The Department of Veterans Affairs headquarters building as seen in Washington, D.C., on July 6, 2022. (Carlos Bongioanni/Stars and Stripes)
WASHINGTON — Roughly 100,000 veterans who received bonuses to separate from the military early have been forced to return the money in the last 10 years because they were also receiving disability benefits from the Department of Veterans Affairs, according to agency officials.
The bonuses collected by the VA total more than $2.5 billion and the numbers could increase drastically as more veterans apply for compensation through a law passed two years ago to provide benefits for those suffering from illnesses caused by toxic exposure, including burn pits.
“More veterans are filing new claims after many years,” said Marquis Barefield, assistant national legislative director of Disabled American Veterans. “I just heard from a 75-year-old disability veteran who filed a new claim. The VA went into his record and found they had never collected separation pay when he originally qualified for disability 30 years ago.”
A federal law stops the VA from paying monthly disability compensation to veterans who accepted separation benefits to exit the military voluntarily at a time when the military services drew down troop strength, agency officials said. The monthly disability compensation that a former service member was approved to receive is instead applied to repaying the bonus amount, which can be tens of thousands of dollars in some cases.
“The VA calls this double-dipping,” said 63-year-old former Army sergeant Vernon Reffitt, whose monthly VA disability compensation for a leg injury recently went from $171 per month to zero.
The VA and veterans advocacy groups said they are fielding more questions and complaints about the rule because a recent spike in claims for disability by veterans is triggering a review of veterans’ records.
In fiscal 2023, the VA recouped separation pay from more than 9,200 veterans, compared to 6,600 in fiscal 2013, according to the VA.
The DAV and other veterans groups said they oppose the VA using a veteran’s disability compensation to pay down a special separation bonus. The lump-sum separation payment is not based on or due to disabilities incurred in service, DAV said.
“Withholding a veteran’s VA disability compensation due to an unrelated military separation benefit must end,” Barefield said. “These are two totally different benefits and should be treated as such.”
John Colage of Indiana, a Navy veteran, is making that argument in a federal court.
Navy veteran John Colage, 62, has a case before the federal Court of Appeals for Veterans Claims to stop the Department of Veterans Affairs from taking back a $29,000 separation bonus that he received in 1992 to voluntarily leave the military early because he subsequently qualified for disability compensation. (John Colage)
Colage, 62, who is representing himself in the U.S. Court of Appeals for Veterans Claims, is trying to stop the VA from taking back a $29,000 taxable bonus that he received in 1992.
The federal court gave the VA until Sept. 16 to respond to Colage’s brief that states the VA acted incorrectly when it began in February to withhold his monthly disability checks as repayment of his incentive bonus.
Colage said he believes the VA has “convoluted the law” and is applying it incorrectly to justify collecting special separation bonuses from disabled veterans.
“The simplest way to state this is that we veterans are being held to a legal standard for people who later receive retirement pay, when we should be held to the legal standard for disability compensation,” he said.
The loss of the bonus can come as a surprise to a veteran who qualifies for VA compensation many years after receiving separation pay, according to the Rand Corp., a nonprofit that conducts research on veterans issues.
“Separation pay can be thousands of dollars, so it can take years to fully recoup. In the meantime, veterans with disabilities do not receive disability compensation from VA,” according to Rand.
The armed services have a history of offering special separation bonuses to reduce troop numbers, and the VA is required by law to recoup the lump-sum payments, according to Rand.
Colage, who was a petty officer first class, said he chose to leave the military after 13 years and forgo retirement pay that is typically awarded after 20 years of military service.
“I can’t stomach what the VA is doing to me and to my family,” he said. “This lawsuit should shame the VA. I have repeatedly asked for consideration on how this hurts me financially. The VA said I was wrongfully enriched by taking a separation bonus and now receiving disability.”
In 1989, Colage was aboard the USS Iowa when a gun turret on the now-retired battleship exploded during a naval exercise and killed 47 people. He left the military three years later.
