Disability Severance Pay?

RonG said:
The disability severance pay is non-taxable for combat related injuries.. The Combat-Injured Veterans Tax Fairness Act of 2016, went into effect in 2017. Under this federal law, Veterans who suffer combat-related injuries and are separated from the military are not to be taxed on the one-time lump sum disability severance payment they receive from the Department of Defense. This law instructs DoD to identify Veterans who were taxed in order for them to file an amended return to receive their refund. Go to LINK —->Combat-Injured Veterans Tax Fairness Act Claim Information for more details.

It is a one-time payment; it is not a continuing annual payment.

I have no legal expertise.

Ron
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It is also something that the VA won't recoup if the condition(s) that are causing you to be separated occurred in a combat zone as defined by SECDEF per NDAA-2008.
 
Scoob19 said:
Is DOD medical severance check counted as annual income. I ask this because MCCS is trying to use my severance check as a basis to increase child care fees.
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Check with your state's bar association to see if they have an attorney that will assist you pro bono, each state has one, for example, Massachusetts is Home
 
RetiredColonel-MikeT said:
Check with your state's bar association to see if they have an attorney that will assist you pro bono, each state has one, for example, Massachusetts is Home
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Good advice by Col Mike.


Re: DOD medical severance check counted as annual income?
If the military disability severance pay is NOT related to combat related disabilities, then it is taxable in the year (singular) it was paid. It would seem that the child care "fee" could be increased for the calendar year in which you received the payment.

Ron
cc: @RetiredColonel-MikeT and @Provis
 
From a related discussion.

Computation of Disability Severance Pay

Hello @LBK --six years in the case you described.

Your Disability Severance Pay, if based on a disability incurred in the line of duty in a CZ (as designated by the SecDef) or incurred during the performance of duty in combat-related operations (as designated by the SecDef) WILL BE SIX YEARS.

From DoD Financial Management Regulation
LINK <---

5.3 Computation

5.3.1. Formula. To compute disability severance pay, multiply the sum of the highest applicable basic pay amount (described in paragraph 5.3.3) for 2 months by the number of combined years (but not over 19) of active service and inactive duty points. Do not include as basic pay the 25-percent increase prescribed under certain conditions for a Navy or Marine Corps member retained on active duty after enlistment expires.

5.3.2. Years of Service. The member’s separation orders will specify the total combined years of active service and inactive duty points to be counted in computing severance pay. Round this total to the nearest whole year, with 6 months or more rounded up. The maximum number of years of service for computing the disability severance pay will be 19 years. The minimum number of years for computation purposes will be:

5.3.2.1. Six years in the case of a member separated from the Armed Forces for a disability incurred in the line of duty in a CZ (as designated by the SecDef) or incurred during the performance of duty in combat-related operations (as designated by the SecDef); [added: if the member has less than six years, six years will be used for this catefory]

or 5.3.2.2. Three years in the case of any other member. [added: three years is the minimum for other cases]

5.3.3. Grade at Which Disability Severance Pay is Computed. Compute severance pay based on the basic pay of the following highest grade or rank described:

5.3.3.1. The grade or rank in which the member is serving on the date placed on the Temporary Disability Retired List (TDRL) or, if not applicable at separation;

5.3.3.2. A higher temporary or permanent grade or rank than that subparagraph 5.3.3.1 in which member served satisfactorily as determined by the Secretary of the Military Department concerned; or

5.3.3.3. For those selected for promotion to a permanent regular or reserve grade, if the disability for which the member was separated found during a physical examination, then the grade or rank to which the member would have been promoted if there was no disability. For those who would have been promoted to a temporary grade or rank had it not been for the discovery of the disability, then that temporary grade or rank if eligibility for promotion was required to be based on cumulative years of service or years in grade

Ron
 
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DeputyDog said:
I have an interesting situation with my Severance and my MSC didn't really have a clear answer for me.

