Military back pay cost will be shared

By Tom Philpott: Military update

The departments of Defense and Veterans Affairs have worked out a plan for sharing the cost and the task of delivering about $500 million in back pay to more than 100,000 military retirees with VA rated disabilities.

The retroactive payments are owed to nearly half of all recipients of Combat-Related Special Compensation (CRSC) and of Concurrent Retirement and Disability Pay (CRDP) since those programs began in 2003 and in 2004.

VA and DoD “are looking to make this happen as soon as possible. No one wants to delay it,” said an official who attended an Aug. 1 decision meeting between the two departments, the Defense Finance and Accounting Service (DFAS) and representatives from every branch of service.

Retirees awaiting their retroactive payments won’t have as long a wait as officials believed a few weeks ago. Even the most complex calculations of back pay involving CRSC and CRDP can be done by computer rather than by hand. This
cuts down significantly on earlier projections by DFAS that the repayment
process could take up to six months.

VA and DoD aren’t yet ready to announce the date that back payments will be made. Their new estimate on dollars to be distributed is about a half billion. VA is expected to cover 60 percent of that and DoD the remainder. The size of payments, which might average between $4,000 and $5,000, will depend on rank, level of disability, and the period covered by retroactivity.

Some retirees could receive payments from both VA and DoD, but officials hope to synchronize the process to minimize confusion for retirees. The back pay will be electronically deposited in whatever bank accounts the VA or DFAS, which will make payments for DoD, have on file for individuals. A VA official said retirees will receive a letter explaining the back payments, presumably shortly before the money appears in their accounts.

No one should have to apply for the money. Also, if retirees have died before receiving their full CRSC or CRDP entitlement, the money likely will go to surviving spouses or to the deceased retirees’ estates.

For many years, military retirees saw their annuities reduced, dollarfor-dollar, by amounts they received in tax-free VA compensation for service-related disabilities.
Congress enacted CRSC and CRDP to end this so called ban on “concurrent receipt,” but only for certain retirees who served 20 years or more: those with combat-related injuries or ailments, and those with non-combat related conditions rated
at least 50 percent disabling. CRSC took effect June 1, 2003. Initially, payments went solely to active duty retirees who applied and were deemed to have combat-related disabilities rated at least 60 percent disabling, or disabilities for which they received the Purple Heart. Eligibility later was expanded to any retiree having a combatrelated disability to include reserve component retirees.

CRDP took effect Jan. 1, 2004. It is payable to retirees with 20 or more years of service and non-combat-related disabilities rated 50 percent or higher. CRDP payments are being phased in based on degree of disability. By 2014 it will end the
retired pay reduction for all retirees.