The Biden Administration is forcing U.S. military veterans to immediately pay back tens of thousands of dollars in disability and separation payments, in an attempt to recoup those losses, leaving thousands bankrupt.
Most of these affected veterans were given single, lump-sum payments to leave the military during cutbacks that led to the downsizing of active-duty personnel, reported CNBC.
Many are currently disabled or are senior citizens who left the armed services decades ago and are unable to afford the financial losses on such short notice.
A little-known federal law has been used by the Department of Veterans Affairs to force almost 122,000 disabled veterans over the last 12 years, to return thousands of dollars in payouts they received back to the government.
One item in the law prohibits veterans from receiving both disability and special separation pay, but veterans advocates claim that it leaves many blindsided and robs them of two types of earned benefits that should technically not be linked.
Legislators in Washington have yet to pass any bills to address this issue, which has left thousands of veterans being thrown into sudden financial hardship.
Rep. Ruben Gallego, (D-AZ) introduced legislation that would change the federal law in 2022, but progress so far in the House has been slow.
“It is costly,” Gallego told NBC News, explaining “that’s kind of been the biggest hindrance of why I can’t get it through.”
According to a 2022 study by the RAND Corporation, an average of $19,700 to $53,000 was withheld from veterans by the VA for recoupment from 2013 to 2020.
After 2014, when recoupments hit 7,500, numbers held steady at around 12,000 before surging again in fiscal year 2018, according to the VA.
That year, the VA took back special separation payments from more than 17,000 veterans, compared to about 12,400 in 2017.
For the next three fiscal years, the number of veterans having to pay back the VA, declined annually until the PACT Act was signed into law in August 2022.
The bill expanded disability benefits to millions of veterans exposed to burn pits and other toxic substances while in the service, but caused recoupment demands from the VA to spike to almost 9,300 in 2023 from 7,940 in 2022.
As of the end of June 2024, the VA said it already had recouped payments from more than 8,920 veterans.
VA press secretary Terrence Hayes told NBC News, that the department would not speculate on the surge in recoupments, but that they were legally bound to recover special separation benefits from veterans first before those eligible could start to receive disability payments.
He suggested that a rise in disability claims was the reason for the rise in recoupments and noted that veterans who applied for PACT Act benefits were far more likely to receive benefit increases than cuts in payments.
He further noted that the Veterans Benefits Administration began scanning all veterans’ service and medical records into electronic files in 2021, which “reduces the likelihood of this situation reoccurring."
Hayes said that the VA received a total of 2.3 million compensation claims from veterans in 2023, a 42 percent increase from the year before.
“Fiscal year 2023 was a record-breaking year for VA,” Hayes continued and said that there was "no concerted effort to increase recoupment. Instead, it is a part of the normal, legally required process during completion of the initial claim application which asks claimants if they received a separation bonus and the amount received."
According to the VA, veterans have the option to waive recoupment rules for only certain special separation benefits under the law, but many are confused by the required paperwork and procedures to apply for a waiver.
The VA also states that the secretary of each service branch must determine that “recovery would be against equity and good conscience or would be contrary to the best interests of the United States” for a veteran to receive a waiver for voluntary separation pay.
These waiver applications are few and many are regularly denied, NBC News reported, with only six waivers being granted since 2016, all from the Air Force.
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