The 30-second version
For years, retirees approved for CRSC were told their backpay could only reach back six years, no matter how long they'd actually been eligible. The government justified that cap using a law called the Barring Act. In Soto v. United States, decided June 12, 2025, the Supreme Court ruled 9–0 that the Barring Act's six-year limit does not apply to CRSC. The CRSC statute has its own settlement authority, which displaces the Barring Act. Translation: CRSC backpay can now reach all the way back to your original date of eligibility — often well beyond six years — and it's still paid tax-free.
Why this matters: For a retiree eligible since, say, 2008, the old rule capped backpay at six years. Under Soto, that same retiree may now recover the full window — potentially tens of thousands of additional tax-free dollars that the six-year cap would have erased.
What actually happened in Soto v. United States
Simon Soto, a retired Marine medically separated in 2006 after service in Operation Iraqi Freedom, was later diagnosed with PTSD connected to his combat service. When he applied for CRSC in 2016, the Navy approved his eligibility but limited his retroactive payment to six years, citing the Barring Act (31 U.S.C. § 3702), which generally bars payment of government claims older than six years.
Soto challenged that limit, arguing the CRSC statute (10 U.S.C. § 1413a) contains its own mechanism for settling and paying claims — so the Barring Act's generic six-year rule shouldn't override it. The Supreme Court agreed. In a unanimous opinion authored by Justice Thomas, the Court held that because the CRSC statute confers authority to settle CRSC claims, it displaces the Barring Act's settlement procedures and limitations period. The six-year cap was gone.
Veterans' legal organizations described it as a "massive" win, affecting a class of more than 9,000 combat-disabled retirees across all branches who had been wrongly limited to six years.
From the August 2025 cutoff to the May 2026 reversal
A Supreme Court ruling sets the law, but DoD has to tell DFAS and the branch boards how to apply it — and that implementation took three tries.
August 20, 2025 — Interim guidance. DoD ordered the boards to stop applying the Barring Act and to find and pay the “Pre-Soto Population” — retirees whose awards had been capped at six years — according to the statute. But the same guidance limited retroactivity for applications filed on or after that date.
January 30, 2026 — Clarifying guidance. DoD refined the framework but kept the limits on post-cutoff applications. NVLSP and Sidley Austin filed a class action in the U.S. Court of Federal Claims — Ploe v. United States — challenging those limits.
May 14, 2026 — Retraction. DoD withdrew the 2025–26 limitations. The branches must now set CRSC effective dates as the statute directs — back to the first date all conditions were met (subject to the statutory start dates of June 1, 2003; January 1, 2004; or January 1, 2008) — and DoD says it will review the records of veterans affected by the earlier guidance and issue revised, corrected decisions.
The practical takeaway: the full retroactive window is open under current guidance — but litigation continues, the review of earlier decisions is just beginning, and the rules have changed three times in twelve months. What protects you through all of it is a packet that documents the earliest date of eligibility and preserves every argument for retroactive payment in writing.
Why the date your eligibility began is the whole ballgame
Two retirees, both approved for $1,500/month in CRSC. One was found eligible in 2009; the other in 2023.
- Under the old six-year cap: both recover at most six years of backpay — roughly $108,000 — and the 2009 retiree's earliest 9+ years simply vanish.
- After Soto and the May 2026 guidance: the 2009 retiree may recover the full window back to eligibility — well over $250,000 in tax-free backpay — while the 2023 retiree's amount is unchanged because they were already inside six years.
Illustrative only. Actual backpay depends on your eligibility date, rating, retirement type, and your branch board's determination. Standfast does not guarantee any amount.
What this means if you've never filed for CRSC
If you're combat-disabled and have never filed, Soto raises the stakes of doing it right. The benefit was always worth claiming; under current guidance an approved claim’s backpay reaches back to your date of eligibility — for many retirees, far beyond the six years everyone assumed was the ceiling. But a bigger potential payout only matters if the packet proves combat-related causation and pins down the correct date of eligibility — the two things branch boards scrutinize hardest. If your packet gets the category wrong or leaves the eligibility date vague, you can win the claim and still lose most of the backpay Soto just unlocked. And because the implementation rules are still in litigation, every packet should preserve its retroactivity arguments in writing.
This hits one group especially hard. Chapter 61 medical retirees and others who became eligible early — and who can't fall back on CRDP — often have the longest backpay windows of all, because their entire retired pay was being waived for years. For them, Soto can turn a six-year cap into a full-career recovery of tax-free dollars they were previously shut out of.
What this means if you were already approved and capped
If you were approved before and your backpay was limited to six years, you may fall into the Pre-Soto Population whose effective date is supposed to be recalculated. This is worth reviewing carefully — the recalculation isn't always automatic or correctly applied, and the difference can be substantial. This now also applies to retirees whose awards were limited under the August 2025 / January 2026 interim rules — DoD has said those decisions will be reviewed and corrected, but “supposed to be recalculated” and “recalculated correctly” are not the same thing.
One more thing worth doing now: even for claims that fall under the going-forward rules, it's smart to build a packet that documents the earliest possible date of eligibility and preserves every argument for retroactive payment. If future guidance or litigation expands the window further, a well-preserved record is what lets you capture it. Locking that language in is part of how we build every Standfast packet.
Frequently asked questions
What did Soto v. United States actually decide?
On June 12, 2025, the Supreme Court ruled 9–0 that the Barring Act's six-year limit does not apply to CRSC backpay, because the CRSC statute has its own settlement authority. CRSC backpay can now reach back to the original date of eligibility.
How far back can CRSC backpay now go?
Back to the first date you met all CRSC eligibility conditions, subject to the program's statutory start dates (June 1, 2003; January 1, 2004; or January 1, 2008). For long-eligible retirees that can be well beyond the old six-year cap.
Is CRSC backpay taxable?
No. CRSC — including the retroactive lump sum — is paid as federally tax-free compensation.
I was already approved and capped at six years. Do I need to reapply?
If you were limited to six years under the old rule, you may be part of the Pre-Soto Population whose effective date should be recalculated. It's worth reviewing your award carefully to confirm the recalculation was applied correctly.
Sources: Soto v. United States, No. 24-320 (U.S. June 12, 2025); National Veterans Legal Services Program (NVLSP); U.S. Department of Defense interim CRSC guidance (Aug. 20, 2025). This article is general information, not legal advice.