Retirement options can be complicated and difficult to understand. Today we’ll break down the options so that you can make the best choices for your future. The three main options are:
- Retired Pay
- VA Compensation
- Concurrent Retirement and Disability Pay (CRDP)
Retired Pay is the pension you receive after retiring from the military. There are a variety of retirement plans which have different methods of determining monthly pay. To find out more about them in detail, visit here. No matter which retirement program you are enrolled in, your Retired Pay is considered taxable income.
The Veterans Administration provides benefits separate from Retired Pay.
VA Compensation is a tax-free payment separate from your pension. The Veterans Administration provides benefits to most Veterans (or their dependents) with service-related disabilities. (Veterans with dishonorable discharges are ineligible for the benefits.) VA benefits for Veterans generally fall under one of two categories:
- Disability Compensation
- Special Monthly Compensation (SMC)
Disability compensation is a tax-free benefit paid to retirees who suffered injuries or illness during their military service. They are designed to compensate Veterans for a resulting lack of employment or diminished working time. They are paid to:
- Veterans with disabilities resulting from a disease or injury sustained or aggravated during active military service.
- Veterans with post-service disabilities that are considered related or secondary to disabilities occurring in service and for disabilities presumed to be related to circumstances of military service, even if they may develop after service.
- Certain Veterans disabled from VA health care.
Regional offices are currently closed due to the coronavirus pandemic, but you can apply online for VA disability compensation here. The standard wait is four months to hear back about a claim. However, there are ways in which you may expedite a claim.
SPECIAL MONTHLY COMPENSATION (SMC)
SMC is a benefit that can be paid to Veterans, Veteran spouses, surviving spouses, and Veteran parents. The amount of the SMC is determined by the circumstances of the recipient.
Veterans may receive a higher rate of compensation due to special circumstances such as the need of aid and attendance by another person or a specific disability (e.g. the loss of a limb).
Spouses and surviving spouses may receive compensation based upon the need to aid and attendance by another person. This benefit is often referred to as “aid and attendance.”
CONCURRENT RETIREMENT AND DISABILITY PAY (CRDP)
CRDP allows military retirees to receive both retired pay and Veterans Affairs (VA) compensation at the same time. It’s designed to offset VA disability payments. This option was prohibited for many years and was completely phased in during 2014. It is provided by the Defense Finance and Accounting Service (DFAS).
There are specific requirements needed to be met for eligibility. You may be eligible for CRDP is you are a:
- Regular retiree with a VA disability rating of 50% or higher.
- Reserve retiree with 20 qualifying years of service, with a VA disability rating of 50% or higher, who has reached the set retirement age for your specific service.
- Retired under the Temporary Early Retirement Act (TERA) and have a VA disability rating of 50 percent or greater.
- 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% or higher. You might become eligible for CRDP at the time you would have become eligible for retired pay.
However, you do not need to enroll in CRDP. If you are eligible, you will be automatically enrolled.
In some cases, such as if the VA determines that your disability makes you unemployable, then you may receive not just offset payment, but full payment of retired pay and VA compensation at the same time.
If you have any questions regarding your CRDP payments, call DFAS at: 800-321-1080
For all applications, regardless of category, you will be asked to provide documentation regarding the disability. The VA requires a clear connection between a condition and a service-related injury. If the application seems overwhelming, you are entitled to FREE representation through an accredited claims agent or a Veteran Service Organization (VSO) to help you prepare and submit your claim for benefits.