Retirees unlikely to see full pay restored

Tom Philpott: CNJ columnist

Military retirees rated “unemployable’’ are unlikely to see their retired pay fully restored under the “accelerated concurrent receipt’’ provision that Congress approved last fall.

After months of internal debate, the Department of Defense is nearing a final decision to limit full concurrent payments to 23,000 retirees who have disability ratings of 100 percent, an official said.

That would mean 28,000 retirees rated as “individuals unemployable’’ (IU) will not see their retired pay fully restored immediately but rather will continue to see it phased in under a 10-year schedule set in 2003.

“Concurrent receipt’’ refers to payment of both military retirement, usually after 20 or more years’ service, and VA disability pay for injuries or illnesses that occur while on active duty. Until recently, all disabled retirees who completed full careers saw retired pay reduced, dollar-for-dollar, by any amount they received in tax-free VA compensation.

Congress a few years ago voted to end the retired pay offset for combat-related disabilities, and to phase it out over a decade for retirees with non-combat disabilities of 50 percent or higher. Last year, lawmakers relaxed the concurrent receipt ban further, voting to fully restore, effective Jan. 1, any offsets in retired pay for 100-percent disabled retirees.

Defense officials found the law’s technical language vague, however, with regard to retirees rated as unemployable. These retirees have disability ratings below 100 percent but still so severe they can’t work. VA declares such disabilities “total’’ and provides compensation equal to that of 100-percent disabled retirees.

Last December, Charles S. Abell, principal deputy under secretary of defense for personnel and readiness, sent a memo to the White House’s Office of Management and Budget stating that “a legal review of the relevant statutory authority and legislative intent language’’ had determined that IU retirees are eligible for full concurrent receipt.
Abell also advised OMB that the department intended to restore their retired pay, at a cost of $1.3 billion through 2013, unless OMB had “differing views.’’

The memo, which was leaked and published by crlegislation.com (now VETSPAC.com), is being described by a defense official as a “poor attempt’’ to get OMB to take a stand and clarify conflicting legal opinions both inside the Defense Department and with Justice Department attorneys.

OMB officials never issued an official response but let it be known they “believe we have no authority to pay’’ full retired pay to IU retirees, a defense official said.

Defense policymakers are left with three legal views. One holds that accelerated concurrent receipt must be extended to the unemployables. Another finds that the law prohibits it. A third suggests Defense officials have authority to restore full retirement immediately to IU retirees but payment would be discretionary, and subject to available funds, rather than a mandated entitlement.

The only point on which all of the government lawyers have agreed is that Congress intended to restore full retired pay only to retirees with 100-percent disabilities, not to 23,000 IU retirees.

A defense official said that absent a definitive legal opinion, Abell now is recommending against restoring full retired pay to 28,000 IU retirees. This official said the decision was aided by a tear-out letter published in the February issue of Military Officer Magazine.

The letter, which members of the Military Officers Association of America are encouraged to sign and mail to lawmakers, says “technical language’’ in the 2005 defense authorization act omitted retirees deemed unemployable, even though, “for all other purposes’’ except accelerated concurrent receipt, IU retirees “are treated the same’’ as 100-percent disabled retirees.

That MOAA, a powerful advocacy organization for retirees, recognizes that the law bypassed IU retirees, weakens any DoD argument to the contrary, this official said.

Steve Strobridge, MOAA’s director of government relations, scoffed at the idea of Defense officials using a letter campaign to help interpret the law.

“It’s pretty strange that a confident (DoD) general counsel can’t say what the law is,’’ said Strobridge. “It’s pretty clear from this debate that they aren’t sure the law prohibits’’ full restoration of retired pay for IU retirees. “So if the law doesn’t prohibit it, they ought to do it.’’

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at:
milupdate@aol.com