We recently wrote about the wide frustration with the seemingly ever-increasing Social Security Disability (SSD) application wait times. As applicants wait for an answer, they usually face growing financial difficulties, leading many to seek other options to pay their bills. Some may consider the Veterans Disability Compensation (VDC) program, thinking that it is similar to SSD. However, there are significant differences between the programs, and an applicant who is eligible for one may not be eligible for the other.
VDC was created to compensate military veterans who develop or worsen medical conditions as a result of their military service. In recognition of this, the program is not an insurance program like SSD, and is funded through a mandatory appropriation under the federal Veterans Administration budget. In comparison, SSD is an insurance program which aims to replace a portion of the earnings of a civilian worker whose illness or injury renders the applicant completely unable to perform any substantial gainful activity. The cause of an injury does not have to be work related.
The severity of the injury differs between the two programs, as well. Under VDC, veterans are compensated for both full and partially disabling conditions, subject only to the requirement that the condition was incurred or aggravated by the veteran's military service. For SSD, workers must be fully disabled, and as a result must be unable to work.
Another significant difference is the tax status of the monies paid out under the two programs. Because SSD is funded by taxpayer dollars, the earnings received by applicants are subject to taxation. VDC, on the other hand, provides veterans with tax-free cash benefits.
Source: Wolters Kluwer, "CRS compares differences between SSA and VA disability programs", 23 November 2010