the civilian workforce, and builds on the veteran’s existing transferable skills. The Regulations set out the principles (section 8), and the factors (section 9) that must be considered when developing these individualized vocational rehabilitation plans.
The Standing Committee on Veterans Affairs’ June 2014 report The New Veterans Charter: Moving Forward recommended that vocational rehabilitation programs be more flexible and less strictly related to the skills that were acquired during a veteran’s military service.
Issues
After extensive analysis, VAC identified gaps and areas for clarification with the permanent impairment allowance, the earnings loss benefit, and vocational rehabilitation services that limited its capacity to meet veterans’ needs. These issues are outlined in the following paragraphs.
Permanent impairment allowance
The Regulations (section 40) list what is considered a “permanent and severe impairment” for eligibility for the permanent impairment allowance. The list includes [paragraph 40(f)] “a permanent requirement of the physical assistance of another person for most activities of daily living.” Activities of daily living are those actions that are necessary for normal self-care, such as feeding, washing, dressing, grooming and personal care, mobility, foot care, toileting, and taking medication.
This wording did not recognize a veteran who requires the physical assistance of another person to perform fewer than most (or even one) activities of daily living, including mobility or self-care issues, or a veteran who may be able to perform these activities independently, but needs to perform them more frequently and/or requires more time to perform them. In both cases, and as a result of these limitations, the veteran’s employment/earnings potential and career progression may have been significantly impacted, yet the veteran was not eligible to receive the permanent impairment allowance.
Earnings loss benefit
The earning loss benefit is calculated using a veterans “imputed income,” which is defined in the Regulations for full-time reserve force and regular force veterans, and part-time reserve force veterans. The “imputed income” for full-time reserve force and regular force veterans is defined as the higher of the monthly military salary at the time of their release (indexed until the benefit is payable) and the monthly military salary of a basic corporal at the time the earnings loss benefit is payable (annual salary of $56,528 in 2015). The “imputed income” for part-time reserve force veterans was a deemed amount of $2,700 per month, irrespective of rank and pay level. Therefore, part-time reserve force veterans did not receive a similar level of income through the earnings loss benefit as full-time reserve force and regular force veterans, given that the “imputed income” used to calculate the amount of the earnings loss benefit was defined differently in the Regulations.
The difference in how “imputed income” was defined created an inequity between the amount of replacement income that was available to part-time reserve force veterans, and the amount available to full-time reserve force and regular force veterans. Because these definitions are also used in determining the amount of earnings loss benefit paid to eligible survivors and orphans, the same inequity existed between survivors and orphans of part-time reserve force members and veterans whose deaths were related to service, and survivors and orphans of full-time reserve force and regular force members and veterans whose deaths were related to service. Furthermore, the Regulations did not accurately reflect that the Government of Canada values full-time and part-time service equally.
Vocational rehabilitation services
The principles outlined in the Regulations (section 8), which guide the development of rehabilitation plans, did not clearly indicate that the entirety of a person’s background, both military and other, should be considered when developing a rehabilitation plan. As a result, VAC’s vocational rehabilitation services may have limited a veteran’s future career directions by placing an emphasis on helping the veteran obtain the same or a similar job in the civilian workplace as was held in the military. This emphasis limited a veteran’s opportunity for training in a different field that better meets his/her own motivation, interests, and aptitudes.
In addition, under section 9 of the Regulations, the “cost of the plan” was a factor when developing the individualized vocational rehabilitation plan; however, it was unclear whether this also included consideration of the “cost-effectiveness of the plan” and their long-term employability. Consideration of only the cost potentially limited an individual’s career if consideration was not also given to the long-term cost-effectiveness of, for example, the high employment potential and/or career progression in certain occupations.
Objectives
The objectives of these regulatory amendments are as follows.
Permanent impairment allowance
- to better recognize the impact that severe limitation in mobility or self-care can have on employment potential and career progression; and
- to ensure that more veterans who have a “permanent and severe impairment” that impacts their employment potential and career advancement opportunities are eligible for the permanent impairment allowance.
