VA's recoupment of severance pay

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pdetar

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I was told by a Naval lawyer that the VA does not recoup your severance pay unless they rate you 10% or higher for one of the conditions listed on your PEB or IPEB. Meaning, if you were found Unfit with 0% and uncoded or with codes the VA didn't later rate, they would not recoup your severance pay if they found you 10% or higher for other conditions not listed on your PEB paperwork.

It's a sound, logical argument, but I haven't seen anything in writing to prove this theory.

Any truth to this?

PD
 
If the VA rates you at 10% or more, they have to pay you, I believe it starts at $115/month. If they pay you, then they're going to recuperate the after-tax amount the military gives you as separation pay.

If the VA only gives you 0% (not a bad thing), then they're not going to pay you a montly compensation, so they're not taking your separation pay to make up the difference. The separation pay is kind of best viewed as an advance loan from the VA if you're going to get a 10% or higher rating from them.

From the VA rep I spoke with, if you get rated by the VA at 10% or more for anthing service connected, they're going to wait until the separation pay amount has been made up in months that you would have been paid by the VA, then they'll start paying you again.
 
I got this from the NDAA.

SEC. 1646. ENHANCEMENT OF DISABILITY SEVERANCE PAY FOR MEMBERS OF THE ARMED FORCES.

  • (a) In General- Section 1212 of title 10, United States Code, is amended--
    • (1) in subsection (a)(1), by striking `his years of service, but not more than 12, computed under section 1208 of this title' in the matter preceding subparagraph (A) and inserting `the member's years of service computed under section 1208 of this title (subject to the minimum and maximum years of service provided for in subsection (c))';
    • (2) by redesignating subsection (c) as subsection (d); and
    • (3) by inserting after subsection (b) the following new subsection (c):
  • `(c)(1) The minimum years of service of a member for purposes of subsection (a)(1) shall be as follows:
    • `(A) Six years in the case of a member separated from the armed forces for a disability incurred in line of duty in a combat zone (as designated by the Secretary of Defense for purposes of this subsection) or incurred during the performance of duty in combat-related operations as designated by the Secretary of Defense .
    • `(B) Three years in the case of any other member.
  • `(2) The maximum years of service of a member for purposes of subsection (a)(1) shall be 19 years.'.
  • (b) No Deduction From Compensation of Severance Pay for Disabilities Incurred in Combat Zones- Subsection (d) of such section, as redesignated by subsection (a)(2) of this section, is further amended--
    • (1) by inserting `(1)' after `(d)';
    • (2) by striking the second sentence; and
    • (3) by adding at the end the following new paragraphs:
  • `(2) No deduction may be made under paragraph (1) in the case of disability severance pay received by a member for a disability incurred in line of duty in a combat zone or incurred during performance of duty in combat-related operations as designated by the Secretary of Defense .
  • `(3) No deduction may be made under paragraph (1) from any death compensation to which a member's dependents become entitled after the member's death.'.
  • (c) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act , and shall apply with respect to members of the Armed Forces separated from the Armed Forces under chapter 61 of title 10, United States Code, on or after that date.
 
builtgypsy said:
From the VA rep I spoke with, if you get rated by the VA at 10% or more for anthing service connected, they're going to wait until the separation pay amount has been made up in months that you would have been paid by the VA, then they'll start paying you again.
Click to expand...

It can happen that way (and it did for me), but it's not supposed to. Fortunately, or not, it depends on which state you are in as well.

I was initially awarded a 50% combined rating - 30% for hysterectomy and 20% for urinary incontinence:mad:, and the VA withheld all of my compensation to recoup the severance pay which was ONLY awarded for the urinary incontinence by the Air Force. The initial award was done in Hawaii. Then I moved to Nevada and appealed the withholding. Nevada refused to reduce the monthly withholding, even though we all know that the military doesn't compensate anyone (normally) for loss of reproductive organs. Then I moved home to Seattle, where I requested a DRO hearing about the denial. Less than 6 months later, I had a a big fat check and started receiving the 30% portion of my VA award.

