David Magann, P.A. Stands with Veterans Against Unfair Repayment of Military Payouts

Tampa, Florida – Over the past 12 years, nearly 122,000 disabled veterans have been required to return payouts they accepted to leave military service, according to a recent NBC News report.

Why 122,000 Disabled Veterans Were Asked to Return Payouts

The issue arises from an obscure legal requirement prohibiting veterans from receiving both disability pay and special separation pay.

Special separation pay is a one-time, lump-sum payment for service members who agree to leave the armed forces when the military needs to reduce its active-duty numbers. Service members accept special separation pay and leave military service. When they do so, this little-known law prevents them from also receiving disability benefits.

Before the passage of the PACT Act, “recoupments” – in which the Department of Veterans Affairs requires repayment of special separation pay – were relatively rare. The VA reported only about 12,400 recoupments in fiscal year 2017 and steadily decreasing numbers between 2018 and 2022, the year the PACT Act passed.

The PACT Act greatly expanded opportunities for service members to seek disability benefits. As service members filed for these benefits, however, they also faced demands for recoupment of their special separation pay. Recoupments jumped from 7,940 cases in 2022 to 9,300 in 2023, mostly linked to PACT Act veterans.

Now, some service members who filed for disability benefits with the VBA under the PACT Act are facing mixed consequences. On the one hand, they’re receiving needed disability benefits. On the other, they’re facing demands to repay the special separation pay they received when they agreed to quit their active duty career.

The Consequences of the Recoupments

Under the law’s terms, the VBA cannot pay disability benefits to veterans until the veteran has repaid their special separation pay. This situation has left many veterans struggling: They cannot easily repay their special separation pay, yet they need disability benefits to stay afloat.

Various veterans have tried different ways to handle the situation. One veteran interviewed by NBC News estimated it would take him 15 years to repay the special separation amount he received. Another said the household is cutting expenses wherever possible and that his wife, who already has one full-time job, is looking for additional work.

In some cases, the VBA deducts special separation recoupment from disability benefits directly. NBC News interviewed a veteran who received $10,700 to leave the Army in 1996. In 2012, he began receiving disability pay for a knee injury.

He did not receive notice of the demand for recoupment until 2023, however, when he filed a claim for asthma under the PACT Act. The VA notified the veteran that it would withhold his monthly disability payment until he had repaid the $10,700 special separation payment. For the veteran, who relies on his disability payment to meet his basic needs, this obscure law has turned into a significant hardship.

The VA has stated that it is not making a “concerted effort” to recoup special separation pay. Rather, recoupment occurs as part of its routine process of evaluating disability claims and issuing benefits. The VA estimates that its recoupment claims total less than one percent of the total disability claims the VBA handles each year.

What To Do If You’re Struggling to Keep Your Benefits

As the number of recoupment-affected veterans increases, so do calls to change the law. Efforts to encourage members of Congress to address the issue are ongoing. Veterans can contact their representatives to voice their concerns and stance on the issue.

Whether you’re dealing with recoupment demands or fighting to receive or keep veterans’ benefits for other reasons, you can take steps to preserve your claim:

Keep all your paperwork in one place. Keep copies of all paperwork related to your benefits claim in one safe location. Consider making both a digital and a paper copy and storing them in separate locations. Include bills, receipts, notes from doctor’s visits, paperwork from the VA, and any other information related to your claim. This paperwork can help you build your case.

Log your communications. Each time you speak to a doctor or someone else from the VA, write down the date, time, who you spoke with, and what was said. This log can help you keep track of what happened and build a case for benefits.

Talk to an experienced lawyer. An attorney can answer your questions, advise you on your legal rights, and help you turn your saved information into a case for benefits.

To learn more, contact the offices of experienced veterans’ lawyer David W. Magann today.