17 January 2014

Congress's New COLA 'Fix' Creates Haves and Have-Nots Among Retirees | RallyPoint.com

New COLA fixes by Congress

By Tom Philpott
Copyright 2014 Tom Philpott and Stars and Stripes

Congress has rushed to protect the medically retired and survivor benefit recipients from the cap on annual cost-of-living adjustments it approved only a few weeks ago for all “working age” military retirees.

The quick “COLA fix,” part of a massive “omnibus” funding bill for 12 federal departments, still leaves most military retirees under age 62 with future COLAs trimmed by one percent below the annual inflation rate, an erosion of retirement value set to begin in January 2016.

The fix also creates a disparity in COLA protection between separate groups of disabled retirees, critics contend.  It won’t affect retirees with conditions diagnosed and rated in service, even if the rating is as low as 0 or 10 percent for those with 20 or more years served.  Full COLAs are being restored for anyone medically retired, so-called Chapter 61 retirees.

The COLA cap remains for retirees under 62 whose service-connected disability ratings came later, from the Department of Veterans Affairs (VA).  These VA-rated disabled retirees will continue to receive full COLAs on disability compensation but not on any military retired pay they also draw.  [Only in the last decade did Congress phase out a long-time ban on “concurrent receipt” of both payments for many disabled retirees.]

Retired Army Lt. Michael Parker, an advocate for disabled retirees, said the COLA disparity from the quick fix in the omnibus bill would create “huge inequities.”  He gave a few examples.

“A fully employable Chapter 61 disability retiree rated at 0 percent [disabled] by DoD,” which occurs when a condition is recognized but not compensable, “will not be subject to COLA reduction,” Parker explained.

Yet an unemployable length-of-service retiree rated by VA, even if rated 100-percent disabled, would see the COLA cap impact their retired pay.

And so would a length-of-service retiree who sustains a severe non-service connected disability in retirement, for example, if paralyzed in a car crash, Parker said.

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