Anyway, it's possible to overcome the VA's impulse to keep every red cent til the severance pay is recouped, but you may have to move to different regional office....
 
This one continues to confuse people. Here is the answer as to recoupment for conditions not rated by DoD that are later rated by VA.

"38 CFR 3.700
"(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... Where entitlement to disability compensation was established prior to September 15, 1981, 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, 1981, 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.

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

So, in short, after September 15, 1981, it did not matter what condition you were rated for, it is only the fact that you are receiving severance pay and VA disability compensation that triggers recoupment.
 
I'm a little confused. In my posting, I was talking about the "rate" of recoupment, not the "amount" of recoupment. The amount of recoupment (since I received my disability severance pay after Sep 1996) is the post-tax amount. The total severance pay was approx. $39,000 but I only received about $27,000 after tax was withheld - later, the IRS refunded the taxes withheld. The VA recouped the $27,000 from my compensation. Originally, they withheld my entire monthly compensation amount - the "rate" of recoupment was 100% of my monthly VA compensation. After I won the appeal, the total recoupment amount didn't change, but the amount the VA withheld from my monthly compensation did - they began withholding only 40% of my monthly compensation amount - the portion of my VA award that was for the same disability as the severance pay.

This was a big deal. Basically, my severance pay was an interest-free loan from the government. In repaying that loan, I was making huge payments - the entire monthly compensation amount of my VA award - about $1500 per month. By winning the appeal, my monthly payment dropped down to about $700 per month on the interest free loan. I still had to pay all of the severance pay back, but I enjoyed the repayment terms a lot more!

The guidance that VA uses to determine the "rate" of severance pay recoupment is located in M21-1MR, Part III, Subpart v, 4.B.7.c:

Important:
· The rate of recoupment should not be in excess of the rate of compensation payable for the initial determination of the degree of disability assigned to those disabilities, except for hospitalization (Paragraph 29) and convalescence (Paragraph 30) ratings. The initial determination of the degree of disability is the first schedular rating for that disability under Subpart B of Part 4 of the CFR. For example:
- If the initial disability evaluation was 20 percent, but the current evaluation is 30 percent, the recoupment is at the 20 percent rate.
- If the disability was initially evaluated as 50 percent, but a temporary 100 percent rate was paid due to Paragraph 29 or Paragraph 30, the recoupment is at the 50 percent rate.
- If the disability was initially evaluated as 0 percent and then a temporary 100 percent rate is assigned due to Paragraph 29 or Paragraph 30, there is no recoupment until the first regular schedular compensable evaluation is assigned. (See 38 CFR 3.700(a)(3))
 
Assuming that someone was prepared to be separated, that they had the 6-12 months of living expenses in savings, it makes more sense financially to take a large sum of money up front instead of having payments spread over a period of time. From a modest investment, you could gain a little over $1,400 in dividends (S&P 500 average return of 9.1% over several decades), and from a great savings account (like ING Direct) you could gain about $1,200. In one year, you've nearly managed to gain an extra monthly payment from the interest you've gained. Over a very short period of time (from an investment standpoint), that compound interest adds up beyond anything that putting that monthly compensation into savings ever could.

That's just an exercise in extremes, and most people won't be able to sack their severence pay into a savings account, but it still shows the more you can initially put away towards retirement/house/college/debt/ the more you get in return.
 
SheilaLundee,

I am not sure exactly what went on in your case, but it appears that your case benefitted from the succesful appeal''s effect on the recoupment rules. The tax issue seems to be a separate issue from the rate they recouped, so I would discard that in the analysis (though, having the money in hand is a very big deal, I mean to say that it appears that your case had more to do with the provisions you cited than with anything to do with the tax status).

Didn't mean to confuse you, I was more replying to the original posters question regarding recoupment for different disabilities rated by DoD and VA.
 
Does anyone know if the new policy with military retirement and va compensation (I think it is that retires will receive 100% of the VA compensation by 2012 and prorated before that) will that have anything to do with severance pay recoupment?

