On June 6, 2024, enthusiastic fans dressed in U.S. Army World War II uniforms parade through Utah Beach as part of the “D-Day” commemoration event marking the 80th anniversary of the Allied landings in Normandy during World War II.
Loik Benans | AFP | Getty Images
New data obtained by NBC News shows that over the past 12 years, about 122,000 disabled veterans have been required by federal law to return tens of thousands of dollars in payments they received when they were discharged from the military.
The statistics come amid renewed calls to change a little-known law that would prevent veterans from receiving disability benefits and special retirement benefits at the same time, two one-time lump-sum incentives given to service members when the U.S. was forced to reduce its active-duty military.
“Nobody knows they’re doing this to so many people,” said Vernon Reffitt, who was told to repay the $30,000 he received after being discharged from the military 30 years ago.
The recall action has left many veterans in a state of sudden hardship. One said it would take nearly 15 years to pay off his debt. Another said he had to cut back on unnecessary expenses because his wife, who works full-time, was considering another job to make ends meet.
The U.S. Department of Veterans Affairs said it had to collect special separation payments from more than 17,000 veterans in fiscal year 2018, the highest annual total to date. The total is up from about 12,400 the previous year, but the reason is unclear.
According to VA statistics, the number of claims declined nearly every year until the PACT Act, a measure that would extend benefits to millions of veterans exposed to burn pits and other toxic substances while serving, was signed into law in August 2022. In fiscal year 2023, claims requested by veterans would increase from 7,940 in 2022 to nearly 9,300.
VA spokesman Terrence Hayes said the agency could not speculate on why the numbers were going up or down. He said the VA is legally required to collect special separation payments from veterans before eligible individuals begin receiving disability benefits.
At least two veterans who have been receiving both benefits for years said they discovered the error only after VA submitted its PACT Act claims.
Shawn Teller received a one-time lump sum payment of about $10,700 to leave the military when the U.S. was forced to reduce its active-duty force in 1996. Then in 2012, the veteran, who served for about eight years, including during Operation Desert Storm and Operation Desert Shield, began receiving monthly disability payments for an old knee injury.
He filed a PACT Act claim for asthma in the summer of 2023, and the VA approved it, raising his disability rating slightly. But the benefits didn’t last long. A few months later, the VA sent him a letter saying he shouldn’t have been able to receive both disability and separation benefits without penalty for the past 12 years.
“It was something that someone overlooked at the time, but they’re just noticing it now,” said Teller, 55, of Walnut Creek, California.
The VA said it would withhold Teller’s monthly disability benefits, which amount to about $586, starting in July until he repays his retirement benefits.
“I depend on this paycheck every month,” Teller said. “It’s not right.”
Likewise, NBC News reported that Reffitt, who had served in the military, began receiving disability benefits in 1992, the same year he received special retirement benefits.
But after Reffitt filed a PACT Act claim for chronic obstructive pulmonary disease (which was denied), the VA began withholding his monthly disability payments in May until he paid back $30,000. At age 62, it would take him nearly 15 years to do so.
“This is wrong,” said a Twin Cities, Georgia, resident.
‘No cooperative effort’
The VA said it had to collect separation benefits from about 6,700 veterans in fiscal year 2013, the earliest for which data is available, the lowest number in 12 years. The total increased slightly to about 7,500 in fiscal year 2014, the data show. It then remained at about 12,000 for the next three fiscal years before jumping to more than 17,000 in fiscal year 2018.
VA was required to recover retirement benefits from 8,130 veterans in fiscal year 2020 and 8,550 veterans in fiscal year 2021.
The number of recoveries is expected to drop further in fiscal year 2022, then spike in 2023. As of late June, VA said it had already initiated recoveries for more than 8,920 veterans this fiscal year.
During the haze A VA spokeswoman said she could not speculate on the reasons for the dips and spikes in the annual tally, saying disability claims were up. In fiscal year 2023, when the VA had to collect retirement benefits from about 9,300 veterans, Hayes said the agency received a total of 2.3 million claims, a 42% increase from 2022.
“Fiscal year 2023 has been a record year for VA,” he said. “There is no concerted effort to increase the amount of the recovery. Instead, this is part of the normal, legally required process when filing an initial claim, which asks claimants whether they received a separation bonus and how much they received.”
Hayes said the number of cases the VA has processed over the past five years has consistently been low, less than 1 percent of the total number of disability claims or beneficiaries. He said more than 5.6 million veterans received compensation in 2023.
Hayes said veterans who apply for PACT Act benefits are much more likely to see their benefits increase rather than decrease.
It’s unclear how many recall errors like Teller’s and Reffitt’s have been detected since the PACT Act was enacted. VA says it doesn’t track such cases.
In Reffitt’s case, the VA said it “did not know the amount” of his retirement benefits when he began receiving disability benefits in 1992, and thus erroneously allowed him to collect both benefits without penalty for more than 30 years.
VA said it discovered errors when Reffitt filed her claim under the PACT Act and should have followed up on her attempts to determine the amount of the separation and initiated recovery sooner.
The agency said Teller’s retirement payments went undetected until 2023 because she either failed to indicate on her previous VA forms that she had received the benefits or failed to file a claim within a year of filing her intention to claim the benefits.
Hayes said in 2021, the Veterans Benefits Administration began scanning all veterans’ service and medical records into electronic files, which “will reduce the likelihood of something like this happening again.”
A unique exception to the law
Veterans have the opportunity to seek a waiver of liability for certain special segregation benefits under the law, but even then, the bar is high and confusing.
To obtain a waiver of voluntary retirement benefits, the VA says the secretary of the service must determine that “recovery would be contrary to equity, good faith, or the best interests of the United States.”
Officials said at least six have been approved so far.
The Air Force says some members signed “incorrect” affidavits of interest when they left active duty between 2007 and 2014. The forms incorrectly stated that if they were later eligible for disability benefits, they would be exempt from receiving them, said Lt. Col. Erica Yepson, an Air Force spokeswoman.
The Air Force said it has granted waivers to at least five veterans affected by the error since fiscal year 2016, when it changed how it tracks the data.
Yepsen denied the other 17 requests, but said in those five cases “it was determined that waiving the recovery was consistent with fairness and good faith.”
Yepsen said the Air Force also approved a waiver request for a sixth veteran “because of the individual’s disability and inability to earn an income.”
The Navy, Marine Corps and Coast Guard said they did not know who requested the exemption for the recovery. Navy spokesman Charlie Spirtos said the service approved reducing the amount of disability benefits withheld when it recovers voluntary retirement benefits in 2023.
The military did not respond to a request for comment.
Advocates argue that the law not only harms veterans, but also deprives them of benefits that should not be financially tied to them.
While special discharge pay is paid based on a soldier’s military service and is calculated based on years of active duty service, disability pay applies only to illnesses or injuries sustained while on duty, said Marquis Barefield, assistant national legislative director for DAV, an advocacy group formerly known as Disabled American Veterans.
“The two payments have nothing to do with each other,” Barefield said. “They are two separate accounts.”
According to a 2022 study by the nonprofit research group RAND Corporation, veterans had between $19,700 and $53,000 withheld on average from 2013 to 2020.
In 2022, Arizona Democratic Rep. Ruben Gallego introduced legislation to change the recovery law, but legislative progress was slow. “It’s expensive, and that’s the biggest hurdle I can’t get through,” he said.
