Ok have a few questions, playing the what if game. BTW I searched the Severance Pay thread before posting. If one receives DoD Disability Severance pay is that payment based on active service points only or both active and inactive service points. My PEBLO is stating only active service points but DFAS is stating active and inactive service points counts towards calculating payment. I have 15 active years of service but with reserve time have 19 total years. Next, if you receive the lump sum payout how does the VA offset work. I understand if I were receiving a monthly DoD disability check the VA would/could deduct the VA monthly amount from the DoD amount but how does that work with the lump sum severance payment? Thanks in advance.
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Severance Pay and VA payment
- Thread starter lucky208
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Ok I found one answer as posted by @RonG
Someone else will probably provide a more complete set of answers.
1. Disability severance pay is a one-time lump sum payment. The amount equals 2 months of basic pay for each year of service which includes active service and inactive duty points, but the total service years cannot exceed 19 years. Additionally, the minimum number of years required for computation purposes is six years for a disability incurred in the line of duty in a combat zone, or 3 years in the case of any other member. Prior to January 28, 2008, a maximum of 12 years and minimum of three years creditable service was used.
2.
Disability Separation Pay: The VA is required by law to withhold disability compensation payments for service members 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). (Note: this must be a Line of Duty designation by the DoD to be waiverable – this is related to the CRSC rating mentioned above). This exception applies to members who were separated from the Armed Forces under Chapter 61 of title 10, United States Code, on or after January 28, 2008.
I guess my PEBLO is incorrect in his assumption that DoD Disability Severance pay is based only on active duty service points- I know that is shocking. But, I still don't know how the VA recoupment/ offset will work if one receives the lump sum payment.
Someone else will probably provide a more complete set of answers.
1. Disability severance pay is a one-time lump sum payment. The amount equals 2 months of basic pay for each year of service which includes active service and inactive duty points, but the total service years cannot exceed 19 years. Additionally, the minimum number of years required for computation purposes is six years for a disability incurred in the line of duty in a combat zone, or 3 years in the case of any other member. Prior to January 28, 2008, a maximum of 12 years and minimum of three years creditable service was used.
2.
Disability Separation Pay: The VA is required by law to withhold disability compensation payments for service members 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). (Note: this must be a Line of Duty designation by the DoD to be waiverable – this is related to the CRSC rating mentioned above). This exception applies to members who were separated from the Armed Forces under Chapter 61 of title 10, United States Code, on or after January 28, 2008.
I guess my PEBLO is incorrect in his assumption that DoD Disability Severance pay is based only on active duty service points- I know that is shocking. But, I still don't know how the VA recoupment/ offset will work if one receives the lump sum payment.
The reference for the information at item one in the preceding post is at https://www.dfas.mil/retiredmilitary/plan/separation-payments/disability-severance-pay.html
Ron
Ron
Going along with the scenario above: Service member receives less than 30% disability from DoD which results in Severance Pay from DoD. My assumption is that in order to receive VA treatment or payment the entire amount received from DoD has to be repaid. Since the Severance pay was paid in a lump sum does the service member either decide give the money back in order to receive VA treatment or does the VA withhold a determined amount for a certain number of years.
Example: Made up example
DoD Severance pay for 20% rating: $100,000 after taxes.
VA rating: 60%: For a service member, spouse, child approx. $1300/ month.
For the service member to receive VA care or monthly payments does the service member hand over the 100k or does the VA withhold the $1300 until the $100k is "paid back", which would be about 76 months. Does that mean the service member can't receive treatment until the 100K is paid back? Or does the VA withhold 20% (DoD rating) of the 60% (Va rating) until the amount is paid back (I was using the example percentages above)?
Example: Made up example
DoD Severance pay for 20% rating: $100,000 after taxes.
VA rating: 60%: For a service member, spouse, child approx. $1300/ month.
For the service member to receive VA care or monthly payments does the service member hand over the 100k or does the VA withhold the $1300 until the $100k is "paid back", which would be about 76 months. Does that mean the service member can't receive treatment until the 100K is paid back? Or does the VA withhold 20% (DoD rating) of the 60% (Va rating) until the amount is paid back (I was using the example percentages above)?
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Comment:
Qualification for VA Health Care is not based on whether a veteran has or has not received DoD Disability Severance Pay.
------------------
Recoupment Information.