I can't believe how this recoupment thing works. It is so unfair! I had 10 years in and I consider my separation pay making up for what I would have had in retirement. Then I get my back and rest of my body screwed up by the Air Force and I don't get squat for 3 years. Does anyone know if anyone is fighting this policy through some veterans groups? How is non-disability separation pay even considered the same thing as VA compensation.
 
Hello, new guy here. I’m a little confused. I finally received my award letter today. I was awarded with a disability rating of 90% w/ extra.
I’m definitely grateful for that blessing from GOD, but when I continued reading the award letter, something caught my eye.

Under the section, “what is your entitlement amount and payment start date” it reads the total amount of money I will be getting monthly.
According to what it reads, I won’t be getting a payment until 6 months from now. January 2009 will be my first payment and it’s not even the full amount. (Recoupment of Separation Pay) ß that’s what it reads next to my payment date.

Now this is where I get confused b/c when I was in my TAP’s class, the VA rep told a few of us that were getting put out involuntarily would not have to pay back any separation amount b/c we were involuntarily put out. A bunch of us were put out HYT (high year tenure). I don’t know how well everyone knows what HYT is (since I’m new here) but it is when you get put out involuntarily b/c you did not reach a certain rank in whatever amount of years. I mean, I could of made it, but…that’s another story.

So my question to the board is…
- If a member was put out involuntarily/ High Year Tenure and the Navy gave them severance pay (so they can get back on their feet)
Does the VA re-coup all the severance money before they receive their first VA payment? I know they do for people who get severance pay for a lot of other things, but even when you were unexpectedly, involuntarily –PUT OUT? I’ve heard difference answers and even know more than enough people that have been put out HYT and still get their VA check…

Sorry for the long story, but that’s just how I am J
 
I was in the same situation just a month ago. This severance thing is out of control. I had 21 1/2 years of total service and 14 1/2 of active before I was injured. What we need to do is band together as brothers in arms and fight this fight as if it were the current war we are being forced to fight. I would like to see hundreds, if not thousands, of us come forward so we can have a voice and resolve this issue. I agree with you; the severance check to me was a thank you for getting hurt, just like it would be in the civilian world. The problem is the US Armed Forces does not work like a text book, but hopefully we can all work together and fix this problem. By the way where is my ID Card for my Service Connection?

For you the first thing you need to do is contact the main VA number at 1-800-827-1000 to complain about the amount they are taking out. Two things can happen on this call, one you can talk to the person on the phone to see if they can resolve the issue, or two you can ask to be transfered to your regional office. To have your amount deducted reduced you MUST tell them you have an EXTREME HARDSHIP based off your financial status and you are unable to support your family. Then your argument is based off your rating from the Navy (ie. 10%, they can only take 10%) that is all they can take from your VA check. Look below this post and you will see all the regulations needed to argue your point to the operator on the other end of the phone. The key here is act like you know the regulation better than they do and do not waver from your stance. Please see governing sections of the VA below.

The guidance that VA uses to determine the "rate" of severance pay recoupment is located in M21-1MR, Part III, Subpart v, 4.B.7.c:

Important:
· The rate of recoupment should not be in excess of the rate of compensation payable for the initial determination of the degree of disability assigned to those disabilities, except for hospitalization (Paragraph 29) and convalescence (Paragraph 30) ratings. The initial determination of the degree of disability is the first schedular rating for that disability under Subpart B of Part 4 of the CFR. For example:
- If the initial disability evaluation was 20 percent, but the current evaluation is 30 percent, the recoupment is at the 20 percent rate.
- If the disability was initially evaluated as 50 percent, but a temporary 100 percent rate was paid due to Paragraph 29 or Paragraph 30, the recoupment is at the 50 percent rate.
- If the disability was initially evaluated as 0 percent and then a temporary 100 percent rate is assigned due to Paragraph 29 or Paragraph 30, there is no recoupment until the first regular schedular compensable evaluation is assigned. (See 38 CFR 3.700(a)(3))
 
heedaf said:
Does anyone know if the new policy with military retirement and va compensation (I think it is that retires will receive 100% of the VA compensation by 2012 and prorated before that) will that have anything to do with severance pay recoupment?