Earnings loss benefit
- to ensure that part-time reserve force veterans and full-time reserve force and regular force veterans are treated in a similar manner;
- to ensure that eligible survivors and orphans of part-time reserve force members and veterans whose deaths were related to service are treated similar to survivors and orphans of full-time reserve force and regular force members and veterans whose deaths were related to service; and
- to acknowledge that injury or death related to service to one’s country is similarly recognized, irrespective of the class of service.
Vocational rehabilitation services
- to clarify in the Regulations that rehabilitation plans are to be developed in consideration of not only a veteran’s military skills, but also his/her non-military experiences, and that cost-effectiveness is a consideration in such a plan, resulting in civilian employment which is reasonable for that veteran’s needs, motivation, interest and aptitudes; and
- to demonstrate the Government of Canada’s commitment to supporting a veteran’s transition to civilian employment.
Description
Permanent impairment allowance
The amendments replaced the wording in paragraph 40(f) of the Regulations from “a permanent requirement for the physical assistance of another person for most activities of daily living” to read “a severe and permanent limitation in mobility or self-care.” This change will expand eligibility for the permanent impairment allowance to more veterans whose employment potential and career progression have been impacted by a permanent and severe impairment related to their military service.
Earnings loss benefit
Amendments to paragraphs 18(b), 19(b), 20(b) and 20(d) of the Regulations redefined the definition of “imputed income” used to calculate the amount of earning loss benefits for part-time reserve force veterans, and for survivors and orphans of part-time reserve force members and veterans whose deaths were related to service. The definition used in the determination of the imputed income for part-time reserve force veterans (and eligible survivors and orphans) is now based on the method used to calculate the imputed income for full-time reserve force veterans. Specifically, the imputed income is based on the greater of the veteran’s monthly military salary, adjusted from the date of completion of service (or the date of the member’s death), until the benefit is payable, and the monthly military salary for a basic corporal in the standard pay group at the time the benefit is payable.
Vocational rehabilitation services
The amendments created a new principle under section 8 of the Regulations that clarifies that an individualized vocational rehabilitation plan should focus on building the participant’s skills, education, training and experience, not just those attributes acquired in the military. Specifically, paragraph 8(e) states “that the services provided not be focused solely on the applicant’s military occupation.” Section 9 of the Regulations, which sets out the factors to be considered when developing an individualized vocational rehabilitation plan, has also been amended. Specifically, the wording in paragraph 9(e) has been amended from “the cost of the plan” to “the cost-effectiveness of the plan.”
Regulatory and non-regulatory options considered
VAC considered two options: maintaining the regulatory status quo or updating the regulatory requirements to address the identified gaps in the above-noted benefits and services.
Status quo approach — Without these regulatory amendments, the identified gaps in these benefits and services would have continued to exist. Some veterans who have a permanent and severe impairment related to their military service would have continued to be excluded from receiving the permanent impairment allowance, and, therefore, would not have been compensated for their economic disadvantage with respect to employment potential and career advancement opportunities. As well, the inequity between the amount of earnings loss benefit provided to part-time reserve force veterans versus that provided to full-time reserve and regular force veterans would have continued to exist. This would mean that part-time reserve force veterans would continue to receive a lessor economic benefit for their service-related injury or illness. Lastly, the ambiguity surrounding what should be considered when developing rehabilitation plans would have continued to exist, resulting in less flexibility in choosing a veteran’s civilian vocation, potentially impacting their earnings capacity due to job dissatisfaction. Generally, without these regulatory amendments, veterans and other eligible individuals would have less financial assistance and support for reintegration into civilian life. This option was, therefore, rejected.
Regulatory approach — Defining what constitutes a permanent and severe impairment as an eligibility requirement for the permanent impairment allowance is outlined explicitly in the Regulations (section 40). Therefore, expanding the eligibility requirements for the permanent impairment allowance to a broader group of veterans could only be achieved through a regulatory change to this definition.
