Revised November 25, 2024
VIII.iv.3.A.1.aEstablishing Entitlement to TDIU
To establish entitlement to a total disability rating for compensation based on individual unemployability (IU), the Veteran must be unemployable in fact (unable to secure or follow substantially gainful employment) by reason of service-connected (SC) disability and either
- meet the schedular requirements of 38 CFR 4.16(a), or
- have an extra-schedular IU evaluation, under the provisions of 38 CFR 4.16(b), approved by Compensation Service.
Notes:
- IU is also referred to as total disability based on individual unemployability (TDIU).
- Marginal employment (to include employment in a protected environment), does not preclude a Veteran from eligibility to IU benefits.
References: For more information on
- establishing an effective date for IU benefits, see
- 38 CFR 3.400(o)(2)
- Rice v. Shinseki, 22 Vet.App. 447 (2009)
- Dalton v. Nicholson, 21 Vet.App. 23 (2007), and
- Hurd v. West, 13 Vet. App. 449 (2000)
- submitting compensation claims for extra-schedular consideration, see
- marginal employment, see M21-1, Part VIII, Subpart iv, 3.A.2.c and d.
VIII.iv.3.A.1.bUnemployable Vs. Unemployed
Being unemployable and being unemployed are not synonymous for the purpose of determining entitlement to an IU rating under 38 CFR 4.16. A Veteran may be unemployed and even have a history of unemployment from several jobs, but not be incapable of substantially gainful employment (unemployable). Unemployment can be due to economic factors, work performance issues, or other reasons and not necessarily related to being unable to secure or follow substantially gainful employment due to an SC disability(ies). A Veteran might also be unemployed from one job due to an SC disability, but still be capable of securing or following another substantially gainful occupation.
VIII.iv.3.A.1.cComponents of Inability to Secure or Follow a Substantially Gainful Occupation
The inability to secure or follow a substantially gainful occupation , as defined in 38 CFR 4.16(b), hinges on two components:
- economic, as discussed in M21-1 VIII, Subpart iv, 3.A.2, and
- non-economic, as discussed in M21-1, Part VIII, Subpart iv, 3.A.3.
References: For more information on
- the components necessary to establish the inability to secure or follow a substantially gainful occupation, see Ray v. Wilkie, 31 Vet.App. 58 (2019)
- completing a decision concerning entitlement to IU, see M21-1, Part VIII, Subpart iv, 3.C.3, and
- how to address economic and non-economic components of an IU
- determination in the rating decision, see
2Economic Component of IU Determinations
This topic contains general information on IU claims, including
- economic component of an IU determination
- definition of substantially gainful employment
- definition of marginal employment
- circumstances for considering marginal employment
- definition of protected environment, and
- examples of protected environments.
Revised November 25, 2024
VIII.iv.3.A.2.aEconomic Component of an IU Determination
The economic component of an IU determination is based on a decision about the wages an individual is capable of earning. Particularly, the evidence must be reviewed to determine the nature of any employment or ability to be employed. A decision maker must take into account the Veteran’s earning capacity in employment or potential employment scenarios including whether such employment would be
- substantially gainful, as defined in M21-1, Part VIII, Subpart iv, 3.A.2.b, or
- marginal (to include employment in a protected environment), as defined in M21-1, Part VIII, Subpart iv, 3.A.2.c and e.
VIII.iv.3.A.2.bDefinition: Substantially Gainful Employment
Substantially gainful employment is defined as employment at which non-disabled individuals earn their livelihood with earnings comparable to the particular occupation in the community where the Veteran resides. It suggests a living wage. Substantially gainful employment is
- competitive (not protected) employment, and with
- earnings exceeding the amount established by the U.S. Department of Commerce, U.S. Census Bureau, as the poverty threshold for one person.
Reference: For more information on the definition of substantially gainful employment, see
- Faust v. West, 13 Vet.App. 342 (2000), and
- Moore v. Derwinski, 1 Vet.App. 83 (1991).
VIII.iv.3.A.2.cDefinition: Marginal Employment
Marginal employment exists
- when a Veteran’s earned annual income does not exceed the amount established by the U.S. Department of Commerce, U.S. Census Bureau, as the poverty threshold for one person, or
- on a facts-found basis, and includes, but is not limited to, employment in a protected environment, such as a family business or sheltered workshop, when earned annual income exceeds the poverty threshold.
Important:
- Marginal employment is, by definition, not substantially gainful employment.
- Do not consider amounts received from participation in the Veterans Health Administration’s Compensated Work Therapy Program as income for IU purposes.
References: For more information on
- the U.S. Census Bureau’s poverty threshold, see http://www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-thresholds.html, and
- marginal employment in a protected environment, see M21-1, Part VIII, Subpart iv, 3.A.2.e.
VIII.iv.3.A.2.dCircumstances for Considering Marginal Employment
38 CFR 4.16(a) does not limit consideration of marginal employment to only those Veterans who are currently employed. If the evidence or facts reflect that a Veteran is capable only of marginal employment, then the Veteran is incapable of securing or following a substantially gainful occupation and is therefore entitled to IU if the Veteran’s SC disabilities are the cause of that incapability. When the facts of a case indicate that the Veteran’s ability to work might be limited to marginal employment, a rating decision must address whether or not the Veteran is incapable of no more than marginal employment due to an SC disability(ies), even if the Veteran is not employed at the time. Reference: For more information on the appropriate circumstances in which to consider marginal employment, see Ortiz-Valles v. McDonald, 28 Vet.App. 65 (2016).
