FEDERAL REG

SOR/2016-240: Regulations Amending the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations

REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE

Registered
August 26, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Background Since the early 1990s, comprehensive programming at Veterans Affairs Canada (VAC) has evolved to meet the changing needs of traditional war Veterans as they aged. In the years prior to 2006, however, programs and services available from VAC to assist Canadian Armed Forces (CAF) members and Veterans we... (Click for more)


Published on August 26, 2016

Bill Summary

SOR/2016-240: Regulations Amending the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Background Since the early 1990s, comprehensive programming at Veterans Affairs Canada (VAC) has evolved to meet the changing needs of traditional war Veterans as they aged. In the years prior to 2006, however, programs and services available from VAC to assist Canadian Armed Forces (CAF) members and Veterans were primarily limited to disability pensions for service-related disabilities under the Pension Act and other health benefits in associated regulations. In the late 1990s, departmental research and consultations with Veterans’ organizations, parliamentary committees, advisory groups, Veterans and their families, concluded that the pension process was an insufficient tool to address modern CAF members and Veterans’ needs, and that appropriate transitional services to help them adjust to civilian life were unavailable. As a result of the findings, VAC undertook a comprehensive review to modernize programming for CAF members and Veterans. This review of VAC programming resulted in the creation of the New Veterans Charter (NVC), which was brought into law through the Canadian Forces Members and Veterans Re-establishment and Compensation Act and its associated Regulations, and implemented on April 1, 2006. Along with the disability award — a lump sum award to recognize the pain and suffering associated with a service-related disability — and the death benefit, the NVC offers rehabilitation and vocational assistance, economic loss benefits, career transition support, health benefits and family supports. In the NVC, the lump sum disability award recognizes and compensates CAF members and Veterans and certain survivors for the non-economic effects of a service-related disability on their lives and the lives of their families. The financial benefits, including the earnings loss benefit and the permanent impairment allowance, compensate for the economic impact that service-related or career ending conditions have on Veterans’ ability to earn a living. Since the implementation of the NVC, various stakeholders have found (and VAC’s own research and evaluations have confirmed) that the principles and framework of the NVC are sound, but there are areas for improvement. Enhancements were made to the NVC in October 2011. In June 2014, the Standing Committee on Veterans Affairs tabled a report making 14 recommendations for further improving the NVC. In the report, the Committee agreed that the NVC suite of benefits and services provided a solid foundation on which to help CAF Veterans transition to civilian life. In response to the report, changes were made to the NVC on April 1, 2015, and three new benefits were implemented in July 2015. While Veterans and other stakeholders support the principles and fundamentals of the NVC, criticism remains regarding the inadequacy of the financial supports offered to Veterans and their families and other supports available to families in general, particularly in comparison to the Pension Act benefits. In the November 2015 Minister of Veterans Affairs mandate letter, the Government of Canada committed to increasing the value of the disability award, expanding access to the permanent impairment allowance and providing injured Veterans with 90% of their pre-release salary, and indexing this benefit so that it keeps pace with inflation. The mandate letter also included a commitment to ensure that injured Veterans have access to financial advice and support. In the December 4, 2015, Speech from the Throne, the Government of Canada confirmed its commitment to do more to support Canada’s Veterans and their families. Budget 2016 (introduced in March 2016) included additional financial support for Veterans, indicating that the NVC needed to be enhanced to meet the needs of modern-day Veterans. Budget 2016, therefore, proposed the following enhancements: increasing the disability award and indexing it to inflation, and providing the benefit of this increase to recipients of the disability award prior to April 1, 2017; expanding access to higher grades of the permanent impairment allowance, renaming it the career impact allowance and ensuring that the impact of the impairments on Veterans’ career advancement is considered in determining the level of financial support; and increasing the earnings loss benefit to provide income replacement of 90% before deductions, removing the 2% cap on indexation to allow it to keep pace with inflation, and amending the calculation of the minimum benefit to be based on a senior private’s salary. To implement these measures, costing $1.6 billion over 5 years starting in 2016–2017, both statutory and regulatory changes are required. The statutory changes were included in the Budget Implementation