Additionally, defining “imputed income” for determining the amount of earnings loss benefit payable is contained in the Regulations. Regulatory changes for the “imputed income” for part-time reserve force veterans were required so these veterans would have the same minimum amount of earnings loss benefit payable, before offsets, to that of full-time reserve and regular force veterans. As well, regulatory changes were required to ensure a similar uniformity with eligible survivors and orphans.
Finally, the principles and factors which guide the development of the rehabilitation plan are described in sections 8 and 9 of the Regulations. Amending the principles and factors in the Regulations has removed any ambiguity and provided clear direction on what should be considered as part of developing the rehabilitation plan, which could only be achieved through a regulatory change.
Benefits and costs
The following analysis provides an overview of the costs and benefits of the regulatory amendments. The table below highlights the benefits and costs, factoring in a discount rate of 7% per year as recommended by the Treasury Board of Canada Secretariat.
The estimated net present value of the amendments is –$3.8 million over 10 years, from fiscal year (FY) 2015–16 to FY 2024–25, with an annualized value of –$0.5 million. The present value (PV) of total benefits is valued at $81.7 million over the period, while costs are valued at $85.6 million, yielding a ratio of the benefits-to-costs of 0.95.
Cost-benefit statement (see reference 1)
| First Year 2015–16 | Final Year 2024–25 | Total (PV) | Annualized Equivalent | |||
|---|---|---|---|---|---|---|
| A. Quantified impacts (in millions of Canadian dollars, 2015–16 constant dollars) | ||||||
| Benefits | Certain CAF veterans and other eligible individuals | $5.9 | $17.9 | $81.7 | $11.6 | |
| Costs | Government of Canada (VAC) | $6.7 | $18.4 | $85.6 | $12.2 | |
| Net benefits | ($3.8) | ($0.5) | ||||
| B. Quantified impacts in non-dollars | ||||||
| Positive impacts | Permanent impairment allowance — Certain CAF veterans | 195 | 450 | N/A | 321 | |
| Earnings loss benefit — CAF part-time reserve force veterans and eligible survivors/orphans | 220 | 380 | N/A | 303 | ||
| Vocational rehabilitation services — Certain CAF veterans and eligible spouses/common-law partners and survivors | 41 | 104 | N/A | 91 | ||
| Negative impacts | None identified | |||||
| C. Qualitative impacts | ||||||
| Certain CAF veterans, spouses/common-law partners, survivors and orphans |
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| Families, Canadians and Veterans Ombudsman/veterans stakeholder groups |
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| Government of Canada (VAC) |
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- Reference 1
The table presents the results of benefits and costs over the 10-year period starting from the coming into force of the regulatory amendments on April 1, 2015, through the end of the fiscal year 2024–25, using a discount rate of 7%. Figures may not add up due to rounding.
Benefits
Over the first 10 years of implementation, these regulatory changes are expected to benefit annually 321 permanent impairment allowance recipients; 303 part-time reserve force veterans and others receiving the earnings loss benefit; and 91 vocational rehabilitation clients. These individuals will be positively impacted as follows.
Permanent impairment allowance
The number of CAF veterans expected to benefit annually from the permanent impairment allowance changes was determined by using a proxy population which was deemed, based on a file review, to have similar levels of impairment. This proxy population was the number of totally and permanently incapacitated clients, for the purposes of the earnings loss benefit, with a disability benefit assessed at 48% or greater as of March 2014 (and not in receipt of the permanent impairment allowance or other benefit [i.e. exceptional incapacity allowance]). It was then determined that based on entitled conditions deemed of sufficient severity as to result in probable severe limitation in mobility or self-care, 30% of this group would represent those who would likely qualify under the expanded eligibility by having “severe limitations in mobility or self-care.” Because these calculations are applied to the cumulative population of forecasted totally and permanently incapacitated clients, permanent impairment allowance intakes and exits are included in the figures.
