What if your VA benefits were deducted from your military retirement pay?

Military retirement pay

A report released August 7 by the Congressional Budget Office presented the option of ending what it calls “concurrent receipt” of benefits. This means that military service members who receive a military retirement annuity would have that military retirement pay lowered by the amount that veteran also receives in VA disability benefits compensation. Prior to 2003, military retirees were forced to choose to decline their VA disability benefits, and keep their retirement intact, or have their retirement annuity offset by their VA disability compensation. Congress, specifically Congressman Mike Michaud (D-ME), requested this report but has not yet acted on it.

This is the fifth time the CBO has presented these options to Congress as money-saving policy changes to veterans benefits. VetsHQ is concerned that veterans know what the impact of this policy option would be on each veteran, individually. By understanding the consequences of a policy change like this, you can decide if you want to support it or oppose it. There are 22 million veterans in the United States. This represents a sizable pool of people affected by the policy changes CBO lists as options. You can see a list of all the changes recommended to Congress by CBO, and the total financial “savings” CBO believes will be generated here.

In addition to the “concurrent receipt” policy option, CBO has also listed the option to tax VA disability compensation benefits. Military retirement annuities are generally taxable, while VA disability compensation is nontaxable. The calculator below lets you see the effects of both options. If you are not currently receiving military retirement benefits, visit our taxable income calculator to see what effect a policy change to tax veterans disability benefits would have on you.

Based on disability compensation cost-of-living increase of 1.7 percent, effective December 1, 2014.

About Concurrent Retirement and Disability Pay

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. A phase-in of disability offset was complete effective January 2014. You do not need to apply for CRDP. If qualified, you will be enrolled automatically, according to the Defense Finance and Accounting Service (DFAS).

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

Under these rules, you may be entitled to CRDP if…

  • you are a regular retiree with a VA disability rating of 50 percent or greater.
  • 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.
  • 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 CRDP at the time you would have become eligible for retired pay.