To keep it as simple as possible....
I was awarded 100%P&T per the VA/ 0% from the DoD for my disqualifying disability. Also note, my boardable disability was deemed "not rated" by the VA.
We're trying to find out if I have to pay this dang severance back or not! As an E-7 with 11 years of service its not a small amount of pennies.
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Okay so what about being awarded 100 % P&T per the VA and 10 or 20% from the DOD for disqualifying disability? Do you still pay back severance pay?
 
@tct1991

Hello,

Recoupment is required ONLY when the DoD and the VA BOTH provide a rating or ratings for the same disability or disabilities.
The following is part of a longer explanation that is posted in this thread. It explains the rate of collection/recoupment.

Ron

III.v.4.B.3.b. General Policies Regarding Withholdings to Recoup Disability Severance PayGenerally, if a Veteran received disability severance pay, VA must withhold from his/her monthly compensation an amount equal to the monthly compensation payable for the disability(ies) for which the Veteran received disability severance pay. VA continues to withhold this amount until it has recouped the amount specified in M21-1, Part III, Subpart v, 4.B.2.d.

Important:
  • The monthly withholding may never exceed the monthly amount of compensation payable based on the initial, compensable rating, as defined in M21-1, Part III, Subpart v, 4.B.3.c, that VA assigns the severance-pay disability(ies).
  • If a Veteran has multiple, severance-pay disabilities, each rated 0-percent disabling, and VA assigns a 10-percent disability rating to them under 38 CFR 3.324, no withholding is necessary for these disabilities until VA assigns a compensable rating to one or more of them, individually.
  • Withhold the additional benefits payable because of application of the bilateral factor if
    • the initial, compensable rating included application of the bilateral factor, and
    • entitlement to the bilateral factor was based exclusively on severance-pay disabilities.
 
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Hey everyone!
So the DoD is offering me 0% with severance pay for only once condition. However, the VA is offering me 40% total, but 0% for the condition that is driving the separation. Will Uncle Sam withhold my VA monthly payments in this case? I believe above people say they will not, but is there a way of knowing for sure?
 
olopez said:
Hey everyone!
So the DoD is offering me 0% with severance pay for only once condition. However, the VA is offering me 40% total, but 0% for the condition that is driving the separation. Will Uncle Sam withhold my VA monthly payments in this case? I believe above people say they will not, but is there a way of knowing for sure?
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You would get severance and your full VA compensation since there is no recoupment with a 0% disability.
 
Regarding : I believe above people say they will not, but is there a way of knowing for sure?

Comment: The regulation cited above is evidence of 'for sure.'
  • The monthly withholding may never exceed the monthly amount of compensation payable based on the initial, compensable rating, as defined in M21-1, Part III, Subpart v, 4.B.3.c, that VA assigns the severance-pay disability(ies).
  • If a Veteran has multiple, severance-pay disabilities, each rated 0-percent disabling, and VA assigns a 10-percent disability rating to them under 38 CFR 3.324, no withholding is necessary for these disabilities until VA assigns a compensable rating to one or more of them, individually.
Reference: M21-1

Ron
 
Provis said:
You would get severance and your full VA compensation since there is no recoupment with a 0% disability.
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Thank you! One more question, regarding Healthcare this time. I have a wife and 4 kids. Since DoD gave me 0% but VA gave me 40%, do they get Free healthcare like I do or would it be just for me through VA healthcare? I remember my VA rep kept saying "30% is the magic number. iF you get at least 30% your wife will have free healthcare for like and all your kids until they are 23 years old." But is this only applicable if you have DoD 30% or above and medically retired? Thanks again.
 
olopez said:
Thank you! One more question, regarding Healthcare this time. I have a wife and 4 kids. Since DoD gave me 0% but VA gave me 40%, do they get Free healthcare like I do or would it be just for me through VA healthcare? I remember my VA rep kept saying "30% is the magic number. iF you get at least 30% your wife will have free healthcare for like and all your kids until they are 23 years old." But is this only applicable if you have DoD 30% or above and medically retired? Thanks again.
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This is only applicable to the DOD percentage. If your DOD rating is 30%, you are retired vs. separated and get to keep Tricare as a retired military member. At 0% DOD, there are no benefits for your family. There is some transition period where you get to keep Tricare since you are being medically separated but after that time period, your family won't have healthcare through the military.

