Government Demands Veteran Return $30,000 He Was Paid Decades Ago

The Department of Veterans Affairs (VA) has recently demanded that veteran Vernon Reffitt return the $30,000 that he was paid decades ago to leave theArmy.

Reffitt got an offer in 1992 to leave the Army for a lump-sum special separation benefit of $30,000, which came as the federal government was acting to cut down on the active-duty force.

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Last May, the VA started to withhold Reffitt's monthly disability payments, which he has been receiving for 30 years, until he repays his special separation benefit as required by a federal law that prohibits veterans from receiving both disability and special separation benefits. This means veterans have to pay off their special separation benefit before they can receive the disability benefit.

"That's wrong," Reffitt, a 62-year-old living in Twin City, Georgia, told NBC News on Thursday. "You can't just up and take it back."

The VA told Newsweek on Friday: "While VA is legally required to recoup separation pay from Veterans in cases like this, we recognize that this is difficult for Veterans, and we seek to work with them every step of the way to minimize the impact on their lives. We always seek to identify the need for recoupment as early as possible, and we will work directly with Veterans to support them through this process.

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The department continued: "We at VA have a team of debt management staff who work directly with Veterans in situations like this, and who can support Veterans who wish to pursue relief of any type. We encourage Veterans to learn more about this process anytime at https://www.va.gov/manage-va-debt/ or connect with a counselor by calling 800-827-0648 (TTY: 711)."

The VA can't waive recoupment of special separation benefits, however.

It said that "the secretary of the applicable branch of service may waive recoupment of voluntary separation pay," which is another type of separation pay. That is, "if the secretary determines that recovery would be against equity and good conscience or would be contrary to the best interests of the United States. Accordingly, VA does not recoup voluntary separation pay from the compensation of a veteran who has received such a waiver."

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A 2022 report by the Rand Corp., a global policy think tank, found that 2,651 veterans had their special separation benefits recouped by the VA between 2013 and 2020 because they received other VA benefits. On average, each veteran had $25,700 recouped.

Meanwhile, 72,206 veterans had their voluntary or involuntary separation pay, which are different types of separation benefits, recouped in this time frame. Of this group of veterans, an average of $19,700 was recouped per person.

The VA recouped separation pay from 9,298 veterans in the 2023 fiscal year, according to the department.

Veterans are notified of recoupment when they fill out a form known as the Veteran's Application for Compensation and/or Pension during the application process for VA disability compensation.

"There is language, contained within the form, stating that separation pay may be recouped from VA benefits. In addition, this form includes a block that is to be completed to report receipt of separation pay," the VA told Newsweek. "Further, when VA awards compensation to a veteran, the notification letter includes a paragraph explaining that separation pay must be recouped from VA compensation, when applicable."

In May 2023, Representative Ruben Gallego, an Arizona Democrat, introduced a bill, the Restore Veterans' Compensation Act, to deal with this issue.

The bill would eliminate the recoupment of separation pay, special separation benefits and voluntary separation incentive payments from Armed Forces members who receive disability pay. The act would also limit the authority of the secretary of defense to recoup these types of separation benefits from veterans who later receive retirement benefits or retainer pay.

Newsweek reached out to Gallego's office by phone for comment.

The bill has not mademuch progress in the House. It was last referred to the Subcommittee on Disability Assistance and Memorial Affairs in June 2023.