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Severance Pay recoupment from VA

I finally got my official VA rating via the mail (my last day in the Navy was January 1st and I received the VA package February 3rd). When I got my PEB results from the Navy (NOV 2011), my unfitting condition was rated 0% with severance pay, and 80% VA for all my other conditions. I was told from my VA counselor that I would not have to pay back my severance pay because the VA gave me a 0% rating for my unfitting condition. I was waiting for the actual paperwork from the VA so I could post if that was true or not. The VA counselor was correct, I do not have to pay back the severance pay. My VA paperwork stated that due to the fact that I am not being paid twice for the same condition (i.e. the 0% rating) than there is no recoupment of the severance pay. If the unfitting condition increases in rating later through the years, than I will have to pay back the severance pay via the new rating %. For anyone who is found unfit, 0% with severance pay, I hope this helps :) God Bless!
 

rickman

PEB Forum Regular Member
PEB Forum Veteran
I'm not doubting what the letter says or how you read it - you may want to double-check what they said. They could have made an error and when an audit finds the mistake, they will come after the money. My understanding is it doesn't matter if you are found unfit at 0% or even 20%, you will receive severance pay from the DoD for an unfitting condition and you will be paid by the DoD using the formula (last 3 year average base pay x 2 months base pay x whole number of years served (19 max)). That amount will be deducted from your VA compensation check. The severance pay will be tax free - but you will have to file for the withholding (and you better check to make sure you claim it at the right time). Once you are separated, your unfit DoD rating will not change - unless you find an error with your ratings. Then you have to file with BCMR since you accepted the unfit findings. The only rating that can change is the VA rating depending on if/when a review is done and medical examination determines a change is warranted.

Bottom line is whatever the DoD pays will be deducted from your VA compensation amount.
 

StillWaiting

PEB Forum Regular Member
PEB Forum Veteran
Guiret28 is 100% correct. The VA will recoup any severence amount paid by the DOD. However, in the PEB process the severence is based upon the board finding of unfit which is based only on the disqualifying diagnosis'. It in the future that diagnosis that the member was seperated for has a rating increase the member will not receive the compensation for that percentage amount only. They will still receive the other compensation for the other diagnosis'.
 

gunmate1

PEB Forum Regular Member
PEB Forum Veteran
Guiret28, I am just wondering what you were found unfit for? 80% from the VA you would think you would get more than 0 from the Navy. I found out the other day that the VA recommended to my PEB that i be 50% for DOD and 80% for VA. Just wondering if my ratings could change before the Navy accepts them. Ever hear of that?
 

rickman

PEB Forum Regular Member
PEB Forum Veteran
I'm not doubting what the letter says or how you read it - you may want to double-check what they said. They could have made an error and when an audit finds the mistake, they will come after the money. My understanding is it doesn't matter if you are found unfit at 0% or even 20%, you will receive severance pay from the DoD for an unfitting condition and you will be paid by the DoD using the formula (last 3 year average base pay x 2 months base pay x whole number of years served (19 max)). That amount will be deducted from your VA compensation check. The severance pay will be tax free - but you will have to file for the withholding (and you better check to make sure you claim it at the right time). Once you are separated, your unfit DoD rating will not change - unless you find an error with your ratings. Then you have to file with BCMR since you accepted the unfit findings. The only rating that can change is the VA rating depending on if/when a review is done and medical examination determines a change is warranted.

Bottom line is whatever the DoD pays will be deducted from your VA compensation amount.

Sorry - I made an error - The severance pay COULD be taxed depending on your situation. Please read the top story on this link (it also clarifies VA recoupment):

Disability Severance Pay Taxed

Also from DoD Financial Management Regulation Volume 7B Chapter 11:

110504. Severance Pay and VA Disability Compensation. The amount of disability severance pay received under Title 10, United States Code, section 1212 (10 U.S.C. 1212) may be subject to recoupment by the VA. The member should contact the applicable VA office for more information. Effective January 28, 2008 and later, no deduction is made in the case of disability severance pay received by a member for a disability incurred in the line of duty in a combat zone or incurred during performance of duty in combat-related operations as designated by the Secretary of Defense. No deduction is made from any death compensation to which the former member’s dependents become entitled after the member’s death.

So for Guiret28's case, it all depends on under what circumstances he was found unfit for.
 

Guiret28

PEB Forum Regular Member
PEB Forum Veteran
My unfitting condition was narcolepsy. The highest rating for it is 10%, but because my medications are working so well, the VA rated me at 0%. The VA recoups severance pay at the % at which the disability was rated. If they would have rated me 10%, then they would take 10% of my VA disability pay until the severance pay (after taxes) is paid off. They will not pay twice for the same disability. DOD gave me severance pay for my disability, the VA is not paying me for the disability. However, if the VA changes my rating of narcolepsy from 0% to 10% in the future, I will have to pay back the severance pay (after taxes) at the rate of 10% of my VA disability paycheck.



