VA resumes collection of debts from benefits overpayments, medical co-pays

Veterans Affairs officials resumed debt collections this weekend for individuals who were overpaid disability and education benefits or owe co-payments for medical visits, ending a suspension of the debt program put in place at the start of the coronavirus pandemic.

The move means that veterans who owe the department money will start receiving debt notifications in coming days, with information on how to repay and what financial assistance programs may be available to them.

However, VA officials said that they won’t start deducting those debts from monthly benefits payouts until January 2022, to give individuals time to prepare for the financial impact of the moves.

About 600,000 veterans are expected to be impacted by the move. Of that group, about half have made payments to VA since the debt collection suspension was announced in April 2020. The rest have made partial payments, or entered into a repayment plan.

VA officials said money owed to them totals about $1.13 billion.

Debt collections were paused by the department as part of a series of changes that the department put in place to respond to the then new pandemic threat.

Many of those office closings and program suspensions have been rolled back in recent months, as the number of staff and patients throughout the VA system have gotten vaccinated and returned to normal business operations.

In a statement, VA leaders said they will “continue to provide relief options such as extending repayment plans, waivers and temporary hardship suspensions during these challenging times. It has been and will remain a priority of the department to work individually with each veteran.”

Officials said that all veterans who owe debts related to compensation and pension benefits payouts will be automatically put in a 36-month repayment plan starting in January.

In cases where individuals have small benefits payouts and large outstanding debts, the money withhold could erase their entire monthly allowance. But officials called those “rare cases” and said officials from VA’s Debt Management Center would work with all individuals to ensure those moves do not cause financial harm.

For education debts, the department will “recoup benefits payouts to cover the debt instead of instituting an automatic repayment plan.” Officials said the reason for that approach is to ensure student veterans don’t face significant debt after graduation.

Veterans can apply to defer collection action until the end of fiscal year 2022 — which is Sept. 30, 2022. In some cases, veterans can also appeal to have their debts reduced or erased completely.

Individuals with questions about debts owed because of benefits overpayments or mistakes can call the VA Debt Management Center at 1-800-827-0648 for more information.

Individuals with medical repayments should manage those issues through the Health Resource Center, available at 1-866-400-1238.

Additional details are also available on the department’s web site.

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