350506. Recoupment From VA Compensation DoD 7000.14-R Financial Management Regulation Volume 7A, Chapter 35
The VA deducts disability severance compensation from any VA compensation for the same disability to which the member or member’s dependents become entitled. There are two exceptions:
A. No deduction will be made in the case of disability severance pay received by a member for a disability incurred in the line of duty in a CZ or incurred during performance of duty in combat-related operations (as designated by the SecDef); or
B. No deduction will be made from any death compensation to which a member’s dependents become entitled after the member’s death.
------------
M21-1, Part III, Subpart v, Chapter 4, Section B - Recoupment of Separation Benefits
[This is a VA in-house procedures manual]
III.v.4.B.3.b. General Policies Regarding Withholdings to Recoup Disability Severance Pay
Generally, 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.c.
Qualification for VA Health Care is not based on whether a veteran has or has not received DoD Disability Severance Pay.
------------------
Recoupment Information.
350506. Recoupment From VA Compensation DoD 7000.14-R Financial Management Regulation Volume 7A, Chapter 35
The VA deducts disability severance compensation from any VA compensation for the same disability to which the member or member’s dependents become entitled. There are two exceptions:
A. No deduction will be made in the case of disability severance pay received by a member for a disability incurred in the line of duty in a CZ or incurred during performance of duty in combat-related operations (as designated by the SecDef); or
B. No deduction will be made from any death compensation to which a member’s dependents become entitled after the member’s death.
------------
M21-1, Part III, Subpart v, Chapter 4, Section B - Recoupment of Separation Benefits
[This is a VA in-house procedures manual]
III.v.4.B.3.b. General Policies Regarding Withholdings to Recoup Disability Severance Pay
Generally, 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.c.
I'm still confused. I get that the VA will deduct severance pay "equal to the monthly compensation payable for the disability(ies)" but if you receive a lump sum payment how is the recoupment calculated? In my example how would the VA determine recoupment or withholding?
Example: Made up example
DoD Severance pay for 20% rating: $100,000 after taxes.
VA rating: 60%: For a service member, spouse, child approx. $1300/ month.
If the service member was receiving monthly DoD disability payments then I can see how the VA calculates its withholding but the severance pay lump payment is still confusing.
Example: Made up example
DoD Severance pay for 20% rating: $100,000 after taxes.
VA rating: 60%: For a service member, spouse, child approx. $1300/ month.
If the service member was receiving monthly DoD disability payments then I can see how the VA calculates its withholding but the severance pay lump payment is still confusing.
Hello lucky.... I can only tell you about what happened to me. I was medically separated in 2003 and given severance pay. When I went to the VA and got my rating from them, I was still seen by them buuutttt i did not receive any disability pay until the complete amount of severance pay was paid back in full. Hope this helps.I'm still confused. I get that the VA will deduct severance pay "equal to the monthly compensation payable for the disability(ies)" but if you receive a lump sum payment how is the recoupment calculated? In my example how would the VA determine recoupment or withholding?
Example: Made up example
DoD Severance pay for 20% rating: $100,000 after taxes.
VA rating: 60%: For a service member, spouse, child approx. $1300/ month.
If the service member was receiving monthly DoD disability payments then I can see how the VA calculates its withholding but the severance pay lump payment is still confusing.
Re: “I'm still confused. I get that the VA will deduct severance pay "equal to the monthly compensation payable for the disability(ies)" but if you receive a lump sum payment how is the recoupment calculated? In my example how would the VA determine recoupment or withholding? ”
My interpretation is that they will collect (recoup) at the monthly rate of your VA compensation ($1300 in your example).
In your example, the after tax amount of $100,000 would be collected.
Ron
My interpretation is that they will collect (recoup) at the monthly rate of your VA compensation ($1300 in your example).
In your example, the after tax amount of $100,000 would be collected.
Ron
So wait, if you are awarded $1300 monthly from the VA and got a severance pay from the DOD then you get no money for years until its recouped?
I know someone who got out for MEB and received severance pay and the VA only recoups a small portion of the severance pay each month. For example, she was awarded $1300 per month, however to recoup the severance the VA only takes something like $50 per month. So she still receives $1250 per month.
I know someone who got out for MEB and received severance pay and the VA only recoups a small portion of the severance pay each month. For example, she was awarded $1300 per month, however to recoup the severance the VA only takes something like $50 per month. So she still receives $1250 per month.