The only time that your family could get healthcare through the VA is if you were rated 100% permanent and total from the VA. That would make them eligible for ChampVA which is the VA's family healthcare plan.
 
robins said:
This is only applicable to the DOD percentage. If your DOD rating is 30%, you are retired vs. separated and get to keep Tricare as a retired military member. At 0% DOD, there are no benefits for your family. There is some transition period where you get to keep Tricare since you are being medically separated but after that time period, your family won't have healthcare through the military.

The only time that your family could get healthcare through the VA is if you were rated 100% permanent and total from the VA. That would make them eligible for ChampVA which is the VA's family healthcare plan.
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Man, I gotta admit this caught me by surprise. My VA rep was terrible at explaining things. I was just assigned a hearing date of 7 jun to go before the FPEB. I don't have an interest in returning to duty, but instead I would like to fight for more conditions to be added so that I can get a medical retirement instead by getting at least 30%. Has anyone ever done this before?
 
olopez said:
Man, I gotta admit this caught me by surprise. My VA rep was terrible at explaining things. I was just assigned a hearing date of 7 jun to go before the FPEB. I don't have an interest in returning to duty, but instead I would like to fight for more conditions to be added so that I can get a medical retirement instead by getting at least 30%. Has anyone ever done this before?
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There is risk especially in your situation when doing a FPEB. There have been instances in the past where a Soldier did a FPEB with 0% unfitting condition and the FPEB changed the result to fit for duty. EVERYTHING is on the table when you demand and have a FPEB. I think that the risk is very high especially if your total VA rating is only 40%.
 
Provis said:
There is risk especially in your situation when doing a FPEB. There have been instances in the past where a Soldier did a FPEB with 0% unfitting condition and the FPEB changed the result to fit for duty. EVERYTHING is on the table when you demand and have a FPEB. I think that the risk is very high especially if your total VA rating is only 40%.
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Dude, thanks much for the heads up. I am a pilot and the chances of me returning are extremely minuscule. That said, I would be ok with coming back. I would just much rather separate now and pursue other professional interest at this time since i'm quite exhausted honestly. Besides, my case is all about my eyes, and it is short of impossible to prove I can come back. I want to fight for an increase from 0% on my one disqualifying disability and also want to add more. any chance you or anyone here have gone through that type of appeal?
 
olopez said:
Dude, thanks much for the heads up. I am a pilot and the chances of me returning are extremely minuscule. That said, I would be ok with coming back. I would just much rather separate now and pursue other professional interest at this time since i'm quite exhausted honestly. Besides, my case is all about my eyes, and it is short of impossible to prove I can come back. I want to fight for an increase from 0% on my one disqualifying disability and also want to add more. any chance you or anyone here have gone through that type of appeal?
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Its late in the game but your best chance is to hire a private attorney. They may have some medical connections too that can help bolster your case. I will send you some references. Still just know going from 0% to 30% or higher is a very high hill to climb.
 
Hypothetical recoup question-

VA rating: 100
DOD rating: 10

Excluding the IDES referred condition, VA rating would be 90%.

Is the new VA monthly payment equal to a 90% VA rated payment until 20 some years down the road the lump sum severance is eventually recouped?

Or is the monthly payment 0 until a few years when severance is recouped?

Thanks
 
PicoBaloney said:
Hypothetical recoup question-

VA rating: 100
DOD rating: 10

Excluding the IDES referred condition, VA rating would be 90%.

Is the new VA monthly payment equal to a 90% VA rated payment until 20 some years down the road the lump sum severance is eventually recouped?

Or is the monthly payment 0 until a few years when severance is recouped?

