We’re touching on a confusing topic today: regular 20-year retirements with disability.
As you all know, 20 years in the military is the basic requirement for a full retirement from active duty. After 20 years, you can retire any time, and you’ll receive complete retirement benefits, including retirement pay, full medical care, commissary privileges, etc. All of these benefits are given by the DoD, not the VA. If you put in 20 years, you will get all this from the DoD no matter what.
So if you are a 20-year Retiree and have a disability, the DoD will give you a military disability rating, but it won’t affect your benefits at all. You won’t get any extra for this disability, since you are already receiving the full benefits from the DoD. So whether you get a 20% rating or a 90% rating from the DoD, nothing will change. The only real benefit you get from the DoD acknowledging that you have a disability is that the VA will not be able to doubt that your disability was caused by military service, and you’ll be able to get full VA disability benefits, no problem.
Now for VA disability benefits. The benefits you receive from the VA for a disability are not affected at all by how long you were in the military. It doesn’t matter. It is all based on the rating the VA gives your condition. So if someone was in the military for 5 years and was given a VA rating of 40%, and someone else was in the military for 25 years and was given a VA rating of 40%, they will both receive the same amount of benefits from the VA since both received a 40% rating.
That’s all pretty straightforward, but now I’m going to throw a wrench in the works. Whenever anyone is receiving both VA disability benefits and DoD retirement benefits (whether disability or not), the amount of the DoD benefits are decreased by the amount of the VA benefits. Basically, the government will not pay you twice, only once.
So, if Bob is receiving $1,000/month from the DoD, and then the VA begins giving him $500/month, the amount he gets from the DoD will be decreased to $500 ($1,000 – $500 = $500).
While this may seem unfair or just plain confusing, there is actually a huge benefit to this system: any money received from the DoD is taxable, while any money received from the VA is not. You still get the overall amount you deserve, but instead of all of it being taxable, only a portion is. And if the amount you receive from the VA is more than the amount you receive from the DoD, you will simply stop receiving any monetary benefits from the DoD (all the other benefits will remain the same), and you’ll only receive the larger amount from the VA, which is all not taxable. Sweet.
To sum up, you will receive full retirement benefits from the DoD if you retire after 20 or more years on active duty. Your DoD disability will not affect these benefits at all. You will also receive VA disability based on your disability rating, and that amount will be subtracted from the amount of retirement pay you are receiving from the DoD. And again, this is awesome since VA money is not taxable.
This system is only true for veterans with 20 or more years on active duty. The system works a bit differently for reservists with 20 or more years, and I’ll discuss this next week.