Clients to benefit — Permanent impairment allowance
| FY | 2015–16 | 2016–17 | 2017–18 | 2018–19 | 2019–20 | 2020–21 | 2021–22 | 2022–23 | 2023–24 | 2024–25 |
|---|---|---|---|---|---|---|---|---|---|---|
| CAF veterans | 195 | 222 | 249 | 277 | 305 | 333 | 362 | 391 | 421 | 450 |
The monetized benefit to this group is assumed to be equal exactly to the increased program costs for VAC (see the “Costs” section below). Although broadening eligibility for the permanent impairment allowance will result in money being transferred to veterans, which contributes to improving their overall well-being, this benefit has not been monetized. Instead, the program costs related to the change have been used as a direct proxy, given the program costs would be the amount provided directly to CAF veterans.
Earnings loss benefit
The number of CAF part-time reserve force veterans and other eligible individuals expected to benefit annually from the earnings loss changes was determined by multiplying 2.5% by the March 2014 forecasted number of all eligible earnings loss clients. The 2.5% represents the ratio of earnings loss clients estimated to be part-time reservists, which was based on an electronic file review of earnings loss client records performed by VAC in September 2013. The review assumed that those individuals paid at or below $3,300/month (the minimum earnings loss payable in 2011 — basic corporal salary) were part-time reservists. Because these calculations are applied to a cumulative earnings loss benefit client forecast, earnings loss benefit intakes and exits are included in the figures.
Clients to benefit — Earnings loss benefit
| FY | 2015–16 | 2016–17 | 2017–18 | 2018–19 | 2019–20 | 2020–21 | 2021–22 | 2022–23 | 2023–24 | 2024–25 |
|---|---|---|---|---|---|---|---|---|---|---|
| Part-time reserve force veterans and others | 220 | 250 | 260 | 280 | 290 | 310 | 330 | 350 | 360 | 380 |
The monetized benefit to this group is assumed to be equal exactly to the increased program costs for VAC (see the “Costs” section below). Providing additional funds to part-time reserve force veterans through the improvements to the earnings loss benefit will contribute to improving their overall well-being. However, this benefit has not been monetized, as the program costs related to the change have been used as a direct proxy, because the program costs would be the amount provided directly to CAF part-time reserve force veterans and other eligible individuals.
Vocational rehabilitation services
The number of CAF veterans and other eligible individuals expected to benefit annually from vocational rehabilitation services was determined by taking 5% of the forecasted number of rehabilitation clients with a rehabilitation plan (as of March 31, 2014) and providing them each with two years of additional training. The 5% uptake was estimated by VAC recognizing that not all clients would have the need or desire to obtain a higher or different education linked to their non-military experience/skills, and given that vocational rehabilitation experts often already assisted individuals in identifying a training path and plan that best suited the clients individual needs and/or skills.
Clients to benefit — Vocational rehabilitation services
| FY | 2015–16 | 2016–17 | 2017–18 | 2018–19 | 2019–20 | 2020–21 | 2021–22 | 2022–23 | 2023–24 | 2024–25 |
|---|---|---|---|---|---|---|---|---|---|---|
| New clients | 41 | 44 | 45 | 47 | 48 | 49 | 50 | 51 | 52 | 52 |
| Carry-over clients | 41 | 44 | 45 | 47 | 48 | 49 | 50 | 51 | 52 | |
| Total clients | 41 | 85 | 89 | 92 | 95 | 97 | 99 | 101 | 103 | 104 |
The monetized benefit to this group is assumed to be exactly equal to the increased program costs for VAC (see the “Costs” section below). Providing some CAF veterans and other eligible individuals with increased flexibility in choosing vocational training may result in improved job satisfaction and employment, which would contribute to improving their overall well-being. However, this benefit has not been monetized; instead, the program costs related to VAC funding additional education training was used as a direct proxy, given the program costs would translate into direct spending on those who would benefit from these changes.