From what I hear the VA is only supposed to recoup the percentage that you are getting a severance for. Fo example if you are getting 20 % severance DOD and 90% from VA they will only take the 20% of your severance a month until severance is paid because it was only for that condition and the other conditions on your VA pay are not applicable. Correct me if Im wrong as I am currently being released from TDRL and am in a similar situation.
The first reference is law written to layperson terms.
The second reference is an internal VA procedures manual.
Recoupment Information.
350506. Recoupment From VA Compensation DoD 7000.14-R Financial Management Regulation Volume 7A, Chapter 35
The VA deducts disability severance compensation from any VA compensation for the same disability to which the member or member’s dependents become entitled. There are two exceptions:
A. No deduction will be made in the case of disability severance pay received by a member for a disability incurred in the line of duty in a CZ or incurred during performance of duty in combat-related operations (as designated by the SecDef); or
B. No deduction will be made from any death compensation to which a member’s dependents become entitled after the member’s death.
------------
M21-1, Part III, Subpart v, Chapter 4, Section B - Recoupment of Separation Benefits
[This is a VA in-house procedures manual]
III.v.4.B.3.b. General Policies Regarding Withholdings to Recoup Disability Severance Pay
Generally, 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.c.
More from M21-1:
7. Instructions Unique to the Recoupment of Disability Severance Pay, Co
b. General Policies Regarding Withholdings to Recoup Disability Severance Pay
Generally, 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 M21-1MR, Part III, Subpart v, 4.B.6.c.
Important:
• The monthly withholding may never exceed the monthly amount of compensation payable based on the initial, compensable rating, as defined in M21-1MR, Part III, Subpart v, 4.B.7.c, that VA assigns the severance-pay disability(ies).
• If a Veteran has multiple, severance-pay disabilities, each rated 0 percentdisabling, 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.
Exception: If VA initially assigns a severance-pay disability a temporary 100-percent rating under 38 CFR 4.28, 4.29, or 4.30,
• VA must withhold all of the Veteran’s monthly compensation until entitlement to the temporary 100-percent rating ends, and
• monthly withholdings thereafter may never exceed the monthy amount of compensation payable based on the disability rating VA assigns the severance-pay disability(ies) immediately after entitlement to the temporary 100-percent rating ends.
Examples: The table below contains examples of how to apply the policies set forth in this block:
Sorry, the table did not properly transfer. Recommend reviewing M21-1.
Ron
Added: LINK to 38 CFR 3.700
The second reference is an internal VA procedures manual.
Recoupment Information.
350506. Recoupment From VA Compensation DoD 7000.14-R Financial Management Regulation Volume 7A, Chapter 35
The VA deducts disability severance compensation from any VA compensation for the same disability to which the member or member’s dependents become entitled. There are two exceptions:
A. No deduction will be made in the case of disability severance pay received by a member for a disability incurred in the line of duty in a CZ or incurred during performance of duty in combat-related operations (as designated by the SecDef); or
B. No deduction will be made from any death compensation to which a member’s dependents become entitled after the member’s death.
------------
M21-1, Part III, Subpart v, Chapter 4, Section B - Recoupment of Separation Benefits
[This is a VA in-house procedures manual]
III.v.4.B.3.b. General Policies Regarding Withholdings to Recoup Disability Severance Pay
Generally, 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.c.
More from M21-1:
7. Instructions Unique to the Recoupment of Disability Severance Pay, Co
b. General Policies Regarding Withholdings to Recoup Disability Severance Pay
Generally, 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 M21-1MR, Part III, Subpart v, 4.B.6.c.
Important:
• The monthly withholding may never exceed the monthly amount of compensation payable based on the initial, compensable rating, as defined in M21-1MR, Part III, Subpart v, 4.B.7.c, that VA assigns the severance-pay disability(ies).
• If a Veteran has multiple, severance-pay disabilities, each rated 0 percentdisabling, 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.
Exception: If VA initially assigns a severance-pay disability a temporary 100-percent rating under 38 CFR 4.28, 4.29, or 4.30,
• VA must withhold all of the Veteran’s monthly compensation until entitlement to the temporary 100-percent rating ends, and
• monthly withholdings thereafter may never exceed the monthy amount of compensation payable based on the disability rating VA assigns the severance-pay disability(ies) immediately after entitlement to the temporary 100-percent rating ends.
