Does Continuation Pay Apply to National Guard
Concurrent Retirement and Disability Pay (CRDP), also known as Concurrent Receipt, allows military retirees to receive both a full military retirement pension and full VA Disability compensation benefits, provided they meet eligibility requirements (listed below).
The CRDP program, which began on January 1, 2004, replaces the VA disability offset, which was previously required by law (and still is for some retirees). There is a 10-year phase-in period in which military retirement pay was increased 10% each year until the recipient began receiving full military retirement pay (there was no phase-in period for retirees with a VA disability rating of 100%). The phase-in period lasted until January 2014.
Concurrent Receipt Replaces the VA Disability Offset
The VA disability offset requires military members to waive part of their military retirement pay in order to receive VA disability compensation benefits. Retirees are required to waive retirement pay up to the amount of VA Disability compensation they received (for retirees who have a VA disability rating of 40% or lower).
The exception is retirees who have a VA disability rating of 50% or higher, in which case they are eligible for Concurrent Receipt, in which they can receive full military retirement pay and full VA disability pay.
Retirees can elect not to waive military retirement pay and forgo receiving VA disability pay. However, waiving military retirement pay makes sense because the VA disability benefit is a non-taxable benefit, and military pensions are taxable income. Receiving VA disability pay will help retirees receive a larger net income.
Concurrent Receipt Eligibility
Military retirees qualify for concurrent receipt under the following conditions:
- You are a regular military retiree with a VA disability rating of 50 percent or greater.
- You are a retiree of the Guard or Reserves with 20 or more Good Years, have a 50% VA disability rating, and have met retirement age (60 in most cases, but some Reservists are eligible for early retirement).
- You are retired under Temporary Early Retirement Act (TERA) and have a VA disability rating of 50 percent or greater.
- You are medically retired under Chapter 61 with 20 years or more and a 50% or greater VA disability rating.
- 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.
The Disability rating of 50% or greater is the primary qualifier for retirees. If you have a disability rating that is lower than 50%, then you will not qualify for the Concurrent Receipt benefit. However, there are other programs which you may qualify for, including the Combat-Related Special Compensation (CRSC) program, which also replaces the VA disability offset program.
The primary requirement for the CRSC program is having a 10% or higher combat-related disability. Examples of qualifying disabilities for the CRSC program include training that simulates war, hazardous duty, armed conflict, and instrumentality of war (weapons, combat vehicles, Agent Orange, etc.).
Individual Unemployability & Concurrent Receipt
You are eligible for full concurrent receipt of both your VA disability compensation and your retired pay if you are a military retiree who meets all of the above eligibility requirements in addition to both of the following:
- You are rated by the VA as unemployable, generally referred to as Individual Unemployability (IU)
- You are in receipt of VA disability compensation as a result of IU
This is effective October 1, 2008, and is retroactive to January 1, 2005.
Applying for Concurrent Receipt
In most cases, you do not need to apply for Concurrent Receipt. It should be automatically applied to your paychecks. However, there may be times when your situation changes and the system doesn't automatically take this into account. In most cases, you will be eligible for retroactive back pay. Determining back pay will require an audit from DFAS and the VA.
DFAS states they will pay any retroactive benefits within 30-60 days of receipt of you're your first CRDP monthly payment. If their audit determines you should be eligible for a retroactive payment for the VA then they will forward the results of their audit to the VA, which is responsible for making the VA disability benefits payment.
Retroactive pay limitations: Your retroactive pay can only go back to January 1, 2004, which is the first date concurrent receipt was available. However, DFAS will only go back to the day you first received a 50% disability rating. If your 50% disability rating was made retroactive, then your eligibility will extend to that date, provided it isn't before January 1, 2004.
Example: The VA has begun extensive reviews of disability benefits ratings for military personnel from the Vietnam Era. Many veterans have begun receiving retroactive disability benefits for Agent Orange exposure and related illnesses, and PTSD. If you are a military retiree who received retroactive disability compensation, then you may be eligible for retroactive back pay for the Concurrent Receipt program.
Other examples of retroactive pay would be someone who retired and began receiving VA disability compensation some months later, after their disability compensation package was approved. In many cases, this can take some months.
Retroactive awards may also be common for those whose disability claim was denied, then later approved on appeal.
Value of Concurrent Receipt Pay
Under the 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.
Those who qualify for concurrent receipt are eligible to receive both benefits in full. The value of this is enormous. You can use the Retired Disability Pay Estimator to get an accurate value of your retirement benefit, but we'll also walk you through an example,
Simplified example: Let's make 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):
- 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
Notes about these assumptions:
- All military retirement benefits are considered taxable income (some states may not tax retirement benefits or other income, but the federal government does).
- All VA Disability Compensation Benefits are non-taxable income at all levels
- The disability benefits are for a retiree with no dependents. The Concurrent Retirement and Disability Pay benefit is worth much more when the retiree has dependents.
Takeaway: having a VA disability rating is valuable for your retirement. A disability rating of 40% or less will offset taxable income with non-taxable income, which will result in large tax savings. A VA disability rating of 50% or larger is worth considerably more over the long run. You can run a similar scenario with your own situation to get an idea of what concurrent receipt would be worth for your specific situation, based on your retirement pay, years of service, and VA disability rating.
The Future of Concurrent Retirement and Disability Pay
There has been talk of extending the Concurrent Retirement and Disability Pay benefit to all military retirees with a VA Disability compensation rating of 10% or higher. Unfortunately, the recent budget problems have shelved those talks, and it doesn't look like that will happen any time soon. In fact, there has been discussion of doing away with the benefit.
As we have seen in recent months, military retirement pay and other military and veterans benefits are under fire. Congress even went so far as to reduce military retirement benefits for some retirees, then later backtrack and restore those same benefits. Concurrent Receipt has been targeted as an area for cutting fixed expenses for retirees. Concurrent Receipt is a relatively new law, having first been approved in mid-2003, and implemented beginning in January 2004. It wouldn't be a surprise to see this law come under more pressure in the near future. That said, Concurrent Receipt made it through the most recent round of benefits cuts. So let's hope Congress leaves this benefit alone.
Where to go for additional information: If you have any questions regarding your CRDP payment from DFAS, call 800-321-1080. For questions concerning disability ratings or disability compensation, please contact the VA at 800-827-1000.
Photo credit: orangejack.
Source: https://themilitarywallet.com/concurrent-receipt-military-retirement-pay/
0 Response to "Does Continuation Pay Apply to National Guard"
Post a Comment