Posted on: Monday, February 14, 2005

MILITARY UPDATE

By Tom Philpott

Military retirees rated "unemployable" are unlikely to see their retirement pay fully restored under the "accelerated concurrent receipt" provision approved by Congress last fall.

The Department of Defense is nearing a decision to limit full concurrent payments to 23,000 retirees who have disability ratings of 100 percent, an official said.

That would mean 28,000 other retirees rated as "individuals unemployable" (IU) will not see their retirement pay fully restored immediately but rather will continue to see it phased in under a 10-year schedule set in 2003.

"Concurrent receipt" refers to payment of both military retirement, usually after 20 or more years' service, and VA disability pay for injuries or illnesses that occur while on active duty. Until recently, all disabled retirees who completed full careers saw retirement pay reduced, dollar-for-dollar, by any amount they received in tax-free VA compensation.

Congress voted to end the retired pay offset for combat-related disabilities, and to phase it out over a decade for retirees with noncombat disabilities of 50 percent or higher. Last year, lawmakers relaxed the concurrent receipt ban further, voting to fully restore, effective Jan. 1, 2005, any offsets in retired pay for 100-percent-disabled retirees.

Defense officials found the law's technical language vague, however, with regard to retirees rated as unemployable. These retirees have disability ratings below 100 percent but so still severe that they can't work. VA declares such disabilities "total" and provides compensation equal to that of 100-percent-disabled retirees.

Last December, Charles S. Abell, principal deputy under secretary of defense for personnel and readiness, sent a memo to the White House's Office of Management and Budget stating that "a legal review of the relevant statutory authority and legislative intent language" had determined that IU retirees are eligible for full concurrent receipt. Abell also advised OMB that the department intended to restore their retired pay, at a cost of $1.3 billion through 2013, unless OMB had "differing views."

The memo is being described by a defense official as a "poor attempt" to get OMB to take a stand and clarify conflicting legal opinions both inside the Defense Department and with Justice Department attorneys.

OMB officials let it be known "they believe we have no authority to pay" full retired pay to IU retirees, a defense official said. Defense policy-makers are left with three legal views. One holds that accelerated concurrent receipt must be extended to the unemployables. Another finds that the law prohibits it. A third suggests Defense officials have authority to restore full retirement immediately to IU retirees but payment would be discretionary, and subject to available funds, rather than a mandated entitlement.

The only point on which all of the government lawyers agreed is that Congress intended to restore full retired pay only to retirees with 100 percent disabilities.

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