Disabled Military Retirees to Receive Back Pay | AccountingWEB

Disabled Military Retirees to Receive Back Pay

The first group of disabled military retirees will soon receive back pay owed them, thanks to legislation that allowed the payments but inadvertently created complicated accounting challenges.


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Now that the Defense Finance and Accounting Service (DFAS) and Department of Veterans Affairs have sorted out the requirements and transactions, 133,000 military retirees will start receiving checks averaging $3,700, syndicated “Military Update” columnist Tom Philpott wrote.

The retroactive payments are owed to half of all the retirees who have disabilities that made them eligible for Combat-Related Special Compensation (CRSC) and Concurrent Retirement and Disability Pay (CRDP) since Congress started those programs in 2003 and in 2004.

The two “concurrent-receipt” programs reversed a previous ban on receiving military retirement pay and disability compensation from Veterans Affairs at the same time. The change means disabled military retirees with 20 or more years of service no longer had their military retirement pay reduced by the amount of their VA disability compensation.

Traditional VA and DFAS rules on withholding failed to account for changes in the concurrent-receipt law, and as a result, too much disability compensation was withheld, Philpott wrote.

The VA and DFAS had to work out a new arrangement for making and tracking the payments. Retirees who received retroactive pay this month represent a sampling of files that DFAS and VA used to test their revised pay software and data exchange processes, according to Military Update.

Affected retirees will get letters explaining reasons for the back pay and how the amounts were calculated.

"Our target is to get the majority of the (back pay) population done within six months," said Pat Shine, DFAS deputy director for operations. "But we also recognize that, because some of these cases are just a lot more difficult and involved, it could take as much as 12 months to get all payments completely satisfied."

DFAS officials plan to soon post a detailed explanation of the back-pay program at www.dod.mil/dfas.

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