The Rule on Concurrent Military and VA Disability Pay
While there is a lot of supplemental guidance on concurrent military retirement pay and VA disability pay, there is no such guidance on concurrent standard military pay and VA disability pay.
You’re probably reading this post because you have separated from the military and are currently the beneficiary of a Department of Veterans Affairs (VA) Disability Rating and associated pension. Congratulations! (That’s congratulations for getting the VA to recognize your condition, of course)
Can Disabled Veterans Still Serve in the Military?
If you are in the Guard or Reserve, though, and have a VA Disability Rating, you may be wondering…
Am I allowed to still serve as a disabled Veteran?
The short answer is yes. There is no law or national policy that prohibits a disabled Veteran from continuing to serve in the Department of Defense (DoD) based solely on holding a VA Disability Rating. Remember, the VA is a completely separate agency from the DoD.
However, as a deployable service member, you are still subject to the health and fitness standards of your respected DoD branch and career field. So, whether you are still medically eligible to serve based on those standards will be unique to everyone. A good place to start your personal research is the DoD Instruction 6130.03, Volume 2 Medical Standards for Military Service: Retention. Each branch will also have their own service-specific regulations with more guidance. And, of course, you can discuss with your medical provider during your annual physical health assessment.
It’s important to keep in mind, a VA Disability Rating is not directly a rating on your inability to work for an earned wage, although they can be correlated. So, the common mindset of, “Well I can still work so I clearly wouldn’t qualify for a disability rating,” doesn’t hold water. Rather, it’s a “rating based on the severity of your service-connect condition.” It’s an acknowledgement that you incurred an injury while serving your nation and that injury has impacted and will likely continue to impact your day-to-day life to various degrees and in various ways.
So what if you’re already in the Guard or Reserves and are awarded a VA Disability Rating?
You may have heard of a little rule in Title 10 of the United States Code–the law that governs the Armed Forces–that prohibits individuals from receiving military pay and VA pay concurrently. While this is true, the execution of this policy is actually a little complicated and can vary whether you’re retired, medically retired, or currently serving.
Retirees may find this Congressional Research Service paper (April 2024) on “Concurrent Receipt of Military Retirement and VA Disability” helpful or directly review the code in Title 10 Section 1414.
For all my currently serving folks, the guidance is far less clear. So, let’s dive in…
Title 10 Section 12316 – Payment of Certain Reserves While on Duty
This rule on concurrent military and VA disability pay for currently serving service members is found in Title 10, Section 12316, Payment of certain Reserves while on duty. The full excerpt below:
(b) Except as provided by subsection (c), a Reserve of the Army, Navy, Air Force, Marine Corps, or Coast Guard who because of the Reserve’s earlier military service is entitled to a pension or disability compensation, and who performs duty for which the Reserve is entitled to compensation, may elect to receive for that duty either—
(1) the pension or disability compensation to which the Reserve is entitled because of the Reserve’s earlier military service; or
(2) if the Reserve specifically waives those payments, the pay and allowances authorized by law for the duty that the Reserve is performing.
(c) Unless the payments because of a Reserve’s earlier military service are greater than the compensation prescribed by subsection (a)(1) or (b)(2), as applicable,, a Reserve of the Army, Navy, Air Force, Marine Corps, or Coast Guard who because of the Reserve’s earlier military service is entitled to a pension, retired or retainer pay, or disability compensation, and who upon being ordered to active duty for a period of more than 30 days in time of war or national emergency is found physically qualified to perform that duty, ceases to be entitled to the payments because of the Reserve’s earlier military service until the period of active duty ends. While on that active duty, the Reserve is entitled to the compensation prescribed by subsection (a)(1) or (b)(2), as applicable,. Other rights and benefits of the Reserve or the Reserve’s dependents are unaffected by this subsection.
10 U.S. Code §12316
The Concurrent Pay Rule in Practice
Title 10 Section 12316 precludes reserve component military members from receiving concurrent military and VA disability pay.
Under Title 10 Section 12316, the Guardsman or Reservist must chose between payment for their continued Guard or Reserve service OR to receive VA disability compensation for injuries incurred during prior periods of service.
In practice, even if the Guardsman or Reservist takes Title 10 active duty orders, they are still considered to be from the reserve component for the purpose of this legislation and still ineligible for concurrent pay–someone please correct me in the comments if I’m wrong.
