Social Security Disability, VA Disability, and Military Retirement

There has been some confusion around social security disability, VA disability, and military retirement. Its important to know that Social security disability and VA disability are two different organizations, VA and Social Security Administration (SSA), and they have different ways of identifying if you qualify or not. Because they are both different organizations you would receive monthly benefits from them separately.

Another thing to know is the way their benefits work. The VA as you may know pays out benefits that depend on the level of your VA rating. As you would know a VA rating of 100% will pay out a higher benefit than a VA rating of 60%. However, the SSA bases its benefit payments on your average earnings from your work history record.

Like I said, there are differences on how you qualify for benefits with the VA and SSA. The main thing about qualifying for the SSA is that your disability must prevent employment completely or must stop you from substantial gainful activity. The idea is that the SSA only wants to approve people who have disabilities that prevent them from earning a living.

Because of each organizations differences in qualification processes some veterans will qualify for VA benefits but won’t qualify to receive benefits from the SSA.

Is there a maximum income I can receive from employment?

Yes, the maximum amount of money you can receive from employment or other self-employment project is $1170 for 2017. As long as your income from employment is under this amount you still will qualify for benefits from the SSA. For the most part if you have serious disabilities you won’t work enough to hit the $1170 limit.

There is another disability program called Supplemental Security Income (SSI), but it is income based. This program also includes unearned income when calculating your qualifications. The SSI has a really low limit. It is very unlikely that you would be able to receive benefits from military retirement, VA benefits, and SSI all at the same time.

Can I receive Military Retirement Pay and VA Benefits?

Up until 2004 it was illegal to receive military retirement pay and VA disability pay at the same time. Retired military had to decide whether they wanted to receive VA disability pay or their retirement pay. And if they did choose toe receive their VA disability pay the money, they received was deducted from their military retirement pay.

However, the law has since changed. And there are two major changes you should know about because you may be able to receive your full military retirement pay along with your VA disability pay. These laws are as follows:

  • Concurrent Retirement Disability Pay (CRDP) which applies retired military who have a combined VA disability rating of 50% or higher.
  • Combat Related Special Compensation (CRSC) which applies to retire military who have a service-connected disability rating of at least 10%, which comes from a combat-related incident.

It is possible to qualify for both of these programs, but you can only receive compensation from one of them. You’ll have the choice of which program you want to receive benefits from, and you can change which one to receive benefits from if your situation changes.

VA Disability Pay vs Military Retirement Pay

A lot of veterans have misconceptions about receiving VA disability pay and their military retirement pay. So, let me help clear up any misconceptions you may have about the two.

Military retirement pay and VA disability pay are entirely separate.

Military retirement is a pension that is based on your years of service. VA disability pay is based on your disabilities that impact your life after leaving the military.

Taxation: Military retirement pay is taxable at the federal government level and is taxed in most states. VA disability pay is considered non-taxable income by the federal government. Now this is a big advantage, because your VA disability pay gives you more spending power because its never taxed. For example, if you were to receive $1000 from your military retirement and $1000 from VA disability pay, the $1000 from you disability pay would be worth more because it would never be taxed.

What Happens When You Qualify for Both Retirement Pay & Disability Pay

If your disability rating with the VA is 50% or higher, you should qualify for Concurrent Retirement Disability Pay (CRDP). If you receive CRDP, you will get your full military retirement pay as well as your full VA Disability pay. You will not have a reduction to your military retirement pay.

If you have a 40% or lower, then you won’t qualify for CRDP. However, if you do have a service-connected disability you may qualify for Combat Related Special Compensation (CRSC). If you have CRSC then it will act like the CRDP and you won’t have a reduction to your military retirement pay.

If your rating is 40% or lower and you do not have a combat related disability, then your pay will be deducted by the amount of VA service-connected disability pay you receive.