I frequently receive questions from veterans who want to know how or why the VA can take money from their VA service-connected disability compensation. Many veterans express disappointment or a lack of understanding when this happens. And I can understand that. After all, they receive this benefit because their health was made worse during, or because of, their military service. Unfortunately, there are times when their disability compensation can legally be reduced or withheld.
The primary reasons this may happen include a withholding, recoupment of your pay, an offset, or a reduction. Let’s look at some of the major reasons these things might happen.
Table of Contents
- VA Disability Compensation Pay Withholding
- VA Disability Compensation Recoupment
- Disability Separation Pay
- Voluntary or Involuntary Separation Pay:
- Separation pay from active duty, but later retired from Active Duty, Guard, or Reserves:
- Cannot Receive VA Disability Pay and Military Pay at Same Time
- VA Disability Pay Offset
- Reduction in VA Disability Rating
VA Disability Compensation Pay Withholding
There are several times when your VA disability compensation can be withheld. Some situations that don’t need much explanation include when there is an error in your award, an error the amount you were paid, if there was fraud involved, or if you otherwise owe a debt to the VA. There may be stipulations on when and how much can be withheld from your payments. But we’re not going to try and define each of those situations as most of these cases will be situational and will require one on one assistance through the VA or through a Veterans Service Organization. If you run into this situation, please get in touch with the VA or a VSO for specific guidance.
VA Disability Compensation Recoupment
This situation is probably the most misunderstood. In short, the VA is required by law to withhold your disability compensation pay if you received separation pay when you separated from the military, then are later awarded disability compensation. This includes medical separation pay (Chapter 61 separations) and voluntary or involuntary separation pay.
Disability Separation Pay
The VA is required by law to withhold disability compensation payments for servicemembers 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.
- Source: 10 U.S. Code § 1212.
Voluntary or Involuntary Separation Pay:
Federal law also requires the VA to withhold compensation pay for veterans separation pay, severance pay, and readjustment pay, less any federal taxes already paid.
Separation pay from active duty, but later retired from Active Duty, Guard, or Reserves:
Members who receive separation pay, but later rejoin the military and earn a retirement (Active, Guard, or Reserves) would also have part of their retirement pay withheld until the amount of their separation pay had been recouped. If the veteran is also a disabled veteran, then DFAS and the VA would coordinate the recoupment of the separation pay.
- Source: 10 U.S. Code § 1174;
- Additional Resource: DFAS FAQ Page.
Note regarding recouped funds and taxes: The VA will only recoup the after-tax amount from your disability payments (for federal taxes already paid). You have already paid taxes on the amount of severance pay received, so the VA will not withhold beyond the amount of money you actually received.
Cannot Receive VA Disability Pay and Military Pay at Same Time
Finally, military members who have a VA service-connected disability rating are unable to receive both their military pay and VA disability compensation for the same period. Servicemembers cannot apply for a VA service-connected disability rating while they are still serving in the military. However, it is possible to receive a disability rating and serve again later. This normally occurs for prior service members who go back on duty or with members of the Guard or Reserves.
Here is an article about joining the Guard or Reserves with a VA disability rating. In general, you can expect to need medical waivers to join the military, and you will have to decide your pay.
Military members who have a disability rating and are serving on active duty or are otherwise activated are required to waive their VA pay while they are serving on active duty. Members of the Guard or Reserves must choose which pay they wish to waive. At the end of the year, they will receive a form from the VA in which the member must elect which pay they wish to keep and which pay they wish to waive.
If the member chooses to waive their military pay, they will be required to pay back everything they earned while receiving VA disability compensation. However, most military members earn more through their military pay and choose to waive their VA disability compensation. In this case, the member elects to waive their VA pay, and the VA will withhold their payments for the corresponding number of days in the following year.
VA Disability Pay Offset
Not too many years ago, military retirees who were awarded a VA disability compensation rating were unable to receive both their full retirement pay and their VA service-connected disability compensation. They had to choose which type of pay they wished to receive. Since VA disability compensation is a tax-free benefit, most service members choose to receive their VA compensation and waive the corresponding amount from their military retirement pay.
The law changed in 2004 when the Concurrent Retirement & Disability Pay (CRDP) law was passed. The CRDP laws allowed veterans with a VA disability rating of 50% or greater to receive both their retirement pay and their VA disability compensation concurrently, with no offset or reduction in pay.
Unfortunately, the cutoff was 50% or greater, and veterans with a rating of 40% or lower are still subject to having their retirement pay offset. This is not a reduction in their VA disability compensation but a reduction in their retirement pay. But it’s worth noting in this article to serve as a reference. Here is a full article that explains how VA disability compensation affects military retirement pay.
- Source: 10 U.S. Code § 1414.
Exceptions for retirees with combat-related disabilities: In 2008, Congress passed the Combat Related Special Compensation (CRSC) Benefits program, which replaces VA disability offset for military retirees who have combat related disabilities. Veterans with a combat-related disability rating of 10% or more avoid the VA offset, even if they don’t meet the 50% rating threshold for the CRDP program. This only applies to those disabilities that are considered to be combat-related.
- Source: 10 U.S. Code § 1413a.
Reduction in VA Disability Rating
Finally, the VA can reduce a veteran’s disability rating if they believe it is warranted based on the circumstances or if the veteran fails to attend required medical examinations. There are some built-in protections for servicemembers who have held their rating for a number of years. This article explains how the VA can reduce your disability rating.
There you have it – there are several ways the VA can reduce, recoup, or withhold your VA disability compensation.
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Marc F Harrell says
Received 10% for rating for a foot injury from DOD upon medical separation. VA rated the the foot 0%. The VA then rated 10% for asthma. The VA then did not pay the 10% for the asthma for the next 22 years as a recoupment of the disability received from the ARMY. This was not the same injury as the VA payments. Also the foot injury was in a combat zone in the line of duty. I would think, from reading the section of the referred to in the article, that they owe me the military disability pay back.
Thomas Wake says
No one waives their right to receive VA disability pay over their retirement pay. The US Government steals my retirement pay to pay my VA disability and have me pay versus them paying me like they swore an oath to do.
Eric Sailer says
I received an SSB Special Separation Benefit when I was asked to leave the Navy in 1994. Now 27 Years later I started to get Disability for injuries. Now the VA wants to Recoup the money which is a 9year payback… I know I can’t stop this but I want to know now to track it? I know that we usually get cost of living adjustments so It might not take as long but do you know of any way to track the recoupment?
Linda says
My husband got out of the Army in 2001, (30%) we got married in 2008. We took our marriage license down. He added me to Tricare, now here in 2019, they started taking $399 a month back, and putting him as single. we’ve been fighting them for 7 months, we gave them copies of my divorce from my first husband, a copy of his from his first wife, a copy of our marriage license and other paperwork they wanted. They were supposed to have a hearing the end of October to determine if they will be returning his money. Here it is almost the end of January, he wants to sue them. Any suggestions?
Kenneth says
I received a Service Separation Bonus when I got out the Air Force in 1992. I didn’t start receiving VA payment until the bonus was recouped at the full gross amount because I was discharged prior to October 1, 1996. Will the money paid for taxes be paid back to me.
J.R. says
Ken, Good evening. My Brother who is in bad condition was recently rated at 70% by VA for PTSD. However, VA told him that he must repay DFAS back for VSI payments that he received during the early 90’s! I am surprised there are no waivers or other types of help available for him and others in his situation. I just don’t understand the reasoning behind Congress writing such a law that has effected so many veterans. It does not seem fair as they were paid such a pittance to leave the service without a retirement and not be able to receive compensation for disabilities they incurred during their military service. Why has the bill been held up? We need to let POTUS know about this injustice!
David Buenaventura says
This is an interesting read, especially the part that says the VA will only recoup the after-tax amount. However, on the DFAS site, for retirement pay, they will recoup the full gross. This raises a lot of questions. Let’s say you were awarded 50k voluntary separations pay gross and minus taxes netted 45k, and you applied for VA disability. Let’s say they rated you at 35% with dependents giving you a monthly amount of $600. It will take you roughly 6 years and 3 months to pay off the 45k. Let’s say during that time you went into the reserves and finished out a retirement, hence in this case the DOD should recoup back the full gross amount at 50k. Reservist don’t get there retirement until 60, so would you start paying back 5k from 60 years old? Or do they start recouping the whole amount again? Who’s actually recouping our separations pay the DOD or VA? Anyone know where we can look to see how much we paid off already? Anyone know the reference regarding VA disability only recouping after-taxes?
Chris says
Hey, I’m coming up on my HYT and I was wondering if I accept the separation pay, do I have to pay it back to the VA if I have a Purple Heart and a NEC code of 0096?
Junior says
The problem is they do not know. No one knows. Not the VA (when you call), not this blog, not anyone in the same predicament.
When I processed out due to HYT I received a check. I was told I did not have to pay it back.
