Congress and the Bush administration have agreed to a $22.1 billion deal over 10 years that will pare back dramatically a century-old ban on “concurrent receipt” of both military retired pay and tax-free disability compensation for injuries or illnesses traced to time in service.

Up to 200,000 disabled retirees with 20 or more years of service, including reserve and National Guard annuitants, will see their incomes rise, for many by hundreds or even thousands of dollars a month.

The deal, expected to be passed as part of the 2004 defense authorization bill, targetscombat-related disabled and the most severely disabledwith non-combat injuries or illnesses. In effect, they no longer will see retired pay reduced by amounts they receive in disability compensation from the Department of Veterans Affairs.

Congressional leaders announced the agreement Oct. 16 at a Capitol Hill press conference after weeks of negotiations between senior House Republicans, the White House and, finally, with Senate Republican leaders.

The deal, outlined here last week, effectively divides 550,000 disabled military retirees with 20 or more years of service into three categories and boosts the monthly income of two of them. They are:

Combat-Related Disabled — Retirees with combat-related disabilities, regardless of severity, would become eligible Jan. 1, 2004, for Combat-Related Special Compensation. CRSC, an income replacement program begun last June, no longer would be limited to retirees with combat-related disabilities rated at least 60 percent.

CRSC is not retired pay but replaces retired pay lost when retirees begin drawing VA disability compensation. Unlike retired pay, however, CRSC payments are tax exempt.

Disabilities will be judged “combat related” if resulting from armed conflict, combat training, hazardous duties or an “instrumentality of war,” which can include Gulf War illnesses and ailments from exposure to Agent Orange, radiation, mustard gas or lewisite. Persons suffering Post-Traumatic Stress Disorder also can be eligible if PTSD is shown to be combat-related.

Concurrent Receipt for Seriously Disabled — Retirees with disabilities rated 50 percent or higher would see reductions in retired pay from accepting VA compensation restored over 10 years.

The first installment, on Jan. 1, 2004, was expected to be $750 a month for 100-percent disabled, $500 for 90 percent, $350 for 80 percent, $250 for 70 percent, $125 for 60, and $100 for 50 percent. Disabilities do not have to be combat-related. Indeed, retirees with a mix of combat-related and non-combat disabilities will have to choose whether to accept tax-free CRSC for combat-related ailments alone, or allow retired pay to be restored through phase in of concurrent receipt. They will not be able to receive payments under both programs.

Steve Strobridge, director of government relations for the Military Officers Association of America, said it’s too early to know how Defense officials will administer theprograms. Retirees certainly will gethelp in determining whether they are better off applying for CRSC or accepting concurrent receipt. But some havinga mix of combat and non-combat related disabilities could see the better choice change from year to year, particularly during the 10-year phase-in, andas disabilities are reevaluated and tax income rises or falls. Perhaps retirees will be allowedto select what program they want to be under from year to year, he said.

A rough estimate is that 200,000 disabled retirees will benefit from the deal to include reserve and National Guard members. Under CRSC, they no longer will face a hurdle of 7200 retirement points to qualify.

Limited Ban Remains — Left outare retirees with no combat-related disabilities and their other VA disabilities below 50 percent. They will continue to seeretired pay reduced by an amount to match VA disability pay.

Presidential Commission – House leaders insisted that the deal includea presidential commission next year to study VA and military disability programs and to recommend reforms. That couldinclude tightening rules for future generations of veterans but a dramatic change would not be pre-determined as under an earlier draft agreement by House Republicans. It was not clear whether potential savings from such a review already were anticipated in calculating the cost of the deal. But lawmakers last week talked about a $30 billion price tag over 10 years.

For eligible retirees, the agreement is a stunning victory, given last year’s veto threat by the Bush administrationand continued opposition torelaxing the ban on concurrent receipt fromsenior Defense officials.

Negotiations were led Reps. Roy Blunt (R-Mo.), majority whip, and Duncan Hunter (R-Calif.), chairman of the House Armed Services Committee. Rep. Michael Bilirakis (R-Fla.) was a key player, having led the fight for concurrent receipt for years. Even Republicans acknowledged a critical push toward a deal fromRep. Jim Marshall (D-Ga.) who sought to force a vote on a full concurrent receipt bill through use of a rare discharge petition. With Republicans Walter Jones’ (N.C.) and Tom Tancredo (Colo.) having already signed the petition, House leaders got serious about a deal.

Factors behind the White House reversalon this issue could include Bush’s recent slide in opinion polls, a veto threat judged against his request for $87 billion to rebuild Iraq and Afghanistan, and a rising tide of angry letters and email from disabled retirees with an election only a year away.

Rep. Lane Evans of Illinois, ranking Democrat on the House Committee on Veterans’ Affairs, urged veterans’ groups to reject the deal because not all disabled retirees will benefit. “This is no victory for veterans,” he said.

— Comments are welcomed. Write to Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, e-mail or visit website at:

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