I can't believe how this recoupment thing works. It is so unfair! I had 10 years in and I consider my separation pay making up for what I would have had in retirement. Then I get my back and rest of my body screwed up by the Air Force and I don't get squat for 3 years. Does anyone know if anyone is fighting this policy through some veterans groups? How is non-disability separation pay even considered the same thing as VA compensation.
Click to expand...


We are in the same boat. There is so much work to be done in terms of fairness and equality in how the regulations are applied. There are many groups fighting the battle on behalf of veterans. I know that COL Mike Parker, who frequently posts on this website, is an outstanding advocate for veterans rights. If you visit the Welcome to MOAA - The Military Officers Association of America Web Base website it contains a wealth of information about work they are doing on behalf of us. I have personally been working with Senator Patty Murray (WA). She has been a great voice for change and was instrumental in changes made to the MEB/PEB process over the last year. I would contact your local Congress person for your state. You can also visit the website for the House Committee of Veterans Affairs (House Committee on Veterans' Affairs). I would email, call, write letters, etc. They are not going to stop to listen to one voice. They need to hear from thousands of us constantly.

The National Defense Authorization Act of 2008 had some interesting changes, although I do not agree with them all. You may want to Google that and do some reading. I think it is important to make change but to also make sure it is retroactive, as appropriate.

How much of your monthly check are they taking out for recoupment? I made another post last night about who to contact to appeal that.

Feel free to email me directly as well.

Bill
[email protected]
 
slickmo said:
Hello, new guy here. I’m a little confused. I finally received my award letter today. I was awarded with a disability rating of 90% w/ extra.
I’m definitely grateful for that blessing from GOD, but when I continued reading the award letter, something caught my eye.

Under the section, “what is your entitlement amount and payment start date” it reads the total amount of money I will be getting monthly.
According to what it reads, I won’t be getting a payment until 6 months from now. January 2009 will be my first payment and it’s not even the full amount. (Recoupment of Separation Pay) ß that’s what it reads next to my payment date.

Now this is where I get confused b/c when I was in my TAP’s class, the VA rep told a few of us that were getting put out involuntarily would not have to pay back any separation amount b/c we were involuntarily put out. A bunch of us were put out HYT (high year tenure). I don’t know how well everyone knows what HYT is (since I’m new here) but it is when you get put out involuntarily b/c you did not reach a certain rank in whatever amount of years. I mean, I could of made it, but…that’s another story.

So my question to the board is…
- If a member was put out involuntarily/ High Year Tenure and the Navy gave them severance pay (so they can get back on their feet)
Does the VA re-coup all the severance money before they receive their first VA payment? I know they do for people who get severance pay for a lot of other things, but even when you were unexpectedly, involuntarily –PUT OUT? I’ve heard difference answers and even know more than enough people that have been put out HYT and still get their VA check…

Sorry for the long story, but that’s just how I am J
Click to expand...

Hello, I was INVOLUNTARY separated from the Marines, because I couldn't pick up the next rank, I got HALF SEPARATION PAY, in 2001. I got 10% ptsd, retroactive to 2006. I just got awarded 20% for my left ankle, retroactive in 2006. Combined they are 30%. I have 6 dependents. I got a letter today about the separation pay I got in 2001, the VA want me to provide proof of that money I got. Since I was involuntary separated how this will affect my monthly compensation?
 
IS there a time frame for recouping the severance pay through the VA payment?

I was first notified in Jan. of 2005, but I just got a letter stating it will start Nov. of 2008. This is almost 4 years later. If this does happen there is going to be a major hardship on my family.

Anything I can do?

