This is the first part of part two.Â I already wrote the article for part two.Â Some missed the first part so here goes...and this applies to ALL VA (Veterans)
Retirees Due Back Pay
Tom Philpott | July 14, 2006
100,000 Disabled Retirees Due Retroactive Pay
Retired Army SSgt. Daniel F. Purinton, 71, has argued for almost two years that the Department of Veterans Affairs owes him an additional $8044.
Purinton said the underpayment occurred as DoD 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 of 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 current 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 non-combat 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 by 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 (DFAS) 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. Â
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 anytime you're eligible for CRSC and VA 100 percent [compensation] you're supposed to get both, and with no deduction," Purinton said. Â
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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THIS IS THE SECOND PART
Â<h1 style="">First of 133,000 disabled retirees get 'VA Retro Pay'Â Â Â Â Â Â Â </h1>
14 September 2006
By Tom Philpott
A small group of disabled military retirees this month will be the first of 133,000 to receive lump-sum back payments, which are tied to start-up challenges for two "concurrent receipt" programs enacted since 2003, say officials with the Defense Finance and Accounting Service (DFAS).
The trickle of back payments in September will become a small geyser at the end of October.Â By then, officials say, another 40,000 retirees will see their catch-up payments deposited electronically in their bank accounts by either the Department of Veterans Affairs (VA), DFAS or by both.
Back payments will vary in size from several hundred dollars up to $10,000 or more.Â The average payment, by one estimate, will be $3700.
Almost all retirees in line for the back pay served 20 or more years and all have disabilities that made them eligible for Concurrent Retirement and Disability Pay (CRDP) or Combat-Related Special Compensation (CRSC).
Pat Shine, DFAS' deputy director for operations, said from Indianapolis that a majority of the back payments will be made within the next six months, with DFAS focusing first on older cases.Â He said it could take up to six more months to calculate and pay the most complex retro pay file.Â These involve multiple VA rating adjustments since CRSC and CRDP began, shifts by retirees between these two types of payments, ex-spouse pay entitlements and any other issues that requires lengthy record searches.
DFAS officials are calling the $500 million back pay effort the "VA Retro Pay Project."Â Retirees don't need to apply.Â A "VA Retro Award hotline" has been set up to field questions from CRSC and CRDP recipients who believe they might qualify.Â That toll free number is 1-877-327-4457.
By late next week, DFAS officials hope to post a detailed explanation of the back pay program on its website at: www.dod.mil/dfasÂ
Thomas J. Pamperin, assistant director for policy with VA's Compensation and Pension Service in Washington D.C., said he and his staff have been working with DFAS for almost 18 months.Â The back pay issue, he said, is "something where neither one of us can do it by ourselves. We need a lot of information exchanged."
DFAS and VA now are "testing files that have been transferred back and forth between us," he said.Â "We are going to have a final test the last week in September to make sure that all the [software] logic is working" to identify eligible retirees and calculate retro payments.
VA figures to pay 80 percent of money owed.Â Some retirees will receive two checks, one from the VA and another from DFAS.Â Before payments are deposited, affected retirees will get letters explaining reasons for the back pay and how the amounts were calculated, Pamperin said.
Most of the shortfalls resulted from VA withholding too much disability compensation after CRSC and CRDP began.Â Traditional VA and DFAS rules on withholding failed to take account of changes to concurrent receipt law.
"What we are talking about here is a situation where people's entitlement to disability pay had a [start] date prior to the date we actually started paying it," Shine said.
The pay shortfalls can be blamed in part on the considerable complexity of CRDP and CRSC.Â Congress designed the programs to alleviate, but only for certain career retirees, a century-old ban on concurrent receipt of both military retirement and VA disability compensation.
Until CRSC began on June 1, 2003, and CRDP began on Jan. 1, 2004, all military retirees with service-related disabilities had to accept a dollar-for-dollar reduction in taxable retired pay in order to receive tax-free VA compensation for their service-related injury or illness.
CRSC allows retirees with at least 20 years of service to receive tax-free pay to replaces any offset in taxable retired pay required on receipt of VA disability compensation.Â For CRSC, retirees must have combat-related injuries or ailments and apply to their service to establish eligibility.
CRDP, on the other hand, is paid automatically if the retiree served 20 years and has service-related disabilities rated 50 percent or higher by VA.Â The full CRDP is being phased in for most of its 170,000 recipients, adding another layer of complexity to the back payment effort.Â
Retirees can be eligible for both CRSC and CRDP but can receive only one.
Before these programs took effect, Shine said, VA and DFAS didn't need to worry about tracking retroactivity of payments.Â When a retiree's VA rating was approved or raised, VA knew to withhold the additional compensation from the retiree until it got word from DFAS that military retirement had been reduced.Â This avoided government overpayments.
Retirees impacted by such withholding simply notified the IRS, on their next tax return, to treat any portion of their retired pay received after their VA benefits kicked in as non-taxable compensation.
This arrangement between VA and DFAS no longer worked â€“ and indeed it created compensation shortfalls -- after CRSC and CRDP took effect.Â Of 220,000 retirees now drawing one of these payments, 60 percent are owed back pay, and most can of that be traced to over withholding by VA.
Retirees who received retroactive pay this month represent the sampling of files that DFAS and VA used test their revised pay software and data exchange processes.Â Back payments owed to the remaining 133,000 retirees have been separated by levels of difficulty.Â The easiest to calculate, using only computers, are 40,000 files prepared for October delivery to VA.Â Pamperin said VA back payments will be made near the end of the month.
DFAS can make batches of back payments weekly, starting in October.
"Our target is to get the majority of the [back pay] population done within six months," said Shine.Â "But we also recognize that, because some of these cases are just a lot more difficult and involved, it could take as much as 12 months to get all payments completely satisfied."
and the rest... we shall see hmmmmmmmmmmmmmmm?