Examples: The table below contains examples of how to apply the policies set forth in this block:
Sorry, the table did not properly transfer. Recommend reviewing M21-1.
Ron
Added: LINK to 38 CFR 3.700
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Saw this old post from @hawkdrivermtp and I was wondering if anyone that received the DOD lump sum severance pay can verify if this is how the VA recoups? Thanks.
"My PEBLO had an excel document that calculated your severance pay based on years of service, base pay, rank, VA %, etc... Wish I had that document but it is fairly simple to determine as long as you know your base pay and years of service.
If anyone wants to find out how many years it would take to repay a military severance, if required, here is how you determine the years you will be "repaying" the VA.
2 x (Monthly Base Pay) x (Years of Service...up to 19 years) = SEVP
2 x $5040.60 x 14 = $141,136.80 SEVP
Finance will take 25% of your SEVP for tax purposes unless your DA 199 has a code of 10a/b/c. If you have a code 10d, your severance will be taxed, however you are able to recover those taxes either through DFAS or the IRS during tax season. I recommend going the DFAS route.
$141,136.80 x .25 = $35,284.20 (estimated amount taxed since my DA 199 has a code of 10d.)
There are two possible percentages that the VA will use to determine how many years it will take to repay your severance if you do not meet requirements on line 10 of your DA 199. It's either at 10% or 20%. A 0% DoD rating still gives you a severance based off the above formula, but you will never repay the VA for a 0% rating.
VA 10% (SEVP divided by $108.00 divided by 12 months = # of years to pay back): 108.9 years to pay back!
VA 20% (SEVP divided by $210.00 divided by 12 months = # of years to pay back): 56 years to pay back.
I am not sure how the $108.00 and $210.00 values are determined, but they were already part of the formula and didn't change. Luckily, I don't have to repay any of my severance back! If I had been given a 10% DoD rating, The VA would have had a hard time collecting from me for 108.9 years, but they might have been able to get every cent back if I was rated at 20% DoD and my injury hadn't occured in Iraq. I would still have to live to be 80 though for that to happen. Of course none of this matters since 21 DEC 2012 is almost here. Kidding!
I figured some people could use this tool to help determine ahead of time, how much the VA will be paying you and how much you might have to pay the VA back over time. All this information was given to me when I signed my DA 199 and the same should go for everyone else, but if you just want to mess around with the numbers, feel free to do so! Hope this helps!"
"My PEBLO had an excel document that calculated your severance pay based on years of service, base pay, rank, VA %, etc... Wish I had that document but it is fairly simple to determine as long as you know your base pay and years of service.
If anyone wants to find out how many years it would take to repay a military severance, if required, here is how you determine the years you will be "repaying" the VA.
2 x (Monthly Base Pay) x (Years of Service...up to 19 years) = SEVP
2 x $5040.60 x 14 = $141,136.80 SEVP
Finance will take 25% of your SEVP for tax purposes unless your DA 199 has a code of 10a/b/c. If you have a code 10d, your severance will be taxed, however you are able to recover those taxes either through DFAS or the IRS during tax season. I recommend going the DFAS route.
$141,136.80 x .25 = $35,284.20 (estimated amount taxed since my DA 199 has a code of 10d.)
There are two possible percentages that the VA will use to determine how many years it will take to repay your severance if you do not meet requirements on line 10 of your DA 199. It's either at 10% or 20%. A 0% DoD rating still gives you a severance based off the above formula, but you will never repay the VA for a 0% rating.
VA 10% (SEVP divided by $108.00 divided by 12 months = # of years to pay back): 108.9 years to pay back!
VA 20% (SEVP divided by $210.00 divided by 12 months = # of years to pay back): 56 years to pay back.
I am not sure how the $108.00 and $210.00 values are determined, but they were already part of the formula and didn't change. Luckily, I don't have to repay any of my severance back! If I had been given a 10% DoD rating, The VA would have had a hard time collecting from me for 108.9 years, but they might have been able to get every cent back if I was rated at 20% DoD and my injury hadn't occured in Iraq. I would still have to live to be 80 though for that to happen. Of course none of this matters since 21 DEC 2012 is almost here. Kidding!
I figured some people could use this tool to help determine ahead of time, how much the VA will be paying you and how much you might have to pay the VA back over time. All this information was given to me when I signed my DA 199 and the same should go for everyone else, but if you just want to mess around with the numbers, feel free to do so! Hope this helps!"