Went to the DAV to file a claim and again was told I did not have to pay it back.
Fast forward 8 years and I find this website.
I can file for a lot more but NOW they are asking if I received sep pay.
Glenn T. Smith says
Thanks veteran NO ANSWER. The DFAS SSB recoupment begins 1 November 2019.
This is the SECOND recoupment of the same SSB amount in 1992, when I separated from the AD Air Force. Tried talking to DFAS and presented three differing documents from VA stating that the recoupment has been collected by VA, they DID NOT BELIEVE closed their ears and continued on with THERE recoupment. I have written to the VA regional office and Department of VA in DC requesting they return the SSB amount that they recouped in 1997. Now stuck between two government offices and neither talk to each other, typical shtuff. This reminds me of an old proverb “They always FU through the drive through” ponder on it.
David Benedict says
This is exactly what I was afraid of the VA recoupment on top of a DFAS recoupment and no one seems to help. I think you’ll need legal counsel from here even if that’s possible. Please update here if you ever find anything that helps
Rob says
Does anyone know what actually happened with H.R. 4016 Restore Veterans Compensation Act of 2017 as far as recoupment of separation pay from VA disability? And have any other attempts been made to change the law since then since it was obviously unsuccessful. I am trying to write congressmen but need the facts first. Also, some of them haven’t responded.
Michelle says
I reenlisted in 2013, and was supposed to receive a bonus. I received the bonus and then in April of 2015 was medically discharged. When I received my disability severance, they had garnished that check for the whole bonus. It was my understanding that I would not have to pay back that bonus due to being injured in the line of duty. Am I wrong about this? Since it has been so long, do I have any recourse concerning this?
Ryan Guina says
Michelle, the only advice I can offer is to contact DFAS. They will review your records and help you understand your options. I wish you the best, and thank you for your service.
Michelle says
Thank you
Glenn Smith says
I was separated from the USAF AD in 1992. I was granted a SSB/Lump Sum. I repayed this in 1997 via the VA. Given priority to join the USAFNG, took advantage, retired in 2017. 2019 DFAS after my retirement for recoupment of SSB. Have requested an audit to be conducted, waiting for result. Have contacted the DAV and am contacting my Congressman. I have furnished three documents two from VA and one from a VA disagreement I filed for “Penalty and Interest” in 2018 that state the SSB has been recouped and nothing is owed. This is a recoupment that occured approximately 22 years ago in the early 1990’s. As far as a formal receipt for the recoupment, never received one. Why is this crap being recouped twice? Upon recoupment the first time means that I never even received “Separation Pay” WTF! Keep all your government papers vets you will need them before you leave this world, believe me.
Glenn T Smith says
DOES ANYONE HAVE AN ANSWER TO SHARE? AM I THE ONLY TDIU/RETIRED VETERAN THAT HAS HAD THIS INJUSTICE HAPPEN TO????
William Washburn says
I was involuntary separated in 2015. I was told I HAD to join the National Guard to get my separation pay. I was told by finance they never heard of that before. fast forward a few years I got medically retired from the National Guard due to shattering my leg during combatives training. Would I still be required to pay this amount back?
Ryan Guina says
Hello William, I have never heard that someone was required to join the National Guard to receive separation pay. If that is the case, I am not aware of the regulation that would require that. Regarding the separation pay – the law is written that those who receive involuntary separation pay must repay that amount if they later qualify for and receive military retirement pay (or would have otherwise qualified for retirement pay if they waive that for disability compensation). So based on the information provided, it appears as though you would be required to repay the separation pay you received. I wish you the best, and thank you for your service.
jameson says
I was told to join the reserves for 2 years (after doing 14 active) to collect separation pay. I was told I would be recouped IF I retire. It has been 9 years and getting over 50% disability. I still haven’t been recouped.
Randy says
Of course the Federal government can write the law any way it wants to cover the cost of military adventures, but it seems unfair and devious to recoup prior payments made legally and in good faith, especially to a member who returns to fight or to fill a specific need of the service.
Laws can be changed. I suggest that separation pay, retired pay, and disability payments be considered separate events which do not impact each other. This is a good fight.
Pamela Lee Stanford says
Can you explain why the Dept. of Veterans Affairs will not give a rating now to a service member that was medically discharged in 1974 with severance/disability but no rating. The VA wants the earnings statement that’s no longer available from DFAS, NPRC, DOD. The DEPT. OF THE NAVY has been asked for it but those records have been destroyed. The VA will make no decision without it. Now what?
Ryan Guina says
Hello Pamela, The VA requires there to be written proof of service and that the medical conditions are service-related. So the VA may simply need proof of service if they don’t have your records in their system. Your best option may be to a lawyer that specializes in these types of situations. I do not have specific recommendations for lawyers, as this is not my area of expertise.
I wish you the best, and thank you for your service!
Lawrence says
Received a 100% disabilty effective date 10 months earlier than given initially after a BVA appeal. The decision was this past January and the VA withheld some of my award to prevent overpayment bc I am also retired military. How long does it take for the DOD make the appropriate payment bc some of what they owe was from my previous 20% rating from which DOD deducted my VA monthly payment from my retired pay?
Ryan Guina says
Hello Lawrence,
This is handled on a case by case basis. You will receive a more personalized answer by contacting DFAS or the VA. They should be able to provide a better estimate than someone can via email.
I wish you the best, and thank you for your service!
William Nelson says
The VA continued to withhold funds after military retirement was wavered. How do I address this with the VA.
Ryan Guina says
Hello William, The best recommendation I have is to contact the VA customer service department. They made need documentation from DFAS or another agency that shows your waiver.
Mike says
I was told that I have to pay 1600.00 back due to failure to report divorce. Why would I have to pay it if they take my army retirement in lieu of va disability? The va got their money. They lost none.
Sarah says
When my husband got out from the Army due to medical reason. He got a separation pay from them (Army) that was on 2005. Last year around Nov 2018, the VA, took almost half of his disability check, until we pay them off, sucks! My question is why giving the money and take it back again, now were in huge problem, as he is not working anymore, due to his disability. Is there any kind of a waiver to reduce the recoupment?
Ryan Guina says
Hello Sarah, The VA will sometimes allow for hardship waivers. You would need to contact them about the process and application. I wish you and your family the best!
Chad says
What documents or law outline how the process works when you start collecting your Reserve Retirement from DFAS in my situation.
I was paid Normal Seps Pay 2014
VA disability pay has been withheld from me to pay back that Seps Pay from 2015-2019. Which is the law.
In 2024 when I am Reserve Retirement Eligible how does DFAS know that I already paid back my Seps Pay to the VA so I do not have to pay back the Seps pay again?
Ryan Guina says
Hello Chad, This is a great question, and one I don’t have the answer to. I recommend contacting DFAS or the VA to inquire if the VA and DFAS communicate this information between their respective organizations. You should also ask them how you can have this annotated on your record so the retirement funds are not recouped twice.
I wish you the best, and thank you for your service!
Chad says
OK will do and I will let you know what I find out.
FYI for others seeking info from DFAS here is a link to DFAS Website to enter a ticket for a question:
https://corpweb1.dfas.mil/askDFAS/custMain.action?mid=12
samuel hill says
Hello my is samuel i recieve servance pay for my time of 20plus years . In the National Guard i have since payed back all the money to Va , is there such a thing as a retirement for me still
Ryan Guina says
Hello Samuel, If you served 20 years then you should be eligible for retirement benefits at age 60. Contact your state National Guard Bureau or DFAS for more information. I wish you the best, and thank you for your service!
James Davis says
I received an overpayment after my wife passed away. I thought I had notified the va of her passing and the benefits I was receiving were for me. She passed in 2014. I recieved a letter notifying me that I received an overpayment in January of this year. I filled out and requested a waiver of overpayment and was told if I did this within 30 days, the va would not withhold any of my va disability compensation, so I made sure I got it filled and sent, by certified mail, within the 30 days.Today, I found out that the va is withholding part of my benefits, putting me in jeopardy of losing my home and vehicle. I sont know what to do, and I’m angry. What good is it to follow their rules, when they dont follow them themselves?
Orlando says
VA collected to pay my Special Separation bonus except the tax taken out. I received not the full amount anyway tax was taken out. Now I’m retired the Finance saying I have to pay the full gross amount since the tax was not paid, Finance collecting that out of my retirement pay $716.18 a month since Aug 1, 1017. To pay the tax amount of $12,974.35. I’m paying this 2X. Don’t make No sense.
Ryan Guina says
Hello Orlando, The tax issue is something I don’t have an answer for. The only thing I can do is recommend contacting DFAS and asking to speak to a supervisor.
Be sure to have records of your separation pay, how much taxes you paid, your VA award letter with your rating, and how much the VA has recouped from your VA compensation payments.
You can work with DFAS from that point to determine what the law and the regulations are to see if they have processed this correctly or if there was an error.
Always be sure to keep good records of all the forms you receive, as well as who you speak with and the result of the phone call.
