Full disclosure: I am not as familiar with this subject as I might be with others.
The following seems to address your situation:
III.v.4.B.3.b. General Policies Regarding Withholdings to Recoup Disability Severance Pay | | Generally, if a Veteran received disability severance pay, VA must withhold from his/her monthly compensation an amount equal to the monthly compensation payable for the disability(ies) for which the Veteran received disability severance pay. VA continues to withhold this amount until it has recouped the amount specified in M21-1, Part III, Subpart v, 4.B.2.d.
Important:
- The monthly withholding may never exceed the monthly amount of compensation payable based on the initial, compensable rating, as defined in M21-1, Part III, Subpart v, 4.B.3.c, that VA assigns the severance-pay disability(ies).
- If a Veteran has multiple, severance-pay disabilities, each rated 0-percent disabling, and VA assigns a 10-percent disability rating to them under 38 CFR 3.324, no withholding is necessary for these disabilities until VA assigns a compensable rating to one or more of them, individually.
- Withhold the additional benefits payable because of application of the bilateral factor if
- the initial, compensable rating included application of the bilateral factor, and
- entitlement to the bilateral factor was based exclusively on severance-pay disabilities.
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My interpretation: If an individual is rated at 0%, there is at least one disability that has been approved as disabling by the DoD for severance pay, although it is without a percentage higher than 0%. If the VA also rates the single disability for VA compensation purposes, then a recoupment should ensue (unless it is for a combat related disability.)
You might consider contacting the VA or a VSO concerning this matter.
Good luck,
Ron