A federal law has forced nearly 122,000 disabled veterans in the last 12 years to give back payouts they received to leave the military when it had to downsize. This law prohibits veterans from receiving both disability and special separation pay, leading to many veterans having to repay tens of thousands of dollars. The U.S. Department of Veterans Affairs recouped special separation payments from over 17,000 veterans in the 2018 fiscal year, the highest annual amount so far. This total has fluctuated over the years, but the numbers increased again in 2023 after the signing of the PACT Act. The recoupments are legally required by the VA before veterans can receive disability payments.
Veterans like Shawn Teller and Vernon Reffitt, who had been receiving both benefits for years, were informed by the VA that they should not have been receiving both without penalty. The VA caught the error in Teller’s case when he submitted a claim under the PACT Act, leading to his disability payment being withheld until he repays the separation pay. Reffitt, who had been receiving disability compensation since 1992, was also told he needed to repay the separation pay he received at that time. The VA said it was unaware of the exact amount of Reffitt’s separation pay, leading to the error in benefits calculation.
The number of recoupments has varied over the years, with the VA stating that the rise in disability claims may be a contributing factor to the recent increase. The agency emphasized that the recoupments are a normal part of the claims process and a small percentage of total applicants or recipients of disability compensation. Veterans can seek waivers for certain types of separation benefits under the law, but the standards for approval are high. A few waivers have been granted by the VA after determining that recovery would be against equity and good conscience or contrary to the best interests of the United States.
Advocates argue that the law is unjust as it forces veterans to repay benefits they rightfully earned. Special separation pay is based on a service member’s military career, while disability pay is related to injuries or illnesses sustained during service. The two types of benefits are unrelated financially, and withholding disability payments to recoup separation pay can cause financial hardship for veterans and their families. In 2022, Rep. Ruben Gallego introduced a bill to change the recoupment law, but progress has been slow due to the associated costs.
The law has impacted veterans like Teller and Reffitt, causing financial stress and uncertainty. Despite the efforts of some members of Congress to change the law, many veterans continue to be affected by recoupment of separation pay. The VA stated that it does not track cases where errors in recoupment calculations were caught after the enactment of the PACT Act. Veterans can seek waivers for certain separation benefits, but the process is complex and not widely known. The impact of the law on disabled veterans has raised concerns among advocates and lawmakers, highlighting the need for reform to ensure that veterans receive the benefits they rightly deserve without undue financial burden.