I wish you the best, and thank you for your service!
Arturo says
The best route I suggest everyone takes is to write your congressman. Someone had a few years back, but unfortunately was not able to follow through because he was relieved of his position. Please look at H.R. 4016 Restore Veterans Compensation Act of 2017. Introduced by 3 different congressmen.
Questions to ask,
Are servicemembers provided with a notification in writing stating their money would be recouped when they claim disability?
How many members have been affected by recoupment?
Why is this considered double dipping if the separation pay is from the military but recoupment is from the VA?
I will be writing my congressman as well.
Jamal says
Have you heard anything back since writing to your congressman?
I was completely blindsided by the fact that I had to pay it back, too! They even got me on the hook for another three years in the IRR! I would have never taken the deal if I knew they would have to repay that money and STILL be on the hook for the three-year commitment!!
Every question that you asked is completely valid!
Tracy Jerrod says
Today my claim closed and I was awarded a 70% rating. I filed my claim 9/2017. When I got out of the Army I received $8k in separation pay. My question is if I get retroactive back pay, will the separation pay come out of the back pay (16-18 mo) first or will I get the entire back pay amount and the separation pay just comes out of that?
Ryan Guina says
Hello Tracy, I recommend contacting DFAS and/or the VA to confirm. They will be able to provide the answer based on current policy. I wish you the best, and thank you for your service!
melissa says
My experience was the debt amount was taken from my back pay.
Sonja Denise Theodore says
I have been out of the military for over 23 years. I served my country for over 13 years and suffered PTSD trauma as well as physical injuries and was told because of the severance/separation pay received in 1995, I will have to pay back the 38,000.00 after taxes from the 42,000.00 awarded to me, from the military benefits that was approved. I thought I could not request anything until I finished inactive reserve that completed the 20 years of service…so frustrated. Is there any type of waivers for veterans after being out over 23 years? It just seems so unfair!
Ryan Guina says
Hello Sonja, I’m sorry to hear about this issue, and I hope you will be able to resolve it.
I honestly don’t know about waivers in this situation. You would need to contact the VA or a veterans benefits counselor. Again, I don’t know if waivers are possible. So these organizations may only be able to provide a definitive answer, I can’t guarantee they can get any waivers.
I wish you the best, and thank you for your service!
LG says
I received non-government company employer paid short and long term disability while an increase disability application was pending. I eventually was granted tdiu (Unemployability). Will the VA recoup those std/ltdpayments? What if the std/ltd payments exceeded the poverty thereshold? Thanks. Reason I’m asking is because VA sent me the form 21-4140 asking about emplyment last 12 months/CY 2017 because I received money for the std/ltd. I did not work nor employed anywhere.
I’ve heard of STD/LTD polieces requesting offset of va disability compensation but not VA comp offsetting and STD/LTD monies. Thanks for any information in regards to this.
Ryan Guina says
Hello LG, Thank you for your question. Unfortunately, I don’t know the answer. I don’t believe the VA recoups disability insurance payments made through an employer. But I don’t know for certain. My recommendation is to contact the VA, your county Veterans Affairs benefits counselor, or a benefits counselor at a Veterans Service Organization such as the DAV, AMVETS, etc. I wish you the best, and thank you for your service!
LG says
Will do sir. Thank-you.
T Smith says
You still need to file the 4140, this is your word that states you haven’t worked. This has to be file every year for approximately twenty years. Has to be done!!
Elaine Anderson says
Can you pay the VA or ARMY back the severance pay in one lump sum to stop the monthly payments being held? If so, who should I contact?
Ryan Guina says
Hello Elaine, To be honest, I’m not sure. I would contact the VA help desk or DFAS. They should be able to let you know. I wish you the best, and thank you for your service!
Junior says
For my navy folks who were HYT.
The regs my VA rep referred to was the milpersman. Specifically 1160-120 page 11 it states:
b. To preclude unwarranted ISP recoupment action by Defense
Finance and Accounting Service (DFAS), commands separating
members in pay grades E-5 and below for HYT, who are otherwise
fully retainable, must enter a reentry code of “RE-6” in block
27 of member’s DD-214 Certificate of Release or Discharge from
Jesse says
Does this mean the didn’t recoupe your separation pay? I have an RE-6 and was separated at 8 years as an E-4. I’m filling for disability and looking to see if they are going to recoupe my separation pay.
Yesno says
Maybe, according to Milpersman.
However, when you apply for disability, there is a question that asks “did you receive severance or separation pay” but does not refer to the Milpersman.
Out processing in Camp Pendleton swore and even showed me in writing that I did not have to pay it back as long as I didn’t retire from the navy.
Although I was HYT with 14, I could only retire in the SELRES.
I am currently at 60% and could get more but now they’re asking if I received a check on the way out.
Ashley says
Does the mean the if you receive a VA rating and you have the re-6 code on your dd214 that you do NOT have to pay back separation pay?
Ryan Guina says
Ashley, I highly recommend contacting the VA customer service department for assistance. They can review your DD Form 214, disability rating, and other factors and give you specific advice for your situation.
I wish you the best, and thank you for your service!
sherree grant says
So I was involuntarily separated in March and received separation pay. I am currently 70% disabled. The VA is withholding my pay. Is there anyway that they can just take half of it and pay the other half of my award.
Heather says
My husband served for six years and was in the reserves all for one year when he deployed to Afghanistan in 2009, when he came back he started having problems and filed for disability, he was 100%. About two years ago he was put on TDRL and a year ago he was medically discharged and was able to get severence pay. We got a letter in the mail with his discharge paper work saying he was discharged due to a combat injury and that the va could recoup it and that it was tax free. But come to find out the va is trying to recoup it, can they still do that? And if we end up keeping the money because he’s getting disability for the same service connected disability, will they withhold his disability that we get every month? This has been stressing us out!
Ryan Guina says
Hello Heather, Thank you for contacting me. The answer to this question will require research into his specific VA disability claim, which is something only the VA can do. I recommend contacting the VA for a specific answer to your question.
You may also consider contacting a Veterans Service Organization, such as the DAV, AMVETS, American Legion, VFW, etc. They have trained benefits claims counselors that often offer free assistance to veterans. They can provide personalized assistance with this question and his claim, which is something I am unable to do.
I wish you and your family the best!
Brenda says
My son in law was in the Navy for 11 years. He received separation pay. Now after his been out for 8 years he received a letter telling him he was overpaid by 5000 dollars and his VA check will be withheld til it’s paid back.
Junior says
Fyi, I’ve tried contacting the VA directly about my situation. No one there knew the answer. It’s always a case by case basis.
Ricky says
Scenario:
I was HYT (high year tenured) in 2011. 14 years in the navy, RE-6 code. I was given a severance check on the way out (NOT DISABILITY SEVERANCE).
I went to the VA to get my claim started in 2011 and started receiving 30% in 2012. In 2016 I started receiving 60%. I was told when I filed I will not be required to pay the severance. It’s 2018 and my compensation is still intact.
What is the “statute of limitations” on this?
I spoke with the VA rep and she said the recoup would start the same day I start receiving disability compensation. Also added they don’t go after those who claim low percentages and she believes after 5 years of the VA not recouping it, will not be an issue.
Was there a date the recoup became effective?
Was my rep handling my claim, wrong?
Also, isn’t the VA and Military pay 2 different entities?
Jason says
I was involuntary separated from the Navy and received a severance check. I did my VA claims and was awarded 30%. I knew had was paying the money back. Recently I was awarded 70% due to combat related issues. I am still required to continuing paying the severance amount still owed? I was informed if VA award something over 50% your should not owe anything back. Is this false information?
Ryan Guina says
Jason, I have never heard of the VA not requiring someone to repay the separation payment if their disability rating is above a certain percent. You would need to contact the VA to verify this. I wish you the best, and thank you for your service!
Ricky says
Jason, I am at 60% . I was HYTed out with a severance check. I have not nor have I been told to pay anything back. I was told however that if I wanted to retire from the reserves, I will be paying the severance back.
I assume those who get out due to HYT do not have pay it back.
Dave says
Due to financial issues I found myself unable to make payments on my pharmacy bill with VA. This morning upon receiving my my 10% disability compensation, VA deducted 65% of my payment, leaving me with a mere $40 and some odd cents.
This hardly seems fair that they can take that much from one check, can they legally do this? By law, a debt collector can only attach 25% of a check in a garnishment, and the Dept of Education can only take 15% from SSDI in a federal offset, why does VA not abide by these same rules?
Rubi says
I wanted to put this out there in case anyone has an answer. I was medically discharged from the Air Force in early April 2016 after 6 years. Since you go through your VA exams at the same time you separate I received my VA rating of 30% before I left Active Duty so I knew what was coming to me upon discharge. I received my disability severance pay of about $26K in late April and in July my VA disability started coming in and has been coming in monthly without any recoupment of my severance pay. So unlike alot of others that is not what I want to address with my comment.
