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))