There are two types of federal benefits for disabled service which supplement military retirement pay members that were created by Congress.
In the past, military retirees with VA disability ratings were required to waive a portion of their retirement pay. It was relative to the amount of VA disability compensation they received (or vice versa). Certain programs are designed to help these veterans recover a portion of those waived retirement funds.
Until 2004, it was against federal regulations to receive VA compensation and military retirement pay concurrently. Since 2004, two federal programs have been developed that affect the amount of funds a disabled veteran is able to draw from military retirement pay and VA disability compensation at the same time:
- Concurrent Retirement Disability Pay (CRDP) is paid to qualifying military retirees with a combined VA disability rating at 50% or higher
- Combat Related Special Compensation (CRSC) is for military retirees with service-connected disability ratings of at least 10% which must be from a combat-related incident.
What You Should Know About Concurrent Retirement Disability Pay (CRDP)
CRDP was created to help qualifying retired veterans collect both military retirement pay and VA compensation. This was not permitted until 2004 when the program began operating.
Concurrent Retirement Disability Pay was phased in over time which brought eligible retiree pay higher until the phase in was completed in 2014.
Retroactive Compensation under CRDP
A retroactive payment may be due to some qualifying retirees. Under no circumstances will retroactive pay be rendered for service prior to 2004 when drawing both VA disability benefits and military retirement pay concurrently was treated differently according to federal law.
The Defense Finance And Accounting Service (DFAS) official site states that, “your retroactive payment date may go as far back as January 1, 2004, but can be limited based on your retirement date or when you first increased to at least 50 percent disability rating.”
Eligibility for Concurrent Retirement Disability Pay
To be enrolled in CRDP, the veteran must be eligible to receive military retirement compensation. Those who were medically retired under a disability retirement process may be eligible for CRDP when the following qualifying circumstances apply:
- The veteran is a retiree with a VA disability rating of 50 percent or greater.
- The veteran is a Reserve retiree with 20 qualifying years of service, who has a VA disability rating of 50 percent or greater, and who has reached retirement age.
- The veteran was retired under Temporary Early Retirement Act (TERA) and has a VA-rated disability at 50 percent or greater.
- The veteran is a retiree with a disability who earned entitlement to retired pay under any provision of law other than solely by disability. The veteran must have a VA disability rating of 50 percent or greater.
Enrolling in CRDP
No enrollment is required. Those who are eligible for this program are automatically enrolled. You cannot receive both CRDP AND Combat Related Special Compensation (CRSC). You must choose one or the other.
Those who qualify for both may, in the year of initial eligibility for these programs, be automatically enrolled in the plan that is deemed “most beneficial.” Each year there is an “open season” where retirees may elect one program or the other.
This requires the retiree to fill out a form to choose the desired program within 45 days. Veterans should know that “in subsequent years, you will need to make this determination yourself during Open Season. Open season usually takes place in January,” according to DFAS.
Tax Implications of Concurrent Retirement Disability Pay
According to the Department of Defense, CRDP is taxable with the rate similar to any current retired pay Federal Income Tax Withholding (FITW) tax rate. Consult a tax professional for more information or advice about withholding in this area.
What You Should Know About Combat Related Special Compensation (CRSC)
Combat Related Special Compensation is a federal program and not a VA benefit. It is described on the VA official site as “monthly compensation that is intended to replace some or all of their retired pay that is withheld” when the retiree receives VA compensation.
The disabilities covered under this program must be related to combat rather than overall military service. CRSC includes funds for medical issues directly related to combat operations. This also includes “hazardous service, in the performance of duty simulating was, and as a result of an instrumentality of war” according to VA.gov.
The amount of this benefit is directly related to an evaluation process assigned to combat-related disabilities. The benefit received under this program must not exceed the amount of retirement pay withheld from the veteran as a result of VA disability compensation.
Tax Implications of Receiving Combat Related Special Compensation
The Defense Finance and Accounting Service states that CRSC is non-taxable. Consult a tax professional for more information or advice about this benefit as it relates to state or federal tax law.
Payment Procedures for Combat Related Special Compensation
Combat Related Special Compensation is paid in a similar manner to military retirement pay. It is transferred on the first business day of each month and paid in the manner the veteran has opted to receive his or her retirement pay. If the veteran receives a paper check or direct deposit for retirement pay, CRSC will be delivered in the same way.
CRSC is not permitted to be divided between a retiree and a former spouse but IS subject to collections and/or garnishment.
Qualifying Criteria for CRSC
You may apply for Combat Related Special Compensation if you meet the VA criteria for this benefit:
- Military Retirees with 20 or more years of service are eligible to apply, including Chapter 61 Medical Retirees, National Guard members or Reservists with 20 years of service
- Veterans with a combat-related VA disability rating of 10% or higher
- A VA disability directed related to the receipt of a Purple Heart
Retroactive Pay of CRSC
Depending on circumstances, retroactive payment of this compensation (as far back as June 2003) may be possible. It may be limited based on one or more of the following:
- The retiree’s overall CRSC start date
- Purple Heart eligibility
- Retirement date
- Retirement law issues (disability or non-disability)
- Six-year barring statute
- Disability retirees with less than 20 years of service are automatically limited to a retroactive date of January 1, 2008.
- All retroactive pay is limited to six years from the date the VA awarded compensation for each disability.
Because the compensation program is not run by the Department of Veterans Affairs, but rather via the DoD, service members must apply by submitting a completed DD Form 2860 via the veteran’s branch of military service. Contact your branch for submission requirements and instructions:
- S. Army (U.S. Total Army Personnel Command) 1-866-281-3254
- Navy/Marine Corps (Naval Council of Personnel Boards) 1-877-366-2772
- Air Force (United States Air Force Personnel Center) 1-866-229-7074
- Coast Guard (U.S. Coast Guard Personnel Service Center) 1-866-772-8724
Remember, a veteran may be eligible for one or both of these programs, but cannot be paid by both. You must choose one or the other during the open season period which is usually held in January. Veterans may be automatically enrolled in either CRSC or CRDP initially depending on which program is deemed “most beneficial” to the retiree at the time.
Enrolling in CRSC
Military retirees should submit a CRSC application under the following circumstances:
- You may be eligible for CRSC and have never applied
- You have applied and been approved for CRSC, but you have more medical issues that may qualify for the program
- The Department of Veterans Affairs has added disabilities to your VA rating that might qualify.
There are certain medical conditions associated with Agent Orange that have been added since this program started that may make a retiree eligible for CRSC compensation:
- Ischemic Heart Disease
- Parkinson’s Disease
- Hairy Cell Leukemia
- Other chronic B-cell Leukemia
Any retiree with a VA rating that includes one or more of these conditions should apply or reapply for CRSC.
Important Documentation to Submit When Applying for CRSC
There are a variety of documents you may be required to submit to support your claim. They include:
- Retirement orders and/or DD Form 214
- 20-year letter or statement of service (for Reservists)
- VA records
- Any relevant medical records
- VA ratings and/or award letters
- Purple Heart award citations
Submission criteria, required evidence and/or documentation may vary depending on the branch of service.
Special Provisions for Individual Unemployability
The DFAS official site informs veterans that eligibility for “full concurrent receipt of both your VA disability compensation and your retired pay” may be possible for retirees who meet the other eligibility criteria AND have both of the following applicable to them, retroactive to 1 January 2005:
- Veteran is rated by the VA as unemployable, generally referred to as Individual Unemployability (IU)
- The veteran receives VA disability compensation as a result of IU
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