VIII.iv.3.A.2.eDefinition: Protected Environment
Employment in a protected environment is a type of marginal employment in a lower-income position (less than substantially gainful) that, due to a Veteran's SC disability(ies), is shielded in some respect from competition in the employment market.When the Veteran’s income exceeds the poverty threshold, claims processors must determine whether the Veteran’s employment is in a protected environment. A Veteran's unique circumstances should be considered in determining employment in a protected environment. While these factors alone do not conclusively demonstrate that a Veteran is working in a protected environment, a claims adjudicator should consider
- if the Veteran is in receipt of an Americans with Disabilities (ADA) accommodation
- any individualized factor or evidence that tends to clarify whether a specific position was shielded in some respect from competition in the employment market, and
- that the income earned from employment in a protected environment must, while exceeding the poverty threshold, be relatively low because 38 CFR 4.16(a) designates earned annual income as the primary standard for determining whether employment is marginal.
Important:
- Consideration of employment in a protected environment is only triggered when a Veteran’s income exceeds the poverty level.
- Context is critical, and no single fact or factor should determine the decision. Entitlement to protected-environment IU, like all other types of IU, ultimately depends on whether a Veteran's SC disabilities render the Veteran incapable of performing the mental and physical acts required for substantially gainful employment.
Notes:
- ADA accommodation is not by itself evidence that a Veteran is working in a protected environment, but a Veteran receiving accommodations beyond those legally required by the ADA may demonstrate that the Veteran is employed in a protected environment.
- The term lower-income position is not specifically defined, however, the extent to which a Veteran's earned annual income exceeds the poverty threshold is clearly a key regulatory consideration. As such, the Veteran’s income may be more than the poverty threshold, but less than substantially gainful.
References:_ _ For more information on
- defining a protected environment, see Labruzza and McBride v. McDonough, 37 Vet.App. 111 (2024), and
- determining marginal employment, see M21-1, Part VIII, Subpart iv, 3.A.2.c and d.
VIII.iv.3.A.2.fExamples of Protected Environments
In the following examples, assume the Veteran’s income exceeds the poverty threshold. Example 1: A Veteran is held to an alternative set of performance standards from those of other employees. The Veteran continues employment despite substandard or lower than satisfactory performance evaluations. This is an individualized factor that may indicate the Veteran is employed in a protected environment. Example 2: A Veteran works in a business owned by the Veteran’s high school friend. The Veteran can take breaks or time off when the Veteran’s SC disabilities flare up. This is an individualized factor that may indicate the Veteran is employed in a protected environment.
- Non-Economic Component of IU Determinations**
This topic contains general information on IU claims, including
- non-economic component of an IU determination
- vocational and educational history in IU determinations, and
- limitation of ability in IU determinations.
Revised July 29, 2021
VIII.iv.3.A.3.aNon-economic Component of an IU Determination
The non-economic component of an IU determination is based on factors contributing to a Veteran’s abilities and inabilities. In determining whether a Veteran can secure and follow a substantially gainful occupation, attention must be given to whether the Veteran has the ability to perform the type of activities required by the occupation at issue. Factors to consider include
- vocational and educational history, as discussed in M21-1, Part VIII, Subpart iv, 3.A.3.b, and
- limitation of ability, as discussed in M21-1, Part VIII, Subpart iv, 3.A.3.c.
VIII.iv.3.A.3.bVocational and Educational History in IU Determinations
A Veteran’s employment, educational, and training history are relevant to determining the types of employment the Veteran would be qualified to secure and follow. In determining whether a Veteran has the ability to secure and follow a substantially gainful occupation, attention must be given to a Veteran’s
- employment history, such as
- type of work
- length of employment
- skills required in this type of employment
- time since last employed, and/or
- intervening history of injuries since last employment
- education
- level of educational achievement
- nature of education (area of educational focus), and/or
- applicability of past education in the current job market
- skill, such as
- vocational skills acquired through past work, education, or training, and/or
- recreational or other skills relevant to current or future employment, and
- training, such as
- formal training courses or experiences, and/or
- on-the-job training.
Note: The example elements listed are not meant to be an all-inclusive list. Decision makers should consider any factor related to vocational and educational history that impacts a Veteran’s ability to secure and follow an occupation.
VIII.iv.3.A.3.cLimitation of Ability in IU Determinations
In determining whether a Veteran has the ability to secure and follow a substantially gainful occupation, attention must be given to whether the Veteran has the ability to perform the types of activities required by the occupation at issue. Physical ability includes functions that are
- exertional, and/or
- non-exertional.
The type of activities required by the occupation at issue may be
- sedentary
- light
- medium
- heavy, or
- very heavy.
Factors that are relevant include
- physical impairment for functions such as
- lifting
- bending
- sitting
- standing
- walking
- climbing
- grasping
- typing
- reaching
- seeing, and/or
- hearing, and
- mental limitations concerning
- memory
- concentration, and/or
- ability to
- adapt to change
- handle work-place stress
- get along with co-workers, and/or
- demonstrate reliability and productivity.
Important: The examples are not all-inclusive. Consider any factor that results in impairment of the Veteran’s ability to perform work-related activities. References: For more information on
- completing a decision concerning entitlement to IU, see M21-1, Part VIII, Subpart iv, 3.C.3, and
- the factors that must be addressed in the rating decision, see M21-1, Part VIII, Subpart iv, 3.C.3.c.
End of Part VIII, Subpart iv, Chapter 3, Section A