Act, 2016, No. 1. Issues The Canadian Forces Members and Veterans Re-establishment and Compensation Regulations (the Regulations) contain provisions that support and provide clarity to benefits created in the Canadian Forces Members and Veterans Re-establishment and Compensation Act (the CFMVRC Act). The majority of the improvements to financial support for Veterans contained in Budget 2016 (e.g. disability award, permanent impairment allowance, and earnings loss benefit) were achieved through amendments to the CFMVRC Act. These amendments require or authorize that certain aspects be detailed in the Regulations to support the benefit and explain how it is to be implemented. Without these regulatory amendments, the overall changes to each of these benefits, as envisioned in Budget 2016, would not be implemented. Objectives The objective of the regulatory amendments is to implement, or support the implementation of, changes to financial benefits for Veterans, as contained in Budget 2016, and to generally provide the regulatory framework to deliver these benefits. Specifically, the amendments are to ensure that the indexation factor for certain benefits is consistent with how the other NVC benefits are indexed, so that all these benefits keep pace with inflation; provide recipients of the retrospective payments resulting from the increase to the disability award and death benefit with support to obtain financial advice, and provide VAC with the ability to collect information or documentation needed to issue the retrospective payments; ensure that the potential impact of permanent and severe impairments on Veterans’ earning capacity and career advancement opportunities will be considered in determining the appropriate level of financial support, ultimately making the grade level determination in policy fairer and more accurate; ensure that the changes to the earnings loss benefit are implemented, but do not inadvertently disadvantage any Veteran who is employed while participating in a rehabilitation plan or vocational assistance; support the earnings loss benefit changes announced in Budget 2016, some of which is achieved through amendments to the CFMVRC Act to provide income replacement of 90% (increased from 75%) of a Veteran’s pre-release military salary; and align certain references in the Regulations with new references in the CFMVRC Act, which were made to better reflect the intent of the benefits. The regulatory amendments also contribute to the Government’s commitment to treat Veterans and their families with care, compassion and respect by contributing to the long-term financial security of disabled Veterans. Specifically, the Regulations will support improvements to NVC benefits for disabled Veterans, including both Veterans transitioning to the civilian workforce as well as those with injuries preventing them from performing any occupation that would be considered to be suitable and gainful employment. Description The amendments to the Regulations will change the disability award, the critical injury benefit, the death benefit and the detention benefit indexation method so that it is based on the percentage change to the Consumer Price Index (CPI) for the year ending on October 31 of the previous year; allow disability award and death benefit recipients receiving a retrospective payment resulting from the increase to the disability award and/or death benefit to be reimbursed for financial advice fees; allow VAC to collect information to determine eligibility for a retrospective payment resulting from the increase to the disability award and death benefit; remove references to “class” and replace them with “rate of award,” as the term class will no longer be used in Schedule 3 of the CFMVRC Act; clarify that the potential impact of a permanent and severe impairment on earning capacity and career advancement opportunities will be considered when determining the permanent impairment allowance grade level; change the name “permanent impairment allowance” to “career impact allowance” and the designation “totally and permanently incapacitated” to “diminished earning capacity” to better reflect the intent of the benefit; include the existing definition of “suitable gainful employment” in a new subsection 6(2), as this term is only used in the definition of “diminished earning capacity”; change the minimum salary used in determining earnings loss benefit from “basic corporal” to “senior private” (sections 18–20); ensure that no earnings loss benefit recipient receives a lower earnings loss benefit amount as a result of these changes, while they participate in a rehabilitation plan or vocational assistance plan and have employment earnings, by allowing for the use of the greater of the monthly imputed income prior to October 1, 2016, and the monthly imputed income on implementation of the regulatory amendments in the calculation of employment earnings off-sets; and remove the 2% indexation cap for the indexation of the monthly military salary and the earnings loss benefit payment. “One-for-One” Rule The “One-for-One” Rule does not apply, as there is no change in administrative costs to business as a result of this regulatory amendment. Small business lens The small business lens does not apply, as there are no costs to small business as a result of this regulatory amendment. Consultation These regulatory amendments are in response to