The original intent of this legislation is unclear to me. People have called it “double dipping,” but it’s obvious to me one is compensation for past injuries sustained in the line of duty, and one is compensation for current, continuous work. And, if this is “double dipping,” then why doesn’t this law apply to disabled Veterans who are now federal civilian employees? Why is it only uniformed members who must forgot one compensation or the other?
A colleague who works on the Hill recently told me it was to account for a budget shortfall–which seems like an actually logical explanation to explain this otherwise bizarre law. No, it’s not an equitable provision, but something had to give.
Whatever or whyever the law, if you separate from active duty, transition into the Guard or Reserve, and apply for VA Disability, you may very well find yourself in a concurrent military and VA disability pay situation.
You are not alone. Many Guardsmen and Reservists have a VA Disability Rating.
How is Concurrent Pay Actually Calculated?
The concurrent pay rule does not mean you must forgo the entire compensation of one or the other for the entire year (thank goodness!). The only exception, of course, if you were on active duty orders the entire fiscal year, in which case you received military pay AND VA disability pay for literally every single day that year.
Rather, you must forgo either military pay or VA disability pay for the total number of days (i.e. periods) in which you received concurrent military and VA compensation each fiscal year.
For example, let’s say you’re a traditional reservist and you worked 12 drill weekends (24 calendar days, but actually 48 paid periods) and 15 days for annual training (15 paid periods). In total, you were compensated for 63 days (i.e. periods) that fiscal year. Let’s also say your VA Disability Rating is 50% with no dependents, entitling you to $1,102 monthly. This means, for those 63 days, you would have received $2,314.19 in VA disability pay.
Under Title 10, Section 12316, you cannot receive compensation for both military pay and VA disability pay for those 63 days of that fiscal year. You must decide which total entitlement you want to receive for those 63 days.
Of course, to make this decision, you must determine which entitlement is worth more given your unique situation.
How Do I Decide Which Compensation to Choose?
Step #1 – Calculate your Total Number of Paid Military Days (i.e. periods) that Fiscal Year
The easiest way is to check your Point Credit Summary Report. In the Air Force, it’s called your PCARS.
Keep in mind, the “days of military pay” really means “periods of military pay.” So while on annual training and other orders, you are compensated one-for-one on each calendar day (including weekends).BUT on a traditional drill weekend, you are compensated for four periods even though it’s only two calendar days.
Step #2 – Calculate your Total Concurrent VA Disability Pay that Fiscal Year
Calculating your daily VA disability pay is the easy part. Take your total monthly VA disability pension amount and divide it by 30. The VA and DoD don’t generally account for each individual month and instead use the average of 30 days per month. You can double check the VA’s Disability Compensation Rates website.
Total Monthly VA Disability Pay / 30 = Daily VA Pay Rate
Then multiply your daily VA pay rate times the number of paid military days (i.e. periods) from Step #1. This will give you the total value of your concurrent VA disability pay for that fiscal year.
Daily VA Pay Rate x Number of Paid Military Days = Total Concurrent VA Disability Pay
Step #3 – Calculate your Total Military Compensation that Fiscal Year
The easiest way to do this would be to check your W2, but unfortunately, your taxes are calculated by calendar year, but your concurrent military and VA pay is calculated by fiscal year. So, instead, you’ll have to compile all your Leave and Earnings Statements (LES) for that fiscal year.
Since your military pay is taxable and your VA pay is not, I also like to deduct my expected taxes from my military pay to get a more accurate side by side comparison. On average, I deduct 30% from my compensation to account for federal (~20%) and state (~10%) taxes. This rate, of course, is highly dependent on your total annual income and state of residence. You can also reference your LESs to get a more specific amount.
Step #4 – Determine Whether your VA Disability Compensation is More or Less than your Military Compensation
Which total number is larger between Step #2 (VA disability pay) and Step #3 (military pay)?
It is generally believed your military compensation will almost always be greater than your VA compensation rate, but DO THE MATH! If you are junior enlisted and have a high VA Disability Rating (80% or more), then your VA Disability compensation may actually be greater than your military pay compensation, especially once adjusted for taxes.
How Do I Manage/Report Concurrent Pay?
You don’t necessarily need to report that you’re receiving concurrent pay. The VA is notified your number of paid military days (i.e. periods) each fiscal year without any preemptive action on your part.
In practice, if you take no preemptive pay elections, you will initially receive both military pay and full VA disability pay each month throughout the fiscal year. Then, the VA will reconcile your debt at the end of the year using a VA Form 21-8951.
You, of course, owe back the lesser of the two values, but I personally think receiving both throughout the year is not a bad option provided you’re setting aside enough money to account for your incurred debt.
