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Disability Compensation from Veterans Affairs

After being medically discharged or retired from the military, most soldiers are encouraged to also seek compensation from the Veterans Administration (VA). This process is just as confusing and drawn out as the process with the Army.

My husband submitted his packet to them at the same time that his medical packet was presented to the MEB. For months following that, we received letters every few weeks that basically stated ‘we haven’t forgotten about you but we’re swamped with cases that need to be reviewed’. We joked that if they spent as much time reviewing cases as they did sending those letters, their backlog may not be quite as large.

He went for his evaluation by the VA in the fall. During the evaluation with the VA, it is important to note that they do not go by what the Army has done. While that information can be added to your record, they conduct their own evaluations (there is talk of this being combined but as of this writing, it has not). Also, the VA evaluates everything that possibly could have happened to you during your time in the service. You are not limited to only filing for the disability that created your discharge or retirement. It’s also important to note that you do not have to be medically discharged or retired from the military in order to file with the VA. Their rating and compensation system is separate from the Army.

In December (eight months later), we received the letter in the mail that his rating had been established and he would begin receiving X amount per month in compensation. The kicker is that you cannot receive payments from the VA and the Army. Also the Army payments are taxable whereas the VA payments are not.

When we received this, the VA let the Army know of the decision as well. By doing this, it reduced the amount of pay received by the Army and he now receives a check from both the VA and the Army. If at some point, the VA quit paying him, then his Army check would revert back to the previous higher amount he was being paid. If for some reason the Army quits paying him, then his VA check will continue unless he is also reevaluated by them as well.

It’s easier to explain this with examples. These are not real numbers and are not based on true compensation. I just used round numbers to make it easier to explain.

Scenario A:

Soldier is receiving $1000/month from the Army as retirement pay, which is taxable. The VA awards him $400/month, which is non taxable. The maximum amount he can receive is $1000. So from this point forward, he will receive two checks. He will receive a check from the Army for $600 before taxes ($1000 – $400) and he will receive a tax free check from the VA for $400 for a total of $1000. So now instead of paying taxes on $1000/month, he only pays taxes on $600/month. If for some reason, the VA discontinued their pay, he would begin receiving $1000 from the Army again. If the Army discontinued their pay, he would continue to receive $400 from the VA.

Scenario B:

Soldier is receiving $1000/month from the Army as retirement pay, which is taxable. The VA awards him $1200 a month which is tax free. He will receive $0 pay from the Army and will receive a tax free check of $1200/month from the VA. If for some reason the VA discontinued his compensation, he would again receive $1000/month from the Army. If the VA reduced his compensation below $1000, it would play out the same as Scenario A

While permanent retirement pay from the Army is just that – permanent; VA compensation can change if you request another evaluation. This evaluation can result in your VA compensation remaining the same, increasing or decreasing. If the VA decides to change your compensation, it does not change your Army retirement pay as they are two separate systems. It will only effect it as described above in scenarios A & B.

There are some exceptions where soldiers are eligible to receive the full amount from the Army and the VA. This applies to soldiers who retired from time in service and have received a certain disability rating from the VA. It is referred to as Concurrent Retirement and Disability Payment (CRDP) Program.

Also, as with everything in the Army, there are exceptions to whether the medical retirement pay is subject to federal tax.

For more information, visit the VA’s website at www.va.gov.

About the author: Stacey is an Army wife of a soldier who joined in 2003. He has since been medically retired but she continues to provide information to Army wives and families to make their adjustment to the Army lifestyle easier. Connect with Stacey: Facebook Twitter Pinterest

{ 10 comments… add one }
  • Don Burbage October 25, 2010, 6:53 pm

    It appears you did not take into consideration of the 50 percent rule. If a person that retired from the military is found by the VA to be 50 percent disabled or more than he is entitled to the full VA disability pay and his retirement check. If he is less than 50 percent disabled then he essentially gets the tax break on on his retirement check by using your explanation. Thanks, Don

  • Michael Bohannon April 12, 2011, 9:26 pm

    The one thing about retirement checks, it also depends on the state you reside in. Some states do not tax medical retirements up to a certain amount. Check your state and see.

  • Connie November 19, 2011, 10:57 pm

    @ Don. The 50% rule currently applies to those who have retired after serving 20 or more years.

  • daniel January 28, 2012, 10:23 pm

    Hello,
    Here is my issue i was medically retired above 50% combat related from the army in 2009 during my medical retirement process wich was through ft drum the entire time i was under the impression that disabled veterens were to recieve both there retirement and va disability and was told this and never told other wise including from aw2 advocates so i did my va claim and was well above army percentage and from apr 09 to jan 12 i was recieving both here is the kicker and i even let my aw2 advocate know that i recieved both and never said a thing to me about this and believe me im not the only one that this has happened to recently well now i know i was not supposed to reciev both wich is wrong and an entirely diffrent rant believe me but now dod retirement is starting to deduct what they paid me from my va benefits wich is just fine i owe the money in the current status of the medical retirement system so i will pay it what i would love to understand is why this is happening to multiple veterens and why the army is not making absolute sure injured vets know this before even proceeding the system is broken and it needs fixed sorry for the rant but i had to get it out there and let other veterens know as well before the same happens to them

  • Jason April 19, 2012, 5:20 pm

    Question for a friend: I have a friend who got out for “mental issues” back in 2001 or so. He is now Finally claiming his VA Disibility. Can or will he get back pay from the time he was discharged from the Army to now? Thanks for the help! =)

  • Glen May 1, 2012, 8:42 pm

    I’m a retired 20 year verteran. I was just awarded 40% by the VA. I had thought you were able to recieve compensation along withyour retirement but was told that up until president Obama, you could not recieve both. President Obama changed it to where you could recieve both, but only if you were rated 50% or more.
    I was told I would only get the 40 % (560 a month) and lose my retirement pay!!! I’m losing 2/3 of my income!! Did I understand that correctly? If so, I need revert back to my retirement pay. Someone please let me know if this is true.

    Thanks-

    • Stacey May 7, 2012, 9:49 pm

      Check this link: http://www.dfas.mil/retiredmilitary/disability/crdp.html

      You shouldn’t lose you retirement pay. It will be offset by your VA pay. So say you get $1,000 in retirement from the Army and $560 from the VA. Total compensation can’t be over $1,000 (the higher of the two) except in certain circumstances (link above). You will get $560 from the VA and $440 from the Army. So you don’t lose pay, you just don’t necessarily get any additional. The benefit is that the VA pay is not taxable whereas the Army pay is – so in the end, it comes out a little better.

  • Stephanie Rohling September 9, 2012, 1:04 pm

    My husband was honorably discharged from the Marines in 2000. He had a disibility rating of 20%. He has never recieved disability benefits. He was told he may qualify for backpay. This was told to him and a request sent on August 8th. How long should it take to recieve a decision from the VA on the backpay and also to start recieving his monthly disability check?

  • lester bailey April 11, 2013, 11:17 am

    can I receive both the med discharge and the va check

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