Thanks,
James
 
Ok I was in the Army 1992-1996. I was injured during the Gulf War. I ETs in 1996. I began to receive medical care through the VA. I filed a claim for the injuries.Left knee & right shoulder)I was granted compensation.30% Now since I had time remaining on my enlistment; I was summons to muster with a reserve unit in April 2000 and submitted my s/c papers to show I was disabled. My enlistment contract ended Sept 2000. I was extended after that date. In 2001 I was told I had to take a physical in turn I failed the physical. I The unit since then did nothing to address for me a MMRB MEB or PEB. Since Feb 2001, I have been extended 21 times with the contingency of a medical board. I have failed each physical 2003, 05, 07, and in 08 for the final PEB I wrote my Congressman in 2007 and that got me a Med board the NARSUM has all my injuries to include the ones I am already s/c for.since being in the reserves awaiting the board I have 2 additional LODs right wrist and my feet due to the new boots has given me flat feet and tarsal tunnel and I lose feeling on my right sidet....the VA has just figured out from my active duty time 1992-1996 I have a pinched nerver which is causing the wrist to go numb and right foot to numb too...now from the PEB I was given 20% and serverance pay...total 16 yrs with 3 yrs being IRR..so about 13yrs for severance pay...now my question is will VA recoup from severance pay monies from the injuries that happen before I was in the reserves that they are already compensating me for or will it be just for the the new injuries???:confused::confused: Somebody anybody please assist me.. thank you in advance or email me at [email protected]
 
morhets said:
I was in the same situation just a month ago. This severance thing is out of control. I had 21 1/2 years of total service and 14 1/2 of active before I was injured. What we need to do is band together as brothers in arms and fight this fight as if it were the current war we are being forced to fight. I would like to see hundreds, if not thousands, of us come forward so we can have a voice and resolve this issue. I agree with you; the severance check to me was a thank you for getting hurt, just like it would be in the civilian world. The problem is the US Armed Forces does not work like a text book, but hopefully we can all work together and fix this problem. By the way where is my ID Card for my Service Connection?

For you the first thing you need to do is contact the main VA number at 1-800-827-1000 to complain about the amount they are taking out. Two things can happen on this call, one you can talk to the person on the phone to see if they can resolve the issue, or two you can ask to be transfered to your regional office. To have your amount deducted reduced you MUST tell them you have an EXTREME HARDSHIP based off your financial status and you are unable to support your family. Then your argument is based off your rating from the Navy (ie. 10%, they can only take 10%) that is all they can take from your VA check. Look below this post and you will see all the regulations needed to argue your point to the operator on the other end of the phone. The key here is act like you know the regulation better than they do and do not waver from your stance. Please see governing sections of the VA below.

The guidance that VA uses to determine the "rate" of severance pay recoupment is located in M21-1MR, Part III, Subpart v, 4.B.7.c:

Important:
· The rate of recoupment should not be in excess of the rate of compensation payable for the initial determination of the degree of disability assigned to those disabilities, except for hospitalization (Paragraph 29) and convalescence (Paragraph 30) ratings. The initial determination of the degree of disability is the first schedular rating for that disability under Subpart B of Part 4 of the CFR. For example:
- If the initial disability evaluation was 20 percent, but the current evaluation is 30 percent, the recoupment is at the 20 percent rate.
- If the disability was initially evaluated as 50 percent, but a temporary 100 percent rate was paid due to Paragraph 29 or Paragraph 30, the recoupment is at the 50 percent rate.
- If the disability was initially evaluated as 0 percent and then a temporary 100 percent rate is assigned due to Paragraph 29 or Paragraph 30, there is no recoupment until the first regular schedular compensable evaluation is assigned. (See 38 CFR 3.700(a)(3))
Click to expand...

You have to go to the VA and fill out the form and take a picture to received your VA service connected card...
 
I was in the US Army had to get out because of a bad knee and sinus problems. I received 20% and paying back half my monthly check to pay severence pay. Can I get back the money I've already paid? I don't think its right I pay half my check for this pay. My State and Federal government took 28% from me each. Is this right?
 
In regards to severance pay, does anyone know what a "VA Waiver" is? Also, I am getting conflicting stories from DFAS (go figure) everytime I ask them about the St. Clair decision. Who do I write to, whom do I call or e-mail to get my money back. Also, they shorted me a year. Same people?
 
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