In this “do nothing” scenario, you are minimizing the amount of calculations and adjustments your DoD and/or VA financial offices must preemptively make in order to compensate you correctly. Rather, you’re asking both offices to operate business-as-usual and then reconcile your debt at the end of the fiscal year when your total number of paid military days (i.e. periods) is final.
Step #1 – Wait for the VA to Send a VA Form 21-8951 at the End of the Fiscal Year
Shortly after the end of the fiscal year, the VA will send you a VA Form 21-8951, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances telling you how many days (i.e. periods) of military pay they think you received that fiscal year.
Step #2 – Verify the Correct Number of Paid Military Days (i.e. periods)
Verify the correct number of paid military duty periods against your Point Summary Credit Report (in the Air Force, this is called PCARS). The VA should not count “Points No Pay” (PNP) days, nor should they count cancelled military orders. The VA has been wrong before, so double and triple check.
Step #3 – Indicate Whether You Want to Keep the VA or Military Pays for those Concurrently Paid Days (i.e. periods)
Then, in Section III, Box 9, elect which pay you would like to forgo for that fiscal year (military or VA). As perviously mentioned, it is generally recommended to forgo the lesser of the two total compensations as calculated in the previous section.
Step #4 – Collect Validating Signatures from Your Guard/Reserve Unit and Send Back to the VA. Don’t Forget to KEEP A COPY!
Finally, collect the signature from your unit commander or their designee (i.e. unit manager), make a copy, and return a copy to the VA. Don’t forget to keep a copy!
Step #5 – Wait for VA to Process the Completed VA Form 21-8951
After a few more weeks (or months) for processing, the VA will send back a letter stating your owed debt and provide you options for repayment. The standard options are (1) lump sum, (2) monthly payments, or (3) withholdings on future disability payments.
Step #6 – Pick Your Preferred Repayment Plan & Begin Repayment
If you decline to chose a repayment option, option #3 is the default plan (withholdings of future disability payments). The withholdings plans seems to be on a three year repayment cycle, since you have three years to repay the debt regardless of method.
Now, option #3 isn’t a terrible option. In fact, if you are fiscally disciplined and have a very healthy savings, delaying repayment to the VA can help you compensate for some of that concurrent pay for which you were ineligible. Because the VA does not charge interest on any VA pay debt as a result of concurrent military pay, you can invest the concurrent pay while you’re waiting for them to push the paperwork at the end of the fiscal year, reconcile the concurrent pay, adjudicate a debt, and collect monthly withholdings until your debt is paid in full.
This is not terribly lucrative. So, definitely do not take any financial risks here. But, it would be a true to statement to say: if the VA pays you $10,000 one fiscal year in which you were actually ineligible due to concurrent military pay, you could receive that money up front anyway and put it in a high yield savings account (HYSA) at 5% interest rate (circa 2024). While you wait for the VA to reconcile your concurrent pay and withhold your disability pay until you’ve pay off the debt (i.e. three years), that $10,000 will have earned about ~$1,500. This interest earnings is still taxable, though, so it’s more like $1,000 take home. In this scenario, instead of losing out on $10,000 of VA Disability Pay, you’ve technically only lost out on $9,000. Not magical, but better.
How to Keep Track of Your Debt
In a perfectly working VA.gov world, you should be able to track you debt digitally on the VA website by clicking on “My VA” in the top right-hand corner. Then scroll down to the “Outstanding Debts” section.
If you can’t see it there, you can also call the Debt Management Center (DMC) at 800-827-0648 (TTY: 711). They’re open Monday through Friday, 7:30 a.m. to 7:00 p.m. ET.
Summary
While there is a lot of supplemental guidance on concurrent military retirement pay and VA disability pay, there is no such digestible guidance on concurrent standard military pay and VA disability pay. Concurrent military pay and VA disability pay is prohibited under Title 10 Section 12316 of the U.S. Code. In practice, it is calculated based on the total number of paid military days (i.e. periods) for that fiscal year. You must elect whether you wish to receive military pay or VA pay for that quantity of days for that fiscal year.
While it may be possible to preemptively elect which compensation to receive, I’ve focused on the “do nothing” approach here, where you receive both compensation through out the fiscal year and then calculate and reconcile your debt at the end when the total number of paid military days (i.e. periods) is final.
While arguably the simplest, this method does require fiscal discipline to save (ideally in a high yield savings account) your concurrent pay in anticipation of your debt collections.
As always, consult your VA representative if you need any support.
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