I need to amend my 2016 tax return so that I can leave off the disability severance pay and I can start qualifying for financial aid again as I’m a single mom currently in nursing school surviving on GI bill housing and VA disability with 2 kids. I have the St Clair reference letter from DFAS stating I can recoup the tax withheld and have been on and off researching how since then. I understand that I need my VA award letter, 2016 W2, Separation orders but I get conflicting info on two things. Some say I need a corrected W2 from DFAS and some also say I need to have my severance pay amount on my DD214 (Mine simply states “Disability, severance pay, non combat (enhanced)” in box 28 which is where I’m guessing the amount could have been placed.
All that brings me to the three questions I am hoping one of you out there may have the answers to:
1) Were you able to get a corrected W2 from DFAS? If so how did you go about it because their phone tree just gave me the run around.
2) Does your DD214 have your severance pay dollar amount anywhere? If not what proof are you using to give the IRS the amount of severance you received.
3) Have any of you successfully recouped the taxes withheld from the IRS?
Thank you to anyone who answers!
Marilyn Brinson says
I was involuntary separated from the Army in 1995. I received separation pay of $12,000 and was also told I had to give 3 more years in the reserve/guard active or inactive and I choose active, even though I had completed my 8 year obligation. Now after 18years of getting out of active duty I put in a VA disability claim and I wanted to know if they are going to recoup this money.
Ryan Guina says
Hello Marilyn, Thank you for your question. So far as I am aware, federal law doesn’t place a time limit on recouping the separation pay. So if you received separation pay, there is a strong likelihood that the VA will be required to recoup the VA disability compensation payments until the amount of the separation pay has been withheld. This is a federal law, and not VA policy. I am not aware of any ways around it.
Tom Micawber says
Ryan:
If the VA awarded disability compensation and is withholding that disability compensation to recoup a voluntary separation pay, can a reservist still receive drill pay?
If the reservist can/cannot receive drill pay during the separation pay recoupment, is their a specific CFR or VA regulation citation to back this up?
I understand that the VA would recoup each pay in separate stand-alone instances, but this seems like a “reverse double dipping” on the VA’s part.
Donald Terry says
Hello, I got out of the Army through the MEB process and received a lump sum. After I got out I filed to have my service connected disability increased. They awarded me 20% 10 for my service connected MEB process and another for tinnitus for the past year they have been taking half of my disability pay to pay back my severance pay. My question is I filled a disagreement 1 year ago if they give me a higher rating and I am entitled to back do I get half of the back pay or do I lose it all to pay back the severance pay? Thank you!
Ken Jacobson says
I was honorably discharged from the AF in 1992, received a payment of $32,000 after having $8000 withheld for taxes, I went into the reserves several years later. I applied for disability and had it approved about 2002, while I was in reserve status. They contacted me and said I had to choose between disability and reserve pay, I chose reserve, later I received a letter telling me they took $12,000 in back pay for disability that would go toward the SSB, also they continued to take my disability until I retired about 2011. Now they just went after my retirement pay, taking nearly half every month and telling me I have a balance of $40,000. Do I need a lawyer?
Ryan Guina says
Hello Ken, Thank you for your quesiton. Federal law requires the VA to withhold disability compensation when a veteran receives separation pay. Federal law also requires DFAS to withhold retirement pay up to the amount of separation pay a veteran received. However, I believe the amount is only supposed to be withheld once across both the VA disability withholdings and retirement pay withholdings. I do not believe the combined withholdings should exceed the original amount of the separation pay received.
I would contact the VA to get a statement from them regarding the full amount of disability compensation they withheld from your payments. I would also contact DFAS and explain that the VA has withheld some of your disability payments. You should be able to provide that information to DFAS, and they should be able to investigate, confirm the numbers, and verify the total amount withheld. If they have not withheld a combined $40,000 to this point, then the withholdings may continue until the full amount has been withheld. If the total withholdings exceed the original $40,000 separation payment, then you should be able to request a refund from the excess amount withheld.
Do you need a lawyer? I’m not sure. I would try to handle this on your own to start. You can also try contacting a Veterans Service Organization such as the DAV, AMVETS, VFW, American Legion, etc. They have trained veterans benefits counselors who can assist with claims and matters such as these. I wish you the best, and thank you for your service!
Amber says
Hello, my husband voluntarily separated from the Army January 2015. He received a separation pay for his time. When he went to the VA and filed he received 30 percent disability we later discovered that it would be recouped. My question is how to get a corrected W-2 because that money was re-collected?
Ryan Guina says
Hello Amber, Thank you for contacting me. I don’t know if there will be a corrected W-2. The money is being recouped from future payments, not from the money you already received. So I’m not sure if there is any correction to be made. I recommend contacting Defense Finance and Accounting Service (DFAS) for clarification. They should be able to either provide a corrected W-2 (if available), or explain why they do not issue them. So far as I am aware, they do not issue them in this case. I wish you all the best.
Rodney says
In April 2000 I received involuntary separation pay. I file for disability using the paper and mail, but I can’t find the documentation. In December 2016 I filed online and was approved in November 2017. I received 30%. The VA back paid to December 2016. But are withholding the involuntary separation pay I received in 2000.
So the VA can only back pay for 1 year, but can recoup for up to 17 years? or is there something I can file to correct this?
J. Nusbaum says
Running into a similar issue as two others. I also forgot to inform the VA of a divorce (I thought DEERS would handle that..they don’t!), to which the VA overpaid me. I understand having to repay the VA but, is there a way the DOD portion of my retirement can be reimubursed?
Ryan Guina says
Hello J. Nusbaum, this is a great question, and one I do not have the answer to. You will need to coordinate this with DFAS and the VA. The money comes from different accounts, so it has to be handled correctly on each side of the table. I wish you the best, and thank you for your service!
P. Clark says
Is there a website or way to check current status of my VA recoupment of separation pay? The recoupment started 2015 and stops 2019 and I would like to know the current balance owed and history of payments made. Thanks in advance.
PC
Ryan Guina says
PC, I’m not certain if there is a website where you can check the status of the recoupment. You can try the VA’s eBenefits website. You can also try contacting the customer service department for the VA or DFAS. One of these departments should be able to give you an update over the phone. I hope this is helpful.
Alan says
There seems to be conflicting info. Is the full gross of regular separation pay recouped or the actual amount the vet received? I see both results above. Thanks for all you do here.
mike says
Hello Ryan,
Could you explain why the separation pay is collected for people who were involuntary separated. The law does not make sense and my understanding of the law is the severance pay, separation pay,is to be collected if you are eligible for retirement or retainer pay. People who are involuntary separated for higher tenure will not be recalled to active duty. The law says the VA can only collect separation pay, severance pay, if you fall under this category (h).
(h)Coordination With Retired or Retainer Pay and Disability Compensation.—
(1) A member who has received separation pay under this section, or separation pay, severance pay, or readjustment pay under any other provision of law, based on service in the armed forces, and who later qualifies for retired or retainer pay under this title or title 14 shall have deducted from each payment of such retired or retainer pay an amount, in such schedule of monthly installments as the Secretary of Defense shall specify, taking into account the financial ability of the member to pay and avoiding the imposition of undue financial hardship on the member and member’s dependents, until the total amount deducted is equal to the total amount of separation pay, severance pay, and readjustment pay so paid.
(2) A member who has received separation pay under this section, or severance pay or readjustment pay under any other provision of law, based on service in the armed forces shall not be deprived, by reason of his receipt of such separation pay, severance pay, or readjustment pay, of any disability compensation to which he is entitled under the laws administered by the Department of Veterans Affairs, but there shall be deducted from that disability compensation an amount equal to the total amount of separation pay, severance pay, and readjustment pay received, less the amount of Federal income tax withheld from such pay (such withholding being at the flat withholding rate for Federal income tax withholding, as in effect pursuant to regulations prescribed under chapter 24 of the Internal Revenue Code of 1986). Notwithstanding the preceding sentence, no deduction may be made from disability compensation for the amount of any separation pay, severance pay, or readjustment pay received because of an earlier discharge or release from a period of active duty if the disability which is the basis for that disability compensation was incurred or aggravated during a later period of active duty.
Regina Pitner says
I am in the same position as another person who was not replied to. I retired and received a 40% rating. Later, I divorced my husband and neglected to tell the VA, assuming the money was mine anyway since they took it from my retirement pay and gave it back to me as VA disability. It caught up with me and now the VA wants to offset my disability pay by 191 each month for a year to pay it back. So, will they put it back in my retirement check?
Ryan Guina says
Hello Regina, Thank you for your question. The VA will withhold the portion of the amount they overpaid you. However, your retirement pay will most likely still be reduced by the amount of VA disability compensation you should have received (the 40% rate). You can contact DFAS to verify the specific numbers.
Regina pitner says
So they just keep the money? It should be credited back to my retirement check! Unfair!!
