MILITARY UPDATE
About 225,000 retirees with disabilities to get pay boost
By Tom Philpott
The best guess now is that 225,000 military retirees with disabilities will see larger annuity checks, starting in January, under the "concurrent receipt" deal struck between the White House and Republican leaders.
Military and federal civilian retirees, survivors and Social Security recipients will see their annuities rise by 2.1 percent, effective Dec. 1 and payable in January. The cost-of-living adjustment reflects inflation over the past year for a market basket of goods and services.
New estimates by the Congressional Budget Office on the number of retirees who will see income gains also show them divided, almost in half, between those who might qualify immediately for tax-free combat-related pay and those with noncombat disabilities serious enough to have their retired pay restored over the next decade.
COLA set
Legislative language that shapes the deal also clarifies what levels of retired pay will be restored, and when, as Congress moves to include the $22.1 billion, 10-year initiative in the 2004 defense authorization bill.
Here are key details that surfaced in the past week:
• Combat-related special compensation: As many as 107,000 more retirees could be eligible for tax-free CRSC payments for combat-related disabilities as low as 10 percent. This is in addition to the 35,000 expected to qualify for CRSC under more restrictive criteria passed last year.
The first CRSC program requires applicants to have Purple Heart medals for war wounds or "combat-related" disabilities rated 60 percent or higher. CRSC applications to date are nearing 30,000. Only about 2,000 have been approved and as many rejected. Payments, which match retired pay reductions tied to these disabilities, are to be retroactive to June 1.
In January, CRSC will expand to include all retirees with 20 or more years' service and combat-related disabilities, regardless of severity. "Combat related" means from armed conflict, combat training, hazardous duty or an "instrumentality of war" such as exposure to Agent Orange.
Screening of applications, which already averages several months, likely will slow even more. Payments under the expanded program will be made retroactive to Jan. 1, 2004. Applicants eligible under the more stringent standards will continue to see checks retroactive to June 1, 2003.
Service members who retired with 15 to 19 years of service under Temporary Early Retirement Authority (TERA), offered during the post-Cold War drawdown, will not be eligible for CRSC.
• Limited concurrent receipt: 115,000 retirees will see a 10-year phase-in of full retired pay, now offset by VA compensation, but only if they have disability ratings of 50 percent or higher. TERA retirees are eligible.
Retired pay will be restored automatically; retirees need not apply. In 2004, the first year of the phase-in, restored amounts will range from $750 a month for 100-percent disabled to $100 for 50 percent. What retired pay offsets remain will drop another 10 percent in 2005, 20 percent in 2006, 30 percent in 2007 and so on until the offset is gone after 2013.
How the phase-in is handled for people who retire after it begins is still under discussion. One idea is to set retired pay offsets for new retirees with disabilities equal to whatever offsets remain for current retirees who have the same level of disability.
• Reserve eligibility: An estimated 3,000 Reserve and National Guard retirees are expected to qualify for CRSC or limited CR.
• IU, SMC and dependents allowance: Military retired pay is offset, dollar for dollar, not only by VA disability compensation but other VA payments for dependents, for individuals deemed unemployable (IU) and the Special Monthly Compensation (SMC) paid for multiple missing limbs or other very severe injuries. The deal struck by Republicans makes clear that retired pay offsets linked to all of these VA payments will be recouped, too.
SMC still must be ruled combat-related to boost CRSC. Nothing in the legislative language, however, appears to clarify for defense officials how to set combat-related criteria for SMC, which has been a difficult area in the screening of CRSC applications.
• Open season: The legislation will order an annual open season for retirees who are eligible for either CRSC or concurrent receipt to switch between plans if they can gain a financial advantage based on new disability ratings, tax exposure or other factors.
• Retirees left out: More than 300,000 career military retirees who receive VA compensation have disabilities rated below 50 percent and that also are non-combat-related. They will continue to see retired pay reduced by an amount to match their disability compensation.
Many more thousands have left service short of 20 years, either because of combat wounds or service-connected injuries or illnesses. Many of these veterans, who also view themselves as "disabled retirees," are critical of the CR deal, saying it widens the disparity in compensation between those able to serve full military careers and those forced out, particularly if disabled close to retirement or from wounds of war.
• Veterans' disability benefits commission: Formal name of the 13-member panel mandated by the deal. The commission will hold its first meeting within 30 days of commissioner appointments. Majority and minority leaders in Congress will name eight commissioners; the president will appoint five. Seven must be veterans awarded at least a Silver Star.
Fifteen months after first meeting, the commission must send to the president and Congress a comprehensive study on revising disability and death benefits for veterans and their survivors.
Questions, comments and suggestions are welcomed. Write to Military Update, P.O. Box 231111, Centreville, VA 20120-1111, or send e-mail to: milupdate@aol.com. Or visit Tom Philpott's Web site.
