INCAP recoupment of VA Disability benefits update...


PEB Forum Veteran
Registered Member
Many don't even know INCAP (Incapacitation Pay) exists, but for those lucky enough to have stumbled on that gem, the Army (National Guard) has a long standing policy of recouping or deducting any VA disability benefit from INCAP received for the same time frame. This is in accordance with AR 135-381 and DA PAM 135-381. But...

In 1990 the VA Legal Counsel found such recoupment is NOT in accordance with the governing Law, as VA disability benefits are NOT "Earned Income".

In 2009 the Army JAG Counsel found the same thing, but in true Army fashion, gave instructions to the effect that "it still tells you to do it in the Army Reg, so..."

Last year, DODI 1241.01 finally got around to instructing the services to stop the practice of recoupment for the same reasons the VA gave 26 years prior.


This summer, the Secretary of the Army published a directive (2017-17) finally instructing the National Guard and Reserves to comply with the DODI. Whew!

I'm working on actually getting the monies wrongfully withheld or recouped back, and I'll keep you posted.
No mountain for a climber, especially with the legal wind at my back.



Registered Member
In its 2011-2012 Annual Report (dated August 31, 2012), the DoD Recovering Warrior Task Force (RWTF) recommended the following: "DoD must establish policies that allow for the rapid issuance of Title 10 orders to RC RWs who have sustained line of duty injuries/illnesses. Delays in Title 10 orders have resulted in the interim use of Incapacitation (INCAP) pay. DoD should define specific criteria for the appropriate use of INCAP pay that will be consistent across all Services." (Recommendation 22, pp. 26-29,

DoD later responded to the many recommendations made in this report as indicated in the notes for the RWTF Business Meeting (April 2-3, 2013), which stated "Concur" for Recommendation 22 and also included the following detailed response: "Implementation: • DoDI 1241.2, “Reserve Component Incapacitation System Management”, May 30, 2001, and DoDI 1241.1, “Reserve Component Medical Care and Incapacitation Pay for Line of Duty Conditions”, February 28, 2004 (certified current as of April 23, 2007), will be consolidated into a single issuance. • Reserve Component (RC) members with line of duty injuries or illnesses to be retained on active orders until the member is fit for duty, or the condition cannot be materially improved with continued treatment and the member has received a final disposition from the DES." (Slide 11,

DoD further confirmed the above implementation plan and that such actions were indeed being taken regarding Recommendation 22 on October 4, 2013, when providing a summary of the RWTF report findings and recommendations along with its own evaluation and implementation to key members of Congress (Attachment 1, pp. 16-18).

Flash forward to 2016 — more than three years since Recommendation 22 was made in 2012 — when DoD finally releases DODI 1241.01 (dated April 19, 2016) and now definitively states the following: "Service members may receive both incapacitation pay and Department of Veterans Affairs (VA) benefits. Since VA benefits are not taxable, they do not meet the definition of earned income. Incapacitation pay will not be offset by VA benefits received." (p. 15). It is worth noting that this formal acknowledgement by DoD confirms the following information which was previously provided by the Army JAG - Office of Soldiers' Counsel on an Information Paper pertaining to Concurrent Receipt of Incapacitation Pay (INCAP) and Department of Veterans Affairs (VA) Benefits (dated 24 September 2015): "VA Disability payments are nontaxable Government benefits, and therefore not part of the earned income definition or reporting requirements... The confusion about the eligibility to receive both INCAP and VA Disability arises from this rule: A member of a Reserve Component who is drawing a pension, disability compensation, retainer pay, or retirement pay from the United States for prior military service, and who performs duty for which he or she is entitled to pay, has to elect whether to receive VA Disability pay or Military pay – but they may not get both. However, INCAP, payable pursuant to 37 U.S.C. § 204, does not represent payment for duty performed and is not subject to this rule... CONCLUSION: Payments to Reserve or Guard Soldiers under the provisions of 37 U.S.C. § 204 that are made at a time when they are no longer in an "active duty" status do not represent "active service pay." Therefore, the prohibition against concurrent payment of benefits is not applicable to these payments. Furthermore, since VA Disability payments are nontaxable Government income, Reserve and Guard Soldier receiving INCAP do not have to reduce their INCAP amount due to VA Disability payments... This Information Paper is provided as a service to Soldiers in the MEB/PEB process and is intended as general information only." (Attachment 2).

On May 31, 2016 (or less than 45 days after DoDI 1241.01 was released), the Secretary of the Army also published Army Directive 2016-22 (Authority to Initiate Applications to Correct Military Records on Behalf of a Group of Soldiers or Former Soldiers Who Were Similarly Harmed by the Same Error or Injustice), which specifically stated the following: "Section 521 of the National Defense Authorization Act for Fiscal Year 2016 amended 10 U.S.C. § 1552 to give the Secretary of the Army limited authority to initiate applications for the correction of military records. Pursuant to 10 U.S.C. § 1552(b), as amended, the Secretary of the Army may file a request for the correction of military records on behalf of a group of Soldiers or former Soldiers who were similarly harmed by the same error or injustice... I hereby delegate to the Assistant Secretary of the Army (Manpower and Reserve Affairs) the authority to file a request for correction of a military record with the Army Board for Correction of Military Records on behalf of a group of Soldiers or former Soldiers to remedy a common error or injustice. This authority may not be further delegated... For purposes of this directive, a “group” consists of three or more Soldiers or former Soldiers... This directive is effective immediately. When the policy in this directive conflicts with Army regulations, this directive takes precedence." (Attachment 3). Given this context, it clearly appears that the Army either had or still has both the authority and ability to correct the undeniable injustice of INCAP Pay being improperly offset, recouped, and/or denied over several years on behalf of a group of Soldiers or former Soldiers who were similarly harmed by this same error or injustice, which has already been substantiated based upon the excellent investigative reporting by NBC Bay Area about two years ago and by several other government reports identifying similar problems with RC post-deployment medical care, missing or delayed LOD's, and improper processing associated with INCAP Pay and/or Title 10 orders and access to the DES:

California National Guard Fails to Meet Deadlines on Critical Benefits Requests, October 5, 2015,

Bigger Than California: National Guard Line of Duty Investigations Overdue Across the Country, November 19, 2015,

Army Reserve Components: Improvements Needed to Data Quality and Management Procedures to Better Report Soldier Availability, GAO-15-626: Published: Jul 31, 2015.

DoD Recovering Warrior Task Force (RWTF) Annual Report 2012-2013, Published: September 3, 2013, (refer to Recommendations, 6, 7, and 21),

DoD RWTF April 16, 2014 Business Meeting Agenda, Office of the Assistant Secretary of Defense for Reserve Affairs Manpower and Personnel, Presentation by Col. Martha Soper on RC LOD's and INCAP,

Assessment of DoD-Provided Healthcare for Members of the United States Armed Forces Reserve Components DODIG-2015-002, October 8, 2014,

Overall, thanks for sharing your story and some very helpful information over several years of fighting to correct such injustice. I would love to further discuss this situation with you and also speak with Mr. Jason Perry about my ongoing issues directly related to this subject matter in order to determine what, if any, legal options should be pursued given my current circumstances…