Ryan Guina says
Regina, the way the situation was explained indicated there was an overpayment due to you not informing the VA of a change in your dependent’s status. The money never should have been paid in the first place. In this case, they are recapturing the overpayment by withholding it from the amount of money you should be receiving. You could always send the VA a check for the balance and then there would be no withholding. Either way, the VA has the right to be made whole based on the way the law is written. Again, you can contact the VA or DFAS to verify the exact amount and duration of the withholding and determine how this will affect your retirement pay and your VA disability compensation.
Joanne Davies says
Also does anyone know if you can pay the Separation Pay back early to start getting your VA Disability pay? Might be worth getting a loan to spread the cost over 5 years to soften the blow.
Joanne Davies says
I am confused by this law.
If the purpose is that a service member should not receive Separation Pay and VA Disability pay for the same period, then surely what should happen is that they won’t get their VA disability backdated for the period that their Separation pay covers (6 months in my husband’s case and $23,000).
So say for example the VA pays out a monthly stipend of $1000, that kicks in 6 months after separation, then it should all be squared away. No back pay but nothing owed either? If the law is to be applied as it stands.
However as it seems to be presented is that my husband will be expected to pay back the full $23,000 as opposed to knocking off 6 months worth of VA benefit.
Is there no way to elect which one you want to cover you for that time period (i.e. if your VA Disability Pay is less than the monthly apportioned Separation Pay then you should be allowed to say you choose the Separation Pay for that period not the VA Disability Pay).
It’s been a real kick in the guts as I am still waiting for my green card and can’t work and my husband had a complete mental break down, which was why he left and has had to wait since May for psychiatric help and his VA appointment is this week.
He only just dropped this bomb shell on me and I can’t believe they would put us in this position where we can’t pay our mortgage or live and it isn’t even applying the law correctly (so it seems).
Phillip O'Connell says
I also am in this boat and am having to wait several years to see anything even though I am rated at 70%. Its not fair.
Phillip O'Connell says
I just don’t understand how the VA can get away with hold back our disability money because we received involuntary separation pay. So didn’t many others that didn’t have a disability! So if you go undamaged you get a large sum reward. If you get injured you don’t get that money since they take it out of your disability? Why hasn’t someone sued the VA on this?
James waldo says
Yes sir, I served 12 years 7 months and 19 days on active duty and got out in 1996 with the VSI severance package about $24,000 I joined the Texas National guard and retired in February 2004 I put in my claim in 2008 and was awarded 20% in 2010 till present I put in another claim in April of 2017 and was awarded 30% but the VA resentful contacted me and stated that I would not receive VA disability until the severance I received 21 years ago is payed in full how could this happen if the VA started paying me in 2010 20% when they could of with held the 20% back then and it would have already been paid off
Ryan Guina says
Hello James, Thank you for contacting me. It sounds like the VA made a mistake a long time ago and just now caught the error. The computer systems are better nowadays.
But if you received severance pay, you will have to have that amount withheld before you are supposed to receive the VA disability compensation. So it sounds like the current situation is correct.
Derrick Jones says
Mr. Guina if I receive 30% or more disability from the Air Force can I still opt for the severance pay.
Ryan Guina says
Hello Derrick,
Thank you for contacting me. Are you receiving a medical separation? If so, there may be a separation pay associated with the medical separation. If so, your personnel section will walk you through the process and help you understand the benefits you will be eligible to receive, how the process works, and other factors.
Also, look into a VA disability claim if you receive a military medical rating. The two systems are different and the VA disability rating may end up being different than the military rating, and the VA disability rating is what determines your VA disability compensation. I wish you the best, and thank you for your service!
Tom F says
In 1991 I had injured my knee on active duty Air Force and I had been recommended to wear a full leg brace to help healing,but had been told by NATO Dr’s @ Londstuhl Army Hospital/Ramstein AB, Germany that my knee would never completely heal as arthritis would set in and lead to continuous knee pain. As time went on they were right and the knee pain never went away 24/7. I was recommended for a MEB(Medical Evaluation Board review from the flight surgeon. These reviews take months to completes and with my current medical history I felt here comes separation. With still no answer from the MEB I was honorably discharged under reduction of forces and left to take care of my own medical health care. Later I was awarded $ under the VSB/SSI program so I took it! along with VA care authorized. Yessss! Then the issue follows again. I was evaluated by C&P and awarded 60% disability by the VA which in turn deducted the award from the VSB/SSI until it was paid back to Uncle Sam leaving me with my disability benefits to live off of. Good luck doing this as I am $4000+ under poverty level, lucky me. I just don’t understand why I had to pay back something that had nothing to do with the other. I know many that are receiving VA benefits and active duty retirement so what gives with this? Kinda like being discriminated by your own govt and both parties served their county honorable. Sure wish there was a way to reverse this. If anybody knows how let me know.
Keith says
I was medically discharged in 2007 due to injuries sustained in a combat zone in 2005 (Iraq). I received around $15,000 of separation pay, which I had no idea I had to pay back. Just recently (Nov 2016), I noticed that my check was considerably short by more than half. After calling the VA, I was informed that after 10 years, I had to repay my separation payment. After looking this information up online, I found that if I received a disability severance payment due to injuries sustained in a combat zone, which I did, then the VA, by law (10 U.S. code 1212) could not take this. How do I get them to stop and give me my money back? Any info would be helpful.
Ryan Guina says
Hello Keith, Thank you for contacting me. Great job catching this. It’s likely the VA didn’t have this coded correctly in their system. You will likely need to submit a formal request to have them change this information and stop the withholding. I don’t know the exact process for doing this. The VA customer service reps should be able to help you find the correct form or process.
You can also try a veterans benefits counselor at the VA or with a Veterans Service Organization. They have counselors who offer free claims assistance. I hope this points you in the right direction. Best of luck, and thank you for your service!
William Blackwwell says
Hello, Ryan, I am an Army retiree and in January won my claim for PTSD and was awarded 100% T&P and special compensation for homebound. I received my award letter and notice on the first page there is a chart for payment Summary. The effective date of my award is 27 September 2015. In this chart is shows they withheld a monthly amount of $457.91 with the payment start date of October 1, 2015. On the second line of the chart, it shows the withheld $459.73 with the payment start date Dec1,2016. On the third line of the chart, it shows they withheld zero dollars with the Payment Start Date 0f Jan 1, 2017. Jan 2017 was when this award got approved. I can not figure out why the VA withheld this amount from my retroactive pay. I did not owe any money to the government, no child support and I did not get A severance pay for retiring. I was already at 60% when I initially filed my claim. I called the VA but could not get a clear answer from them why this money was withheld. Is their any advice you could give me or does this make any sense to you. Thank you, Bill
Ryan Guina says
Hello William, Thank you for contacting me. I don’t know why the VA would do that unless they withheld the payment you received for those months, then paid you the full amount. Normally they would just pay the difference. I would try calling the VA again – sometimes getting another support rep works wonders. The VA has many different programs and quirks and it takes a lot of experience to learn them all. There are also some support reps who are experts in some sections, and less knowledgeable in others.
Jonathan Foster says
I was honorably discharged from the Army in March ’92, and collected an SSB bonus of approx. $36,000. I am currently rated at 60% disabled and they are withholding my monthly checks until the SSB is paid in full. I have been in touch with Defense Finance and Accounting Services, and VA Debt Management, and according to them there’s no way to pay this off in full so I can start receiving my monthly disability checks. My final payment date isn’t until Aug 2018. Me and my wife are planning on moving to Canada this year and I wanted to get the monthly checks started before the move.
Is this true? And if so, isn’t that sort of ridiculous that I can’t pay it off in full? Is there anyway around this???
Ryan Guina says
Hello Jonathan, Thank you for contacting me. DFAS Allows this for military retirees, but I’m not sure if they allow it for the VA. You can read more on the DFAS website.
You can also try contacting the VA to see if there is a way to do it through them. Best of luck, and thank you for your service!
Alan says
I recieved a Severance from the ARMY related to Combat injury (not subject to recoup), in 2009. I was PDBR in 2016 changing me from 20% to 50% then waived my retirement. I am also currently 100% VA disabled.
If a veteran waives their retirement pay due to their VA compensation being higher than retired pay. The veteran will continue to receive CRSC and no deductions will be made to the veterans account, unless their retired pay ever becomes larger than their VA compensation.
My question is if I understand this correctly… will I receive any back pay for CRSC from the date of retirement (2009)?
Cole says
I was involuntarily separated in April 2016 with an honorable discharge. I was entitled to about $12k of separation pay, but they over paid me by about $10k. I already had to pay back a portion of my SRB and they included the overpayment with that. Due to this I was hesitant to go to the VA to receive a rating because I didn’t want to add my separation pay onto it. However, after careful consideration I figured I should within a year of discharge. My question is if I receive a rating, will they use the backpay for that rating directly towards my debt? Or will they withhold the backpay along with the disability payment until I have paid off my SRB, overpayment, and then sep pay since I received a rating? Also by holding does this mean that once the debt is cleared I will be backpaid all of the disability pay or will I just receive normal monthly disability payments once all debt is cleared?
