Concurrent

Retirement and

Disability Pay

About the Firm:

Fighting Exclusively

for Veterans’ Rights

Legal Help ForVeterans, PLLC is a lawfirm dedicated toassisting our Nation’sveterans receive theveterans disabilitycompensation towhich they areentitled based on theirservice to the country.

The law firm has beenassisting veteranssince 1998. Our legalstaff has decades ofexperience in dealingwith medical disabilitymatters and employsa network of medicalspecialists, manyformer military

physicians, who canensure your claim hasthe best likelihood ofsuccess. Our staffincludes formerofficers and enlistedpersonnel, health careprofessionals, anddedicated individuals.

We have anacclaimed nationalpractice representingveterans from acrossthe country. Thisrepresentation occursat the United StatesCourt of Appeals forVeteran Claims, theBoard of VeteranAppeals, and theregional officesthroughout thecountry.

Over the years, LegalHelp For Veterans hasbecome a trustedname in the legalcommunity forproviding services to

veterans. Our lawyersare regularly asked bylaw schools, barassociations, andveterans’ serviceorganizations tolecture and trainothers to practice inthis area.

Brigadier General

Carol Ann Fausone

(ret.)Brigadier General Carol

Ann Fausone (ret.) served

for over 36 years with the

U.S. Air Force and

Michigan National

Guard. As a nurse, her

duty assignments took her

around the country, and

the world, assisting

commanders with troop

readiness.

Table of Contents

Overview…………………………………………………………………………………………

Overview H.R.303……………………………………………………………………………….

Concurrent Retirement and Disability Pay (CRDP)…………………………………..…………

Concurrent Receipt Pay Example ………………………..………………………………………

Combat-Related Special Compensation (CRSC)……………………………..…………………

CRSC Eligibility……………………………………………………………….….…………......

Choosing CRDP or CRSC………………………………………………………….……………

Factors to Consider………………………………………………………….……...……………

Guard and Reserve Issue: Medical Retirees……………………………………………...…….

Tax Issues…………………………………………………………………...………………..…

1

2

4

5

6

7

8

9

10

11

Overview

For more than 100 years before 1999, all disabled military retirees were required to fund

their own veterans’ disability compensation by forfeiting one dollar of earned pay for each

dollar received in veterans’ disability compensation.

Since 1999, Congress has enacted legislation to progressively expand eligibility criteria for

relief of the retired pay disability offset and reduce the burden of financial sacrifice on

disabled military retirees.

To comply with this law, veterans who are eligible for both service retired pay and VA

disability compensation simultaneously are required to waive (give up) part of their service

retired pay. The amount the veteran receives in VA compensation is subtracted from the

amount they receive in retired pay to avoid so-called “double-dipping.” This subtraction is

referred to as the VA Waiver.

Concurrent retirement and Disability Pay (CRDP) allows military retirees to receive both

military retired pay and Veterans Affairs (VA) compensation. This was prohibited until the

CRDP program began on January 1, 2004 and became completely effective January 2014.

For a long time, this was the end of the story for retired veterans who were also disabled.

But now, certain veterans qualify for what is called “concurrent receipt.” Concurrent receipt

is the restoration of service retired pay that has been withheld by the VA waiver. There are

two forms of concurrent receipt: Concurrent Retired and Disability Pay (CRDP) and

Combat-Related Special Compensation (CRSC).

The two benefits serve the same function – restoring all or part of the VA waiver – but each

has different eligibility requirements, application processes, and funding sources. In

instances where veterans are eligible for both benefits, it can be hard to know which

concurrent receipt benefit to choose.

1

Overview

Retired Pay

Restoration

Act

(H.R. 303)

The purpose of H.R 303 is to

amend title 10, United States

Code, to permit additional retired members

of the Armed Forces who have a service-

connected disability to receive both

disability compensation from the

Department of Veterans Affairs for their

disability and retirement pay from the

Department of Defense (DOD).

It is the sense of congress that military

retired pay earned by service and sacrifice

in defending the united states should not be

reduced because a military retiree is also

eligible for disability compensation

awarded for service-connected disabilities.

Congress has authorized full concurrent

receipt for all qualifying retirees with 100

percent disability rating and all qualifying

retirees with combat-related disability

ratings, while phasing out the disability

offset to retired pay over 10 years for

retired members with non combat-related,

service-connected disability ratings of 50-

90 percent.

In the House of Representatives on January

8, 2019, H.R. 303 was introduced and

referred to the committee on armed forces

and the committee on Veterans’ Affairs

regarding an amendment to veteran

retirement. This bill dies if not passed by

the House and Senate and signed by the

President.

2

Under the current VA disability

offset program, you must waive

a portion of your retirement pay

if you wish to receive VA

disability compensation. This is usually a

smart move, because VA disability

compensation is considered non-taxable

income, whereas military retirement pay is

taxable income. You are required to make

this decision if you are a retiree with a VA

disability compensation rating of 40% or

less.

