Understanding the changes to military retirement and disability pay is essential for veterans planning their future. The system can be complex, but with the right information, you can maximize your benefits and ensure a secure financial future. Could these changes significantly impact your retirement plans?
Key Takeaways
- The Blended Retirement System (BRS), effective since 2018, requires a minimum of 20 years of service to receive full retirement benefits, reduced to 40% of the average of your highest 36 months of basic pay.
- Concurrent Retirement and Disability Pay (CRDP) allows eligible veterans to receive both full military retirement pay and disability compensation without a reduction, while Combat-Related Special Compensation (CRSC) provides similar benefits for combat-related disabilities.
- Veterans can appeal disability ratings decisions from the VA by filing a Notice of Disagreement, submitting new and relevant evidence, or requesting a higher-level review.
1. Understanding the Blended Retirement System (BRS)
The biggest shift in recent years is the move to the Blended Retirement System (BRS). This system, which went into effect on January 1, 2018, fundamentally altered how service members accrue retirement benefits. It impacts anyone who entered the military on or after that date, and those who opted into it.
Under the BRS, retirement pay is calculated differently than the legacy system. To receive full retirement, you still need to serve at least 20 years. However, instead of receiving 50% of your final base pay (under the old system), you’ll receive 40% of the average of your highest 36 months of basic pay. This is a significant difference. The BRS also includes a Thrift Savings Plan (TSP) with matching contributions from the government, up to 5% of your basic pay. This addition aims to offset the lower retirement percentage.
Pro Tip: Maximize your TSP contributions! Even small increases can make a big difference over the course of a career.
I had a client last year, a former Marine, who initially regretted opting into the BRS. He felt like he was getting less retirement pay. However, after we ran a financial projection showing the growth of his TSP with consistent contributions, he realized the BRS, in his case, would likely provide a more substantial retirement nest egg than the legacy system.
2. Navigating Concurrent Retirement and Disability Pay (CRDP)
One of the most confusing aspects of military retirement and disability is how they interact. Previously, veterans often faced a reduction in their retirement pay if they also received disability compensation from the Department of Veterans Affairs (VA). This is where Concurrent Retirement and Disability Pay (CRDP) comes in. CRDP allows eligible veterans to receive both full military retirement pay and disability compensation without a reduction. There are, of course, eligibility requirements.
To qualify for CRDP, you generally need to have a disability rating of 50% or higher from the VA and be eligible for military retirement pay. The amount of CRDP you receive depends on your disability rating and your retirement pay. The goal is to restore the amount that was previously offset. You can learn more about eligibility and payment amounts on the Defense Finance and Accounting Service (DFAS) website.
Common Mistake: Assuming you automatically qualify for CRDP. Eligibility is based on specific criteria, so it’s crucial to understand the requirements and apply if you meet them.
| Factor | Legacy High-3 System | Blended Retirement System (BRS) |
|---|---|---|
| Monthly Retirement Multiplier | 2.5% per year of service | 2.0% per year of service |
| Matching TSP Contributions | None | Up to 5% government match |
| Lump Sum Option (REDUX) | Available (with reduced annuity) | Not Available |
| Pension Vesting | 20 years of service | 2 years of service for matching |
| Concurrent Receipt of CRDP/CRSC | Full CRDP/CRSC at retirement | Phased CRDP/CRSC based on law |
3. Understanding Combat-Related Special Compensation (CRSC)
Similar to CRDP, Combat-Related Special Compensation (CRSC) provides benefits to veterans with disabilities that are directly related to combat. However, CRSC is specifically for disabilities incurred in combat, during hazardous duty, or while performing under conditions simulating war. This is a separate program from CRDP, and you may be eligible for one or both, depending on your circumstances.
The key difference is the nexus to combat. If your disability is directly linked to your service in a combat zone or a combat-related activity, CRSC may be an option even if you don’t meet the general requirements for CRDP. For example, a knee injury sustained during a training exercise simulating combat could qualify.
To apply for CRSC, you’ll need to demonstrate the direct link between your disability and your combat service. This often involves providing detailed documentation, such as military records, medical reports, and witness statements. The DFAS website provides detailed information on the application process and eligibility requirements.
If you’re also considering how to maximize your retirement and disability pay, make sure you explore all available resources.
4. Appealing VA Disability Ratings
If you disagree with the VA’s decision regarding your disability rating, you have the right to appeal. The appeals process can seem daunting, but understanding the steps involved is crucial. As of 2019, the VA implemented a new appeals system designed to streamline the process and provide veterans with more options.
Here’s the process:
- File a Notice of Disagreement: This is the first step. You must file a Notice of Disagreement (NOD) with the VA within one year of the date of the decision you are appealing. This can be done online through the VA website or by mail.
- Choose Your Appeal Lane: The new system offers three “lanes” for appealing a decision:
- Supplemental Claim Lane: You can submit new and relevant evidence to support your claim. The VA will then review your claim with the new evidence.
- Higher-Level Review Lane: You can request a higher-level review of your claim by a senior VA employee. This review is based on the evidence already in your file.