Michael Smith says
I think the bureaucratic law in place was originally meant for service members who were rated disabled from the DoD, then this law makes sense for the collection of separation pay. Title 10 DoD offset for title 38 VA collection for members involuntary separated is unjust. Do you realize that service members pay the separation payback of 125% they take the gross amount on your DD-214 before taxes. Do you realize for service members who want to join the reserves to finish out their 20 years of service are required to pay it back to? A person that wants a military retirement plus rated disabled from the VA collect the separation pay twice which was given to the member. So where is our money going every month for the collection what budget? It would have been nice if service members had signed documentation acknowledging of this collection instead of finding out a year later when they get their rating letter back from the VA. The law has been in place for years but 99% of “us veterans” never knew it existed until after the fact. One would think is it legal for a collection on something without disclosure of the law, sounds like a violation of our First Amendment rights as citizens.
Wilson Mowles says
I found this online in a pdf. Separated service members who qualify for disability compensation from VA have the gross (not the net) amount of their separation pay offset. For example, an E3 in the 15 percent tax bracket with 7 years of service who separates in fiscal year 1994 and qualifies for a special separation benefit payment of $13,936 (gross amount) receives $11,845 (net after taxes). If that E3 subsequently qualified for disability compensation from VA, the E3 would have $13,936, not $11,845, of the disability compensation withheld. Thus, veterans must repay the gross amount of their separation pay, even though they actually received only the net amount. For this reason, some veterans want to know whether they can reclassify their separation pay as non-taxable disability compensation to avoid paying federal income tax on separation pay or whether they may deduct from gross income the amount of their recouped separation pay to offset income taxes already paid on their separation pay.
The IRS determined that veterans may not reclassify separation pay as disability compensation. The IRS also determined that veterans may not deduct recouped separation pay from gross income.
Jake Weber says
I wanted to comment here just so others could identify if they have the same issue. I hope I can get this resolved. I see that another poster above had the same problem.
I medically retired with a 100% Army medical retirement and a 100% VA rating. I am considered unemployable by the VA and cannot work. My family and I have received zero money since my retirement date.
All of my paperwork was done and in order for my VA disability payments to start asap.
It is now early January and we have still received nothing. Not even my ratings letter which they say they have sent and which we need in order to apply for CRSC.
I’ve made 7 phone calls to VA reps, asking what the hold up is and when we are going to get paid.
Today we are finally told that payments will begin 1 February but there will be no back pay. Why? Because they are withholding due to me “receiving military retirement pay/severance pay”.
I have never received either. Not a penny. I am sitting here looking at the VA form I signed in September, denying my medical retirement pay because the VA disability pay was better.
I asked why this was happening and the rep stated that they do this now to everyone until an audit is done to prove I never received it. The rep said she’d email me a form that I could fill out to help the process along. She took my email address and then never sent the form. I can’t remember what the form was in order to hopefully find it online. If I ever get it, I’ll follow up here.
This is extremely frustrating. We are broke. We’ve exhausted all of the Vet help groups who help pay bills and now the VA is withholding my only income for a bureaucratic purpose.
Any help? Ideas? Thanks.
Ryan Guina says
Hello Jake, Thank you for contacting me. I don’t have experience with this. The best I can do is recommend speaking with a veterans benefits counselor at the VA or with a Veterans Service Organization. They have counselors who offer free claims assistance. Hopefully they can help you navigate this process.
Additionally, it’s a good idea to verify whether you can or cannot work. There are some ways you can work with a 100% VA disability rating. Just verify this with the VA to ensure this will not change your compensation. Here is more info.
I hope you will get a speedy resolution to this situation. Best of luck, and thank you for your service!
Jennifer says
Hello,
My situation is a little interesting.
I’m currently still Active Duty, still waiting on the finalized PEB findings so I can start my out-process from the Navy. I’m E4, with dependents, with 7 years and 7 months so far. I have a combined disability rating of 30%, and I was injured in the line of duty in 2015 (I got the run-around heavily, to the point where I am still injured, and getting the boot rather than being fixed and retained). I originally was contesting the board findings, but ended up accepting them instead of going to Washington DC, so I am waiting until they finalize and send it off.
The informal findings letter I got initially stated that my disability was permanent, and although not “combat related itself”, it is classified as occurring in a combat zone and during combat-related operations, because I was injured while on a ship during a training exercise.
However, they are trying to state that I should be “separated with severance pay”, as opposed to being medically retired, which I know I qualify for. I’ve done the research on severance pay, and understand the recoupment part, but now I’m trying to figure out a few items.
So I have a few questions in regards to this, maybe you’ll know who I can talk to, since I’ve tried speaking to DAV, VA and DFAS on this matter already, and they couldn’t give me any answers, stating I have to wait until my discharge orders are cut.
1) If I qualify for medical retirement, who do I talk to about getting that put through, instead of them processing me as separation with severance? (I would be awarded more for retirement, obviously, and might not get recouped my severance pay if I get any, from what my research is telling me).
2) If I still get ******* over and must take the severance pay, how do I calculate how much will be taxed-meaning, how much would I be getting out the door from the Navy? (I looked it up and did the math, my severance would be $35,498.40 before taxes, but I can’t find ANY calculator to help me figure out what my pay would be).
3) Is there a time limit to paying back severance pay, before receiving my disability pay from the VA? (I’ll be filing to get more than my current 30%, because due to the new regulation posted last year, SEP 2016, they couldn’t do the ratings for more than my initial claim for my current injury).
I’m looking at out-processing in March this year, 2017. I had involuntary extension due to the wait of my medical board findings being finalized, so I’m running out of time to figure this out.
Any advice/help would be greatly appreciated!
Jennifer says
*amended: I was told that my severance pay would be: Base pay for 2 months, times the years I’ve been in; base pay for E4 with dependents in 2017 = 2,535.40. Times 7 years of service = $35,498.40. So my newest question would be, is the tax rate for involuntary separation the same for disability severance pay?
Frank Love says
Here is a doozy of a situation”
In 2004, I was medically separated with $66k Disability Sep. Pay. In 2012 VA Comp. rated me 70% with retro-pay back to Jan 2011 ($14k+). In July 2013 VA started recouping the $66k – minus taxes = $52k) at a rate of $900 a month (42 months so far)
April 2015 DOD granted me 50% retirement under P.D.R.L. retro back to June 2004. I received 3 large payments (Retro minus taxes & Dis. Sep. Pay recoupement). I recieve monthly PDRL retirement pay of $1,500 a month with the VA offset. VA is still taking the $900 a month, so I started a claim September 2015 to have VA return the Separation Pay and halt the $900 a month recoupment, since DFAS already snatched it all before paying me Army retirement.
My claim is 475 days old now, will VA pay back the $37,000+ (Dis. Sep. Pay Recoupment) in lump sum or will they offer some other form of payback, like I.U. or something of that nature?
Thanks
VA is still recouping
*Amendment to above.
VA has both my DD-214 (Dis. Sep. Pay $66k) and corrected DD-215 (Stating Dis. Sep. Pay Deleted). They started recoupment via the DD-214 and the DD-215 show’s that the Dis. Sep. Pay paid in full) So there should be no challenge to my claim.
VA has all of the DD-214 & DD-215’s, PDBR results, PDRL retirement, etc… etc… Basically I have now paid $90,000 of a $52,000 bill.
Ryan Guina says
Hello Frank, Thanks for your comment. This is a very complicated situation. In most cases, the VA will award back pay in a situation when they withheld too much money, or the situation changed retroactively. I can’t comment on your specific situation, because I don’t work for DFAS or the VA. But it seems like you have a solid case.
I don’t have specific experience with this type of situation. So I would contact the VA to ask if they have an ombudsman who can work with you on this case. Or I would try working with a Veterans Service Organization to see if they can get a case worker to help you with it. This is obviously a big deal, and getting help is often the best way to help navigate the complicated process.
I wish you the best with getting this resolved, and I wish you the best of health going forward. Best of luck, and thank you for your service!
Ricardo Pompa says
It is hard for me to believed that we all have volunteer served our country, and yet, our country can not bail us out as they did for the Housing and Auto Industries! I am paying back at 40% of my gross retirement pay until the full balance of $33,000 I received back in 1994, Reduction of Forces they said. Served a combined time of 32 years and with them doing this to me, it’s like kicking me while I am down! I still have confidence on this great nation.
Gregory Darnell says
Hello Ryan,
I’m a retired Veteran receiving 30 percent disability and military retirement pay. My retirement is reduced by my VA Waiver. It was based on me and my spouse. After my divorce I failed to inform the VA in order to reduce my VA disability compensation which created an overpayment by the time I reported my marital status. My question is, shouldn’t my VA Waiver on my retirement pay have been reduced during the same period of time creating an underpayment of retirement pay? IF yes, how do I go about recouping my VA overpayment from military retirement pay?
