WASHINGTON – Today U.S. Sen. Mark R. Warner (D-VA) pressed the Department of Veterans Affairs (VA) and Department of Defense (DoD) on policies that are impacting former servicemembers in Virginia who have received military separation pay and are later deemed eligible for disability benefits. Under U.S. law, the cost of separation payments received prior to being deemed eligible for veteran’s disability must be repaid before the veteran can begin receiving benefits. However, many former servicemembers have reported that they were not made aware of this policy at the time of separation, and as a result are facing unexpected financial hardship when the disability pay they are counting on to make ends meet is withheld in order to recoup the earlier payment.

“Multiple constituents have reached out to my office for help on this matter after applying for and receiving disability retirement benefits only to learn they will not receive payments until their separation pay has been completely recouped by the federal government. While I recognize that this recoupment is required by law (10 U.S. Code § 1175a), I would like information about how the Department of Veterans Affairs (VA) and the Department of Defense (DoD) are implementing this policy in practice,” wrote Sen. Warner today in a letter to Secretary Bob McDonald and Secretary Ashton Carter.  “As my constituents have indicated to me, and as has been reported in the press, many former servicemembers say that they were never made aware that their separation pay would have to be paid back once they are deemed eligible for disability payments. Those who have voluntarily separated because of a financial incentive to do so might have reconsidered their voluntary separations if they had known the separation pay might later have to be reimbursed.”

Warner pressed the Secretaries on what policies are currently in place to educate servicemembers at the time of separation about the recoupment requirement if they are later deemed eligible for disability pay, and about the process for granting a repayment waiver in cases of financial hardship.

“Separation pay is intended to help ease the transition from service to civilian life, but for veterans who learn only after the fact that the cost of their military separation pay will be deducted from the disability benefits for which they are eligible, it can in fact be a source of additional and unexpected stress for their families,” Sen. Warner noted, requesting a response from the Secretaries about what policies are in place to ensure veterans are able to plan accurately for their financial futures.  

The full text of today’s letter is available below.

October 20, 2015

The Honorable Ashton Carter

Secretary of Defense                                                               

U.S. Department of Defense                                                  

1000 Defense Pentagon                                                           

Washington, DC 20301                                                          

The Honorable Robert McDonald

Secretary of Veterans Affairs

U.S. Department of Veterans Affairs

810 Vermont Ave, NW

Washington, DC 20420

Dear Secretary Carter and Secretary McDonald:

I am writing to you today regarding the recoupment of Voluntary Separation Incentive (VSI) and Special Separation Bonus (SSB) pay from former servicemembers who later become eligible for disability pay through Veterans Affairs.  Multiple constituents have reached out to my office for help on this matter after applying for and receiving disability retirement benefits only to learn they will not receive payments until their separation pay has been completely recouped by the federal government. 

While I recognize that this recoupment is required by law (10 U.S. Code § 1175a), I would like information about how the Department of Veterans Affairs (VA) and the Department of Defense (DoD) are implementing this policy in practice. As my constituents have indicated to me, and as has been reported in the press, many former servicemembers say that they were never made aware by either DoD or the VA that their separation pay would have to be paid back once they are deemed eligible for disability payments. Those who have voluntarily separated because of a financial incentive to do so might have reconsidered their voluntary separations if they had known the separation pay might later have to be reimbursed.

Many of these former servicemembers are counting on disability payments to make ends meet and face financial difficulties as a result of the unexpected recoupment. While policy allows veterans to appeal to have the debt reduced in cases of urgent financial hardship, many of them have reported that this process is bureaucratic, complex, and overly cumbersome.

In light of this, I have several questions regarding this policy:

• What policies are currently in place to ensure that servicemembers are made aware that they will have to pay back their separation pay in the event that they later become eligible for VBA disability pay?
• Does DoD or the VA require a separating servicemember to sign any documentation acknowledging that separation payments would have to be reimbursed under those circumstances? 
• How many veterans have been impacted by this recoupment so far? How many were voluntarily separated? Involuntarily? How much money has been returned to the federal government as a result of all recoupments?
• How many veterans have declined veteran’s benefits after learning they would be required to repay separation pay?
• Under what circumstance might a veteran be eligible for a waiver of this recoupment?

Separation pay is intended to help ease the transition from service to civilian life, but for veterans who learn only after the fact that the cost of their military separation pay will be deducted from the disability benefits for which they are eligible, it can in fact be a source of additional and unexpected stress for their families. I thank you for your attention to this matter, and I look forward to your response.

Sincerely,

Mark R. Warner

United States Senator