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Concurrent Receipt of Military Retired Pay and VA Disability Compensation

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February 23, 2015

Check out MOAA’s new brochure (Undue Sacrifice) for an easy to read version of this fact sheet.

Issue: Congress needs to fully eliminate the law that makes most disabled uniformed services retirees forfeit part or all of their military retired pay for VA disability compensation.

Background: For decades, MOAA has sought legislation providing full relief from the 19th century law that required a dollar-for-dollar offset of military retired pay for VA disability compensation. MOAA strongly believes retired pay is earned for a career of uniformed service, and VA disability compensation is recompense for pain, suffering, and lost future earning power due to service-connected disabilities.

Since we persuaded Congress to make the first very modest step in 2003 for a small, yet significant, group of disabled retirees, we’ve made steady incremental progress almost every year in broadening eligibility. In the ensuing 6 years, we’ve fully restored earned service-based retired pay for 100% disabled retirees with at least 20 years of service and all combat-disabled retirees without regard to length of service or percentage of combat-related disability.

Additionally, we’ve won a scheduled 10-year phase-out of the disability offset (to be completed by 2014) for retirees with 50% or higher-rated non-combat-related disabilities who have at least 20 years of service or were retired under the Temporary Early Retirement Authority of the 1990s.

Although these major improvements cover 304,000 disabled retirees, or 33% of the total disabled retired population, still 623,000 fund their disability compensation from the VA dollar-for-dollar from their retired pay.

MOAA Position: MOAA is committed to ending the disability offset for all disabled retirees. We believe strongly in the principle that career military members earn their retired pay by service alone, and that those unfortunate enough to suffer a service-caused disability in the process should have any VA disability compensation from the VA added to, not subtracted from their service-earned military retired pay. In the case of members forced into medical retirement before 20 years of service, their service-earned retired pay should be vested at the rate of 2.5% times years of service times the applicable pay base. There should not be any distinction between members disabled for combat- vs. non-combat-related causes, as the impact on their quality of life and future earning power is the same in either case.

Key Bills/Status: Congressman Sanford Bishop (D-Ga.) has introduced H.R.333, the Disabled Veterans Tax Termination Act. This bill would end the disability offset for all disabled retirees.  Senator Harry Reid (D-Nev.) has introduced S. 271, the Senate companion to Representative Bishop’s bill.