MILITARY UPDATE
Ban on receiving both disabled, retiree compensation under scrutiny

Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 49, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.

By Tom Philpott

For decades, whether led by Republicans or Democrats, the Defense Department has supported a law banning "concurrent receipt" of both full military retirement and VA disability pay for service-related injuries or illnesses. Under the Bush administration, that hasn't changed.

But Department of Defense officials do intend this year to assess whether career military retirees with disabilities are compensated properly, said Charles Abell, assistant secretary of defense for force management policy.

"If it turns out that, by all measures, the retirement benefit is adequate for those who are disabled, then I would not find a great deal of support" for lifting the 110-year-old ban, Abell said. "If, on the other hand, we find we are a little stingy, then we may have to look at ways of helping to correct that, whether it's concurrent receipt or some other innovative way that I don't even have in my mind yet. But the basic question is, 'Are we providing an adequate retirement benefit to those folks who deserve it?'"

Congress passed a resolution last year asking the Pentagon to study again the law that requires military retired pay to be reduced, dollar-for-dollar, by the amount of tax-free compensation a retiree draws from the Department of Veterans Affairs. Given the Defense Department's support for the ban over the years, Abell's office decided to go outside to get a fresh look. It hired the SAG Corp., of Annandale, Va., which specializes in policy analysis, to review the offset, including purpose and fairness. The report is due to the Pentagon next month.

"I haven't seen it," Abell said. "I know it's on track."

The SAG work likely will be reviewed inside DoD before a final report is sent to Capitol Hill, said another Defense official.

A legal inconsistency that military retirees want explained is why veterans with disabilities who complete careers as government civilians can receive their full federal retirement plus tax-free VA compensation, while military retirees with disabilities suffer the offset.

For the past two years, legislation to lift the ban died behind closed doors of a House-Senate conference committee. No one found money to pay for it although most lawmakers list themselves as the bill's co-sponsor. The fiscal 2002 Defense Authorization Act has language that would end the retired pay offset if President Bush supports it and earmarks the money — about $40 billion over 10 years — in his budgets. His 2003 budget request, unveiled this month, ignored the issue.

Abell's remarks hint at a possible compromise if the study finds, and Pentagon officials agree, there's real inequity and that some retirees with disabilities aren't being adequately compensated for their service and sacrifice. Congress already as moved down that path, approving up to $300 a month in a special pay to military retirees who are rated seriously disabled — 70 percent or more — within four years after completing careers of 20 years or more. A modest expansion of that program — payment of $50 a month to career retirees rated 60 percent disabled within four years of retirement — begins this month.

Legal challenges

The impact of the offset on finances of the most severely disabled veterans is beginning to draw national attention. It was, for example, the topic of a recent feature on NBC Nightly News, increasing pressure on lawmakers. With TRICARE for Life approved, the retired pay offset is now the top legislative priority for more service associations. Advocates are becoming more organized using the Internet.

A lawsuit, filed in U.S. District Court in San Antonio, argues that the ban on concurrent receipt violates the Constitution's Equal Protection Clause and Due Process Clause as well as the American Disabilities Act. Philip Jones, the plaintiffs' attorney, is himself a 70-percent disabled military retiree.

Retirees did lose a similar legal challenge in the mid-1980s when the U.S. Court of Claims ruled that Congress had "a rational basis" to treat military retirees differently than disabled veterans who roll their service years into full federal civilian careers. "But the argument we're making is much more comprehensive," Jones said.

For instance, that "rational basis test" shouldn't apply to claims of military retirees. Like black Americans, Jones said, military retirees should be regarded as a "suspect class" — that is, as victims of past discrimination — given their "disenfranchisement from the political process." He is referring, Jones said, to the impact of overseas assignments and military restrictions on most political activity.

Suspect-class status, Jones said, would force the court to apply instead a "strict scrutiny" standard to the legal challenge. Then the government would have to show a compelling reason why the offset applies to military retired pay but not to disabled veterans retired from civil service. The true purpose of the law, to save money, will be exposed, Jones said, and struck down as unconstitutional.

Many retirees (and some local editors) got confused last week by the lawsuit's web address. They added "www" but shouldn't have. The full web site address is unitedvets.tripod.com.

Housing allowances

Besides next January's targeted pay raise, Abell said a budget highlight for military personnel in 2003 will be an extra bump in Basic Allowances for Housing paid to those living off base in stateside areas. Typical out-of-pocket rental costs will fall next January from 11.3 percent of their monthly rent down to 7.5 percent.

Besides a normal BAH increase, the bump up will amount to about $42 a month for a married E-6, $60 a month for a married O-4. That should make off-base living more affordable and ease the demand for base housing. Currently, average BAH rates equal 38 percent of E-6 basic pay and 27 percent of O-4 basic pay.

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