Costs
Government of Canada — All costs related to these regulatory changes, which came into force on April 1, 2015, will be borne by the Government of Canada. The net present value costs, for both programs and administration, paid by the Government of Canada is valued at $85.6 million or an average of $12.2 million per year over 10 years from FY 2015–16 to FY 2024–25.
Permanent impairment allowance
Program costs were determined by multiplying the number of clients identified above as benefiting from these changes, by the March 2014 distribution of the permanent impairment allowance pay grade levels, and then applying the annualized amount. It was assumed that the distribution of pay grade levels, which is generally constant year over year, would not change from the 2014 distribution of Grade 3 — 92%; Grade 2 — 7%; and Grade 1 — 1%. In addition, an annual inflationary factor of 2% was applied representing the estimated annual increase as outlined in the Regulations (as per the Office of the Chief Actuary annual report on veterans benefits as of March 31, 2014).
Total administration costs (rounded to the nearest 100 thousand) were based on
- the need for additional resources on an ongoing basis in order to implement these regulatory changes, broken down as follows: a senior analyst (AS-04 pay group/level); a national consultant (WP-05 pay group/level); a disability benefit adjudicator (NU-EMA-01 pay group/level); a client service agent (WP-02 pay group/level); and half of a payment officer (CR-05 pay group/level) paid at the maximum rate of pay effective June 21, 2013;
- an assumed 1.5% annual increase in the rate of pay in recognition of expired negotiated contract rates in 2013;
- a start date of April 1, 2015, for all FTEs, however, the disability benefit adjudicator and the client service agent would be half-time in 2015–16;
- amounts for increased Employee Benefit Plan costs (20% of salary costs) and increased accommodation costs (13% of salary costs);
- an amount for operations and maintenance costs of $2,500 per full-time resource (e.g. supplies, training, etc.); and
- the need for two additional contract resources for a 60-day period in order to make modifications to the client service delivery database as a result of the regulatory changes.
Increased program and administrative costs — Permanent impairment allowance
| FY / Dollars in millions | 2015–16 | 2016–17 | 2017–18 | 2018–19 | 2019–20 | 2020–21 | 2021–22 | 2022–23 | 2023–24 | 2024–25 | Total | Total PV (7%) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Program costs | $1.8 | $3.8 | $4.4 | $5.0 | $5.7 | $6.4 | $7.1 | $7.8 | $8.6 | $9.4 | $60.0 | $39.3 |
| Administrative costs | $0.4 | $0.5 | $0.5 | $0.5 | $0.5 | $0.5 | $0.5 | $0.5 | $0.5 | $0.5 | $4.9 | $3.4 |
| Total | $2.2 | $4.3 | $4.9 | $5.5 | $6.2 | $6.9 | $7.6 | $8.3 | $9.1 | $9.9 | $64.9 | $42.7 |
Notes: Figures may not add up due to rounding.
Earnings loss benefit
Program costs were determined by multiplying the number of clients identified above as benefiting from the earnings loss benefit changes by approximately $17,040 per year. Further to this, an annual inflationary factor of 2% was applied representing the estimated annual increase as outlined in the Regulations (as per the Office of the Chief Actuary annual report on veterans benefits as of March 31, 2014). The $17,040 represent the approximate average annual incremental increase in earnings loss benefit costs per client in FY 2015–16. This amount was estimated by subtracting the average earnings loss benefit provided to part-time reservists (after offsets) prior to these changes having come into force ($20,760) from the forecasted average earnings loss benefit that would be provided to part-time reservists (after offsets) [$37,800].
Total administration costs (rounded to the nearest 100 thousand) equate to the need for two contract resources for a nine week period in order to make modifications to the client service delivery database as a result of the regulatory changes.
