Veterans trusted that their VA disability rating meant something fixed: a number grounded in medicine, fairness, and the real impact their injuries have on their lives after service. For decades, nobody questioned whether the rules behind that number were actually built for the era of veterans now returning to it.

Only after separation do many Veterans confront a harsh reality: the system they counted on still runs on outdated 1945 assumptions, gaps that are now directly slashing compensation, health care access, family coverage, and congressional oversight, with the stakes rising in the 2026 VA disability rates.

The System Veterans Assumed Was Modern, But Isn't

For most Veterans, VA disability compensation feels like a permanent feature of post-service life: clinical exams, rating percentages, annual COLA adjustments. It looks and feels like a modern program.

But according to a 2026 Government Accountability Office report, the backbone of the VA disability system still rests on earnings-loss assumptions created in 1945, when disability was defined by how much it reduced a Veteran’s ability to perform manual labor. That model has never been replaced with a modern economic framework.

GAO’s testimony confirmed that while VA has updated medical criteria for most major body systems, it has failed to urgently modernize the outdated earnings-loss model that translates injuries into rating percentages. Alarmingly, the system still treats the post-9/11 labor economy as if it were 1945, ignoring decades of progress and change.

The Best Sitrep for Today's Vets.

Benefits intel, military tech, field-tested gear, untold stories of those who served, and history like you've never heard before. Sign up for the VeteranLife newsletter.

​

Subscribe

Always free. 🇺🇸 | Unsubscribe anytime.

This realization comes only to Veterans after leaving the military, when ratings collide with the realities of mortgages, VA health care eligibility, spousal coverage, and long-term planning.

Status of Disability Modernization & Rating-Linked Benefits (2026)

Body Systems With Updated Medical Criteria:

• Musculoskeletal
• Eye
• Skin
• Infectious Diseases / Immune
• Nutritional Deficiencies
• Genitourinary
• Digestive
• Cardiovascular
• Hemic & Lymphatic
• Endocrine
• Special Senses (excluding auditory)

Body Systems Pending Updated Medical Criteria:

• Mental Disorders (includes PTSD disability rating; anchor: PTSD rating)
• Respiratory
• Auditory (hearing)
• Neurological (includes TBI disability rating; anchor: TBI rating)

Economic / Earnings-Loss Foundation: Still based on 1945-era assumptions; modern earnings-loss studies have not been integrated into rating determinations.

Key VA Benefits Influenced by Disability Ratings

• VA disability compensation amounts determine monthly payments.
• VA health care priority groups use ratings to set access levels. Outpatient/inpatient copay exemptions (typically 10%+) depend on the assigned rating. CHAMPVA eligibility for spouses/dependents is based on specific disability ratings.
• The VA home loan funding fee exemption is available to veterans rated at least 10%.
• VA dental eligibility at 100% or TDIU status (anchor: VA dental eligibility; TDIU) provides full coverage to those with the highest ratings or total unemployability status.

Why the 1945 Logic Still Shapes Veterans’ Post-Service Lives

Inside the military, disability ratings were background noise. Service members were conditioned to believe the system would match medical evidence and real-world impact. Veterans saw the rating as the objective end state: the number was the truth.

But the VA disability system wasn’t designed around modern clinical or occupational reality. It was designed around the “average impairment of earning capacity,” a mid-20th-century concept that assumed Veterans would return to a manual labor workforce.

When PTSD, TBI, chronic pain, and toxic exposure entered the picture decades later, the rating schedule had to absorb them into a framework never designed for those injuries.

GAO traced the issue to three structural gaps:

• The original schedule was based on expert judgment, not modern economic or occupational data.
• The earnings-loss model reflects a 1945 labor market, not a 2026 economy.
• VA’s medical modernization began in 2009, but the earnings-loss component never kept pace.

The outcome starkly exposes why mental health and neurological conditions—some of the most prevalent injuries among post-9/11 Veterans- so often fail to receive the compensation Veterans urgently expect in civilian employment.

The Realization Hits After Separation, Not During Service

The system's age reveals itself only when Veterans depend on it. That moment rarely comes while in uniform. It emerges afterward, in decisions and constraints that accumulate quietly over time:

• When health care copays or priority group placement hinge on rating percentages
• When a spouse’s access to insurance depends on CHAMPVA eligibility (anchor: CHAMPVA)
• When VA dental eligibility (anchor: VA dental eligibility) is either full coverage or nothing, with little middle ground
• When a mortgage shifts drastically based on a VA home loan funding fee exemption
• When state tuition benefits, tax waivers, and transportation support require specific disability thresholds
• When worsening conditions collide with a rating structured for 1945 injuries, not 2026 realities

The system becomes visible not with a DD-214, but when a Veteran needs coverage, financial relief, or family support, when the rating letter’s number decides access.

Congress Finally Sees the System as a 2026 Problem

Congressional scrutiny has reached a critical point in late 2025 and early 2026 as lawmakers finally grapple with the consequences of nearly $200 billion in annual benefits governed by obsolete disability assumptions. The pressure is mounting for swift action.

GAO reported that modernization is occurring in piecemeal fashion: medical criteria updates for most systems are complete, with the remaining updates expected by late 2026. Yet the core economic foundation, which determines whether disabilities are under- or over-compensated, remains dangerously out-of-date, risking further harm.

For Veterans, the concern is not scandal. It is misalignment: a system built to measure impairment in 1945 now governs how veterans access health care, build families, buy homes, and age in civilian communities.

What Veterans Couldn’t See Then and What Becomes Clear Now

When Veterans trusted the rating system, they assumed it reflected modern medicine and real-world disability.

What they couldn’t see in uniform was the infrastructure underneath: a World War II-era view of work, a manual-labor economy that no longer exists, and a benefit structure that would eventually determine their health care access, financial margins, and family coverage long after discharge.

That disconnect only becomes visible once the military safety net falls away. The number on a VA rating letter is not just compensation; it is a lever that interacts with mortgages, copays, family insurance, tax relief, dental care, and long-term treatment.

GAO’s 2026 findings raise alarm: the disability system is modernizing in piecemeal fashion, but its economic foundation remains dangerously outdated. Congress now confronts immediate consequences for millions of Veterans whose post-service lives depend on ratings driven by criteria older than their parents.

The realization isn’t that the system is broken. It was engineered for a world that no longer exists. For Veterans who lived inside that system without ever needing to question it, understanding the age and architecture behind their rating is part of understanding their own post-service reality, not as a complaint, but as context that finally makes sense.

Suggested reads:

• Why Veterans Keep Losing Benefits They Thought Were Permanent
• VA Recalls Certain Eye Drops and Nasal Sprays Prescribed to Veterans
• PACT Act In 2026: What's Covered Now, What's Changing, and What Veterans Still Need to Know