If Defense Finance Accounting Service

(DFAS) finds that you are also due a

retroactive payment from the VA, DFAS

will forward an audit to the VA. They are

responsible for paying any money they may

owe you.

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

If H.R. 303 becomes law after January 1,

2020, additional retired members of the

Armed Forces who have a service-

connected disability will be permitted to

receive both disability compensation from

the VA for their disability and either retired

pay by reason of their years of military

service or Combat-Related Special

Compensation the phase-in period under

current law with respect to such concurrent

receipt will be eliminated.

Overview

Retired Pay

Restoration

Act

(H.R. 303)

3

Concurrent Retirement and

Disability Pay (CRDP)

To be entitled to CRDP:

▪ You must be eligible for retired pay to qualify for CRDP.

o You are a regular retiree with a VA disability rating of 50 percent or greater

o You are 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

• In most cases the retirement age for reservists is 60, but certain reserve retirees may

be eligible before they turn 60.

• If you are a member of the Ready Reserve, your retirement age can be reduced below

age 60 by three months for each 90 days of active service you have performed during

a fiscal year

▪ You are retired under Temporary Early Retirement Act (TERA) and have a VA disability

rating of 50 percent or greater

▪ Even if you were placed on a disability retirement, but would be eligible for military retired

pay in the absence of the disability, you may be entitled to receive CRDP if:

▪ You are a disability retiree who earned entitlement to retired pay under any provision of law

other than solely by disability, and you have a VA disability rating of 50 percent or greater. You

might become eligible for CRPD at the time you would have become eligible for retired pay.

▪ There is no combat-related factor for CRDP eligibility

▪ Unfortunately, medical retirees (Chapter 61 retirees) with less that 20 years of service are not

eligible for CRDP.

▪ CRDP will be applied automatically and your VA waiver will be eliminated.

4

Concurrent Receipt Pay Example

This is a simple example of a retired E-7 with 20 years service. The base pay for an E-7,

according to the 2014 pay scale, would be $4,372. At 50%, the retirement pay would be

$2,186. The following chart shows how valuable this benefit is (assuming the retiree elects to

waive a portion of his or her retirement pay in order to receive the VA disability pay, which is

tax exempt.

5

0% disability: Base pay = $2,186

10% Disability: $2,055 Base Pay, $131 VA Disability Pay; $2,186 Total

20% Disability: $1,927 Base Pay, $259 VA Disability Pay; $2,186 Total

30% Disability: $1,785 Base Pay, $401 VA Disability Pay; $2,186 Total

40% Disability: $1,610 Base Pay, $576 VA Disability Pay; $2,186 Total

50% Disability: $2,186 + $822 = $3,008

60% Disability: $2,186 + $1,041 = $3,227

70% Disability: $2,186 + $1,302 = $3,488

80% Disability: $2,186 + $1,526 = $3,712

90% Disability: $2,186 + $1,714 = $3,900

100% Disability: $2,186 + $2,858 = $5,044

Combat-Related Special

Compensation (CRSC)

CRSC is a version of concurrent receipt for veterans whose disabilities are combat-related.

Unlike CRDP, CRSC does not eliminate the VA waiver. The VA waiver (an amount equal to

your total VA compensation) will continue to be subtracted from your service retired pay. But

CRSC reimburses all or some of your VA waiver in a separate check from your branch of

service.

Thus, veterans receiving CRSC will get three separate checks each month. From DFAS, a

check for service retired pay with the full VA waiver amount subtracted; from VA, a check for

your full VA compensation; and from your branch of service, a check for your CRSC

reimbursement.

However, if your VA compensation amount is greater than your total retired pay, you may only

get 2 checks each month: one for your VA compensation and one for your CRSC payment. You

would not receive a retired paycheck in this case because the VA waiver, which is subtracted

from retired pay, completely eliminates the retired pay. And, unlike CRDP, CRSC is a

reimbursement of your VA waiver rather than a restoration of your VA waiver in the form of

retired pay. Because it is not considered retired pay, the CRSC payment is tax-free.

It is important to note that CRSC may not reimburse the full amount of the VA waiver if only

some of the veteran’s service-connected disabilities are combat-related. For example, the

veteran’s branch of service may determine that only 40% out of your 60% overall rating is

considered combat-related (because of the way your disabilities were incurred), in which case

they would reimburse only the amount of VA compensation you would receive for a 40%

rating.

Similar to CRDP, personnel who retire from the military with a service disability rating may

not be reimbursed the full amount of the VA waiver in their CRSC payment.

6

CRSC Eligibility

Unlike CRDP, CRSC is not automatically applied to eligible veterans. For CRSC, you must

apply to your branch of service. Your branch of service determines what proportion of your VA

disability rating is combat-related and award you a CRSC rating. That CRSC rating

determines the amount of additional money you will receive each month.