Increased program and administrative costs — Earnings loss benefit
| FY / Dollars in millions | 2015–16 | 2016–17 | 2017–18 | 2018–19 | 2019–20 | 2020–21 | 2021–22 | 2022–23 | 2023–24 | 2024–25 | Total | Total PV (7%) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Program costs | $3.9 | $4.3 | $4.7 | $5.1 | $5.6 | $6.0 | $6.5 | $6.9 | $7.4 | $7.9 | $58.3 | $39.5 |
| Administrative costs | $0.1 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.1 | $0.1 |
| Total | $4.0 | $4.3 | $4.7 | $5.1 | $5.6 | $6.0 | $6.5 | $6.9 | $7.4 | $7.9 | $58.4 | $39.6 |
Notes: Figures may not add up due to rounding.
Vocational rehabilitation services
Program costs were determined by taking 5% of the forecasted number of vocational rehabilitation services clients with a rehabilitation plan (as described above in the “Benefits” section) and by providing them each with two years of additional training, and then by applying the adjusted annual average cost for vocational rehabilitation education to each year. The average annual cost for vocational rehabilitation education was identified as $4,200, determined by using estimates calculated from VAC’s 2014 annual rehabilitation forecast. Further to this, an annual inflationary factor of 3% was applied representing the expected industrial wage increase (as per the Office of the Chief Actuary annual report on veterans benefits as of March 31, 2014). Also, clients were accounted for in two fiscal years, as it was assumed that two years of higher or different education would be required; for example, changing an individual’s training program from college to university or from an upgrade course to college. Expenditure limits set out in regulation for vocational training ($75,800) will not change as a result of these regulatory amendments.
Total administration costs (rounded to the nearest 100 thousand) were based on
- the need for two additional resources for a period of six months in order to incorporate these changes into existing business and communication tools; a senior analyst (AS-04 pay group/level) and a national rehabilitation consultant (WP-05 pay group/level) paid at the maximum rate of pay effective June 21, 2013;
- an assumed 1.5% annual increase in the rate of pay in recognition of expired negotiated contract rates in 2013;
- amounts for increased Employee Benefit Plan costs (20% of salary costs) and increased accommodation costs (13% of salary costs);
- an amount for operations and maintenance costs of $2,500 (e.g. supplies, training, etc.); and
- the need for two additional contract resources, from the national contractor who administers vocational services for VAC, to implement minor system changes, including technical edits to the vocational services system; one for a total of 70 days and the other for a total of 130 days.
Increased program and administrative costs — Vocational rehabilitation services
| FY / Dollars in millions | 2015–16 | 2016–17 | 2017–18 | 2018–19 | 2019–20 | 2020–21 | 2021–22 | 2022–23 | 2023–24 | 2024–25 | Total | Total PV (7%) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Program costs | $0.2 | $0.4 | $0.4 | $0.4 | $0.4 | $0.5 | $0.5 | $0.5 | $0.5 | $0.6 | $4.4 | $3.0 |
| Administrative costs | $0.3 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $0.3 | $0.3 |
| Total | $0.5 | $0.4 | $0.4 | $0.4 | $0.4 | $0.5 | $0.5 | $0.5 | $0.5 | $0.6 | $4.7 | $3.3 |
Notes: Figures may not add up due to rounding.
Non-quantified benefits
These regulatory amendments will positively impact a number of stakeholder groups. Generally, these changes will benefit the following:
Veterans’ families — Some family members will benefit from knowing that their family member, who is a CAF veteran will receive regular financial support in recognition of the veteran’s lost opportunities to advance in a civilian career due to injuries sustained as a result of the veteran’s military service; be similarly recognized by the Government of Canada for the sacrifices and commitments that their loved one made while serving in the CAF, whether it be on a part-time or a full-time basis in the reserve force or in the regular force; and be provided with the opportunity to pursue a vocation that better suits the CAF veteran’s or other eligible individual’s personal needs.