(Authority: 10 U.S.C. 1174(h)(2) and 1212(d)

(3) Severance pay. Where the disability or disabilities found to be service connected
are the same as those upon which disability severance pay is granted, or where
entitlement to disability compensation was established on or after September 15, 1981, an award of compensation will be made subject to recoupment of the disability severance pay. Prior to the initial determination of the degree of disability recoupment will be at the full monthly compensation rate payable for the disability or disabilities for which severance pay was granted.
Following initial determination of the degree of disability recoupment shall not be at a monthly rate in excess of the monthly compensation payable for that degree of disability. For this purpose the term "initial determination of the degree of disability" means the first regular schedular compensable rating in accordance with the provisions of Subpart B, Part 4 of this chapter and does not mean a rating based in whole or in part on a need for hospitalization or a period of convalescence. Where entitlement to disability compensation was established prior to September 15, 198 1, compensation payable for service-connected disability other than the disability for which disability severance pay was granted will not be reduced for the purpose of recouping disability severance pay. Where entitlement to disability compensation was established on or after September 15, 198 1, a veteran may receive disability compensation for disability incurred or aggravated by service prior to the date of receipt of the severance pay, but VA must recoup
from that disability compensation an amount equal to the severance pay. Where payment of severance pay was made on or before September 30, 1996, VA will recoup from disability (No. 87 7/5/09) compensation an amount equal to the total amount of the severance pay. Where payment of severance pay was made after September 30, 1996, VA will recoup from disability compensation an amount equal to the total amount of the severance pay less the amount of Federal income tax withheld from such pay. For members of the Armed Forces who separated under Chapter 61 of title 10, United States Code, on or after January 28, 2008, no recoupment of severance pay will be made 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. (Authority: 10 U.S.C. 1174(h)(2) and 1212(d))
 

Charles Maine

PEB Forum Regular Member
PEB Forum Veteran
I hate to beat a dead horse here but I am still not seeing a concrete answer. If I received 10% from the Navy for the unfitting condition and then 50% from the VA (10% of which was the unfitting condition from the Navy). I read this as the VA will keep 10% of my compensation until the Severance is recouped. By 10% I understand this is the $140 or whatever. So if my total VA compensation is $1000 then it would actually be like $850ish until the VA recoups the severance. However lets say the severance is $70,000 or $55,000 after taxes. You are telling me they are going to take that $140 for the next 40-50 years???
 

boobootex

PEB Forum Regular Member
yes, that is how it was explained to me at VAAP class in San Diego. They take the dod percentange out of the VA until the severvance is paid in full. So it could take 40 or 50 years in your example.
 

SGT Bob

PEB Forum Regular Member
PEB Forum Veteran
Registered Member

Sixburg6

Member
Registered Member
Guiret28, I am just wondering what you were found unfit for? 80% from the VA you would think you would get more than 0 from the Navy. I found out the other day that the VA recommended to my PEB that i be 50% for DOD and 80% for VA. Just wondering if my ratings could change before the Navy accepts them. Ever hear of that?
What's up gunmate1 was wondering if your rating at the peb was the same from the va when you received by mail
 

Kontum6870

PEB Forum Regular Member
PEB Forum Veteran
Registered Member
I received severance pay of $6,900 in 1971 and didn't receive a dime from the VA until 1988. But, I had a single rating from both DOD and VA for same condition.
 

eps17

PEB Forum Regular Member
PEB Forum Veteran
Is there a maximum that they can recoup? I got rated 10% for Major Depressive Disorder. The VA didn't rate me for Major Depressive Disorder so I don't have any repayment of my severance. HOWEVER, the VA did rate me at 70% for PTSD and I filed with the AFBCMR to challenge the original condition and 10% rating. If the AFBCMR changes my 10% Major Depressive Disorder to match the PTSD 70% that the VA rated me for what will happen then? Will they really recoup at the rate of 70% when I am 100% TDIU? That's scary if the answer is yes. So I was hoping someone might know the actual answer?
 

scoutCC

PEB Forum Regular Member
PEB Forum Veteran
Registered Member
Is there a maximum that they can recoup?
Yes, the initial level set for recoupment acts as a maximum. If the rating goes down, recoupment rate drops, if the rating goes up, recoupment doesn't exceed that initial level. This is from the M21 manual.

Will they really recoup at the rate of 70% when I am 100% TDIU?
The VA should not recoup if you are changed to retirement. DFAS should do the recoupment in that case. So VA rules about the cap will not apply.
 

eps17

PEB Forum Regular Member
PEB Forum Veteran
I'm tracking. But if the AFBCMR changes my record my original 10% rating will essentially disappear. They will then replace it with a 70% rating. Will DFAS recoup at the new rating do you think? The 10% was for major depressive disorder, the 70% would be for PTSD. Two different codes. Its so complicated.
 

