A federal law has mandated nearly 122,000 disabled veterans in the past 12 years to return payouts they received to leave the military when it needed to downsize, totaling tens of thousands of dollars. This law prohibits veterans from receiving both disability and special separation pay, throwing many veterans into financial hardship. The U.S. Department of Veterans Affairs had to recoup special separation payments from over 17,000 veterans in the 2018 fiscal year, the highest annual amount so far. The number of recoupments steadily increased until the PACT Act was signed into law in 2022, which then caused the number of recoupments demanded to grow in 2023.
The VA is legally required to recover special separation benefits from veterans before they can receive disability payments. Some veterans, like Shawn Teller and Vernon Reffitt, had been receiving both benefits without penalty until the error was caught when they filed PACT Act claims. The VA has not tracked how many errors have been caught since the PACT Act was enacted.
Veterans have the ability to pursue a waiver of their recoupment responsibilities for certain special separation benefits, however, the standards are high and have led to confusion. The law has been criticized by advocates, who argue that special separation pay and disability pay are unrelated and should not be linked financially. Veterans have had an average of $19,700 to $53,000 withheld due to the recoupment law, causing financial strain for many who rely on these benefits.
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