This is the latest update on compat related special compensation. As of May
14, 2003. However, keep in mind DoD has yet to publish the regulations. We
expect they will be released May 31, 2003.
During hearings on the FY 2003 Defense Authorization Act House and Senate
Armed Services Committee leaders, fearful of a veto that would have killed
the whole FY2003 Defense Authorization Act, convinced the Administration to
accept a reduced package focused on retirees with disabilities due to
combat, combat-oriented training or certain other hazard-related
circumstances.

Committee leaders believed they had little choice in taking what they saw as
the only possible route to any progress on concurrent receipt last year. In
essence, the deal established a new form of "special compensation" for
certain disabled retirees who have at least 20 years of active duty or a
combination of active duty time and reserve points comprising the equivalent
of 20 years of full-time active duty. Unfortunately, very few Reserve
retirees qualify under this strict criterion.

The amount of the special compensation will be the full amount of retired
pay forfeited due to receipt of VA compensation for a qualifying disability.
Unlike the special compensation already in law (which provides $50 to $300
per month for certain severely disabled retirees), the new version will not
be capped at a specific dollar amount, and will rise each year as the offset
rises. Unlike the current $50 to $300 special compensation, which requires
that a qualifying disability must have occurred within 4 years after
retirement, eligibility for the new version will not be restricted by any
time limit. Qualifying members will be eligible to receive either the "new"
or the "old" special compensation amount, whichever is higher. The effective
date for the new program is May 2003, with payments being made June 1, 2003.

Qualifying retirees will have to apply for the new special compensation.
There will be no phase-in or ramp-up period. Qualifying payments will be
paid as of the effective date. Veterans who are denied this benefit will
have the right to appeal.

There are two sets of qualifying disabilities, one more complicated than the
other. On the simple side, any qualifying retiree with a disability rating
of 10% or higher that is associated with award of a Purple Heart will be
eligible for the new special compensation. Under this rule, the special
compensation amount will be based on the disability rating awarded for the
combat wound. For example a veteran who stepped on a mine and had to have
the great toe amputated with removal of metatarsal head would receive 30%
from VA and 30% from DoD, which for a single veteran would be $310 from VA
and $310 from DoD or $620 per month and both would be tax free.

The other, more complicated, eligibility rule covers retirees awarded
disability ratings of 60% or higher for other illnesses/injuries
attributable to combat situations, combat-oriented training, hazardous duty,
or instrumentality's of war. The legislators based these categories on the
Defense Department's current definition of "combat-related" disabilities, as
described in DoD Instruction 1332.38, which can be downloaded at
< http://www.dtic.mil/whs/directives/corres/ins1.html >. The following is a
summary of the descriptions in that instruction, which presumably will be
used to guide DOD eligibility, decisions for the new program.
* Direct result of armed conflict: including a war,
expedition, occupation of an area or territory, battle, skirmish, raid,
invasion, rebellion, insurrection, guerrilla action, riot, or any other
action in which Service members are engaged with a hostile or belligerent
nation, faction, force, or terrorists.

* While engaged in hazardous service: including, but not
limited to, aerial flight duty, parachute duty, demolition duty,
experimental stress duty, and diving duty.

The other, more complicated, eligibility rule covers retirees awarded
Disability ratings of 60% or higher for other illnesses/injuries
attributable to combat situations, combat-oriented training, hazardous duty,
or instrumentality's of war. These categories are based on the Defense
Department's current definition of "combat-related" disabilities, as
described in DoD Instruction 1332.38. The following is a summary of the
descriptions in that Instruction, which presumably will be used to guide DOD
eligibility, decisions for the new program.

* Direct result of armed conflict: including a war,
expedition, occupation of an area or territory, battle, skirmish, raid,
invasion, rebellion, insurrection, guerrilla action, riot, or any other
action in which Service members are engaged with a hostile or belligerent
nation, faction, force, or terrorists.

* While engaged in hazardous service: including, but not
limited to, aerial flight duty, parachute duty, demolition duty,
experimental stress duty, and diving duty.

* While engaged in hazardous service: including, but not
limited to, aerial flight duty, parachute duty, demolition duty,
experimental stress duty, and diving duty.

* Under conditions simulating war: resulting from military
training, such as war games, practice alerts, tactical exercises, airborne
operations, leadership reaction courses, grenade and live fire weapons
practice, bayonet training, hand-to-hand combat training, rappelling, and
negotiation of combat confidence and obstacle courses (does not include
physical training activities, such as calisthenics and jogging or formation
running and supervised sports).

* Caused by instrumentality of war (incurrence during a period
or war is not required): includes such causes as wounds caused by a military
weapon, accidents involving a combat vehicle, injury or sickness caused by
fumes, gases, or explosion of military ordinance, vehicles or material.
(i.e. DoD example - an injury resulting from a fall on the deck of a ship
while participating in sports would not normally be covered, since the sport
activity, not the ship, caused the fall. But it would be covered if the
operation of the ship caused the fall.)

Clearly, these guidelines allow for some judgment, so it's uncertain how
many people may qualify. However, it has been estimated that up to 35,000
eligible retirees, with cost estimates ranging from $4 billion to $9 billion
over 10 years.
The new Defense Authorization Act specifies that the Defense Department will
be responsible for applying the above criteria to determine which VA
disability awards qualify for the special compensation.

In discussing the issue on the House floor prior to passage, some
legislators voiced concern that Agent Orange, PTSD and the Gulf War Syndrome
would be covered. To date DoD has indicated they will include PTSD and Agent
Orange related injuries however, Gulf War undiagnosed illness remains to be
decided.

The VFW and other military organizations agreed with the Armed Services
Committees that the authority outlines above are preferable, by far, to the
alternative of getting nothing. But it falls far short of what most believe
is fair, and still leaves many, many thousands of disabled retirees having
to pay for their own disability compensation