Thanks
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Hello,

Your VA compensation will remain at 100%. It will be reduced by the recoupment (a withholding) each month in accordance with M21-1.
Recoupment is required ONLY when the DoD and the VA BOTH provide a rating or ratings for the same disability or disabilities. This explains the rate of collection/recoupment.


From VA Regulation M21-1 :


III.v.4.B.3.b. General Policies Regarding Withholdings to Recoup Disability Severance PayGenerally, if a Veteran received disability severance pay, VA must withhold from his/her monthly compensation an amount equal to the monthly compensation payable for the disability(ies) for which the Veteran received disability severance pay. VA continues to withhold this amount until it has recouped the amount specified in M21-1, Part III, Subpart v, 4.B.2.d.

Important:
  • The monthly withholding may never exceed the monthly amount of compensation payable based on the initial, compensable rating, as defined in M21-1, Part III, Subpart v, 4.B.3.c, that VA assigns the severance-pay disability(ies).
  • If a Veteran has multiple, severance-pay disabilities, each rated 0-percent disabling, and VA assigns a 10-percent disability rating to them under 38 CFR 3.324, no withholding is necessary for these disabilities until VA assigns a compensable rating to one or more of them, individually.
  • Withhold the additional benefits payable because of application of the bilateral factor if
    • the initial, compensable rating included application of the bilateral factor, and
    • entitlement to the bilateral factor was based exclusively on severance-pay disabilities.

Ron

added:
The VA is required by law to withhold disability compensation payments for servicemembers who received a disability severance payment when they separated from the military (Chapter 61), if the VA disability compensation is for the same disability. This is to prevent a veteran from receiving duplicate benefits.

Exception: The VA will not deduct compensation pay if the military disability severance pay was received for disabilities incurred in line of duty in a combat zone or incurred during performance of duty in combat-related operations as designated by the Department of Defense (DoD).
 
Added: If your VA comp is at 100% and a recoupment for 10%
is required, then the amount shown in the VA comp tables for 10% will be the withholding. Your VA comp is not reduced to 90%.

This is an opinion/ interpretation of the M21-1 guidelines’

Ron
 
RonG said:
Hello,

Your VA compensation will remain at 100%. It will be reduced by the recoupment (a withholding) each month in accordance with M21-1.
Recoupment is required ONLY when the DoD and the VA BOTH provide a rating or ratings for the same disability or disabilities. This explains the rate of collection/recoupment.


From VA Regulation M21-1 :


III.v.4.B.3.b. General Policies Regarding Withholdings to Recoup Disability Severance PayGenerally, if a Veteran received disability severance pay, VA must withhold from his/her monthly compensation an amount equal to the monthly compensation payable for the disability(ies) for which the Veteran received disability severance pay. VA continues to withhold this amount until it has recouped the amount specified in M21-1, Part III, Subpart v, 4.B.2.d.

Important:
  • The monthly withholding may never exceed the monthly amount of compensation payable based on the initial, compensable rating, as defined in M21-1, Part III, Subpart v, 4.B.3.c, that VA assigns the severance-pay disability(ies).
  • If a Veteran has multiple, severance-pay disabilities, each rated 0-percent disabling, and VA assigns a 10-percent disability rating to them under 38 CFR 3.324, no withholding is necessary for these disabilities until VA assigns a compensable rating to one or more of them, individually.
  • Withhold the additional benefits payable because of application of the bilateral factor if
    • the initial, compensable rating included application of the bilateral factor, and
    • entitlement to the bilateral factor was based exclusively on severance-pay disabilities.

Ron

added:
The VA is required by law to withhold disability compensation payments for servicemembers who received a disability severance payment when they separated from the military (Chapter 61), if the VA disability compensation is for the same disability. This is to prevent a veteran from receiving duplicate benefits.

Exception: The VA will not deduct compensation pay if the military disability severance pay was received for disabilities incurred in line of duty in a combat zone or incurred during performance of duty in combat-related operations as designated by the Department of Defense (DoD).
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Thank you! So to dumb this down for me…
Basically you’d get paid at 90% vs 100% but you’d still be rated 100%?
 
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