FIGURE 7-1 IU beneficiaries by period of service, FY 2006.

SOURCES: Computer Output Identification Number Control Point 501 for IU; and FY 2005 Performance and Accountability Report for all beneficiaries.

The regulation goes on to say: “Marginal employment shall not be considered substantially gainful employment” and defines marginal employment as earned income that does not exceed the poverty threshold for one person established by the Bureau of the Census. In certain circumstances, such as the protected environment provided by a family business or sheltered workshop, the veteran with higher earnings may be considered for IU by the director of the Compensation and Pension (C&P) Service.

If a veteran is rated 100 percent according to the medical criteria in the Rating Schedule, IU is not considered because, VA has reasoned, it is not needed. There is an advantage for the veteran in being rated 100 percent according to the Rating Schedule rather than extraschedularly for IU: a schedular 100 percent rating allows the veteran to engage in substantially gainful employment, while an extraschedular 100 percent rating based on IU does not.

If a rater finds that a veteran is unable to secure and follow a substantially gainful occupation because of his or her service-connected disability, but the veteran does not meet the minimum rating level of 60 percent for one disability or 70 percent for multiple disabilities, one of which is 40