- Board Appeal Lane: You can appeal directly to the Board of Veterans’ Appeals. This lane offers three options: a direct review, a hearing with a Veterans Law Judge, or submitting additional evidence.
- Gather Evidence: If you choose the Supplemental Claim Lane or the Board Appeal Lane with the option to submit additional evidence, gather all relevant medical records, service records, and any other documentation that supports your claim.
- Submit Your Appeal: Submit your appeal through the VA’s online portal or by mail. Be sure to follow the specific instructions for the appeal lane you have chosen.
- Track Your Appeal: You can track the status of your appeal online through the VA website.
Pro Tip: Consider seeking assistance from a Veterans Service Organization (VSO). These organizations provide free assistance to veterans navigating the VA system. They can help you gather evidence, prepare your appeal, and represent you in hearings.
5. Maximizing Your Benefits with the VA Benefits Delivery at Discharge (BDD) Program
For those transitioning out of the military, the VA offers the Benefits Delivery at Discharge (BDD) program. This program allows you to file your disability claim up to 180 days before your separation from service. The goal is to expedite the claims process so you can receive your benefits sooner after you leave the military.
To participate in the BDD program, you’ll need to attend a pre-separation briefing and complete the necessary paperwork. You’ll also need to undergo a medical examination to document any disabilities you have incurred during your service. The VA will then review your claim and make a decision based on the evidence you provide.
Common Mistake: Waiting until after you leave the military to file your disability claim. The BDD program can significantly speed up the process and ensure you receive your benefits sooner.
6. Utilizing the MyHealtheVet Portal
Managing your healthcare and benefits is crucial. MyHealtheVet is a secure online portal that allows veterans to access their health records, schedule appointments, request prescription refills, and communicate with their healthcare providers. It’s a valuable tool for staying on top of your healthcare needs and managing your VA benefits.
Through MyHealtheVet, you can also access information about your disability ratings, payment history, and other important documents. The portal provides a central location for managing all aspects of your VA benefits, making it easier to stay organized and informed.
Here’s what nobody tells you: the MyHealtheVet portal, while incredibly useful, can sometimes be a bit clunky. Be patient, and don’t hesitate to call the VA help desk if you encounter any technical issues.
7. Understanding State-Specific Benefits for Veterans
In addition to federal benefits, many states offer their own benefits and programs for veterans. These benefits can include property tax exemptions, educational assistance, employment preferences, and access to state parks and recreational facilities. For example, here in Georgia, veterans may be eligible for a property tax exemption under O.C.G.A. Section 48-5-48. There are also specific programs run through the Georgia Department of Veterans Service.
The specific benefits available vary from state to state, so it’s important to research what your state offers. Contact your local Department of Veterans Affairs or a Veterans Service Organization to learn more about state-specific benefits in your area. We had a case study where a veteran was unaware of a state-level tax exemption, costing him hundreds of dollars a year. After connecting him with the right resources, he was able to claim the exemption retroactively.
Staying informed about the changes to military retirement and disability pay is an ongoing process. By understanding the BRS, CRDP, CRSC, the VA appeals process, and the resources available to you, you can ensure you receive the benefits you deserve. Start by reviewing your current retirement plan and identifying any potential gaps in your coverage. Then, reach out to a qualified financial advisor or Veterans Service Organization for personalized guidance.
It’s also crucial to avoid common mistakes that could sabotage your benefits claim.
What is the difference between CRDP and CRSC?
CRDP restores retirement pay that was previously offset by VA disability payments, requiring a 50% or higher disability rating. CRSC specifically compensates for disabilities directly related to combat, hazardous duty, or simulated war conditions, regardless of the overall disability rating.
How does the Blended Retirement System (BRS) affect my retirement pay?
The BRS provides 40% of the average of your highest 36 months of basic pay after 20 years of service, supplemented by a Thrift Savings Plan (TSP) with government matching up to 5% of your basic pay. This differs from the legacy system, which offered 50% of final base pay after 20 years.
Can I appeal a VA disability rating decision?
Yes, you can appeal a VA disability rating decision by filing a Notice of Disagreement within one year of the decision date. You can then choose between a Supplemental Claim Lane (submitting new evidence), a Higher-Level Review Lane (review by a senior employee), or a Board Appeal Lane (appeal to the Board of Veterans’ Appeals).
What is the VA Benefits Delivery at Discharge (BDD) program?
The BDD program allows service members to file their disability claim up to 180 days before separation from service, expediting the claims process and ensuring benefits are received sooner after leaving the military.
Where can I find information about state-specific veterans’ benefits?
Contact your local Department of Veterans Affairs or a Veterans Service Organization in your state to learn about specific benefits and programs available to veterans in your area.
Don’t let confusion around military retirement and disability hold you back. Take the time to understand these changes to military retirement and disability pay, explore the resources available, and secure your financial future. Start by reviewing your current retirement plan and identifying any potential gaps in your coverage. Then, reach out to a qualified financial advisor or Veterans Service Organization for personalized guidance.
