Congress and the Bush administration have agreed to a $22.1-billion deal over ten years that will pare back dramatically a century-old ban on "concurrent receipt" of both military retired pay and tax-free disability compensation for injuries or illnesses traced to time in service.
Up to 200,000 disabled retirees with 20 or more years of service, including reserve and National Guard annuitants, will see their incomes rise-for many, by hundreds or even thousands of dollars a month.
The deal, expected to be passed as part of the 2004 Defense Authorization Bill, targets combat-related disabled and the most severely disabled with noncombat injuries or illnesses. In effect, these veterans no longer will see retired pay reduced by amounts they receive in disability compensation from the Department of Veterans' Affairs (VA).
Congressional leaders announced the agreement on 16 October at a Capitol Hill press conference after weeks of negotiations between senior House Republicans, the White House, and Senate Republican leaders.
The deal effectively divides 550,000 disabled military retirees with 20 or more years of service into three categories and boosts the monthly income of two of them, They are:
* Combat-Related Disabled. Retirees with combat-related disabilities, regardless of severity, would become eligible on 1 January 2004 for combat-related special compensation (CRSC). CRSC, an income-replacement program begun last June, no longer would be limited to retirees with combat-related disabilities rated at least 60%.
CRSC is not retired pay, but replaces retired pay lost when retirees begin drawing VA disability compensation. Unlike retired pay, however, CRSC payments are tax exempt.
Disabilities will be judged combat related if they resulted from armed conflict, combat training, hazardous duties, or an "instrumentality of war," which can include, among other things, Gulf War illnesses or ailments from exposure to Agent Orange. Persons suffering post-traumatic stress disorder also can be eligible if it is shown to be combat-related.
* Concurrent Receipt for Seriously Disabled. Retirees with disabilities rated 50% or higher would see reductions in retired pay from accepting VA compensation restored over ten years.
The first installment, on 1 January 2004, was expected to be $750 a month for 100% disabled, $500 for 90%, $350 for 80%, $250 for 70%, $125 for 60%, and $100 for 50%. Disabilities do not have to be combat related. Indeed, retirees with a mix of combat-related and noncombat disabilities will have to choose whether to accept tax-free CRSC for combat-related ailments alone, or allow retired pay to be restored through the phase in of concurrent receipt. They will not be able to receive payments under both programs.
Steve Strobridge, director of government relations for the Military Officers Association of America, said it is too early to know how defense officials will administer the programs. Retirees will get help in determining whether they are better off applying for CRSC or accepting concurrent receipt. Some who have a mix of combat and noncombat related disabilities, however, could see the better choice change from year to year, particularly during the ten-year phase in, and as disabilities are reevaluated and taxable income rises or falls. Perhaps retirees will be allowed to select what program they want to be under from year to year, he said.
A rough estimate is that 200,000 disabled retirees will benefit from the deal, which will include reserve and National Guard members. Under CRSC, they no longer will face a hurdle of 7,200 retirement points to qualify.
Left out are retirees with no combat-related disabilities and those whose VA disabilities are below 50%. They will continue to see retired pay reduced by an amount to match VA disability pay.
House leaders insisted that the deal include a presidential commission next year to study VA and military disability programs and to recommend reforms. That could include tightening rules for future generations of veterans, but a dramatic change would not be predetermined as under an earlier draft agreement by House Republicans. It was not clear whether potential savings from such a review already were anticipated in calculating the cost of the deal. Lawmakers last week, however, talked about a $30-billion price tag over ten years.
For eligible retirees, the agreement is a stunning victory, given last year's veto threat by the Bush administration and continued opposition to relaxing the ban on concurrent receipt from senior defense officials.
Negotiations were led by Representatives Roy Blunt (R-MO), majority whip, and Duncan Hunter (R-CA), chairman of the House Armed Services Committee. Representative Michael Bilirakis (R-FL) was a key player, having led the fight for concurrent receipt for years. Even Republicans acknowledged a critical push toward a deal from Representative Jim Marshall (D-GA), who sought to force a vote on a full concurrent receipt bill through use of a rare discharge petition. With Republicans Walter Jones (NC) and Tom Tancredo (CO) having already signed the petition, House leaders got serious about a deal.
Representative Lane Evans of Illinois, ranking Democrat on the House Committee on Veterans' Affairs, urged veterans' groups to reject the deal because not all disabled retirees will benefit.
"This is no victory for veterans," he said.