Military Update: Thousands of disabled retirees due retroactive pay
July 20, 2006
Retired Army Staff Sgt. Daniel F. Purinton, 71, has argued for almost two years that the Department of Veterans Affairs owes him an additional $8,044.
Purinton said the underpayment occurred as Department of Defense and VA officials implemented a complex series of laws, starting in 2003, to end for many retirees the ban on “concurrent receipt” of both military retirement and VA disability compensation.
Purinton is right, but he also is far from alone. Back pay is owed to roughly 20,000 recipients of Combat-Related Special Compensation (CRSC) and 78,000 recipients of Concurrent Retirement and Disability Pay (CRDP). Total back pay owed is said to be in the hundreds of millions of dollars.
Within the next two weeks, defense officials hope to resolve final details with the VA on how their underpayments will be calculated, how processing costs will be shared between departments, how retirees will be notified and when most of these retirees can expect to be paid.
Most of the payments have to be calculated manually, rather than by computer, so it could take six months for retirees to be fully compensated, officials explained in draft press release recently shared with Purinton.
Those eligible for back pay have combat-related injuries and illnesses, or service-connected disabilities that the VA rates as at least 50 percent disabling. All of them also had military careers lasting 20 years or longer.
The delay in fully compensating these retirees can be blamed in part on the twisted path Congress choose for bringing some disabled military retirees relief from the century-old ban on concurrent receipt.
The ban requires that retirees who receive tax-free VA disability compensation accept a matching reduction in taxable retired pay. The dollar-for-dollar offset remains in effect today for retirees with noncombat disabilities of 40 percent or less. Also left out of recent law changes are veterans forced by their disabilities to retire short of 20-year careers.
A total of 222,000 military retirees, however, have seen their incomes climb as a result of CRSC, CRDP or both. Almost half of them, whether they know it or not, are owed more, in some cases thousands of dollars.
CRSC took effect June 1, 2003. Early payments were limited to active-duty retirees who applied and were found to have combat-related disabilities of at least 60 percent, or disabilities of at least 10 percent for which they received the Purple Heart. Eligibility was expanded on Jan. 1, 2004, to retirees having any combat-related disability including reserve retirees.
CRDP, which took effect Jan. 1, 2004, is payable to 20-year retirees with disabilities rated at least 50 percent but not tied to combat. CRDP payments are being phased in and will end the retired pay offset for seriously disabled retirees by 2014. The size of the reduction varies by level of disability. Changes for 2005 and 2006 will end the retired pay offset faster for the most seriously disabled retirees.
Dealing with the complexity of CRSC, CRDP, military retirement and VA compensation has stressed the VA and the Defense Finance and Accounting Service and frustrated some retirees. The experience of Purinton, from Flushing, N.Y., might be typical.
In July 2003, after Congress enacted CRSC, Purinton applied to the VA for a service-connect disability for his prostate cancer. He had served a year in Vietnam. His illness was presumed to be related to wartime exposure to the defoliant Agent Orange. In November 2003, Purinton was found 100-percent disabled and awarded disability compensation retroactive to July.
The VA, however, withheld some of the retroactive payment, enough to equal military retired pay Purinton had received since July. That made sense, Purinton said, because the ban on concurrent receipt still applied.
All that Purinton needed to do at that point was to declare on his 2003 tax return that retired pay received since July should be treated as tax-exempt, like the VA compensation previously withheld.
But in December 2003, Purinton used his VA disability rating to apply for CRSC. Payment was approved in February 2004. CRSC, in effect, replaced monthly retired pay lost to the ban on concurrent receipt. But CRSC is tax-exempt. In addition, Purinton continued to draw tax-free VA compensation.
All of that was fine. But CRSC eligibility was retroactive to July 2003. That means the VA owes Purinton the money it withheld from that retroactive payment of disability compensation. The ban on concurrent receipt applies only to military retirement, not CRSC.
“I’m due that money because any time you’re eligible for CRSC and VA 100 percent [compensation] you’re supposed to get both, and with no deduction,” Purinton said.
When VA officials rejected the claim, Purinton turned to Rep. Carolyn Maloney, D-N.Y., who asked the Defense Department for an explanation. In November 2004, Air Force Col. Virginia Penrod, director of DOD military compensation, said DFAS was working with the VA to “rewrite” procedures so retirees are paid in full. Eighteen months later — more than three years after CRSC began — the process of payment is almost ready, an official said.
In making his case to DOD and the VA, Purinton said he got help from fellow retirees, including Army Lt. Col. Jerry Fleming, another victim of Agent Orange, and Air Force Col. Win Reiter, a founder of VetsPac.com, a lobby group that helps retirees through the labyrinth of concurrent receipt law.
Fleming, who has led online discussions of the CRSC back-pay issue for years, said some combat-disabled retirees, sadly, will not live to see the money. Others, when paid, will have waited nearly four years, he said.
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