Canadians — The Canadian public have expressed their support of the Government of Canada’s provision of benefits and services to veterans in assisting with their transition to civilian life, and supporting those who are ill or injured as a result of their military service. Canadians will be satisfied to know that more veterans will be financially supported in recognition of their sacrifice while courageously serving Canada; veterans, regardless of their type of service in the military, will be treated in a more equitable manner; and veterans, after they have dedicated years of their life in service to Canada, will have better opportunities to follow their own career paths after they have left the military.
Veterans Ombudsman and veterans stakeholder groups — Similar to the Canadian public, the Veterans Ombudsman and veterans stakeholders groups will benefit from the knowledge that VAC is making improvements to, and addressing gaps and areas of clarification in, three of the benefits and services offered under the NVC. These organizations have long been lobbying the Government to take action to address their concerns with these benefits and services.
Government of Canada — These regulatory amendments will allow the Government of Canada to fulfill certain commitments made in the Government response to the third report of the Standing Committee on Veterans Affairs, The New Veterans Charter: Moving Forward. The improvements also align with commitments made in the 2013 Speech from the Throne which stated the Government “… will always keep faith with those who have defended Canada with pride. Our veterans have stood up for us; we will stand by them.”
More specifically, certain individuals will be positively impacted as follows:
Permanent impairment allowance
CAF veterans will benefit by having
- — expanded eligibility for those who were previously ineligible;
- — greater financial security knowing that they receive this monthly benefit; and
- — increased satisfaction in knowing the Government of Canada has recognized that their employment potential and career progression has been impacted as a result of their military service.
Earnings loss benefit
CAF part-time reserve force veterans and eligible survivors and orphans of part-time reserve force veterans will benefit by having
- — greater financial security given they will receive the same minimum amount of earnings loss benefit as that provided to full-time reserve force and regular force veterans, or that provided to eligible survivors and orphans of full-time reserve force members or veterans; and
- — increased peace of mind knowing that part-time service or death related to this service is considered no less important by the Government of Canada than services or sacrifices of full-time reserve force and regular force CAF veterans.
Vocational rehabilitation services
CAF veterans, spouses/common-law partners and survivors will benefit by having
- — increased flexibility in choosing vocational training that best meets their abilities, motivations, aptitudes, and interests;
- — greater choice in civilian employment, which may lead to increased personal vocational satisfaction which is important to a veteran’s ability to successfully transition to civilian life;
- — greater potential to improve their capacity to make a good living after they release from the military; and
- — an opportunity to prepare for occupations that are in high demand in the current labour market.
“One-for-One” Rule
The “One-for-One” Rule does not apply to these amendments, as there is no change in administrative costs to business.
Small business lens
These amendments do not increase or decrease administrative burden or compliance costs imposed on small businesses.
Consultation
These regulatory amendments have responded to some of the concerns that have been raised by veterans stakeholder groups, such as the Royal Canadian Legion; the army, navy and air force veterans in Canada; National Council of Veterans Associations; the Veterans Ombudsman and the Standing Committee on Veterans Affairs, since the NVC was implemented in 2006. As part of its outreach with veterans stakeholder groups, VAC has further committed to providing additional information and to answering questions on these changes at regular meetings with stakeholder groups.
Rationale
VAC exists to assist and help those whose courageous efforts gave us our legacy and contributed to our growth as a nation. VAC achieves this mandate by providing benefits and services that respond to the needs of veterans, other individuals and their families. These regulatory changes will help VAC address certain gaps and areas for clarification in, and make necessary improvements to, some of the benefits and services it provides. More specifically, these amendments will
- provide additional support and/or financial assistance and security to more veterans, in sincere appreciation and gratitude of their selfless sacrifice of putting their own lives at risk while serving their country, which may have regrettably impacted their future civilian employment and career potential;
- help to ensure that all CAF veterans who have served Canada and defended its values, are treated similarly in recognition of their courage, service and sacrifices, regardless of their type of service in the CAF; and
- better aid veterans transition into civilian life by assisting them in pursuing their occupational goals and career paths after they leave the military, in acknowledgement of their dedication and service to Canada.
