Federal law has required almost 122,000 disabled veterans to return lump-sum payments they received for leaving the military when it downsized. This has caused sudden financial hardship for many veterans, with some owing thousands of dollars and needing to cut back on expenses. The Department of Veterans Affairs has been recouping special separation payments from veterans, with the highest number of recoupments occurring in fiscal year 2018.
The law prohibits veterans from receiving both disability and separation pay, resulting in veterans having to repay funds they thought were rightfully theirs. Errors have been identified in the processing of claims, with some veterans receiving benefits for years before being asked to repay.
The number of recoupments has fluctuated over the years, with a recent surge in 2023. The VA has stated that these recoupments are part of the normal process when completing initial claim applications. They have also acknowledged errors in detecting separation pay amounts and have made efforts to prevent such errors in the future.
Unique exceptions to the law allow for waivers for certain special separation benefits, but the standards are high and can be confusing. Advocates argue that the law unfairly links unrelated benefits and robs veterans of earned compensation. Despite the challenges, the VA has stated that veterans applying for benefits under the PACT Act are more likely to see their benefits increase rather than decrease.
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