Colage was in good standing with the Navy and accepted a special separation bonus in lieu of longer service and a pension. He said receiving the bonus plus disability compensation is called “concurrency,” which is not permitted. But Colage said he received his bonus in 1992 and began collecting disability compensation in 2017.
“I hardly see how that is concurrent,” he said.
Reffitt, who lives in Twin Oaks, Ga., said he received a one-time taxable payout of $38,000 in 1992 to end his military career early.
“When I left the military, the Army offered the payment as an early retirement,” he said.
Reffitt, who hauls scrap metal for a living, said he figures he will be paying back the money for the rest of his life.
“This is a part of the normal, legally required process during completion of the initial [disability] claim application,” said Terrence Hayes, the VA press secretary.
Veterans completing forms for disability compensation are asked whether they received a separation bonus and the amount, Hayes said. The money is automatically deducted in installment payments from monthly disability compensation.
More veterans are getting collection notices now because fiscal 2023 was a record-breaking year for disability claims, according to the VA.
More than 2 million claims for compensation were filed, up 40% from 2022, since the Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics Act, or PACT Act, was signed into law in 2022.
Reffitt received a notice two months ago from the VA about the collection after he applied for additional disability compensation for burn pit exposure under the PACT Act.
Reffitt, who has chronic obstructive pulmonary disease, said his new health claim was rejected. But the VA did inform him that it was docking his monthly disability checks until his $38,000 separation bonus was fully repaid.
“I started my service career in the ROTC at 17, while I was still in high school. My goal was to retire from the military. But the offer of separation pay sounded good 30 years ago,” he said. “They called this an early retirement, and my family was tired of the deployments. If I had not gotten the offer, I would have stayed 20 years for the pension.”
Rep. Ruben Gallego, D-Ariz., and Rep. Gus Bilirakis, R-Fla., sponsored a bill in 2023 that would eliminate the requirement for VA to recoup separation pay for veterans who later receive disability compensation.
Gallego said the change is important because banning veterans from collecting their monthly disability compensation over prior acceptance of separation pay that often is decades old is “shameful” and “slaps thousands of veterans with unconscionable financial penalties.”
The bill was referred to the House Committee on Veterans’ Affairs subpanel on disability assistance and memorial affairs but has yet to be considered by the group.
The DAV and other veterans organizations, which support the legislation, are not hopeful about the outcome. Barefield said veterans’ bills that come with a cost — or loss of revenue — are getting pushback and often not advancing to approval this congressional session.
“This was money I felt I had earned,” said Shane Collins of Idaho, who left the Marine Corps in 2014 because of a knee injury that kept him from re-enlisting.
Shane Collins, a 41-year-old widower with two children, left the Marine Corps in 2014 after 14 years of service. But Collins, who is 100% disabled, said he was unable to collect monthly disability payments for three years until he had repaid a $30,000 separation bonus that he was awarded upon leaving the military early. (Shane Collins)
Collins was on active duty from 2001-2005 with a deployment to Iraq before entering the Marine Corps Reserve from 2005-2006. He then returned to active duty for eight years, serving in Marine Corps communications at the Pentagon.
But upon qualifying for VA disability when he was discharged in 2014, he said he learned a $30,000 separation payment that he had accepted would be recouped.
Collins, a 41-year-old widower with two children, said he did not receive disability payments for three years until the debt was fully repaid.
“There was nothing I could do about it,” he said.
Colage is 100% disabled now due to a service-connected spine injury and post-traumatic stress disorder, a mental health condition caused by witnessing traumatic events.
He is considered unemployable by the VA, which means he cannot hold a job because of service-connected disabilities.
“I don’t live extravagantly,” said Colage, who remarried after his first wife died of leukemia in 2014. He and his second wife have four children, including a 12-year-old daughter with autism and a 9-year-old son who is deaf.
Colage said he will lose $400 a month in disability compensation, which should resume in five years.
“That’s a utility payment or car payment,” he said. “It’s an extra strain on the family. There’s zero for vets to get relief from this or to wipe the debt clean.”