Eligibility criteria differ slightly for each branch of service, mostly in how they interpret the

term “combat-related.” But for all branches of service, veterans must be receiving both service

retired pay and VA disability compensation. Unlike CRDP, there is no minimum rating

requirement for CRSC to kick in. Veterans with 0% (non-compensable) ratings are not eligible

because they are not receiving VA compensation and thus have no retired pay offset.

7

Choosing CRDP or CRSC

You cannot receive CRDP and CRSC at the same time. If you are eligible for both CRDP and

CRSC, there are two ways you can go about selecting one or the other:

▪ Automatic selection of the grater amount – If you are already receiving CRDP and then

become eligible for CRSC (after applying with your branch of service), DFAS will assess

which of the programs will pay you the greater amount. They will automatically pay you

this greater amount. Many veterans will choose to stick with the benefit that pays the

greater amount, and this requires no additional action. But there are a few reasons you may

want to select a different program.

▪ Voluntary switch during the open season – If you prefer to switch programs after DFAS’s

initial assessment, you will have the opportunity to do so once a year. Every December,

DFAS will mail you an open-season election letter. The letter contains information about

the different amounts you would receive under CRDP or CRSC, and the potential impact

of each on your taxes. You will be ale to select one benefit or the other on the form

included in the letter. If you would like to continue receiving the benefits you currently

receive, there is no need to fill out the form

Open season may be particularly important if your VA ratings or CRSC rating (what

percentage of your disabilities are considered combat-related) changes mid-year. A change in

ratings (increase or decrease) could make one of the benefits more valuable than the other.

8

Factors to Consider

When given the opportunity to choose CRDP or CRSC, it can be challenging to make an

informed decision. Many veterans will simply want to accept the benefit that will give them

the greater amount of money, but there are a few other factors that should be considered,

especially if your CRDP and CRSC amounts are close to equal.

*Otherwise, your branch of service will determine what percentage of your disabilities are combat-

related and you will be reimbursed for only that percentage

9

CRSC CRDP

Full concurrent receipt?Yes

Only if ALL of your

disabilities are combat-

related*

Required minimum VA

disability rating 50% 10%

Application required? Yes – with branch of

service.No – automatically applied.

Taxable? Yes No

Subject to division by

divorce courts (USFSPA

division)?

Yes No

Retroactive payments? Yes – May go back to June

1, 2003

Yes – May go back to June

1, 2004

Guard and Reserve Issue:

Medical Retirees

Regular Guard and Reserve retirees cannot receive retired pay until age 60. So, even if these

veterans are receiving VA compensation before age 60, they will not be eligible for CRDP or

CRSC until they turn 60 and start receiving retired pay and VA compensation simultaneously.

For Guard and Reserve members who are medically retired before reaching age 60, however,

eligibility for CRDP in particular can be confusing. Even though medical retirees do not

receive retired pay before age 60, certain medical retirees will still not be eligible for CRDP

before age 60 . The reason comes down to the difference in how “years of service” are

calculated for regular Guard and Reserve retirement and for medical retirement.

To be eligible for CRDP, veterans must have 20 or more years of service. For regular Guard

and Reserve retirement, your total “years of service” are calculated by adding your “active

years” (on active duty) with your “drilling years.” For medical retirement, your “years of

service” are calculated based only on your active duty years.

So, for medical retirees who have less than 20 years of active service, but 20 or more years of

combined drilling and active service, eligibility can feel complicated. Unfortunately, the

medical retirees in this “gray area” are not yet eligible for CRDP, but will become eligible

when they turn 60. This is because, under medical retirement, the veteran is considered to

have less than 20 years of service, so DFAS and VA make the same assumption for CRDP

purposes. At 60, the veteran can include the total time for their Guard and Reserve retirement

(active years and drilling years), and would be considered to have 20 or more years of service,

thus meeting the eligibility criteria for CRDP.

10

Tax Issues

CRDP is taxed. CRSC is not. These simple facts can lead to some pretty complicated tax

issues, especially when veterans are awarded CRSC or their VA ratings change mid-year.

When VA or DFAS approve these changes, the changes are often implemented retroactively.

So, as a simple example, a veteran whose overall VA rating was increased from 50% to 70%

might receive retroactive payment of all the benefits he or she would have received, back to

an effective date that the VA determines.

When a veteran is receiving CRDP and is then awarded CRSC, CRSC benefits are often

retroactively applied. But the retroactive implementation of CRSC also means a retroactive

removal of CRDP. Because the CRPD benefits were taxed but CRSC is not, veterans may be

able to claim a federal tax refund for the year in which CRSC was awarded and for the years

it was retroactively applied.

11

Conclusion

This is a confusing area of VA regulations. You should consult a Veteran Service Officer

(VSO) knowledgeable in this area. This e-Book is not providing legal advice but simply

information. The failure to pass H.R. 303 will change some of the information provided in

this e-Book.

11

“It is Our Duty to

Protect Those Who

Protected Us.”

-Brigadier General

Carol Ann Fausone (ret.)

41700 W. Six Mile Road, Suite 101

Northville, MI 48168

800-693-4800

www.legalhelpforveterans.com