SCOTUS To Tackle USFSPA

January 20, 2017

This year the Supreme Court will issue a decision that could affect hundreds of thousands of military retirees and spouses.

In 1982, Congress passed the Uniformed Services Former Spouses' Protection Act (USFSPA). The law provides former spouses of military retirees numerous benefits, including direct payments from retired pay for child support, alimony, or as a division of marital property.

Prior to USPSA, the Supreme Court ruled that military retired pay was not considered divisible property in divorce proceedings because Congress meant for military retirement to be a “personal entitlement” of servicemembers.

Since Congress enacted USFSPA, the Supreme Court has only decided one case related to its application. In 1989, the court held that VA disability compensation may not be divided as marital property.

In the 1989 case, the divorce occurred after the servicemember retired, and the VA already had granted disability. However, in the case the Supreme Court will hear this year, the divorce occurred while the servicemember was on active duty and the VA had not yet granted a disability rating.

Generally, servicemembers receive VA disability after leaving the service.

If the Supreme Court agrees the disability offset in USFSPA does not apply to divorces occurring before the VA grants a disability rating, then a person who gets divorced while on active duty will always be required to pay an former spouse the full retirement division, even if the VA later grants a disability.

Current case background

In the current case, a family court granted the former spouse 50 percent of the servicemember's retirement. Years later, the retiree received a 20 percent VA disability rating and waived a portion of military retired pay to receive the VA disability compensation instead.

As a result, the portion of the servicemember's military retirement went down by $304 a month; the former spouse took the retiree to court to get her portion of that ($152 a month) back.

A lower level court held that, even though the reduction was the result of a VA disability, the retiree still had to pay the $152 per month to the former spouse. The court reasoned that the former spouse had a “vested interest” in the retired pay and had come to rely on the full amount.

The issue

States have interpreted USFSPA inconsistently under these circumstances. Five states have found, if a retiree gets divorced before obtaining a VA disability rating, then the retiree is on the hook for the whole amount of the former spouse's portion of retirement pay, regardless of offset for VA disability. Five states have decided the opposite and found that USFSPA prohibits this outcome.

FSPA map table

Current benefit background

Under current law, retirees with less than a 50 percent service-connected disability rated by the VA must waive a portion of their military retirement pay if they wish to receive tax-free VA disability compensation.

USFSPA states that “a court may treat disposable retired pay” as divisible property in a divorce proceeding. The law defines “disposable retired pay” as the retired pay that remains after any waiver for VA disability compensation.

How to fix it

To change this, Congress needs to repeal an archaic 19th century law that required a dollar-for-dollar offset of military retired pay and VA disability compensation.

If Congress passes concurrent receipt for all retirees receiving VA disability compensation, offsets to retired pay would end, and this problem would no longer exist.

Click herefor the latest information on Congress's efforts to provide full concurrent receipt.

MOAA continues to advocate for full concurrent receipt of retired and disability pay regardless of disability rating.

“The two are paid for different reasons,” said Lt. Col. (select) Aniela Szymanski, USMCR, MOAA director of National Guard, Reserve, and Veterans Benefits. “Military retired pay is earned for a career of uniformed service. VA disability compensation is recompense for pain, suffering, and loss of future earning power due to a service-connected disability.” 

 

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