Jasmine says
So I was curious to know what this means… Combat Disability Severance Pay Errounously Recouped? Does this mean they wrongly took his severance pay?
My husband provided proof that the VA wasn’t supposed to withhold his severance pay from a letter we received from the DOD, We turned it in the first year we received the letter telling them that they were recouping it to begin with. I am very confused… Please help!!!!
Ryan Guina says
Hello Jasmine, Thank you for contacting me. The best recommendation I have is to work with a veterans advocate who can assist you with your specific situation. There are some organizations that offer free benefits claims assistance, such as the DAV, AMVETS, American Legion, and more. I hope this points you in the right direction!
Bethann C. Hill says
Hi Ryan,
My husband went through an MEB and was offered a disability rating and a severance from the AF. I understand that if he takes the severance he will have to pay it back in order to get the full VA benefits. Do you know how to deny the severance if he does not want it in order to just start getting the full VA benefits? I appreciate your time and help in advance.
Thanks
Ryan Guina says
Hello Bethann, Thank you for contacting me. To be honest, I’m not sure how to waive the involuntary separation pay. Your husband should ask his personnel or finance department for more information about whether this is allowed, and how to do it if it is allowed. Sorry I don’t have a better answer! I wish your husband the best of health, and I hope the transition goes smoothly for your family!
Autumn says
Do I get to keep my VA rating even though I’m paying my severance pay back? I have 40% now, but for the condition I have to pay back, I’m rated at 30%. Can I still claim my 40% on job applications and things like that?
Ryan Guina says
Hello Autumn, Thank you for contacting me. So far as I am aware, your rating will not change unless the VA reassesses your claim and they determine a change in the underlying condition warrants a change to your rating.
When the VA withholds disability compensation to repay severance pay or an offset, the VA will normally direct 100% of your disability compensation to DFAS in order to pay back that amount. They don’t typically award a 40% rating, then only direct compensation at a 30% level toward the offset.
Finally, your rating level is not anyone’s business and isn’t something you should include on a job application. The only time a VA disability rating should be a viable part of a job application is when you are applying for a state, federal, or other government job that awards points to veterans with a disability rating. Otherwise, that information should not be included anywhere on your resume or job application. I hope this is helpful. Best of luck, and thank you for your service!
Marcus says
In 2005, I was discharged by the USAF. I received a 20% rating from the VA, and they withheld half of my pay each month until an amount equal to my separation pay had been with held. All good so far.
Fast forward to late 2015, and my discharge was retroactively upgraded to a PDR, with a rating of 30%. I (eventually) received a lump sum payment, less taxes, for most of the back pay. However, DFAS ******* things up repeatedly, and it’s been a fight to get things figured out with them. Now, the only thing that still needs to be addressed is the separation pay, which DFAS has withheld again. They are claiming that the VA never withheld the separation pay, and that unless I can find some proof of it, I should just shut up and go away.
The VA online payment records only go back to 2009, which was well after the separation pay had been recouped. The VA, DEERS, RAPIDS, etc websites are all not especially user friendly. How do I obtain a payment record from the VA which shows the separation pay being recouped?
John Banta says
Ok if am am reading this right. I was discharged in 2012 for medical reasons. I got hurt in Iraq in 2010 which is a combat zone. I was given a seperation package. I finale got about 32000 in one check. Now the VA is taken money’s back every month for like 15 plus years. But I was injured in a combat zone. Do I have to pay that money’s.
Ryan Guina says
Hello John, Thank you for contacting me. In general, the VA will recoup separation pay if you later receive VA disability compensation. I do not know if there is a difference whether or not the injury occurred in a combat zone. I would contact a veterans benefits counselor at the DAV, AMVETS, or a similar organization that offers free benefits counseling. I wish you the best, and thank you for your service!
Katie perry says
So a little help. My husband got out after 14 years under a family care plan. The army gave him severance pay. He filled for disability and recieved 60 percent. He was owed 26000 dollars in back pay. He only recieved 6000 why would this be.
Ryan Guina says
Hello Katie, Thank you for contacting me. The VA is required by law to recoup Separation Pay before they can pay out disability compensation. The article explains this topic the best I am able to do so. For more specific information, I would contact DFAS or the VA and ask them to give you more specific details. I wish you and your family the best during your transition.
Michael Knight says
Hello,
I was involuntarily separate from the Navy back in Oct 2005. Honorable Discharge, and was “Shown” a severance pay of a little under $10,000. Unfortunately, in Sept 2004 I had re-enlisted for another 6 years with a SRB of $16,000. Which I had received my half up front of $8,000 (closer to $5,000 after taxes). My seperation happened right before my anniversary pay too. They told me that the severance pay was being used yo recoup the SRB payment. Which I still should have received a little of, but didn’t. Now, fast forward to September 2013 and I finally receive my meager VA disability rating of under 30% thanks to the valiant work of my local DAV. But I was told that I had to pay back that so called severance I never received. It is now June of 2016, I have sent many request as have the DAV reps regarding this mistake, and haven’t heard anything. As of May 31st, 2016 I was Involuntarily terminated from my civilian job because my Doctor is pushing for me to be on full disability. My employer caught wind and they terminated me due to disability and a liability to their company. I just turned 40 on May the 28th, I have a disabled wife and 6 kids. And I am so lost, depressed and drowning…. the reason my doctor did this is because I have herniated my 4th disk in less than a year, resulting in two pinched nerves and also pinching off of my sciatic nerve. He gives me maybe a year before I am wheelchair bound. My VA disability is for the tear in my L4-L5 that they so graciously gave me (yeah right. After fighting 8 years) They have denied my other claims repeatedly. What do I do????
Ryan Guina says
Hello Michael, Thank you for contacting me, and I’m sorry to hear about your health issues. I hope you will receive the health care you need. Each situation is unique, and your requires specific assistance that I am not qualified to provide. I recommend speaking with specialists at a Veterans Service Organization such as the DAV, VFW, AMVETS, or a similar organization. They have trained professionals who provide free veterans benefits claims assistance, and they may be able to help you with your claim or other benefits options.
D. Brown says
Good afternoon,
I am the daughter of a two tour vietnam veteran. He suffers from PTSD, COPD and heart failure and is homebound living with me. Prior to staying with me he was in and out of nursing homes and hospitals. I now take care of my father full time. I bathe him, dress him, dispense his medication, and console him at 3am when he wakes up thinking his legs are blown off because he thinks he is still at war. Because my dad needs certain accommodations, we were unable to stay in this 2bedroom apt with 14 stairs. So we found a fully handicapped accessible house for him, complete with his own bathroom. He agreed that because it was so short notice we had to move, that he would help cover the costs of moving and contribute to the bills that I would now have to pay that I did not have before (water,gas). I was only paying rent and electric. He was released from the nursing home with a balance of over $1200 because he stayed longer than his medicare would cover. This was on June 1st 2016. A few days later I make arrangements to pay his bills for him (car note, cell phone, a few installment loans we made arrangements to make payments on since he is now homebound). His acct was in the negative over $500 because his pension did not deposit and creditors took their money out of his acct. This made me have a panic attack because without his financial help I cannot afford to accommodate him . After days of trying to contact the VA they finally tell him they overpaid him in the amount of over $25,000!! At 72 how will he ever repay this if indeed he was ever overpaid?? And the waiver request they sent him needs detailed information that I do not have and that my dad has forgotten some of because he suffers from early signs of dementia. Please give me advice on what to do. I just don’t know. I can’t go back to work because my dad is more important to me and needs me. Please help us!
Sincerely,
Demetria Brown
Daughter of Francis Brown
USMC Vietnam
Ryan Guina says
Hello Demetria, Thank you for contacting me, and I’m sorry to hear about this situation. First and foremost, you are doing a wonderful service to your father. I hope he receives the care and support he needs, and I hope you will be able to help with this.
Regarding assistance: I recommend speaking with a veterans benefits counselor with a Veterans Service Organization such as the DAV, Vietnam Veterans of America, AMVETS, etc. They have benefits counselors who offer free benefits claims assistance. They may have some ideas on how and where you can receive help. I hope this points you in the right direction. I wish you and your father the best.
David Lee says
Ryan,
I served 12 years in the Army and was recently honorably discharged in February. I received around $33K after taxes as separation pay. I’m sure like many of the veterans, I was not informed that this would need to be recouped before receiving any disability from the VA. I’m still unsure as to why this has to be repaid as one is due to service and the other is due to disabilities from that service. But i guess one of my biggest questions is do those who separate from service and receive separation pay but do not receive disability have to repay this as well?