some of the concerns that have been raised by Veterans stakeholder groups, such as the Office of the Veterans Ombudsman and the Standing Committee on Veterans Affairs. As part of its outreach activities, VAC held a stakeholder meeting on April 7, 2016, and a stakeholder summit on May 9–10, 2016, which was attended by stakeholder organizations, members of the six ministerial advisory groups, Veterans and family members. At the summit, the Budget 2016 changes to the earnings loss benefit, disability award and permanent impairment allowance were discussed, and the feedback received was generally positive. The Department received feedback on various aspects, including implementation of the changes, retroactivity, and name changes. The record of discussion for regular summit meetings is posted to the stakeholder engagement page of the VAC external Web site. The Minister also engaged with the broader Canadian Veteran community, in May 2016, by hosting a Facebook live session and taking questions from the public. VAC has further committed to providing additional information and answering questions on these regulatory changes at regular meetings with stakeholder groups. Rationale The regulatory amendments will support Budget 2016 by implementing, or supporting implementation of, improvements to financial benefits for Veterans and generally providing the regulatory framework to deliver these benefits. These regulatory changes will help VAC clarify and make necessary improvements to some of the benefits and services it provides. Additional payments provided through these regulatory amendments (in conjunction with the related statutory amendments) will result in greater financial security for eligible CAF members and Veterans, and will support their continued well-being. CAF Veterans eligible for the permanent impairment allowance (renamed the career impact allowance) will also have the impacts of their service related impairments, in terms of the loss of career progression and lost earnings capacity, more fairly recognized. The regulatory amendments will create no cost or administrative burden for Veterans or businesses. There will be no new additional cost to government associated with these regulatory changes beyond those costs contained in Budget 2016; the minor system changes required will be made at the same time and by the same resources as those making the system changes in connection with the statutory amendments. These amendments respond to concerns raised by some Veterans organizations and stakeholder groups, and reinforce to the Canadian public that the government continues to stand by those who have defended Canada with pride. VAC continues to work with Veterans and other stakeholders to respond to their concerns, and to explore further enhancements to the benefits and services provided to these men and women in appreciation of their service to Canada. Implementation, enforcement and service standards The regulatory amendments related to the earnings loss benefit will come into force on October 1, 2016, and the remaining regulatory amendments will come into force on April 1, 2017. Earnings loss benefit changes will come into force six months earlier, as the preparatory work for implementing these statutory and regulatory amendments is less complex than that required for the other benefit changes. The existing service delivery framework and program delivery process will be used to implement these amendments for eligible CAF members and Veterans and their families, and, where necessary, system changes, other supporting policies, business processes and guidelines will be revised to allow for these changes. Ongoing communication with front-line staff will be an integral component to the successful implementation of these changes. Training and information will be provided to VAC staff prior to these changes coming into force. On implementation of the changes to the earnings loss benefit, a recalculation of benefits will take place for existing earnings loss benefit beneficiaries. For Veterans who are eligible for the earnings loss benefit, the monthly military salary will be recalculated from the date of release to the day of implementation without the 2% cap. This recalculated monthly salary will be compared to the monthly military salary of the senior private and the greater amount will be set as the Veteran’s monthly income. The new monthly income amount will be used on a go forward basis. The indexation change to the disability award (including the other listed NVC benefits) will be processed through a system generated calculation using the new indexation after April 1, 2017. The reimbursement of fees for financial advice regarding the retrospective payments provided for in the Budget Implementation Act, 2016, No. 1 will be processed using the same method established for the current reimbursement of financial advice fees related to a disability award. Contact Katherine Morrow Acting Manager Cabinet Business Unit Veterans Affairs Canada Daniel J. MacDonald Building 161 Grafton Street, Room 427 Charlottetown, Prince Edward Island C1A 8M9 Email: [email protected] Footnote a S.C. 2016, c. 7. s. 82 Footnote b S.C. 2015, c. 7. s. 87 Footnote c S.C. 2015, c. 36, s. 222 Footnote d S.C. 2016, c. 7, s. 90 Footnote e S.C. 2005, c. 21 Footnote 1 SOR/2006-50

This Bill does not amend any statutes.

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