Additionally, although the cost-benefit statement demonstrates that from a financial perspective the costs to the Government of Canada exceed the monetized benefits provided to veterans (and other eligible people), the non-quantified benefits indicate that the benefits far outweigh the financial costs. While VAC must remain financially responsible to the taxpayers of Canada, it must also ensure that these deserving men and women are provided the benefits and services that they need.
Lastly, these amendments also respond to concerns identified by veterans stakeholder groups, and will help confirm to the Canadian public that the Government continues to stand by those who have defended Canada with pride. In keeping with the concept of a “living charter,” VAC continues to work with veterans and stakeholders to respond to their concerns, and to look at ways to further improve the benefits and services offered to these men and women, our Canadian heroes, in recognition of their service to Canada.
Implementation, enforcement and service standards
These regulatory amendments came into force on April 1, 2015. As of that date, VAC has been able to consider applications for the permanent impairment allowance using the expanded definition of “permanent and severe impairment.” As well, the calculations for determining the amount of earnings loss benefit payable to part-time reserve force veterans, and eligible survivors and orphans of part-time reserve force members and veterans whose deaths are related to service, have used the updated definition of “imputed income.” In addition, updated principles and factors are being taken into consideration when developing rehabilitation plans.
The existing service delivery infrastructure has been used to implement these amendments; however, and where applicable, system changes, other supporting policies, business processes and guidelines were revised to allow for these changes. In addition, VAC has employed additional human resources to help with implementation. Ongoing communication with front-line staff and the third-party national contractor who delivers vocational rehabilitation services on behalf of the Department has been an integral component to the successful implementation of these changes. Training and information has been provided to VAC staff and the third-party national contractor, prior to the effective date of these changes coming into force.
VAC has also established service standards for many of its benefits and services. As noted in the 2013–14 departmental performance report, there are specific service standards for timely decisions on: applications for permanent impairment allowance — a decision will be rendered within 12 weeks; earnings loss benefit — a decision will be rendered within four weeks; and applications for the Rehabilitation Services and Vocational Assistance Program, of which vocational rehabilitation services is a component — a decision will be rendered within two weeks. Although one of these regulatory changes is expected to result in an uptake in eligibility, and therefore applications, it will not affect these established service standards.
Performance measurement and evaluation
Reviews will be conducted in accordance with the performance measurement strategies, which have been developed to guide the selection, the development, and the ongoing use of performance measures. The purpose of these strategies is to assist VAC to
- continuously monitor and assess the results of programs, as well as the economy and efficiency of their management;
- make informed decisions and take appropriate, timely action with respect to programs;
- provide effective and relevant departmental reporting on programs; and
- ensure that credible and reliable performance data are being collected to effectively support evaluation.
As the permanent impairment allowance and the earnings loss benefit are under the umbrella of the financial benefits provided under the NVC, they are included in the financial benefits programs performance measurement strategy. The Rehabilitation Services and Vocational Assistance Program, of which vocational rehabilitation services is a component, is found in the Rehabilitation Services and Vocational Assistance Program performance measurement plan. These performance measurement strategies will be used in the ongoing monitoring and evaluation of the three programs.
VAC’s Audit and Evaluation Division also conducts audits and evaluations of all VAC benefits and services. Results are published regularly on VAC’s external Web site.
Contact
Katherine Morrow
Manager
Cabinet Business Unit
Policy Division
Veterans Affairs Canada
P.O. Box 7700
Charlottetown, Prince Edward Island
C1A 8M9
Telephone: 902-566-8960
Email: Katherine.Morrow@vac-acc.gc.ca
- Footnote a
S.C. 2011, c. 12, s. 17 - Footnote b
S.C. 2005, c. 21 - Footnote 1
SOR/2006-50