Ryan Guina says
Hi David, Involuntary separation pay is awarded to members because they are no longer eligible for military retirement pay. So far as I am aware, those who separate but do not receive disability compensation do not have to repay the separation pay, unless they later return to service and earn a military pension (this includes those who later join the Guard or Reserves and earn a Reserve retirement). Members would not have to repay the money twice – meaning someone who receive separation pay and disability compensation would have to repay the separation pay, but they wouldn’t have to repay the separation pay again if they later retire from the Guard or Reserves.
Seagram says
M21-1 Part III Subpart V means nothing to the VA.
Tim says
i was put on TDRL in Jan 2014 and started receiving my disability compensation in march 2014. I was re evaluated and in march 2016 i was removed from TDRL and was medically discharged with severance pay. should i expect to not receive my disability compensation?
whitney says
I went through the same process. Discharged in 2011 filed va claim in 2012, got my rating in 2013 and been getting a disability check every month…. now 2017 i submitted a new claim and I got a letter stating I had to pay back all of my severance pay and now my va disability checks have stopped for the next 2 1/2 years
Ricky says
I’ve yet to receive that letter. I mirror what you just posted. I was HYT though.
I did submit a claim last year but it was declined. I’m at 60% right now.
I’m not 100% but I believe the only people not getting recouped are HYTers.
I was told the only reason I’d pay the severance back is if I decided to retire from the reserves.
Not doing reserves.
Steph says
I received a phone call from the VA last week asking for my bank information, and I was told what my individual ratings were. It all adds up to 70%. Since I filed in early October, I was expecting a lump-sum payment this Friday, and monthly payments after that. HOWEVER, according to the letter I received in the mail, They are withholding around $9100 (that’s after the tax-deduction) of separation pay recoupment. The problem is this: I never received separation pay.
I was given a general discharge in December 2006 – around 6 months early. The only pay I received after my separation date was to pay me for the 3-ish days I was still enlisted after the 15th of the month. How is it legal for them to take so much based on an amount that I never received?
This is extremely raw for my right now, and I am frustrated/furious over this.
Ryan Guina says
Hello Steph, Thank you for contacting me. It sounds like there is a clerical error that you should be able to resolve, though it will likely take some work on your end. You will need to get in touch with the VA and let them know there is an error and that you never received any Separation Pay. Ask them what the process is to prove you never received this pay. They should be able to coordinate with DFAS to verify your military compensation and verify you never received Separation Pay. I don’t know the exact details of how this will work, so you will need to have a little patience and try a few things.
I would start by trying to speak to the same person at the VA each time so you don’t have to explain your situation to each customer service rep you speak with. So ask if you can open a claim number and get the individual’s direct line or email address. You can also elevate your issue to a manager if you don’t get any results with a few phone calls.
Finally, you can try working with a benefits claims counselor at a Veterans Service Organization such as the DAV, VFW, etc. Many of these organizations offer these free services. I hope you can get this resolved quickly. Best of luck, and thank you for your service!
Curtis StPierre says
Will the VA consider taking half of my disability instead of all, to payback the Invol Sep pay?
Ryan Guina says
Curtis, Thank you for contacting me. You can contact the VA to see if they will allow a hardship exception. However, I do not know if there is a policy in place that allows for this. You would need to contact the VA to learn more about the options available to you.
Wilson Mowles says
I was told they will only offer hardships to vets with terminal illness? Is this true?
Lafellis says
I received severance pay in December 2013, I filed for Va compensation July 2015. Will they still withhold my compensation?
Brian says
First I wanted to tell you thanks for all of your informative posts. I have found a lot of useful information on this site. After reading several articles today I wanted to share a very confusing situation I am now involved in after separating from active duty. Last year on or about 1 April 2015 approximately 2000 Captains were separated from active duty Army due to downsizing of the force. I happen to be one of those Captains. I understand every situation is unique and I have reached out to others that are in the same situation that I am now facing. Let me explain:
I was given separation pay with a gross of $45,488.52. This amount was subject to tax. I understand that this is normal procedure. I had a total of $11,421.94 deducted for Federal taxes, FICA, SGLI and FSGL. My net pay that I received was $34,313.30.
In October, I was awarded 100% VA disability. I did not know it at the time but I found out that the severance pay would be withheld until the full amount of separation pay was recuperated ($34,313.30). All of the compensation I would have received from the VA in 2015 was withheld. The recovery continued into the payment until February 2016.
As you know compensation is nontaxable. The problem is that the separation pay was included on my W2 as income along with my regular pay for the time I was active duty January to March 2015.
Since the separation pay was recouped, I did not retain any of the taxable pay. The taxes have already been deducted and submitted. Since my VA pay was not taxable, and the separation pay was recovered using nontaxable pay, the separation pay should not appear as taxable income on my W2. I have contacted DFAS to assist in resolving the matter and have ran into road blocks in getting my request to the appropriate tax department. Other Captains I have contacted have been experiencing the same issue. We all have a real mess on our hands. Any advice or assistance would be greatly appreciated and passed along to others I know in this same situation.
Lewis says
Hi Brian, I am going through the exact same situation. I was released from active duty last April as one of the 2000 Captains and my disability benefits are being held to pay back my separation pay. In 2015 the VA kept almost 15000 dollars of my disability compensation but the entire separation pay was listed on my W2. Not being able to get my compensation has put a severe financial hardship on my family and I am definitely not getting any help to recover any of it. My wife has done a lot of research on our tax situation this year because the separation pay listed on my W2 has put us in a higher tax bracket and we are looking at a 7000 dollar difference in our refund, a refund we desperately need right now. The only thing she has found that we might we able to use is listing the amount as a repayment of wages (IRS pub 525 & 529). We are meeting with a CPA next week and hopefully she can help us. Also, we have a phone call scheduled with a tax advisor from Military One Source on Friday. Hope this helps and if we find out better news I will definitely pass it along.
Mikki says
Hello I am sorry that you guys are dealing with such a mess. I myself am a retired police officer ,injured in the line of duty , and I am helping my sister with her separation from the military on disability. The military did this exact same thing to her when she separated, she did receive a 100% va rating. They included the amount of her severance as taxable wages in which with a 100%rating it should have been nontaxable. Therfore they told her to offset it when she filed for her tax return. We deducted the severance pay from her active duty normal pay from the previous year to get her normal yearly wage. She was then able to recoup her non taxable amount from the IRS. Which was $13,000. Good luck to,you all. I really hope you have figured this out. She separated in Oct 2015 and she is still dealing with this issue and it’s July 2016. But just keep at it. Don’t give up!
Justin says
I was under the impression, that with a disability rating of 51% or higher, Involuntary Separation Pay was tax free. Perhaps this is why they will recoup 100%? I am curious as to the result, because I will be involuntarily separated in April, and will be eligible for a disability rating as well.
Milton says
Hello Ryan:
I spent 11 years in the Army (Active Duty) got out in November 2014 and received involuntary separation pay that at the end after taxes came down to 24,000. I filed for VA compensation right after and was awarded 60% but according to the letter they sent me back then with the dates for the recoupment, they will recoup everything the Army gave me for involuntary separation (Wont start getting VA disability pay until June 2017), even though there is a paragraph in the same letter where it states that they only recoup amounts after taxes. From reading your article, I realized they are just suppose to recoup the 24,000 I got after taxes. Is this correct? Why are they trying to recoup the whole entire amount I was awarded for involuntary separation if its only the amount after taxes?? How do they know how much someone is taken out for tax purposes? Do they use some kind of chart to determine this?. Right now I have 2 more claims pending decision from VA and those should be coming out soon, will they hold my payments from these other 2 claims as part of the recoup or will only continue recouping from the one I already have been awarded compensation from???. If they hold payments from the 2 new ones coming out, could the debt be declared paid since they are suppose to back track everything to November 2014 and I was still within my year of separation???. Also, my VA rep has been telling me that the 2 new claims will be awarded separately from the one I already have of 60%, is this information accurate?? or will they mix some of the conditions from these 2 new claims with the ones already awarded compensation from the first one??? . Hopefully you can clarify some of my doubts so I can have a better understanding of all this situation which is hurting my pocket in a real bad way since there are bills to pay and child support to take care of. Thank You!
Justin says
This may help..
From VA M21-1, Part III, Subpart V: Non-disability severance pay issued on or before September 30, 1996, recoup based on pre-tax amount, after September 30, 1996 after-tax amount.
From the tax code: If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. However, you must include in your income any lump-sum readjust- ment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA.
Justin says
Also, effective May 28, 2003, the tax rate for separation pay is 25 percent, regardless of dependent status.
Sonny says
What they take out (25%) is only an initial withholding and has no bearing on how much you actually pay in taxes.
Can you give the tax code you cited?
Thanks
Fredrick Robinson says
So if you receive reduction in Force payments back 1992 this law was retro back from 1996
Homer Denson says
So once I pay the severance pay back do i get my retirement back?
Ryan Guina says
Hello Homer, Yes, your retirement pay should resume in full once the severance pay has been recouped by the government.