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VETS' COMMISSION GETS EARFUL ON SURVIVOR

 BENEFITS -- VDBC urged to end offsets

in survivor payments.

 

 

Story here... http://www.heraldnet.com/
stories/07/03/03/100bus_philpott001.cfm

Story below:

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Veterans disability pay under review

Tom Philpott
Military Update

Army Sgt. Maj. Keith Witt had been a soldier 29 years when illness forced him to retire in 1993. The Department of Veterans Affairs rated him fully disabled with multiple sclerosis, and later with cancer presumed to have been caused by exposure to the defoliant Agent Orange in Vietnam.

Witt had signed up for the military Survivor Benefit Plan for his wife, Kay. His retirement pay was reduced by 6.5 percent a month to pay for its premiums.

By 1997, Keith's condition had worsened to a point that Kay retired early from her federal civilian career to be his full-time caregiver. She estimates the decision reduced her pension by about half.

When Keith died in 2001, Kay became eligible for a survivor annuity equal to 55 percent of Keith's retirement pay. Because Keith had died of service-related illnesses, she also was eligible for Dependency and Indemnity Compensation from the Department of Veterans Affairs.

Here, however, is the catch. To accept dependency compensation of $1,067 a month, the law requires an equal cut in survivor pay. Premiums that were paid for the portion of survivor benefits that disappear are returned to the widow.

This offset affects 59,000 military survivors and simply isn't fair, Witt and other widows told the Veterans' Disability Benefits Commission last week. The two payments have distinct purposes, they said.

Dependency pay, which is tax-free, compensates for a service-related death and the resulting economic loss. Survivor pay is like life insurance. Kay qualified for it only because her husband bought it for her with monthly premiums.

"It would be illegal if a civilian company did that - refunded your premiums, without interest, and said, 'You know, we've changed our minds. We don't want to pay this,'" she told me.

The benefits commission is examining all facets of the veterans disability system. A final report is due in October. But the commission could decide what it will recommend regarding the offset within a month or two.

The commission staff presented three options:

* Endorse the offset and continued partial refunds of survivor benefits.

* Recommend eliminating the offset for all recipients, including survivors of members who die in service.

* Recommend eliminating the offset only for survivors of retirees who paid survivor premiums before their death. Under this option, the offset would continue to affect survivor payments for deaths in service.

Edith Smith, widow of a retired Marine officer who died in 1998 after disabled for many years by a severe heart ailment, said the Gold Star Wives group strongly supports the second option and strongly opposes the others.

"To change nothing is unconscionable," Smith said.

The common argument against ending the offset is the cost, $6 billion to $8 billion over its first 10 years. Because it's an entitlement change that doesn't help recruiting or retention, Defense officials argue, it's an imprudent step to take, particularly in wartime with defense costs rising.

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Larry Scott  --