As has been widely reported, President Obama has asked Congress to phase in “concurrent receipt” for all Chapter 61 retirees – those who received a disability retirement from the Department of Defense.
This plan, if enacted, would boost pay for 103,000 veterans by a total of more than $2 billion through 2014.
Concurrent receipt means being able to receive both VA disability compensation and military retired pay earned for years served. For many decades, retired pay had been reduced by the amount of disability pay.
Most Chapter 61 retirees were forced from service by ailments or injuries before they could serve 20 years and qualify for regular retirement. Other Chapter 61 retirees served at least 20 years but still qualified for a tax-exempt DoD disability retirement for permanent medical conditions.
Effectively, the administration’s plan would expand eligibility for the Concurrent Retirement and Disability Pay (CRDP) – a way of recalculating retired pay – to all Chapter 61 regular retirees.
CRDP started in 2004 and was applied only to non-disabled military retirees who, after leaving service, qualified for disability ratings of 50 percent or higher from the Department of Veterans Affairs. CRDP allows them to receive earned retired pay and VA compensation.
Non-disabled retirees with VA ratings of 40 percent or lower still see retired pay offset by VA disability compensation.
Why has Obama targeted Chapter 61 regular retirees for concurrent receipt? Apparently, the White House’s Office of Management and Budget developed the idea as an affordable compromise. It would cost $5.4 billion over 10 years versus $45 billion if Obama fulfilled a campaign pledge to extend concurrent receipt to all disabled military retirees.
Since not everybody could be included at this time, because of cost, the idea was to look at those who might be the most deserving. Retirees put out because of disabilities, whether in combat or just job-related was the targeted group.
The schedule to expand CRDP to Chapter 61 retirees would begin Jan. 1, 2010, for those having fewer than 20 years of service and VA ratings of 100 or 90 percent. Full retired pay would be restored on schedule dates, rather raised incrementally as was done after CRDP was launched.
On Jan. 1, 2011, those with fewer than 20 years of service and VA ratings of 80 or 70 percent would be eligible. On Jan. 1, 2012, those with fewer than 20 years of service and VA ratings of 60 or 50 percent would qualify. On Jan. 1, 2013, all Chapter 61 retirees with VA ratings of 40 or 30 percent would be eligible to include any Chapter 61 retirees who served longer than 20 years. On Jan. 1, 2014, a small group of Chapter 61 retirees receiving VA disability compensation and not included earlier would become eligible.
The idea behind concurrent receipt of military retirement and VA disability compensation, is that the Department of Defense pays retirees for years of service and VA pays for disabilities incurred. But until a Dole-Shalala Commission recommendation to simplify the process in this way is fully adopted, DoD remains in the disability retirement business.
Applying the precise formula is predictable difficult. But here are some general examples.
1) An E-4 with four years of service is rated 50 percent disabled by DoD and 90 percent by VA. On base pay of $2,200 a month, a 50-percent DoD rating provides disability retirement of $1,100. Because a 90-percent VA rating pays $1,600 a month, this E-4, under current law, would opt for the VA compensation and get nothing for his service time.
Under CRDP, however, he would receive retired pay for years served. That’s four years multiplied by a 2.5 percent for 10 percent. Apply the 10 percent to base pay of $2,200 for $220 a month in retired pay. This would be paid in addition to $1,600 in VA compensation.
2) An E-7 with 18 years of service also is rated 50 percent disabled by DoD and 90 percent by VA. On base pay of $4,000 a month, a 50-percent rating provides disability retirement of $2,000 a month. That’s better than $1,600 in VA disability compensation.
But under CRDP, retired pay would be calculated on years served (18 x 2.5) for a 45 percent multiple applied to base pay ($4,000). The result: $1,800 a month. This E-7 originally would have accepted $2,000 in disability retirement, because it paid $400 more than VA compensation. With CRDP, he would get $1,800 from DoD plus $1,600 from VA, a total of $3,400 monthly.
3) An 0-4 with 12 years of service is rated 70 percent by DoD and 90 percent by VA. On base pay of $6,000, a 70-percent rating provides military disability retirement of $4,200. This retiree now would take the $4,200 rather than $1,600 payable for a 90-percent VA rating.
Actual retired pay for 12 years of service would be 30 percent of $6,000, or $1,800 a month. Accepting this $1,800, plus $1,600 in VA compensation, would fail to match $4,200 in disability retirement. So this retiree will not receive any additional retirement under CRDP.
Of course, as we all know, plans are plans—-and sometimes the reality and intent of policies become convoluted. We shall have to take a wait and see attitude to judge this plan’s effectiveness. The bottom line is that any plan to assist our disabled veterans is a worthwhile effort, and one which deserves our full support.
That’s it for now.
Advocate
