Retirees will benefit from new laws

By Tom Philpott

When legislative language misfires, Congress can intend to do one and instead does another. That seems to have occurred twice last October with passage of the 2005 National Defense Authorization Act (NDAA). It likely reshaped benefits, in unintended ways, for two groups of disabled retirees.

One provision, which executive-branch lawyers continue to study, appears to award “accelerated concurrent receipt’’ to 28,000 military retirees with disability ratings of less than 100 percent but who are rated “IU,’’ or unemployable, by the Department of Veterans Affairs.

A final legal determination is pending. But a knowledgeable Defense official said the “statutory language seems to mandate’’ that these retirees be treated the same as 23,000 other retirees rated “100-percent disabled.’’ As a result, a group twice as big as expected likely will see military retired pay in the form of Concurrent Retirement and Disability Pay — fully restored effective New Year’s Day, rather than phased in over the next nine years.

A second provision of the NDAA adopts a fairer formula for calculating disability retirement for activated National Guard and Reserve personnel.

In contrast to the IU matter, however, the initiative to benefit mobilized reservists, at least for now, is written in a way that helps far fewer members than lawmakers hoped. In fact, it leaves behind most Guard and Reserve members who have been seriously wounded in war.

Here are details on the two provisions:

“HIGH 3” RESERVISTS — National Guard and Reserve personnel injured while on active duty, and awarded disability retirement on or after Oct. 28, 2004, will have their pay calculated using a more generous formula.

The change was proposed by Defense officials after seeing a disturbing disparity in disability retirement between active duty members and activated reservists injured in Iraq and Afghanistan.

The problem is linked to the “High-3’’ retirement formula that applies to any member who first entered service on or after Sept. 8, 1980. Those who joined earlier, and who serve 20 years, see their annuity based on a percentage of “final’’ basic pay. Retirees under High-3 see annuities based on a percentage of average basic pay over their highest-three earning years, which usually are their last three years of active service.

But three years’ active service for a mobilized Guard and Reserve member, to calculate disability retirement, can mean going back to period of service when basic pay was set far below current pay levels. This can sharply lower the value of disability retirement compared to active duty colleagues. Indeed, older, more experienced reservists wounded in Iraq can receive disability pay only half the size of that provided to injured active duty peers.

With the NDAA, Congress stepped in to require that disability retirements be computed for High-3 Guard or Reserve members as though they had served their last three years on active duty. But the law wasn’t written, officials discovered, so it could be applied retroactively to reserve members injured since the war on terrorism began Sept. 11, 2001.

Knowing that was the intent, Defense lawyers and policymakers reviewed the language carefully over the last two months. They found no way to interpret it more broadly. In late December, officials issued guidance to military finance centers to apply the more favorable High-3 formula only to disability retirements on or after Oct. 28, when the law was signed.

It’s too early to assure disabled reservists that the new Congress will vote to move the effective date back to 9/11. But it clearly is out of sync as written with another 2005 NDAA change, this one directing that the more favorable High-3 formula be used to recalculate survivor benefit to families of reservists who died on active after September 10, 2001.

“IU” RETIREES — As reported here a few weeks back, lawyers from the Defense Department and other agencies were studying whether the NDAA provision to restore full military retirement to 100-percent disabled retirees in January should be interpreted broadly, to apply to retirees who have lower-rated disabilities but are deemed “IU’’ or unemployable.

At the end of December, Defense officials awaited a final legal opinion.

But one senior official said, “I believe the law is clear. We pay.’’

The “accelerated CR’’ initiative had originated in the Senate. A staff member there said senators assumed it applied only to retirees with 100-percent disability ratings, if they had 20 or more years or had retired under temporary early retirement authority used during the post-Cold War drawdown. Cost estimates from the Congressional Budget Office, used by a House-Senate conference committee in shaping a final NDAA, assumed accelerated CR would apply to the smaller 100-percent disabled population.

But again, it seems, legislative intent will be tripped up by the actual language of law, in this case to the delight of 28,000 unemployable retirees.

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at:
milupdate@aol.com