DoD over VA Compensation

[AL_Shep]

Greetings everyone. Active duty Air Force and anticipating going to MEB/PEB soon, and wanted to clarify some possible outcomes. Ratings from my condition could fall somewhere between 60% and 100%, and I keep hearing that for these numbers, VA compensation is almost always the better option, and that the only time someone would waive VA pay was if the DoD rating was higher than the VA rating (excluding CRDP/CRSC). However, in the example of 60%/100%, if my base pay is ~$8000, a 60% DoD rating puts my compensation at ~$4800. So anything 60% or higher (DoD) tells me that compensation will be higher than the 100% VA of ~$3100. I feel like even a 40% DoD rating puts the math at higher compensation than the full 100% VA compensation rate, right? Am I missing something critical here? This whole process sucks, but you've all made it much easier just by reading your stories. Thanks!

 

[RonG]

Hello,

Re: "VA compensation is almost always the better option,..."

Accepting VA compensation is ALWAYS the better option in my opinion, even when the DoD percentage is higher. I am surprised that this remains a mystery.

When one accepts VA comp, they waive their retired pay dollar for dollar in the amount of VA comp received. Any residual retired pay is retained/kept by the retiree.

If one declines VA comp when the DoD is higher than the VA, there is the distinct possibility of losing money via that choice.

Ron

 

[RonG]

Hello,

Your example: "However, in the example of 60%/100%, if my base pay is ~$8000, a 60% DoD rating puts my compensation at ~$4800. So anything 60% or higher (DoD) tells me that compensation will be higher than the 100% VA of ~$3100.

Results in:
a. accepting DoD only: 4800 DoD (taxable); zero from VA
b. accepting VA at 3100: 4800 minus 3100 = 1700 residual retired pay (taxable); plus 3100 VA comp (non-taxable) TOTAL: 4800

Ron

 

[RonG]

@AL_Shep

Accepting VA comp...

Here is another example using 50% DoD and 40% VA ($600 example amount) without dependents, and high three average base pay of 8000.

1. 8000 x 50% = 4000 retired pay
2. 4000 - 600 = 3400 residual retired pay kept by retiree
3. Also receive 600 VA comp

Ron

 

[AL_Shep]

Thanks, Ron. You've definitely cleared this up for me. I think part of the mystery is in the understanding of what "accepting VA > DoD" actually means. I was under the impression that accepting VA would mean accepting ONLY VA compensation, and forfeiting the entirety of the DoD amount. According to your explanations, in reality, accepting VA compensation only really offsets that amount - taken away from the DoD compensation, and any residual amount of DoD pay is still retained/kept. Long ways to go for me still, but thanks again.

 

[RonG]

“Accepting” is my term; others might use “selection “, but you have a good understanding of the association of VA comp and DoD disability retired pay.

The waiver of retired pay dollar for dollar in the amount of VA comp received is part of the certification on the VA form for application for VA Comp.

This was discussed in detail in several threads on this board.

Good luck,
Ron

 

[tony292]

Ron is correct. If your DOD is higher than VA you’ll collect the full amount of VA and the residual amount of DOD minus VA. It’s much better to accept it this way because your VA portion will be tax free.