Again, thank you Ron.
I think I'm getting it now. Curiously, no one has told me that VA compensation plays a part in this. The bottom line is that with a VA rating of 100% and a regular retirement, CRSC may simply not be the most advantageous path - even considering the tax implications.
I appreciate your taking the time to explain it to me in laymen's terms.
That very well might be the case (i.e., CRSC not being the best choice for you).
Upon creation of your CRSC account, the DFAS will automatically pay you the higher amount (probably CRDP). You will be given the opportunity to change it.
I have received either CRDP or CRSC since the advent of the programs. My VA ratings have changed several times over the years, including one temporary rating.
I once chose CRSC over CRDP even though the CRSC approved percentage did not replace/cover all the waived retired pay. The reason? I ended my Army career about the time you began your Navy career and later retired from a university. I determined that taking the lower amount (CRSC in this case) was advantageous because of the other taxable income I received (including 85% of my social security for age). Now I am 100% T&P with the VA and 100% approved CRSC.
Some History of Concurrent Receipt:
In 1891, Congress first prohibited payment of both military retired pay and a disability pension under the premise that it represented dual or overlapping compensation for the same purpose. The original law was modified in 1941, and the present system of VA disability compensation offsetting military retired pay was adopted in 1944. Under this system, retired military personnel were required to waive a portion of their retired pay equal to the amount of VA disability compensation, a dollar-for-dollar offset.1 If, for example, a military retiree received $1,500 a month in retired pay and was rated by the VA as 70% disabled (and therefore entitled to approximately $1,000 per month in disability compensation), the offset would operate to pay $500 monthly in retired pay and the $1,000 in disability compensation. The advantage for the retiree was that VA disability compensation was not taxable. For many years some military retirees and advocacy groups sought a change in law to permit receipt of all, or some, of both payments. Opponents of concurrent receipt frequently referred to it as double dipping, maintaining that it represented two payments for the same condition.
Concurrent receipt refers to the simultaneous receipt of two types of federal monetary benefits: military retired pay and Department of Veterans Affairs (VA) disability compensation.
Prior to 2004, existing laws and regulations dictated that a military retiree could not receive two payments from federal agencies for the same purpose. As a result, military retirees with physical disabilities recognized by the VA would have their military retired pay offset or reduced dollar-for-dollar by the amount of their non-taxable VA compensation. Legislative activity on the issue of concurrent receipt began in the late 1980s and culminated in the provision for Combat-Related Special Compensation (CRSC) in the Bob Stump National Defense Authorization Act for Fiscal Year 2003 (P.L. 107-314). Since then, Congress has added Concurrent Retirement and Disability Payments (CRDP) for those retirees with a disability rated at 50% or greater, extended concurrent receipt to additional eligible populations, and further refined and clarified the program.
There are two common criteria that define eligibility for concurrent receipt: (1) all recipients must be military retirees and (2) they must also be eligible for VA disability compensation. An eligible retiree cannot receive both CRDP and CRSC. The retiree must choose whichever is most financially advantageous to him or her and may change the type of benefit to be received during an annual open season.
In FY2017, approximately one-third of the retired military population was receiving either CRSC or CRDP at a cost of $12.4 billion.
Selected CRSC Information:
Combat-Related Special Compensation (CRSC) Program
This program provides a special monthly payment equivalent to the offset to military retired pay due to receipt of VA disability compensation determined to be combat-related. Qualified individuals include any military retired members with an offset to retired pay due to VA compensation determined to be combat-related. Today, more than 75,000 retirees are receiving CRSC payments of over $71 million per month.
Effective June 1, 2003: I: Initial benefits were payable only to members with at least 20 years of active duty or equivalent reserve duty (i.e. 7200 points) who had combat-related disabilities totaling a rating of 60% or more, or with a rating of 10% or more for combat-related injuries for which they were awarded a Purple Heart.
Effective January 1, 2004: Eligibility was extended to members with any level of VA rating for combat-related disabilities or Purple Heart which results in an offset to military retired pay. Additionally, eligibility was extended to members receiving Reserve retired pay (i.e., Reserve members at age 60 or younger in certain cases and with 20 "good" years or Reserve members retired under Temporary Early Retirement Authority (TERA)).
Effective January 1, 2008: Eligibility was extended to military disability retirees (i.e., Chapter 61 of title 10 United States Code) and members retired under active duty TERA rules.
Effective January 1, 2013: The method for computing the monetary entitlement for members with military disability retirements under Chapter 61 of title 10 United States Code was changed to ensure no such members were disadvantaged from receiving an increased disability rating.
Special Rules for Chapter 61 Disability Retirees: According to law, members retired for disability under Chapter 61 of title 10 United States Code must have the CRSC entitlement limited to an amount that when combined with any military retired pay remaining after offset for VA disability compensation will not exceed the retired pay they would otherwise be entitled to for retirement computed for years of service (i.e., 2 1/2 percent x years of service x pay base).
Ron