Yes. They can. But it isn't quite that simple. Let's look a little deeper.
The VA can reduce your disability rating if your condition improves. They can't do it without examining you first. Usually these examinations are scheduled between 2 and 5 years after your initial exam. If the VA decides that they have information that indicates that your condition has improved they will send you a letter asking you to show up for an examination. Don't ignore it (kind of like a letter from the IRS). You have 60 days to submit information supporting your position that your rating should not be reduced. You can also ask for a hearing. You have 30 days to do that. Bottom line: don't ignore the letter and show up for any examinations and/or hearings. Failure to show for the exam or hearings could result in a reduction.
There are some "Safe Harbors"
It is unlikely that you'll get re-examined if one or more of the following apply
You're older than 55 (another good deal beyond the senior citizen discount at MacDonald's!)
Your disability won't improve and/or is total
You have a disease or condition that is permanent (missing limb)
Reducing an individual rating won't change the overall rating
You're already at the minimum rating for the condition
Some Ratings are Protected
In some cases, your benefits are protected (Protected Rating). While not impossible, it is very hard for the VA to reduce your rating for these protected ratings. They are
5 Year Rule. If you've been rated the same for 5 years or more they can't base a reduction on an exam only. They have to look at all medical evidence
10 Year Rule. After 10 years the rating can't be terminated, but it can be reduced
20 Year Rule. If your rating has been in effect for 20 years or more, you're pretty safe
100% Disabled Rule. In this case, your condition must improve "materially" for the VA to reduce your rating.
One other special case
If you're in jail, the VA can temporarily reduce your benefits. So, just in case you needed motivation to not commit crimes, here is some for you.
Financial and Tax Impacts of VA Benefits
One would think that VA benefits are pretty straight forward. You're disabled, you get cash. But in reality, they can affect your tax picture and your overall financial plan quite a bit.
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