A federal law has caused nearly 122,000 disabled veterans to return payouts in the last 12 years, due to a little-known law that prohibits veterans from receiving both disability and special separation pay. This has resulted in veterans being forced to repay sums ranging from a few thousand to tens of thousands of dollars, leaving many in financial hardship. The Department of Veterans Affairs recouped special separation payments from over 17,000 veterans in the 2018 fiscal year, the highest to date, but the reasons for the increase in reclaiming are unclear. The recoupments dropped each year until the PACT Act was enacted in 2022, leading to a resurgence in recoupments. The VA is legally obligated to recover special separation benefits before veterans can receive disability payments.
Instances of veterans receiving both disability and special separation pay without penalty for a significant period have been uncovered when they filed a PACT Act claim. One veteran, Shawn Teller, had received both benefits for a dozen years before the VA realized the error, leading to deductions from his disability payments. Another veteran, Vernon Reffitt, repaid over $30,000 after an error spanning more than 30 years was detected. Despite implementing measures like scanning records into electronic files to prevent such cases, the VA does not track how many errors have been caught under the PACT Act. Exceptions to the law are available in certain cases, with high and confusing standards that have led six veterans to receive waivers for voluntary separation pay.
Advocates argue that the law unfairly links two separate benefits that are unrelated in nature, as special separation pay is based on a service member’s time in the military, while disability pay is related to illnesses or injuries suffered during service. Recoupments have ranged from $19,700 to $53,000 on average from 2013 to 2020, according to a study from the RAND Corporation. The Air Force has granted waivers to some veterans who were affected by the law due to erroneous statements given during their separation from active duty, with waivers granted based on equity and good conscience standards. The Navy recently authorized reducing the amount of disability pay withheld during recoupment of voluntary separation pay. However, the Army did not respond to requests for comment on the issue.
The number of recoupments by the VA has fluctuated over the years, with a surge in 2018 and 2023, coinciding with increased disability claims. There has been no concerted effort to increase recoupments, according to VA press secretary Terrence Hayes, who stated that fewer than 1% of total applicants or recipients of disability compensation have had recoupments processed over the past five years. Recoupment errors have been detected when veterans file PACT Act claims, prompting the VA to take action. The law remains a source of confusion and financial hardship for many veterans, who are left to repay sums they received upon leaving the military years ago, often leading to significant financial strain for them and their families.
Efforts have been made to waive recoupments in certain cases, but the process is complex and not well understood by many veterans. While some have been successful in obtaining waivers due to errors in paperwork or financial need, others are left struggling to repay substantial sums. Advocates like Marquis Barefield from DAV argue that the law unfairly impacts veterans who have earned these benefits through their military service and suffer from disabilities or illnesses unrelated to their separation pay. The issue highlights a gap in the system that adversely affects many disabled veterans, leading to financial uncertainty and challenges in accessing essential services and support.