RLTWvet

New Member
Registered Member
First time posting here...

Situation: I was medically separated in 99 I received 53k in severance pay. The 53k was tax free.
Medical board I received 10% lumbar strain - and 0% for Right knee.
VA rated me at 20% - 10 Lumbar - 10 right knee

In 2007 my back went to 20%, knee still 10% and my shoulders were added along with migraines, these were all 0% when I got out.
Over the years my overall rating has gone from 20% (10% back - 10% right knee) to now 80% during that time, they were only taking out 10% to pay back the severance pay.
2014 they started taking out 20% to pay back my Severance. I was told, because I'm at 80% they are now going to take 20%. They also tied in my right knee on the print outs they give after adjudication of claim.

I thought - as I read above they would only take 10% regardless if my condition increased, based on my Army Board of 10%. Currently I'm 80% but being paid out at 60%.
 

eps17

PEB Forum Regular Member
PEB Forum Veteran
What you're stating sounds right. The deduction is based on the condition you were medically discharged for and at the first percentage rating that was assigned. Which from everything you're saying should be 10%.
 

tlow54

New Member
Registered Member
Wow finally found a thread with someone in the same situation please reply to this with any advice

I am active duty usmc. Just signed my ratings at 0%DoD and 80% VA

So like I'm seeing here and what I was told is I will be separated soon with my severance pay and no other DoD benefits (tdrl or pdrl) and then after discharge I will receive my full VA compensation every month because I was rated 0% for my one unfitting condition from the DoD?

So is this all true? And will I be able to get the taxes back from the severance I get?

And is anyone else worried about that VA percentage going down ? I'm only 21 years old at the moment
 

eps17

PEB Forum Regular Member
PEB Forum Veteran
Well, being 21 years old how many years do you have in?

That is a huge disparity in ratings; however if the only unfitting condition was rated 0% you are in the severance situation.

You should get TAMP benefits; 6 months Tricare, an ID card good for 2 years, but you only get it tax free if the unfitting condition is deemed "combat related."

It is also possible to get the taxes back; but only if the VA rated you and pays you for the same condition; but that would put you in a different situation of recoupment where they take out money from your VA check every month to repay your severance pay. No joke.

VA percentages CAN go down; most definitely. There are a few rules out there to protect veterans and "lock in" the ratings but they usually require a lot of time; decades actually.
 

tlow54

New Member
Registered Member
I have 3 years in going to be separated before my 4th.

So youre saying that even though my one rated "unfitting condition" is at 0% I still have to pay back that severance pay with my VA recoupment?

I'm just trying to figure out if I'm set up good right now or not lol. I do not know what TAMP benefits are. all I know is I'm getting separated with severance pay no benefits from the DoD and got a 80% VA combined rating that will start paying me after separation. Does this all sound right? and yeah ive read a lot more information on the years ahead of getting re examined . I don't believe my conditions will get better so I guess I'm not as worried about it as I was.

But as I keep researching I'm basically looking at when I get out taking my little severance check (probably no more than 10k after taxes). and a month later looking at either post 9/11 GI Bill BAH with my VA compensation to keep moving forward. Havent gotten briefed on other VA benefits yet like healthcare or VOC REHAB which sound enticing.

Honestly my unit isn't even letting me checkout yet theyre saying I have to wait until they formally change my EAS date in MOL which is crazy I even show them the PEB counseling saying I'm 6-8 weeks from getting separated. pretty annoyed since I'm stationed in Hawaii and have no idea how DMO and moving works.
 

eps17

PEB Forum Regular Member
PEB Forum Veteran
You "should" get TriCare for 6 months for free and you "should" get an ID card for two years albeit a tan colored one. Your severance WILL be taxed at around 40% if it is NOT combat related; and if the VA rates you for the same condition you received severance for the law states you cannot be paid for the same disability twice, ie. severance AND va disability compensation. HOWEVER, since the VA rated you zero percent and assuming the VA rates you zero percent for the same condition (I error'd earlier as I am used to assuming the VA always rates higher than DoD) it is possible the severance recoupment would not be triggered since you wouldn't technically be getting paid for the VA zero percent rating. I know, its crazy. Since the VA rated you for all kinds of other conditions that the DoD did NOT rate you for; you're entitled to that money free and clear since you're not getting paid for the same disability twice, only once from the VA because the DoD didn't rate them.

Post 9/11 GI Bill is a good plan; but don't forget you're eligible to file for unemployment! Many people work AND go to school; interpret that any way you want and some states will still pay you unemployment if you're going to school. Again, depends on where you file unemployment at.

You should use your CAC and log onto www.ebenefits.va.gov and create a premium account; and start getting familiar with that website and all of the specific information it can and will generate based solely on you.

As far as DMO/TMO stuff; they'll pay for your relocation and moving your stuff, etc. for up to one year after you separate.
 
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